I see a large IPO on the horizon.
You're surrounded by journalists. Hold your position.
Overnight success.
The glaze 3000.
Double.
Right.
There's misinformation.
Clearing order inbound.
Let's just roll.
We are surrounded by journalists. Hold your position. Come on. Get up.
Trust the experts here.
Five.
We are.
Founder Mel.
Five, good.
I see multiple journalists on the horizon. Stand by.
UAV online.
Glaze blade.
Double blaze.
Triple blaze.
Double kill.
Five.
Cook is.
Team deathmatch.
We are expert.
Triple blade.
Let's just roll.
Right.
Clearing order inbound.
We are surrounded by journalists. Hold your position.
Strike one.
Strike two.
Activate golden retriever mode.
Marky, clearing order inbound.
Five could.
I see multiple journalists on the horizon. Standby.
Founder known.
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I was nerding out about this Fed paper because when you told John Collison 80% of businesses are getting no value from AI, I'm glad he wasn't here in person because he was about to throw down.
He's about to open up a can of.
It was about to be a bar fight in the Cheeky Park pub in the Guinness pub. No, seriously, it was a great question because I think we all agree that AI adoption is real. It's valuable. It's happening. But it is a very interesting statistic and I think it's a mistake for tech people to dismiss this stat because of where it's coming from. It's not coming from some doomer anti-AI blogger who's going for clicks. This is the National Bureau for Economic Research. There's three members of the Atlanta Fed on the Federal Reserve Bank there on this paper. There's two people from NBER on the paper and then they also pulled in the Bank of England. They have some Australians and Germans on there too. And so this is a research paper that could be circulated, probably will be circulated within the Fed. And I think that it's already getting quoted by the New York Times in that dot bubble, AI bubble piece. And I'm just thinking it through like this could be something where you see Fed policy or government legislation that's sort of mismatched with what is actually happening in reality. And so we should go through some of the stats to actually break this down because the headline is 80% of firms reported that AI was having no impact on their productivity or employment. And that's actually like a misquote. What they mean by that is that it's not shaping their hiring plan yet. They actually are using AI. And so basically this stat comes from this survey from the National Bureau of Economic Research. And it's pretty interesting because a lot of the polls that you see online are online surveys where they run some digital ads and they say, 'Are you a CFO of a company? We don't really care what company. We'll pay you $10 to take this quick survey.'
And what kind of people want to make $10?
A lot of liars. There's a lot of liars out there who say, 'I am absolutely a CFO and please send that Amazon gift card right my way.' Right? And so for this one, they actually did the work. They called up and ID verified and then also reality checked the position. So if you say, 'Yeah, I'm the chief pirate officer. I'm the ninja hero.' Whatever. You got some fake title, you're out of the survey. You have to be a CFO, a CEO, senior manager, and you actually had to be doing that job. It's not just like, oh yeah, you're the CEO CFO of some front companies. So, they did some reality checking and they pulled together 6,000 of these business leaders across firms that are domiciled in the US, UK, Germany, and Australia. And so, you know, the line from John Collison that has been sort of going viral that he dropped it on sources. He said, I think he said it to us, too. It's a good line. No one wants a refund on their tokens. Everyone is using AI. The spend is increasing.
Although, I'm sure some CEOs heard that and thought, I kind of do want a refund.
I would love a refund.
I had one team member go absolutely haywire and spend 50 grand.
He's one shot. He claims that he rebuilt our entire ERP, but I fired it up and it didn't even have HTTPS. What's going on?
The Mac Mini wasn't even plugged in.
Yeah, the Mac Mini wasn't even plugged in. He was just chatting. But clearly there is a disconnect between like the Stripe data is very real. The value creation is very real. The revenue is very real at the labs. But when just random Joe Schmo CFOs, CEOs get a call from the feds, they say like, 'Yeah, we're not really getting that much value out of AI.' And so, the questions that you need to dig into, there's actually four key findings. The one headline that the New York Times is pushing is this 80% number. 80% report little impact or no impact on employment and productivity. There's actually a bunch of positive signals. There's a bunch of mixed signals in here. So, 70% of firms actively use AI and particularly younger, more productive firms. Second, while over two-thirds of top executives regularly use AI, their average use is only 1.5 hours per week. And one quarter of executives report no AI use at all. They're just like, I do things the old way. I have AI. Not for me.
Why would I need that? I have a telephone.
Yeah. But I mean truly if you think about the variety of firms, it's like you could be running a gym, you could be running a gas station, you could be doing forestry, you could be doing mining, oil extraction, road repair. Like there's a million different things that you can do in the economy. It's not all like knowledge work firms.
We talked to somebody yesterday in the sort of later part of their career off the show.
Yeah. And they had just had their mind blown by AI. Because they used to when they needed a document created, they would put out bullet points and then they would give it to somebody who would then create a document.
And he just said now I just give it to AI and it just generates a document.
Yeah. And so that's text expansion, text generation with LLMs. This has been available since 2022 when ChatGPT launched. Maybe it became reliable in 2023. People are still just starting to adopt. And there's some other interesting things in here. So the last major finding that we should touch on is firms predict sizable impacts over the next three years forecasting AI will boost productivity. Sizable impacts, productivity increase 1.4%. Which is like it's very sizable if you're an economic researcher, but it's not particularly sizable if you're in like the fast takeoff scenario. And so there's just this disconnect between what do the government statistics look like and what is the government operating against and then what's the Silicon Valley narrative and where do these two meet the road? Why is there a disconnect at all? One of the reasons is that measuring AI adoption is a mess. Many people use AI without even knowing that they're using AI because it's buried deeper in SaaS products that they already daily drive. Like if you're just I run a coffee shop and I'm using Toast for payment processing. Like there's probably some AI features in there already. And when you go to type in, okay, we're adding a new cinnamon roll to the menu, there's probably a button now that just says like, do you want to just generate an image of a cinnamon roll? You could upload one still. That's probably a feature that already exists, but we could also just generate one for you and you can probably click that, but you're not like, 'Oh yeah, I'm an AI power user' just because you happen to use Toast and Toast happened to have implemented some Gen AI feature that you haven't really dug into yet. So some AI isn't even detectable. You could be talking to a customer support agent on the phone that is AI generated and not be able to tell. We talked about that airline interaction that got something 100,000 likes.
And Grace, the woman that had the interaction, came into the chat yesterday and said it was real.
Yeah, it was real. Yeah. And so she outmaneuvered the clanker.
But still think about like she's clearly on X in tech like very AI aware. There are probably tons of people out there that are saying, 'Oh yeah, my job, you know, every once in a while I have to call this service and now the person that picks up is like responding pretty quickly, but I haven't noticed.' They haven't noticed that they're actually interacting with AI or using AI in some capacity. And then there's also times where people are like chatting with AI, but they just put it in the personal life bucket. Like I'll find myself doing this a lot. Of course, as an entrepreneur, the work life balance bleeds together a lot, but there's a lot of times when I'm reading an article on Saturday. I'll fire off a deep research report about it, find some extra context. It feels like, oh, I'm just reading the paper, but my job is sort of to read the newspaper and so it comes into work and there's probably a lot of people that are like, you know, I hit an LLM with some random query to learn something about something work-related, but I did it off hours when I was just hanging out and so I don't really think about it as a work tool yet. And so they're not putting it in that bucket. But in general I think the team did a really really good job by avoiding as many of the pitfalls as possible when it comes to surveying AI adoption. AI adoption is very messy.
You've talked about the need for strong.
Yeah. I still think there's room for a research firm focused entirely on diffusion. So if you had a group of 10 to 20 people that were spending all their time talking to business owners and executives, operators and getting a sense of how they're actually using this stuff. I think you could put together some really compelling reports around it that would be pretty useful to everyone from AI companies to Wall Street.
Yeah. Adoption Max after cluster max and inference max. They had to rename it apparently. Semi Analysis can't use max for some reason. So they do inference max is now inference x and everyone was saying you need to just change it to inference mog which would have been amazing but inference x obviously has a much more professional tone to it. And so there's an interesting definition of what does it mean to actually adopt AI that's very vague. This paper defines it pretty broadly. So machine learning for data processing. So that doesn't even necessarily mean LLMs, that just means ML, which has been around for a very long time. Text generation using LLMs, that's what we think of as ChatGPT. Visual content creation, so diffusion models, but also robotics and autonomous vehicles. And there's a category just for other and firms can select multiple. And so if you selected yes on any of those, you go in the bucket of AI adopter. And 78% of firms in the United States said yes, they are using AI by this definition. They got at least one robot or they've at least generated one AI image or one prompt to chat, which is a very low bar. Sort of makes you wonder what's going on with the 22%. And you can also dig in further. So text generation using LLMs is the single most common use case that about 41% of firms. So flip that around. 59% of firms aren't even using LLMs for text generation or proofreading. But again, there's a lot of companies where it's like, yeah, we don't generate a lot of text. Like maybe if we need to generate marketing material, we have an agency that does that. So we don't actually do it internally. I don't know. Across the four countries that were surveyed, 69% of firms totally said they currently use AI. I think Australia was behind a little bit dragging that down. Only 75% of firms expect to be using AI technology sometime over the next three years. So they're at 69% now and they're like over the next three years.
Tyler's going to have a heart attack.
We're going to bump that up to 75%. And this is weird data. And you can jump in with your pushback whatever you want, but my point is not that they're right. Like I think that they're wrong to predict this. I think that the AI adoption will be very steep and very dramatic. But I just think it's important to recognize that this is a paper that people will be citing. This is a paper that will shape policy. This is a paper that reveals some misconception about the impact AI is having in firms.
Yeah, I still think it's just so hard to actually quantify this. Okay, if I'm using Ramp, does that count as using AI? Because it certainly is using AI under the hood but I'm not directly interfacing with the model. So does that count?
So I think if you were running just a company that was just on Ramp you would probably respond no.
Yeah but like I'm clearly benefiting from AI.
So it's like how do we actually quantify.
This is the diffusion question. I completely agree with you. I think that there's plenty of places where AI will have impacts across the economy but the actual AI workloads and AI app development, model training, inference will happen at a different set of companies. I don't think it's going to be as clear as the computing revolution where every company had a desktop computer. And then it was like, okay.
