If we're looking at a Terminator scenario, I will be in the resistance.
Gavin Baker is with us, managing partner and CIO at Atreides, to collaborate on artificial intelligence investments. I feel safer when Antonio's firm Valor is invested and on the board.
Antonio Gracias, a board member at Tesla and an early investor in the company. We were known at Valor for investing in world-changing companies, a shared passion, and that shared intellectual passion has led us to deals together. If you do not start using AI regularly, you will be outcompeted by people who do.
All right, guys. Thank you for joining us again. So we did this last year. Three of us. I still haven't been able to get Gurley back. So you're still stuck with me.
Thank you. I love you, too, Gavin. All right, so let's start with AI because you guys are definitely experts in AI. And I need to tell you, I recently installed Claude Code, which then was something else, and now is Open Claw. I am completely addicted to this thing. It is doing a million things for me. I haven't given it access to anything. It doesn't have access to my email or my phone, but I gave it its own email address and I kind of treat it like an assistant. It will talk to people and send information and analyze things. It's unbelievable how good it is. So is someone... this thing scares me at the same time, right? Because it's open source and I hear horror stories about, you know, things giving away like API keys and stuff. But it clearly is the next step in my mind in the evolution of AI. Do you either of you have one yet? And if not, will you soon?
Yeah. Good. I hope I have one soon. I do agree I think, whether it's Open Claw or something else, this is maybe, maybe the next kind of consumer and maybe even business, you know, UI, UX layer for AI. It ensures that the AI always has all the context and information necessary to be useful to you. It knows what's going on in your life. The fact that it's open source should make you feel better, not worse. Open source projects are generally more secure. They're fixing bugs every time. It's a tool. If you, you know, a knife can be dangerous if you use it in the wrong way. And I am encouraged that the Open Claw Foundation is staying open source even after OpenAI acquired Peter Stein.
Steinbrenner, who? The creator. Who's the creator. But I do think it's something really, really important. And it's a new game for these AI companies.
Yeah. So, I wanted to put one... I wanted to have my own in my compliance as well. You can't do this. We do have, because I just want to try this stuff, you know? Yeah, we do have six developers at Valor that we hired about... like four years ago, because our view was like, we have to. We have to eat our own cooking and use our intelligence. So we started with, like, the boosted trees and then obviously, LLMs. We started using this probably, 2 or 3 weeks ago. And it's extraordinary. I mean, I think it's going to remake the way we think about the business and the way we do our underwriting, our analysis in total, uninterrupted, productive. You know, I already own the numbers. Yesterday, our developers started using Claude Code like two weeks ago, they've seen an uptick in their productivity. So yeah, it's extraordinary. So I am now developing software with it. Like, if I have an idea in a moment that I'd like a piece of software to do x, y, z, I just talk to this thing. It develops the software. I then tell it to have Grok check all the code. Grok then says there are these critical security holes. I say fix those holes. I iterate like three times, and then it gets like a super high rating in terms of the quality of the code. And I have a software product, right. And I'm doing this like I built an entire CRM for myself in two hours. Three hours. I mean, it's really mind-boggling.
Do you think that element of it is potentially going to impact SaaS businesses like I'm, I'm thinking we pay 100,000 a year for HubSpot. Like if I... it's me doing it and I'm an idiot really with this stuff. If I gave someone that tool who's really good, would they be able to redo our HubSpot? Much better and more precise for what we need?
Yeah. Oh, I mean, well, one, this is 100% being priced into the market. You know, I think HubSpot peaked at $850 and it's in the low two hundreds. Maybe I'm off by a little, on either, but, yeah, these stocks are down a lot. So that risk is for sure being priced in. I think it will be interesting to see if you are a, you know, how it bounces. Like, it may end up that small businesses are the ones that kind of vibe code their own software and larger, more regulated businesses want, you know, a Good Housekeeping seal of approval on it. But this is for sure a risk. And conversely, I also think with the valuations some of these public companies are at, particularly the ones that are smaller cap, it might make sense for one of the labs to acquire a few of these. The reason Larry Ellison is one of the wealthiest people in the world isn't just, you know, he came up with this incredible relational database. It's that he was kind of the original Vista Equity Partners after the bubble burst. He acquired PeopleSoft, he acquired Siebel, and he had the same playbook. He just took out 80% of the humans. Revenue is recurring, and a lab can do the same thing. You can acquire one of these small software companies, take out most of the humans for a couple of your kind of AI native experts and use it as a distribution channel. So it's going to be really interesting to see what happens. And I do think, you know, to quote Maximus Decimus Meridius, the decisions the software company CEOs make now will echo in eternity. Currently, like they have 2 to 3 months to make good decisions. Maybe.
I know we actually have not invested in a pure software company in, like 6 or 7 years. Wow. So it became clear to us that, our stock is going to be like a real... what are we going to be? Would you stop doing... you know, we don't short when I leave a mark, which we can't use for these things. And who knows when it's already broken is going to break. I will say there are already companies that actually have from here in Miami. I know that's doing this. It's buying private software companies and we're making them using AI. We just brought on, you know, one of our newest partners, is a former this guy. Look at this for us. And yeah, I mean, I think if you're in the software business, you either evolve now, like we're right now, or you're dead. And I think the not going to fix that are going to be very extreme because many of these firms that were in those for the buyout world in the last 5 or 7 years have hired debt out. Right. You saw what happened. This is going to have implications throughout the markets and all the way to the debt markets. Again, I don't play in those markets, but I'd be very worried if I were holding the, you know, 3 or 4 times levered, high yield security for a buyout done by a software firm two years ago. Right. I you worry about that.
I think I would just say, I think it's very interesting to me that you haven't seen any of the traditional software firms make a purchase yet. You know, they're all saying like, hey, we think it's going to be amazing for software. Well you used to think eight times sales was an incredible deal that now you can buy stuff for three times sales. Yeah. Or four times sales. It's a failure. So where are you. Right.
Yeah that's a great point.
Can we talk about some of the safety issues? I know there have been the, like, lots of stuff on X about, people who've been able to get various AI tools to say some pretty scary stuff. To lie. I heard one story that, one of the bots actually threatened someone who was having an affair in the company with, like, hey, I'm going to tell everyone about your affair. If you don't do x, y, z, I was Claude. That's cool. Yeah. So, like, careful your Claude, by the way. That's... Who knows that access. Yeah. That's true. Keep it off your phone. So, like, how do we deal with that element? Because I love this thing. I don't want to give it up, but I also don't want it to kill me in my sleep some day.
I mean, listen, it's a tool like you do. You don't drive your car drunk for a reason. Yeah. Like, you know, you're very careful when you give these bots your payment credentials or, you know, right. Access to your life in the sense of read access and write access. And, I mean, it's these issues are only multiplying, like, Amazon had a significant outage because they gave a coding agent autonomy to improve code. And it decided that the code, a critical piece of code at AWS, was so bad that it just deleted it and started over. It sounds like you, by the way, it's very, very loud. Very loud. But there was yelling on there was a 14 hour outage. You know, they were able to unplug the servers at X and