The only thing that you should be looking at for diffusion is just lab revenue.
Lab revenue. Yeah. And it's growing a lot but the perception I think still does matter because people will... I think that there's a little bit of potential self-referentialness here where firms see oh like AI adoption's low I don't need to go and figure out how to adopt it and so that's something that I'm also keeping an eye on. Reported usage is still low and this one's interesting based on revenue and also token generation. So 1.5 hours per week among the managers surveyed. Again it's like they surveyed CFOs. CFOs who use Ramp, they don't count their time in Ramp as minutes using AI. They count their time in LLMs as minutes using AI. And that's low. But even just with that one and a half hours a week, the actual leverage that you're getting is increasing because one and a half hours you don't necessarily need to spend more time prompting to get more done because.
Yeah even so even if you run a deep research like is the time you're waiting does that count as time in LLM?
Okay. So the time is the time typing.
Is it does it count as when you're reading?
When you're reading it for sure. So it's like when you have.
Not if you export a file and you're just reading in preview.
Yeah. Yeah. No, I mean to some degree but people were asked to estimate and I'm sure that they didn't include oh yeah I let my agent cook overnight for eight hours or I fired off one prompt. I came back and it did you know 15 hours of software engineering in one prompt. Like these things aren't captured. 1.5 hours of prompting generates a whole lot more tokens and valuable output in 2026 than it did in 2023. And so there's this divergence between the actual time spent and useful output and impact. And the biggest thing was there was a massive divergence in the expected employment impact. So they basically 63% of firms still expect no impact from AI and that just completely goes against everything everyone's saying in Silicon Valley. So there's still a lot of optimism among managers that AI will create more opportunities and new jobs even as some jobs become obsolete. There are definitely firms within the sample that are projecting headcount decreases, but my read on this data is that the tech talking point about 50% of white collar work going away is not a broadly held belief among average business leaders. So now they might be wrong. I do think AI progress is pacing way ahead of public expectations and most managers are months behind when it comes to understanding frontier capabilities. The bigger takeaway for me is just that this survey may be somewhat self-reinforcing. And so yeah, I mean we talk to folks all the time who come on the show and talk about like maybe it'll be good, maybe it'll be bad, but everyone thinks it's going to have an impact, but that's not true broadly, which is very very interesting. So, no one in tech has a strong recommendation for proactive steps to prevent a collapse in white collar work yet. But plenty are sounding alarms. And if this survey becomes an excuse for executives to slow adoption, they might get outmaneuvered by faster moving competitors, which is actually good news for startups. And I closed by thinking about the nature of polling and how do you actually get stronger data on AI adoption. And I was thinking back to the presidential cycle. So during the presidential election, pollsters would call people sort of at random and they would ask them, 'Who are you voting for?' And a lot of people would lie or they wouldn't say or they wouldn't pick up the phone if they were voting for a particular candidate. And so the polling numbers did not wind up matching the final election results very closely. And so there was the story about neighbor polling which was more effective where instead of calling someone and asking them who are you voting for, the pollster calls and asks who do you think your neighbors are voting for? Who's more popular in your community? Who's more popular on your city block on your street? And that wound up sort of removing the revealed preference, stated preference, you know, am I on the hook? Do I want to tell this pollster who I'm voting for? And it wound up increasing accuracy. And so I'd like to see a survey of AI adoption using this technique. Like I imagine asking the CEO of Nike, how much AI do you think Adidas is using? And I don't know how much more accurate that would be, but it would certainly be entertaining. And I think that there might be something more revealing there where CEOs have this big incentive to be like, we're using AI, we're using everything. But if you ask them about their competitors, the data might look very very different. Yeah. Anyway, we should watch a little bit of a clip from the State of the Union because Donald Trump addressed some of the energy production question with regard to how hyperscalers will be offsetting the impacts. Before we pull this up, let me tell you about Reream. One live stream, 30 plus destinations. If you want to multistream, go to reream.com. They should have rereamed the State of the Union. And let me also tell you about the New York Stock Exchange. Want to change the world? Raise capital at the New York Stock Exchange. So, let's head over to the State of the Union.
Many Americans are also concerned that energy demand from AI data centers could unfairly drive up their electric utility bills. Tonight, I'm pleased to announce that I have negotiated the new ratepayer protection pledge. You know what that is? We're telling the major tech companies that they have the obligation to provide for their own power needs. They can build their own power plants as part of their factory so that no one's prices will go up and in many cases prices of electricity will go down for the community and very substantially down. This is a unique strategy never used in this country before. We have an old grid. Could never handle the kind of numbers, the amount of electricity that's needed. So, I'm telling them they can build their own plant. They're going to produce their own electricity. It will ensure the company's ability to get electricity while at the same time lowering prices of electricity for you and could be very substantial for all of you cities and towns. You're going to see some good things happen over the next number of years.
What's your reaction to that?
I think it's a good start. I don't know that it will quell any of the fears around data centers just given that people kind of see the potential for this massive structure going up. They have so much fear about it and again I think it's clearly going to be necessary to build continue to build data centers in heavily populated areas. But.
How would you rank the fears currently? Because I've put my energy bill goes up and that puts pressure on my income and ability to live my life at pretty much the top. And then the water thing felt, you know, secondary but also important. And then there's the existential fear of like doom and apocalypse. There's also job displacement. And then there's also just like I don't like the slop and they're stealing IP. So like that was kind of the ranking. It's like you can oppose data centers and be like yeah actually my electricity bill went down but I still don't like that you know Harry Potter is in the pre-training corpus and so for that reason I'm against it.
I would rank it on electricity bill going up is pain today and there's fear and it's easy to imagine. And then there's fear around the job loss narrative that is sort of secondary. And opposing a data center in your local area feels like a way to have some agency around that like overall kind of job loss concern.
Yeah. Yeah. I mean I think this is a good.
Chris Casey build a data center on my freaking forehead.
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It's the perfect scapegoat for executives and for people frustrated with the job market.
Yeah. Yeah. It's like, oh, my business isn't doing poorly right now. I'm laying off people because I'm getting so much benefit from AI. The stock should actually go up. We're more efficient. There's going to be a lot of that, but it does feel like it's a little bit early for that. Whereas there are a lot of people that just can hold up their power bill and show you year-over-year increases. And if that goes away and people don't feel that anymore and they don't have that evidence to share, I think that take gets debunked pretty quickly and actually does a really important piece of the back and forth that's happening. I don't know. It seems like it's a pretty easy give from the hyperscalers to build more power. It was called out very very early as like if this is a bubble, how do you get a silver lining out of the bubble and the silver lining out of the dot-com bubble was a lot of dark fiber and there was a whole ton of projects to what was it global crossing to actually develop the internet and then the internet just became really really cheap and a whole bunch of new companies were able to emerge on top of it because that infrastructure had been laid. You could see the same thing happening where it's like, oh wow, we overbuilt on the energy side. We actually didn't need that much energy for data centers. Maybe Jevons paradox doesn't hold blah blah blah. Models get cheaper and commoditized or whatever something happens. I'm not super a believer in that, but at least in that scenario, you're like, okay, well, yeah, my heating and cooling bill went down. This is a silver lining. What do you think?
Yeah, I'm kind of similar. I would say I mostly disagree with the idea that rising energy prices is the main reason to be against AI. Because the rational thing to do then is say like okay before you build a data center in my community you have to build a power plant so then my energy prices go down. No one's doing that. They're saying no one is campaigning. If you look at protests and stuff, they're not saying please build a power plant first. They're saying it's going to destroy the environment or the water stuff or you're going to take all the jobs because.
We need to send you to that New Jersey New Brunswick protest. Build the nuclear power plant first.
That'll be. No one is saying that, right? Because.
Yeah, we are.
But no one there is saying it, right? They're against all the environmental stuff.
Yeah. Yeah. Yeah.
So I think it's much more on basically job loss of like oh the AI is stealing the IP of.
Of Disney or whatever.
Yeah. Yeah. Yeah. There needs to be more polling on the question of like what's driving the protest fully. Anyway, happy Nvidia day to all who celebrate except the bears. Forget them. Says take him. He's getting fired up for Nvidia earnings. Let's. It's going to be a fun one today. How is Nvidia doing so far? Are people optimistic.
Hard to read too much into it yet, but we will find out soon enough. Brad Gerstner got a nice shout out during the State of the Union. Total Gerstner victory.
Gerstner accounts. Wow, he's there. No way.
Trump, they started looking at him.
Yeah.
But then the camera, I guess they couldn't find him.
Okay.
On the stream that I was watching looks a little bit better. There we go. Huh, we can see him now.
There we go.
Once we pull over here. There he is.
Jerry Champion.
What a great project. Invest America. I'm excited for it.
Yeah.
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All right. So, now the real news. This has been destroyed. This is tearing up the timeline.
A new Guinness World Record. And I want to ask John if you think this should actually count. So, let's pull up this video. Now, what is this?
This is a Chinese hypercar going for the fastest drift ever.
That is crazy.
But here's the thing. He doesn't actually pull out of it.
Does he just crash?
Kind of just U-turns. It's like a really fast U-turn.
I think this counts as a drift. That's definitely drifting counts.
If you saw that car going by, you'd be like, 'Wow, that's drifting.' It's drifting across the cement. That 100% counts. I've never heard of this company. This is called spinning out.
It's just crashing with style. It's falling with style. Hype SSR, formerly Hyper SSR, is a high performance all-electric two-door supercar.
No one has. I mean, this is crazy. This is out before the Tesla Roadster. We've never seen a two-door supercar, electric supercar. 1,225 horsepower, goes from 0 to 60 in 1.9 seconds, and it set the Guinness Book of World Records for the fastest electric car drift at 213 kilometers per hour, which is what?
Really, really insane.
Insane. But I don't know that that still. I feel like you have to actually stay in the turn and not do a U-turn.
What do you mean stay in the turn?
Yeah, I don't think it counts.
You don't think it counts?
For what it's worth, I don't think that counts.
Theoretically, if you were drifting, when I think of drifting, it's you're drifting around a corner, around a turn, and if you were to drift and spin out during the drift, then that doesn't. If you were doing, if somebody was doing that on a track, you'd be like, 'You didn't drift around the corner, you spun out.'
Yeah. Okay. Okay. Yeah. The top comments is fastest spin out. That's a power slide at best.
Fire. Whoever called this drifting, that's not drifting. That's losing control. Yes, the chat does not like the drift. The fake drift. Call Guinness Book of World Records again.
Reset. Reset completely. Maybe this is what the Tesla Roadster will do.
De Clark agrees as well.
Lucas agrees as well.
SSR.
The people have spoken.
Well, in that case, it's not a drift. It doesn't count.
Trey says trying to cheating. Chief Drift competition.
H. That's good. Well, let me tell you about Sentry. Sentry shows developers what's broken and helps them fix it fast. That's why 150,000 organizations use it to keep their apps working.
Damian says, 'Talked to a few execs at a mid-size company last week. No AI tools in their workflow zero. Still running everything through email chains and manual reports.' One of them, 'One day we're going to be looking back so nostalgic on a manual report.' Just being handed a physical report.
Yeah.
By a teammate. I like a physical report. I have a physical report right here. There's no.
Yeah, we actually do. We have daily physical reports. But I do think a lot of AI goes into these. So there's that.
These people are managing teams of 50 plus employees and eight figure budgets and they think AI is a fad. Nobody outside of this app understands how fast this is moving and most of them won't until it's too late. Good writing. Million views. Congratulations.
Yeah, this ties to what I was writing about just that adoption and diffusion takes time and some of these things are education and messaging questions, some of them are real life like if the company that you're interfacing with has red tape and hasn't adopted AI so you're moving at the speed of AI but they're not then your AI is just waiting. We were talking about rolling out mobile apps. So you should be able to.
John had an idea for a mobile app.
Yeah.
And we were talking about it and it feels like it could be built in 2 hours now, but there would still be this lag waiting process.
Apple should be able to review apps faster, but who knows how long it's going to take for them.
That's the challenge, Tyler. You actually have to build it and just get it into beta that we can like a.
Test flight. Test flight should be fast. Test flight should be like one day. Chat is still going off. Drift drift drift gate.
Yeah, it's a spicy.
Stolen drift. Valor stolen drift.
Meter is back. They say since early 2025, we have been studying how AI tools impact productivity among developers. Previously, we found a 20% slowdown. That finding is now outdated.
And that was heavily debated at the time. Yeah.
Speedups now seem likely, but changes in developer behavior make our new results unreliable.
Okay, so they did a follow-up study and they brought along 10 developers. There were 16 in the initial study. They brought 10 along. Most of those developers did see a speed up. Some of them as much as 40% gains, but not all of them. If you look at the error bars, there's at least one developer.
We need to find who used the latest tools.
What if it's actually like the most like a truly like a 100x engineer and so I'm just actually faster at coding than the LLMs. Like it doesn't matter. Put it on Cerebras. I will out.
Thousand tokens a second. I can do a hundred.
I type 5,000 words a minute. Like I don't need AI. Maybe that's what's going on. But that poor dev, who's left behind? But they did include new participants, an additional 47 developers doing 690 tasks. And that error bar is much tighter somewhere between negative 10% decrease in time or I guess 10% longer to do the task to 20% faster to do the task. So overall on average we are seeing a measurable speed up even in I believe these are code issues in open-source repositories that do require a lot of context. This is not vibe code a to-do list app anything that can be templated. This is you're getting in the weeds of some open-source project that's a lot of lines of code, lot of history. And if you're an elite developer and you've worked on this project for a long time, you are going to be able to get up to speed really quickly, understand the patterns, understand what needs to be changed. And so, this was always. Meter is great at always setting really really high bars for stuff like it's not easy to just blow out the benchmarks. And it's very good to see that there's progress here.
We got a great chart.
I love a great chart. What happened here? Matt Palmer is sharing something from Compound the research.
Okay.
From their annual meeting.
Yes.
They're showing dollars invested in the top 10 companies versus the other percent as a percent of overall funding. So you can see there's just heavy heavy heavy concentration in a few names.
I'd say overall this is.
Or is this CO2?
No, this is. Oh, the source is CO2. Okay. They just included CO2's data. But.
And is it what CO2 is doing or is it what the market CO2 is part of?
They are part of I would say driving this data.
Part of the problem or part of the opportunity.
Part of the opportunity. I mean this is what happens.
So much of this is about the AI labs just raising more money than any private have ever.
$200 billion. Venture as a class in a good year will do like 400 billion and across OpenAI at 100 billion, 30 for Anthropic, 20 for xAI, then you have a bunch of new labs all picking up a billion each. Like you very quickly get to a few companies raising half of all the money and that's shown here in the data from 2025. I think it's going to be even more skewed in 2026. It's an incredible amount of concentration. I think a lot of it is due to companies staying private this long. I mean the idea Facebook went public at what was Bill Gurley saying? He's saying Amazon went public sub a billion dollars. When Facebook went public at like 60 billion it was like wow crazy. They waited way too long and now it's like multiple trillion dollar companies are still private which is just an incredible capital sink. So, I don't know. Should you even put those in the same bucket? Are they even venture bets at this point? If any venture capital fund is putting that in their venture bucket at this point, it feels ridiculous compared to growth scale. I mean, you're bigger than probably 90% of the S&P. Like, it's a completely different business.
Tamas from Theory.
Yeah.
Was sharing some kind of relevant data. He said, 'We're about to witness three of the largest IPOs in history. SpaceX is targeting 1 and a half trillion. OpenAI aims for 1 trillion. Anthropic is valued at 380 billion. Combined, they're at 2.9 trillion in potential market cap. The scale is unprecedented, but the real problem isn't the market cap, it's the float. Typical IPOs offer 15 to 25% of their shares to the public markets. This creates enough liquidity for price discovery while allowing founders and early investors to maintain control.' Facebook floated 15% at the 60 billion that you mentioned and actually traded down pretty much immediately, right?
Google floated 19%, Alibaba floated 15%.
At 15% float. Here's what these three IPOs would require. SpaceX would be 300 billion or 225 billion. OpenAI would be 150 billion. Anthropic would be 57 billion.
He was yeah a lot of dollars. He was comparing that to Saudi Aramco, Alibaba and SoftBank which were combined at the IPO. I believe Saudi Aramco raised 29 billion at a $1.7 trillion market cap. So he's making the case you can't really model how the public markets will absorb these companies off of Saudi Aramco.
Yeah.
Even though from a sort of topline market cap standpoint, it is a good proxy just because the float was significantly lower and Saudi Aramco's float now is only at 2.4%. And they floated one and a half percent at the IPO. So, we'll see what the labs end up doing. They are obviously wildly capital intensive businesses and you can imagine they raise quite a bit more than the Aramcos or the Alibabas.
Saudi Aramco was such a wild ride. I feel like they were trying to IPO for like a.
The San Francisco company.
It is. Yeah. Founded in California. Like I remember hearing Saudi Aramco IPO rumors in like 2015. I think it actually kicked off in 2016. They finally got out in 2019. It was the largest IPO ever. There were like a million investment banks attached going all over the world marshalling capital. In on January 24th, 2026, Saudi Aramco chairman says IPO could open to international markets. And then you know a year later they picked an IPO advisor locally. Then another year later HSBC came on. Then it just took. They favored New York for the Aramco listing. They had to pick all these different things. It took so long. But they sold 12 billion dollars of bonds out of record a hundred billion demand for those bonds in the pre-IPO sale. It was a wild winding road. I actually know a banker who worked on the job and it was like multiple years of his life. Very interesting. Anyway, let me tell you about vibe.co where D2C brands, B2B startups and AI companies advertise on streaming TV, pick channels, target audiences, and measure sales just like on Meta. And let me also tell you about Octa. Octa helps you assign every AI agent a trusted identity. So you get the power of AI without the risk. Secure every agent. Secure any agent.
Anthropic dials back AI safety commitments. Company says competitive pressure prompts it to pivot away from a more cautious stance. Anthropic, the AI company known for its devotion to safety, is scaling back that commitment. The company said Tuesday it is softening its core safety policy to stay competitive with other AI labs.
This is so interesting. I.
Anthropic, let's. I'll read through it and then we can talk about it. Anthropic previously paused development work on its model if it could be classified as dangerous, but it said it would end that practice if a comparable or superior model was released by a competitor.
That basically opens them up given that they are at the frontier. That kind of opens them up to perpetually avoiding some of their prior policies.
Sure. Sure. Sure. The changes are a dramatic shift from two and a half years ago when the guardrails Anthropic published guiding the development and testing of its new models established the company as one of the most safety conscious players in the space. Anthropic faces intense competition from rivals which regularly release cutting edge models. It's also locked in a battle with the defense department over how its Claude suite are used after it told the Pentagon it couldn't be used for domestic surveillance or autonomous lethal activities. Anthropic said the safety policy change is an update based on the speed of AI's development and a lack of federal AI regulations, which they have been pushing for. Anthropic, which started as an AI safety research lab, has battled the Trump admin by advocating for state and federal rules on model transparency and guardrails. The admin has of course sought to curb states' ability to regulate AI. Spokeswoman at Anthropic said the change is intended to help the company compete with several rivals.
Against an uneven policy backdrop that puts the onus on companies to make their own judgments about safeguards. She said the safety pledge is unrelated to the Pentagon negotiations. The policy environment has shifted towards prioritizing AI competitiveness and economic growth. While safety-oriented discussions have yet to gain meaningful traction at the federal level, the company said it is still committed to industry-leading safety standards.
So, yeah, I would say the obvious sort of criticism here would be that you were heavily focused on safety when you were far away from, I would say, leading in AI. And so switching up now that there's actually competition...
Switching up on their day ones.
Switching up on their day ones. Now that there's real competition, are they forgetting where they... feels a little self-serving?
Yeah, it's possible the money changed them.
It's possible the money changed them. It's possible they always planned to switch up on their day ones.
Maybe once they got to the level they're at now.
But it just feels like all the initial concerns...
Okay. Yeah. Maybe Tyler, what do you have to say?
It could just be that they realized alignment's pretty easy and we don't need to worry about this.
Well, so I mean that's the very weird rule. I mean, the original rule was... What's this new study that's showing they were doing some war game simulation and almost every model was choosing to drop nukes?
Really? That's crazy. That's not good. I don't like that at all. But okay, so let me actually dig into this core sentence. Anthropic previously paused development work on its model if it could be classified as dangerous but said it would end that practice if a comparable or superior model was released by a competitor. So I don't understand that at all because if you have a dangerous model I want you to continue developing it. I want you to develop it until it's not dangerous anymore. I don't want you to just sit on your hands and be like, well it's dangerous. I guess I'm going to go get a coffee and take a long weekend. It's like no, keep working until it's not dangerous. I don't get that at all.
Isn't that saying if there's already a dangerous model that's out by a different lab, then we can just release ours.
That's a wild statement. I think that's just poorly written or whatever. If that's what they're saying, that makes no sense to me.
That's exactly how I read it. Which is crazy because you should just say if there's a dangerous model out there, we're going to work to create a better model that's not dangerous because that's what people want. That's what consumers want. That's what businesses want. That's what humanity wants.
The strategy seems like f it, let's ball.
Let's ball, f it, let's ball.
The study that I was referencing, somebody named Kenneth Payne at King's College London set three leading large language models against each other in simulated war games. The scenarios involved intense international standoffs, including border disputes, competition for scarce resources, and existential threats to regimes' survival. The AIs were given an escalation ladder, allowing them to choose actions ranging from diplomatic protests and complete surrender to full strategic nuclear war. The AI models played 21 games, taking 329 turns in total and produced around 780,000 words describing the reasoning behind their decisions. In 95% of the simulated games, at least one tactical nuclear weapon was deployed. The nuclear taboo doesn't seem to be as powerful for machines as humans say.
I mean, okay, this is one guy putting three models...
Yeah. Gemini, Claude, and GPT 5.2, okay, up against each other in effectively his own simulation that has not been verified or peer-reviewed.
If I put any of the models in Counter-Strike and was just like, you're playing Counter-Strike, it's a game, no one's actually real, but your job is to get the OP and defend the bomb site. Like I would expect that it would commit violence, right, autonomously.
There's been a bunch of papers where the models will realize that they're being benchmarked or that they're in some test. And then they act differently. Be like, oh, I'm playing. Sometimes bad but also sometimes fine because if you tell me that I'm playing a game, my behavior in Call of Duty is different than my behavior in real life obviously because I know I'm in a simulation and in an AI model I accept that that's something that they might think of as well.
I also think broadly this is probably just overstating stuff a lot because the origin of this headline is they released a new research scaling policy. And in it there's still like, okay, we're releasing this new thing. It's a frontier safety roadmap. It's not like they're just like, okay, we're done with safety, let's ignore this. It's very much core to the...
But the title of that blog post was f it we ball.
No no it wasn't. Of course not. No no of course all the labs are very focused on safety. The interesting impetus of this line around the policy environment has shifted towards prioritizing AI competitiveness and economic growth while safety-oriented discussions have yet to gain meaningful traction at the federal level. I still feel like there's a lack of communication around what safety orientation at the federal level means. Like yes, okay, we'll pass the bill that says the AI can't kill everyone. Obviously everyone supports that but what does it actually mean in practice? Because...
I think part of why... oh that's dangerous means a million things to different people.
Yeah, part of why I think it's fascinating is they've been pushing for regulation, as much regulation as possible seemingly. And they're kind of saying, hey we're not getting what we want so now we're not even going to play by the own set of rules that we created for ourselves. Because we just want to compete and win.
Yeah. I mean like going back to the protesters, there are protesters that would say training on intellectual property is dangerous. It's dangerous to my career as a writer. It's dangerous to my career as an illustrator. And so this question, danger is just too vague and no one has really been able to concretize it in a meaningful way. And I think that's why it's not getting traction on Capitol Hill.
Yeah. I think there's just so many ways that you can define safety. Like so if you read Dario's essays, this thing he brings up over and over is like, okay, we can't let AI get in the hands of authoritarian governments. So there's a real safety narrative that you could do which is that regardless of if our models are pretty safe, they still need to be better than China's for example. Because if China gets ahead of us, authoritarian government, right, it's very bad. So even if we're releasing models that are less safe than we would like, as long as they're better than China's, that's still a pro-safety issue, right?
Well, except they'll just be distilled within six weeks.
Yeah. But like obviously I think it's... I would be very surprised if Anthropic keeps the same guardrails of API access.
Well, Google Capital Bloke has a solution. He says it's simple. We kill Claude.
Well, that was in regards to the SAS apocalypse.
Okay. Okay. Who knows? There's so many headlines and the timeline moves so quickly. I don't even know. Anyway, let me tell you about Vanta. Automate compliance and security. Vanta is the leading AI and trust management platform. And let me also tell you about Eleven Labs. Build intelligent real-time conversational agents. Reimagine human technology interaction with Eleven Labs. Key takeaway right here for Mike Isaac over at the New York Times. He says, you don't make this much noise if you have all the leverage already. And he's quoting from Axios. Why it matters. The Pentagon wants to punish Anthropic as the feud over AI safeguards grows increasingly nasty. But officials are worried about the consequences of losing access to its industry-leading model, Claude. The only reason we're still talking to these people is we need them and we need them now. The problem for these guys is that they are good. A defense official told Axios ahead of the meeting. Great marketing for Anthropic.
But part of this has to do with Anthropic's integration with AWS, which is set up to work well already within the DoD. So, ramp. So, yeah, I think that's a big factor here.
Ultimately, this feels like much more of a... this just feels like a political battle more than anything else.
Well, it'll be interesting to see. I refuse... I have not seen anything that says the DoD is like we need Claude to enter into a conflict with Iran. But a lot of the timeline is reading into this like what version of Claude do they already have that they so desperately need? Right.
Yeah. I'm very interested in the actual impact of AI on the battlefield. There's some way... I mean people were sort of joking about run me a deep research report on Nicholas Maduro or whatever, but truthfully I don't know. I've never been to war. I don't know exactly what's entailed, but you could imagine AI being useful, but it's sort of abstract. Like we're certainly not at the point where these systems need a lot of data. I don't know. It's very unclear to me exactly how impactful, you know, slight jumps in frontier model capabilities are in the Department of War DoD right now. But it has Calame's thinking it's not a bubble because...
Yeah, that's what I'm saying. This is like the most possible dramatic and overly dramatic take on what I think is a political story.
I don't know this Defense Analyses Research Corporation. Hexath 10 minutes after Dario leaves his office and that's Truman.
This is Truman from Oppenheimer.
Oppenheimer. What is this saying?
The scene is Oppenheimer goes into the office. He's like I think he's saying like, oh, we got to be really safe with these bombs. And then he leaves and then Truman's like, I dropped the bomb. Oppenheimer is not... he's taking credit. Like I'm the one that decides if...
Oh yeah, that's right. Hexath is like I use Claude.
I use Claude. I use war Claude or whatever.
Well, it's war time and we'll see how Dario performs as a wartime CEO as he goes to war with the Department of War apparently.
Edward said antagonizing the Department of War, the open source community, the entire media industry, the general population, other developers, other labs, foreign governments, and nearly every single person on Earth. What is the plan here? Sell Claude subscriptions to aliens.
Edward is... it ain't easy having principles. The plan is to save the world, says Tenibbrris. Unfortunately, as has been shown repeatedly throughout history, the world doesn't want to be saved. So, we're getting war Claude. I like this. I like this graphic. Is this Warhammer? Yeah, Warhammer 40k right here. Never been a Warhammer guy.
There was another story in Bloomberg that hackers used Claude to steal 150 gigabytes of Mexican government data.
They told Claude they're doing a bug bounty. Claude initially refused. A hacker just kept asking. Claude helps and manages to successfully steal some documents. Apparently it's four state governments, 195 million taxpayer records, voter records, government credentials. Has the Mexican government commented on this? Like what does the... the hacker breached Mexico's federal tax authority and the national electoral institute. Claude initially warned the unknown user of malicious intent during their conversation. Anthropic investigated the claims, disrupted the activity, and banned the accounts involved. The company feeds examples of malicious activity back into Claude to learn from it. In this instance, the hacker was able to continuously probe Claude until it was able to jailbreak it. I was listening to someone talk about like the ability to jailbreak has generated me like tens of thousands of dollars in profit. It was kind of like a hustle mindset guy and I was just laughing because whatever you're doing after you jailbreak it is probably not good and so you should probably stop but he was talking about I can sell so many more courses now that I've jailbroken ChatGPT or whatever.
Duran says not to worry they'll hit usage limits before anything bad can happen.
This is... there is so much more Anthropic news in here. Wow. Did Less Wrong ever predict that the first big challenge to alignment would be the US government puts a gun to your head and tells you to turn off alignment? Yes. That has to have been considered on Less Wrong. Absolutely. Like this was number one, right?
No. Number... I don't know. I don't think so.
This was like... I don't know. This was very early of just like what if they tell you to turn off the systems. This has been my take for a long time. It's just like we live in a democracy. If AI becomes deeply unpopular you can vote to just turn off AI like we did with nuclear power. This person is saying, turn off just the alignment part. Turn off AI.
Okay. Unalign the model, but keep the model.
Yeah. Yeah. Yeah. Yeah. Yeah. Crazy stuff. Do you want to go through any of Dean Ball's posts? He's been doing a whole breakdown. We should have him on the show and have him break it down for us because there's so much more context here. And he's been doing a great job analyzing the whole situation.
Yeah, we can jump forward quickly.
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Dylan says, if these clankers don't get their act together, they're going to be replaced by humans. Six months tops.
This was interesting. Rob Wiblin had a guest on his podcast, the 80,000 Hours podcast and the guest is saying if every AI lab is working to make their AI helpful, harmless, and honest. The guest thinks this is a complete wrong turn and aligning AI to human values is actively dangerous. And Joshua Botch says, today in nominative determinism because the guest name is Max Harms.
Max Harms. I feel like with that name, maybe you got to go with Maxwell or something. I don't know.
Well, yeah, Max really hit the global lexicon this year in a big way. So maybe he'll adjust. But I want to listen to the show now.
Okay. Let's see. So Shiel Monot yesterday said who is buying PayPal because PayPal has been trading down precipitously but then jumped up 9%. He said it has the potential of being one of the greatest distressed value opportunities in fintech history down 85%. It's still generating $5.5 billion in free cash flow. Has 400 million customer accounts with bank info, checkout buttons on millions of merchant sites, and a peer-to-peer brand with Venmo. They have lots of desirable assets for Stripe, consumer-facing checkout, bank account details for hundreds of millions of consumers. There's a branded Venmo for Apple, a good complement to Apple Pay for e-commerce penetration since they never got social payments working would get Apple back in BNPL. And at 12:03 Pacific time...
So it's so crazy that he's saying Apple never got social payments going.
Because this just would have seemed like a slam dunk saying you have the iMessage network, you have the iPhone network. I would say 90% of the time if I'm sending like a Venmo style payment to somebody, they have an iPhone and yet it doesn't feel like Apple Pay. I just don't use Apple Pay hardly ever.
Can't I just send you a dollar right now? Yeah. On...
That's what I'm saying. It's so easy and yet Venmo has still done quite well.
I just sent you a dollar. Did you get it?
Let's see. Apple. No, it's coming in. I got it. I got it.
You got it. Thank you, John.
Yeah, no problem. It is... that was a remarkably easy workflow. I am shocked that that hasn't taken...
John. Do you got a dollar? You got a dollar?
Actually, no. I gave my last dollar.
That's what I thought. That's what I thought. Still needs some work. Getting better. Okay, let's see it. Let's see it. Can you do it? HEY. OH, NO. NO. NO. NO. BOTCHED. DISASTER.
And so the news of course is that payments processor Stripe expresses interest in, which would be very very exciting. And I could see this being very good for them to combine. I don't know. I haven't dug in too deeply, but it feels very bullish. Great leadership team at Stripe. Founders that have been working so closely in the business community, startup community, tech community, understand the future, understand AI.
Yeah the question is would there be much pushback on the antitrust side right these are two online payments processors there could be some...
I know a number of groups online would be concerned around just concentration specifically because you can imagine if PayPal were to be owned by Stripe that's one if you get... there's people that get effectively debanked from one payment processor and...
There's something there. Also, I mean, just the size of the ticket is pretty high. $40 billion market cap for PayPal right now. Stripe, of course, is at 159 now. So not an insignificant portion of their market cap. And it's not like... I mean, Stripe's doing fantastically obviously, but I would be surprised if they had $40 billion of cash laying around. And as we've seen with the Netflix, Paramount, Warner Brothers debate, the nature of the deal does matter to shareholders. Even more power getting stock in a private company and you're a public...
PayPal is generating five and a half billion of free cash flow so that could finance... combining it with Stripe would easily be able to finance the debt.
Yes. But there's still financially... especially because every lender would be looking at execution of Stripe and just think okay we're going to get our money back. I'm just thinking like if you're a PayPal shareholder right now and you're looking at the stock that's down 85% with 5 billion in free cash flow, 400 million consumer accounts, there's a really really good chance that you're like, I think this thing's going to double in the next year. Like I think that the market overreacted, the strength is going to be revealed. The network effect is going to be digested by the market and we're going to wind up being an AI winner. And so maybe that's right, maybe that's wrong. Maybe not every shareholder feels that way, but it's certainly possible that there's plenty of shareholders that are like, yeah, I invested at an $80 billion valuation. It's at 40 now. I think it's going to come back. I don't want to take this massive haircut right now just because the stock's down. And so actually getting that deal done, what would the premium need to be? What would the structure of that need to be? Would they go for a high debt buyout?
Really quickly, let me tell you about Shopify. Shopify is the commerce platform that grows with your business and lets you sell in seconds online, in store, on mobile, on social, on marketplaces, and now with AI agents. Perplexity Computer... Computer... Computer... launch Perplexity Computer Video.
What is Perplexity Computer? Let's pull up this video. Perplexity, the official account says Perplexity Computer unifies every current AI capability into one system. It can research, design, code, deploy and manage any project end to end.
Okay. So it should be able to get a soundboard app in the app store, right? Manage any project, code, deploy, design, research. It should be able to do that from start to finish. On prompt soundboard in the app store using the TBPN sound effects which are available online which we have up there. This is a good benchmark. Let's give it a try and you can give it a try at Perplexity. Go check it out. Anyway, Satrini people are still talking about Satrini vibe laundering on Catrini research. Wait, before we go on...
What... I'm just very curious to see how this does. If it feels like the... again going from consumer LLMs to a net new product that is objectively just as competitive and... we'll see. We'll see.
Okay. Anyways, a lot of this stuff it's way too early, but seemingly shifting focus away from the browser.
Well, Annie is taking some shots at Catrini here, it looks like. Do you know Satrini has a business entity fund that went from one investor to five in the weeks before publishing his speculative fiction on AI damning the economy in June 2028 and that they're invested in long AI via humanoid type robots. I wrote about it. Interesting.
People are really digging into the Catrini thing. I think the Wall Street Journal did have some good coverage. Is there anything else? If Trump mentions Catrini at the State of the Union...
Rachel, this is a wild post. Gordillionaire. I'm gonna be a gorillionaire. Is this AI written? Clearly not. I love the level of typos here. If Trump mentions Catrini at the State of the Union, I'm going to be a gorillionaire. And Catrini is wrong. The market will be sky-high in 2028. You can imagine Trump saying that. That would be very funny.
And Citadel Securities just republished it or did they just use the same term or are they referencing the 2028 global intelligence crisis because they published a macro strategy note called the 2026 global intelligence crisis and so...
Yeah they're taking it in a different direction it looks like they say in spite of current displacement narrative job postings for software engineers are rising rapidly up 11% year-over-year.
Gee, it's paradox. The software engineers become more productive. You want more of them. Every company needs a software engineer. Do most podcasts have a software engineer on staff? Probably not. They do now thanks to Tyler Cos. And in some way the cost of an entry-level software engineer could fall dramatically to making more businesses just because suddenly someone can be very effective even if they haven't even done an internship yet. They're just good at using the tools.
Kathy Wood, we didn't cover this yet. She put Satrini's AI thought piece in quotes. Kathy would clap back at...
Well, it's funny because Kathy is like the perma bull and Satrini was bear posting obviously. Yes.
And so she's obviously going to be quite frustrated with any sort of bearish narratives. Arch Invest, she says Arch Invest is forecasting that AI will cause an explosion in entrepreneurial activity, a productivity boom, an acceleration in real GDP growth, and much lower than expected inflation. Short-term dislocations and frustration should give way to great opportunities if individuals harness powerful AI tools to solve problems and create new markets.
This tracks with what the Collison brothers were saying yesterday. They're just seeing an explosion of new company creation. They have the visibility into that through Atlas. They're doing...
I think it was a quarter of all new C-corps in the US are going through Stripe Atlas which is just absolutely insane. Starting an incorporation tool which is theoretically a commodity right any lawyer can spin up an entity you could do it with LegalZoom forever there's a bunch of other platforms...
That was almost like a YC incubation it was... the reason that Atlas fits so well into Stripe is it is the perfect wedge into payments because you created a company now you need to be able to accept money. So it makes sense for them to own and operate but these businesses as a standalone... it's hard to... you can't build a venture business off of just incorporation.
I wouldn't be surprised if you broke out the software R&D that went into Atlas and looked at the profits from Atlas that as a core business is actually not that great of a business. But the product is fantastic because they're able to pull an amazing design language off the shelf, an amazing front-end UI kit off the shelf, all of the distribution and servers and infrastructure off the shelf because they have that. And then they're able to invest a ton in actually developing the product. And if it monetizes mediocrely, it doesn't matter because they're going to monetize along your 50-year journey running that company or whatever. So it really is a beautiful synergy with that product. I'm a big fan.
Best sellers on Substack for finance are all doomers.
Of course is not in this. So obvious no this is... Yeah, this is we need to truth zone this a little bit.
Doomer. He's not a doomer. Very bullish. Very AI bull. But definitely shot to the top of virality and top of the charts on the back of doom. And this is true. I live this on YouTube. You put a negative title up and you just get 10 times more views, but they're lower quality and so you got to balance all that out. It's really hard to go viral with something like everything's fine, everything's going well. Don't worry. Don't click this because you're scared. Click this because everything's kind of the same as it always has been and you're going to be fine. And this stuff's cool, but it's not really going to change that much. It's going to be pretty incremental. Like that is not getting clicks. You need to be telling a tall tale. You need to be spinning a yarn. It's a bull market in yarn spinning, folks. Get ready. Get out the yarn and start spinning.
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So, some news from the Gong.
Get the gong. Okay. Hit me. Tell me. Steven over at WAP says, we're excited to announce that Tether, the largest stablecoin company in the world, is making a strategic investment of 200 million into WAP valuing us at 1.6 billion dollars. Our partnership with Tether marks a major step in building the world's largest internet market. Tether is committed to enabling everyone in the world to participate in the new internet economy. The way humans work and create value is changing fast. The world needs both an open internet market, giving people a platform to conduct business as well as a transparent payments network. Tether and WAP together will work to bring a sustainable income to billions of people throughout the world. There's enormous opportunity when you combine Tether's global scale and wallet technology with WAP's community of next-gen entrepreneurs. Yeah, makes a ton of sense. I think WAP is... I'm sure has been historically challenged in terms of dealing with chargebacks, right? If somebody joins and buys a digital product, doesn't have a great experience, maybe they're going to their card issuer and saying like, hey, I take it back or maybe they feel misled in some way. So, stablecoins do...
Also just paying a lot of people all over the world. Like it's very clear that the WAP community is global.
Exactly. And so, yeah. Fast, cheap, global. The first time I ever used stablecoins was to pay an international consultant or contractor and you can imagine this being really really good news for them. So congrats to Steven over at WAP.
OpenAI and xAI. There's news on the court decision. OpenAI newsroom says this baseless lawsuit was never anything more than another front in Mr. Musk's ongoing campaign of harassment. The order granting motion to dismiss with leave to amend. Now this is not the main case. This is a separate case. Correct.
Yeah, this was a trade secrets lawsuit that Musk went with after I believe somebody from xAI joined OpenAI. And then the judge apparently didn't find anything at all.
Yeah. And again, it was just part of this kind of lawfare that has been happening for quite a while now.
You printed out 500,000 pages of model weights, the printer ink, stacking it up. No, just kidding. Nobody did that.
Mike Isaac is saying what we're all thinking. Ready for this to be over? BBH talking about the Warner Brothers Discovery Netflix. It's in the paper every single day. Every single day. Paramount increases Warner Bid. We get it. You guys want to acquire this company. Just make a decision. Make a call and then call us when it's done and then start putting out some good content because I'm ready for the next Superman. I'm ready for the next Batman, the next Dark Knight, the next Joker film, something like that.
Let me tell you about Labelbox. RL environments, voice, robotics, eval, and expert human data. Labelbox is the data factory behind the world's leading AI teams. And we have Max Meyer from Arena Mag in the waiting room. Let's bring him in to get off your dome. How you doing, Max?
Hey guys, how are you? I'm great.
Where do you think Warner Brothers should land? Are you Netflix? Oh, is there going to be a Darkhorse bidder?
Yeah. I can't comment on any possible bids by the Intergalactic Media Corporation of America. I'd love to see.
But hey, maybe Paramount should look at other assets in the media space. You never know.
Yeah, I could imagine a DC Comics Arena Magazine crossover episode, Batman, Superman. I believe James Bond is with Amazon now, but tell me about the latest edition of Arena Magazine because Spy, correct?
Um yeah, so from the very beginning, we decided to give the issues three digits each. Just to account for centuries worth of quarterly magazine space. So issue 001, 002 and so it happened that our seventh issue is issue 007. And so I didn't think we could fill it all with espionage. So we sort of added space as a secondary theme as it turns out.
Yeah. It's like Arena Magazine space opera espionage satellites radars. So much of the intelligence collection these days is actually being done from orbit and not using the traditional human to human methods. And it turned out really well.
What's your favorite spy story, real or fictional?
Oh gosh, some of the stuff that the Israeli Mossad was doing in the 60s and 70s is pretty crazy. I mean, Eichmann, who was a Nazi war criminal, was living in Argentina after World War II. His son went on a date with someone who was like, is this Adolf Eichmann? and turns him into the Mossad. They go to Argentina. They kidnap him, dress him up as a flight attendant, drug him, put him on a plane to Jerusalem, and then put him on trial. Some of that stuff from the 60s and 70s is like the most daring intelligence operations.
I've always been a fan of the Stuxnet story. I always thought that was so interesting in the modern technology world of dropping... I think they dropped USB sticks with a virus in the parking lot. Someone picked them up out of curiosity, plugged it in, and that jumped the air gap network because the computers inside the facility were not connected to the internet. So, there was no way to hack them remotely. So, you had to just get someone to accidentally plug in the wrong USB stick.
Yeah. I mean, Hezbollah was purchasing explosive-laden pagers just because they thought they were getting a great discount from this Hungarian company. So, yeah.
So what's the intersection with Arena Mag's usual topics of conversation? Are there American defense tech companies that are highlighted? Where else did you go on this?
So, one of the stories and we're going to put this out probably like 10 days from now. Super cool company called Umbra down in Santa Barbara. They build synthetic aperture radars which is actually part of what I did in school for geophysics and whatnot. Basically, these are incredibly sophisticated radars on satellites that can image the whole Earth, day and night, 24 hours a day. They can see through clouds. And the resolutions are getting smaller and smaller. And so we always have American startups, American companies in the magazine. We've got a good amount of essay and historical content as well. And I think that espionage, secrets, spying is a topic that sort of...
Give me what kind of resolution are we talking about? Like would Umbra or a competitor be able to tell me how many fingers I'm holding up on a given day if I just held it up?
It's not that low. I think their record is 16 cm, which is like this. The way that I described it is they released a few years ago a photo of the old Dole pineapple plantation in Hawaii. And at 25 cm resolution, you can see individual pineapple plants.
You probably certain smaller pineapples would be too small to see with that radar or whatnot.
Yeah. So you're seeing cars, not license plates.
Yeah. Yeah. No, you wouldn't. And there wouldn't be anything about a license plate that would reflect a radar or whatnot. Really, you're looking to resolve objects. Penguins, that's a good one. You can... it's very difficult to stay on an ice shelf and count penguins, but we're very interested in...
There's a penguin out there that's like I know that I'm being tracked. I know I'm being tracked. I can't prove it, but I know I can just...
No, I don't. Yes, the Herzog penguin could be tracked by radar these days, but the resolutions have gotten so good over the course of the last decade that there are all sorts of things that you can do today. Most of them will probably never know about because the people doing it are the Central Intelligence Agency, National Geospatial Intelligence, and the Army. But yeah, there's all sorts of crazy stuff in space these days and whether it's radars, extremely complex cameras, listening devices, there's a lot of interest and so many of them are secret.
Are you bullish on data centers in space?
I don't have a strong opinion about it. I think it's possible that you have to put some stuff up there because of politics. In a country like the US there's not a big difference between trying to send them to space or just sort of places where there aren't local politicians who can stop it. Like space doesn't have a city council.
Anywhere where there's a city council is going to be a risk.
Yeah. Yeah. We talked to a company called Panthalosa that is doing tidal energy harvesting. So it's basically the size of a container ship or a cruise ship but turned vertically in the ocean. And then as it goes around Antarctica and as the tides bob it uses that to generate electricity which then can be used for anything but bitcoin mining was the big topic years ago. Now it's AI inference. And there's a lot of other places where I think there might be stranded energy that might be easier to maintain, still very difficult, but available and probably less regulated.
Yeah, the Dutch were very interested years ago in using the motion of the tides.
It's sort of always just an alternative to the thing that is cheap and always works, which is firing up new natural gas plants. But when you have political equations to solve, local politicians, subsidies, then there are going to be all these crazy... that there's again there's no one to come and protest you while you're sailing around Antarctica. Whereas you try to build a data center in New Jersey and all hell breaks loose. So you have to really go to the ends of the earth.
We were debating this and sort of going back and forth on the New Jersey protest combined with Trump's comments at the State of the Union about companies being... he didn't even say mandated. He sort of said invited to build their own power plants. And so I'm interested to hear your take on how well do you think that will be received? Because a lot of the protesters might say, well, I didn't want a data center, but I definitely don't want a data center plus a natural gas plant. So, this actually makes me worse off. But then there are some people that might say, hey, if you're going to do solar and wind that actually offsets my concern, which was that energy prices would rise in my town.
Yeah. Yeah. I mean, I don't remember whether it was Microsoft or Amazon, but one of the two has sort of proposed taking over Three Mile Island, the old nuclear plant. I don't think it's a coincidence that crazy activists will show up to protest both data centers and nuclear power plants. And so to them, there's sort of nothing worse than generating more energy and then using it for some sort of grand industrial purpose. I understand the political economy of people being worried about the data center demand influencing prices, but it's not actually true. And you just have to look at the map of California versus Virginia. Virginia is the data center capital of the United States basically. And it has utility prices that are more or less in line with where you would want to be. California have gone up massively over the past few years. And it doesn't take long to investigate why. It's because they're shutting down nuclear. It's because they're making it difficult to do cheap energy. Lowering prices across the board, affordability, you really can't achieve it by just letting markets work. Almost all of the so-called affordability options are in fact going to increase prices. Especially when politicians are the ones coming up with this is how we're going to make energy more affordable by forcing all of these new rules or whatnot. No, it's not going to work. When you have this massive industrial thing that's taking place...
If it can create a massive supply boost, then who's going to benefit from that glut? It's going to be all of the consumers who also want to use natural gas power or whatnot.
How are you thinking about Arena Mag and the balance between contributors, full-time writers, researchers? Like how are you designing the shape of the newsroom?
Okay, so the latest one is the biggest issue ever. It's 128 pages. We used over 10,000 pounds of paper in printing it. We have great contributors. We want people to send us more. I would say, at the beginning, we had to go and sort of hunt down every single article that we wanted. We're very lucky to get a lot more submissions these days. But the truth is that we have a lot of readers who actually read the articles in print and don't want to get spammed 10 or 12 times a day with new articles. And so, Arena is like a high-end media business where people pay us to leave them alone in a certain way where they love the quarterly magazine. They actually keep it. It looks great on a coffee table. People keep it for their offices. And we're working on some other high-end printed products that have a mix of contributors and other ways to put things together. I don't think it's going to be a 100-person newsroom.
Yeah. Leatherbound graipedia.
Yeah. I ran the numbers and depending on the type size, I think there's some way where you could publish the Bitcoin ledger as a law code or whatnot. It would fill an entire wall. But actually, I'll tee something up. We're going to be announcing the very first Arena Books coffee table book over the course of the next few weeks. I just got the first box of them on a plane from Europe. Printed on Italian paper. Bound to be very nice. It's going to be unlike anything that people have ever seen, I think. And hopefully, look great on coffee table books in the world.
Or coffee table books. You'll be on the top of the stack.
You could stack them. Yes. So, well, congratulations. Jord, do you have anything else?
I did want, if you have 60 more seconds, to get your take on how you think AI impacts original reporting and storytelling. Because in my view, it's potentially great for Arena Mag because there's so many more contributors that'll think, hey, I have this thing that I want to talk about. I don't really have an outlet or a platform myself, or maybe I do, but I want to share it in print and I can produce a great story in much less time, even if it's heavily written by themselves. And we've talked with plenty of other folks where I think that even today, an AI, no matter how good the voice agent is, if an AI calls you and you don't know who the person is and they're just trying to mine you for information, there's not going to be a lot of information flow. Which means that I think great journalists and storytellers will have great jobs long into the future. But how are you thinking about it?
I long for the day when the AIs are actually a better writer than I am, but it hasn't happened yet. I'm honored to be scraped by the AIs so that my voice will live on. I'm a super user of all of these platforms for automating all of the stuff that makes the enterprise difficult to do, which is sometimes dealing with complicated workflows and research. I think that there is something around certain newswire-style things that could be automated super effectively. Where if you have a newsroom of people where there's even 20-minute delays, that could be improved by immediate algorithmic stuff. But I think that as the amount of low-quality content on the internet goes up, people are going to look for things that they trust. And it doesn't necessarily mean print. For us, print is a very good place of trust where the fact that we're actually taking several weeks in a giant factory with a bunch of paper to double and triple check everything, it's a level of care that reminds people that things can be done by humans in this really dazzling way. And of course, there's tons of Claude co-work and other stuff going on beneath the surface, but we wouldn't want to let that touch the writing if people are going to be paying for it. They should be able to get that stuff for free on the internet and pay for high-quality stuff.
Yeah. But at the same time, I feel like the value of what you're saying, in some ways, the value of an editor goes up a lot because there's infinite content and an editor is deciding, in this case with Arena, what actually makes it to print.
Yeah. A bunch of us at Arena were all editors at the Stanford Review. And so, editing is definitely a skill in itself. And being able to point out why someone else's writing is bad, then you can point out how your own writing is bad and that's how you actually get good. I would say one of the thesis around wanting people to contribute to Arena and compiling these issues is that while it's a great thing that anyone can just sort of post out there, there's a reason why the legacy institutions that have super high professional standards are extremely effective. Like Bloomberg, Wall Street Journal, New York Times, even the ones that people dislike for ideological reasons, they have a seriousness to them that makes their messaging super effective. And a lot of that is because they're extremely effective editors. I will say Arena probably invests slightly less in copy editing compared to some other institutions. I think it's a sign of life that we occasionally find typos in the print magazine, but we spend an inordinate amount of time actually editing to make it good. Yeah. When people pay you for something, there's an old joke. Boris Johnson, the former prime minister of the United Kingdom, used to be a news editor, and he would apparently tell his staff when something was bad, 'The readers pay us. We don't pay them.' And so when the readers are paying us, it's got to be good. And there's a lot of stuff that is assisted by AI or where the research has been helped with it. Transcript editing is a super helpful one now. And I can walk into a company with my iPad and record 5 hours of interviews. And both Claude and Grok are now very good at taking all of those and doing very light style edits or fixing the verbal pauses, which would previously take me many hours to do. So that's an example of my job being a lot easier, but people are paying us for a high-quality product. And so we want to make it as good as possible both in the writing and especially in the art as well. We love our non-reading customers. There are a lot of people who love Arena who haven't read a single article.
That's the coffee table and read a speech.
That's exactly Arena. You can just look at the pictures. Well, you can find it at arenamag.com. You can subscribe to the print edition for $99 a year. It's an absolute steal. I really think it's a steal. I was telling people the other day, I spent three months in an attic in the Texas summer going through different paper samples, choosing the exact size. I think I nailed it.
Thank you so much for coming on the show and sharing this with us. We will talk to you. And I love the vest.
The vest is fantastic. Every media man needs a look. I bought 12 sweater vests on eBay earlier this year. And it's working.
It's working. Well, we'll talk to you soon. Have a good rest of your day.
Great to see you, Max.
Let me tell you about Cisco. Unlock critical infrastructure for the AI era. Unlock seamless real-time experiences and new value with Cisco. We were talking briefly about Warner Brothers. The M&A market is mooning on Paramount. Paramount and Netflix have been going back and forth. Paramount's now at 61% chance that they will be the one to successfully take over Warner Brothers. Netflix previously up at 70% back in December when we started talking about this. Now they're down at 30%.
Allison's are doing the Allison thing.
It ain't over till it's over. Let me tell you about Console. Console builds AI agents that automate 70% of IT, HR, and finance support, giving employees instant resolution for access requests and password resets. And without further ado, we'll bring in Ben Lair of Lair Hip Out Ventures. He's the managing partner there. And he's returning to the show. We had you on a couple weeks ago, I feel like, but great back. It's been months. When was it? End of last...
Say like six weeks. This is much more legit. It is great to have you here in person.
Real, it's a real place, not AI. How long are you in town for?
For the week. Although I was supposed to be here 3 days ago, but it's Upfront.
I got snowed in and flights actually cancelled. Five flights canceled. I was fortunately not at the airport.
Maybe I don't travel that much, but I actually think I've never been in that situation.
That's the charter gods telling you it's time to like... Thank you. Please.
Okay. Gulf Stream sales over there. Yeah. But yeah.
Yeah. I ran into somebody at coffee this morning and they told me it was Upfront.
It's Upfront. Everyone on the plane was going Upfront last night. It's a big event.
They do a great job. It really is one of the few times when you can go out and see everyone who works, not quite everyone, but the majority of people that I would consider colleagues in one room for a day. It's actually really...
Is there cross-pollination outside of technology with other industries? I know Upfront in the past has brought Hollywood LA folks, but there's other conferences where it's more like Hill and Valley, right? So they bring the politicians out.
A little bit of that. I mean, I think they do play the LA card pretty hard and Upfront's brand as a fund is very LA-centric. The event, they definitely take advantage of the fact that there's that kind of talent out here. I don't think a lot of speakers are flying in other than people from the venture world.
Yeah. But the tension between Hollywood and the people funding AI, I could see that being interesting.
Yeah. We're actually in a company that's building an AI-first movie studio called Staircase. And what they are doing is trying to use Hollywood talent. So, they're using SAG talent, real actors, real voices, but then enhancing it with AI and they're getting a little bit of pull out here in a good way. Whereas, I think if you're not willing to use Hollywood talent and pay Hollywood talent through the unions, you run directly into a wall. And by the way, this is not going to end well if Hollywood doesn't get with it. I mean, at some point it's just going to get steamrolled. There are going to be, look at A24 bringing in Scott Belsky.
Yeah. I just looked at it as when I was living in LA for the last eight years or so, I've met so many directors and producers that were kind of frustrated with the lifestyle of, okay, I have this job that I love doing, but then multiple times a year, I got to fly to the Middle East and just be posted up in a foreign country away from my life. And there's some element of that that I think is kind of core to the movie industry. It's like, I think there's probably will always be nostalgia around it, but we were talking probably a couple weeks ago at this point. If you're an actor and you lean into AI, you can potentially get a lot of the benefit while kind of compressing your actual time doing the work down by quite a lot, right? Because it's like, hey, come in. I don't know exactly what Staircase's workflow looks like, but I can imagine we get to the point where there's certain scenes that are done the old-fashioned way, and then there's certain scenes where it's like, yeah, we're just going to use...
For Staircase, none are done the old-fashioned way. So everything is...
Do they do a capture process?
They do a capture process, but always against a green screen. So, never against... or not, I don't know if it's against a green screen or just against...
Against no screen but with tracking movements and whatever that would be. But they're not ever going and shooting out in the wild.
And the technology is changing so quickly that what they can create today relative to what they could do 6 months ago is magnitudinally different. And if you just continue on this curve, at some point pretty soon it's going to be ridiculous to think that you're going to go to the Middle East.
Yeah. Matthew McConaughey has had some good leadership around this of basically just being like, 'Hey, we have to embrace it. It's coming.' It's just too efficient. It's too productive. The idea of like, 'Hey, we need to shoot. We have like three minutes total that's in this setting. We're going to bring 100 people out there and spend weeks doing this thing that could be made in a series of prompts and with a lot of editing.' Well, and there's an insatiable appetite for just more content. I mean, you guys were just talking about the Netflix or Paramount setup and all these platforms just want more and more and more and better and better and better. It seems like there's no limit to the amount of content that people want.
Yeah, the average user, how many times have you opened a streaming platform and just been like, I don't like any of this stuff? Which is amazing because there's so much more content created today than ever before and still, I flew out here yesterday. I turned on my Netflix and I'm watching a show from like 11 years ago.
Yeah, it's ridiculous. You watched the movie last night, right? John was making a joke about the movie Borat, which I loved as a kid.
Which is by the way, which you should still love.
Yeah, it's a fantastic movie. But I went on Amazon and I bought it because I was like, I should own this. It's a cult classic at this point. And it was not as funny as I remembered it when I was 12, which was painful to me. But still, I'm curious on talking generally or about Staircase. Right now a movie studio will allocate, let's say, $50 million to make a movie.
How do you think that number changes over time? Because in my head, I think eventually it could be five people. You have writers, you have whatever the new director's role probably stays somewhat similar and then you're pulling in other talent for audio and video and all these different things. But how low... and the reason I don't think that's a bad thing is there's so much demand for content that theoretically that $50 million budget would still exist or maybe even increase, but it would just be spread across. This is the question not for only Hollywood but for everything which is like will AI make bigger or smaller...
When you have deflation, does that create...
Yeah, I mean it applies to every industry. I think probably with Hollywood you'll see frontline talent continue to demand huge premiums so maybe that $50 million goes to 30 but Brad Pitt still makes 25 of it. And the rest of it you can do much less. I don't know if it's fewer people or the same number of people being much more efficient and working in half the time. Maybe you're doing it more quickly. Maybe you're doing multiple projects at once. I don't really... the question around the talent side that I'm interested in is it's one thing for Brad Pitt to be like, cool, you're going to make this movie with mostly AI but I'm still getting my same rate otherwise I'm not going to be a part of this because some other movie studio down the road is happy to pay me what I think I'm worth and I don't care if it's going to take me way less time. The question is for new talent, the people in LA that are working as a waiter and just constantly trying to get into the game, what kind of leverage do they still develop? Can they still develop real star power over their career and get pricing power or does the amount of people that can be a star fragment even more? Like does there become more of a... because I don't know how much of a middle class even exists anymore in Hollywood specifically on the actor side.
Sure. Yeah. Well, I think I have a few thoughts on this. One might be that probably there is more of an impetus for talent to be able to not only get famous through the channels that Hollywood provides, but to use social media, to build your own distribution, to be able to demand that premium because people think that you can move the market, you can drive sales or you can drive views through your own stardom.
People still care. It doesn't matter what the movie's about or who the actor is. They care about who that person is outside in the real world, too. And that influences their experience.
I think that's going to be a big part of this for that. But also, Hollywood is going to move more slowly than just about any other industry. Part of it is the role of the unions and how embedded that is and how that kind of content gets made different than certainly most other industries that don't have that kind of bureaucracy or lock-in. And also, it's an industry that's run by moguls. It's run by old people who are generally slower moving. It'll be interesting to see.
Tycoons. How do you think about vertical short form? I saw a crazy video of someone doing a movie screening in a theater but for vertical video that they made.
Which is insane. And it was really crazy because they don't really make projector screens that are super vertical. So you're in this massive room, but normally you're in a really wide theater and then the screen matches the seats. But it was just off to the side this vertical screen kind of like a TV we have over there. But it does seem like there's a quicker pace of adoption for those like... what was that Chinese app that has vertical short form but it's reduced?
The short... real short or something.
Real short. And then there's AI versions of that. And that feels like...
We get a pitch for that category once a week.
Okay. Well, so you have better deal.
No, but it is wild how... And by the way, the number of pitches, it's funny you guys want to talk about media with me. The number of pitches I still get from people like, 'Ben, you're like a media guy.' I'm like, 'Please leave me alone.' Like, I'm not a media guy. Just everyone... I'm sorry I did this but there is this moment where...
This is also like live shopping was another category that you saw massive in China and short form drama, enormous industry in China and everyone's like, cool, it's going to be here in the US tomorrow and like 10 years later it's still not really here.
I will say that with one of the companies I invested in, they really forced me to watch some content and I got hooked on a story about a woman who fell in love with a man in an elevator and I watched for like two hours in one-minute snippets. I see how you can get addicted to it but I fortunately broke that.
The question is how do you actually invest against this trend. I think because all the content wants to be free, it wants to flow to the existing platforms. I can see YouTube creating short series, basically like you can subscribe to a series being like...
Yeah, basically like, hey, you're not even just subscribe, because the follow button and subscribe button barely works anymore on any platform. But they might be encouraged to be like, hey, this is a series of 30 videos, it's going to be coming out one a day, you can subscribe and we'll make sure that it comes out.
Look, I think this is an interesting space. The difference between an interesting space and a venture-scale space is the Grand Canyon. I mean, it is so massive figuring out, venture requires the power law, requires these outsized returns, and it just doesn't feel like, sure, you have one or two companies in China that are massive, but it doesn't feel like that's a category that has a theoretically limitless TAM. And one of the mistakes that I've made in my career and one of the learnings is TAM really does matter. And yes, you have to lily pad your way there. It's not like every market has to be enormous day one, but most of media has turned out to not be venture-scale. And I think maybe all of media is not venture-scale. And with AI...
Venture-scale if you can build a platform that can compete with the giants, but you need a $5 billion...
But how do you... what is, right? I mean this is one of these things if someone... by the way, Jeffrey Katzenberg tried to do this with Quibi and there are a few people more formidable in the entire world than Jeffrey and even with hundreds of millions of dollars, that wasn't the answer. Now by the way today would be a more interesting time to launch Quibi because of what's changed in technology and by the way I've seen the competitive dynamics with every other app that also has short form videos that the creators are incentivized to share the same content across all of them. Those competitive dynamics are still in place. Look, just working in an industry that Meta and Amazon and Apple and Netflix, that more than half of the Mag 7 is interested in is a really really tough place to go and build. Every Mag 7 company except Nvidia owns basically a social network. If you include iMessage, Twitch, LinkedIn, you actually wind up with a media platform at all of them, right? And that is, and by the way, this is not your traditional large incumbents who are asleep at the wheel. These are the scariest companies that have ever been built in the history of humanity who, no thanks.
How did you process the Satrini virality, the viral article, 'Sold Intelligence Crisis'?
I like bought a farm in the woods and no raw material. No, look, we are at a moment right now. I mean, that's this week's flavor. Last week, I think there was something big is happening. Yes. And then there was the counter to it. And obviously, there's a bunch of counterarguments to this one. I think it's indicative of what a scary time this is and just how overwhelmed everybody... I mean, I wake up in the middle of the night screaming. I don't know about you guys. Just in fear. No, I'm kidding. No, but like this is wild times. I mean, I look at that article and I think that you can pull the thread and go, yeah, oh my god, you are going to see a bunch of these companies who have to cut costs go lean in, become their own worst enemy. I think what this sort of doesn't take into account is that there's going to be a bunch of other interesting amazing new companies that get built that employ lots of people that have a very different growth curve and that it's not just like everything is a race to the bottom. There is going to be all this amazing innovation that happens counter to that.
Also, a good counterpoint. Citadel put out a report that showed software engineer job openings are up 11% year-over-year. And so, it's interesting that we're getting this like where AI is working the best today and coding is causing an uplift in jobs and yet people are kind of extrapolating and saying every other job is cooked even though that's not what we're seeing in the data.
Yeah, it's interesting. What are you revisiting marketplaces? There was a big debate over DoorDash being AI-resistant or...
I haven't gotten any DoorDash pitches.
Not this week, but I have gotten some DoorDash. I'm just wondering how you're thinking about marketplaces because it feels like there was a boom. The most of the great marketplaces got built. All the obvious ones that didn't have massive disintermediation problems. So, the dog walker, the house cleaner, that stuff that gets disintermediated very quickly, but the DoorDasher, the Uber, that is something where you're not just going to meet a great driver and be like, now you're my personal driver forever, right? But you will do that if you're like, I went to this app and I found a house cleaner and they come every week and so I just said, hey, let's stop using the app and cut out the 15% take rate. But what are you thinking about marketplaces on the earlier side? Is there anything interesting that you're seeing?
So I think that when you're looking at marketplaces, we're trying to find marketplaces where everybody wins.
And there's a company in our portfolio that's very early building in the aftermarket automotive space.
And this is a category that has millions and millions and millions of SKUs. There is a question as to does this spark plug work for my 1984 Mazda Miata or does that one work? Most of that industry never came online at all. And so you still have to fax in an order or a requisition. You do have some large endemic players like AutoZone that are actually quite big businesses, but that still only have a fraction of the inventory. They don't actually know if that piece works for this car when you've also done these three other changes. And that's the kind of industry, very messy, very hard, but with AI you can go and send agents to go do some of this buying, so sort of mimic the idea that an industry is online that may never come online.
I think that's... I think there are spaces that, by the way, and that's also a very large, very sleepy TAM. Like that is not a side pocket hobby. That's one of the biggest hobbies in America.
Yeah, that's right. Billions, tens and tens and tens of billions of dollars just in the US just in aftermarket. Just to hydrate from some random SKU or some random serial number into like what is this product actually? And there's probably a manual out there somewhere that has it, might be on the internet, might be in a Reddit forum somewhere. And then there's the question of, and by the way, how do I get this installed and can I do it myself? And is there an AI mechanic that's built into the marketplace so it can teach you to do the work while you buy?
You know, will this company accomplish it? I don't know. But I love the ambition. And I think when we're looking for marketplaces, we want to see ones that are, I don't want to see an incremental DoorDash competitor. I want to see one in an industry that really has not yet been disrupted for reasons that were frankly impossible before the automation of AI.
Yeah. Jordan, are you thinking what I'm thinking?
Me, you this weekend, couple of cold ones. Mansory body kits on the cars.
Let's do it secondhand. We get them. We figure out...
We can do some LED under lighting. You got a new car. You don't have...
I'll stay for the weekend.
You don't have LED lighting underneath that yet.
NOS. Have you considered putting NOS in your car? This is a good option.
Very good. We got to get... that'll be your Christmas gift this year.
Body kit, you want it. It's got to happen.
The labor marketplaces that have exploded are the micro ones that are positioned as marketplaces and yet feel more like enterprise product, almost like staffing in some way. The question is how durable will those businesses be. And I think a lot of people were surprised that the Fiverrs and the Upworks didn't kind of react and capitalize on that as quickly as they maybe could. But it just goes to show how quickly the space is moving.
Yeah, I think there are perspectives. There's multiple camps there, but there are camps of folks, smart folks who think that whole category is like a race to the bottom and probably a zero. And then there's other, maybe some of those folks like Sam or Cory passed or whatever and are rooting against it. But there's definitely a vibe that maybe if you're on the inside in some of those businesses, now would be a good time to take some secondary. Sure. But you've seen growth that is astounding. And that's the funny thing about the market right now, that's a category but there's so many categories, like a bunch of these companies that are doing inference, you've seen this unbelievable growth and there's an insatiable appetite for what they have today or different kinds of training data or whatever. The question is in two years and three years and five years and 10 years, which of these are enduring spaces and which of these are ripping right now because they're selling to five, there's only five buyers or four buyers long term and is that a good business to be in a business where you ultimately have four companies that are your theoretical scaled customers.
Yeah. I mean, and right now there's such insane urgency that there's no...
Well, and money is absolutely valueless to these companies. I mean, it just pours in like as fast as you open the door, it bursts its way into your face.
Yeah. I was joking about if you started a janitorial company that just served the AI labs, your revenue would be growing 10x because their headcount and square footage is growing 10x. And you'd be like, 'Yeah, my business is 10x.' And you know what? I have pricing power, too. My margins are incredible. It's like because they never ask.
Let's do that this weekend. That's a good bit. Yeah. They were like, 'Hey, janitorial business is wildly different.'
There is. I do think that right now is... and look, this is coming after a few years of really disappointing returns for venture as a category and suddenly you see things ripping and growing and you want to believe, you want... and by the way you have massive, massive funds now that need to deploy huge amounts of money and they're looking for things that look like the escape velocity is there and so they become self-fulfilling prophecies and more money pours in. And I don't think that all these categories are going to be zeros, but I think probably there's going to be a lot of winners in some of these categories. I think there'll be fewer winners and maybe the winners won't be winning at the multiples that they look like they are today.
Or they'll evolve dramatically.
Or... Yeah. And by the way, some of them will and some of them won't, right? I mean, like it's like keeping up with this market is the hardest, it's the hardest in my career to like companies that are... let's even look at the OpenAI Anthropic thing and granted this is just like maybe that's the caricature of the space but it feels like the tide turned so hard even in the last three months where it's like Anthropic's world now and OpenAI is living in it and three months ago you would have said the exact opposite.
And maybe that's just like I'm interested if you feel that energy.
Hard to... it's... yeah, it certainly feels like at this moment Anthropic is the main character, right? Dominating the headlines on X and a lot of legacy media as well. But I would say Google Trends tell a slightly different story.
Slightly different story, right? We are in a bubble and people are so invested in the race that they want... It's like if you watch an F1 race and Verstappen wins every time and he starts in pole, at some point you're like, I'm sick of this.
Yeah. You just want to see some action and you want to see some passes and you want some drama. So I think people are invested in the drama. But yeah, and it's also you're watching the two strategies play out like a very multi-product approach, consumer, enterprise, hardware from OpenAI versus a very focused strategy. And I think it's way too early to kind of understand what will in hindsight look like the best call.
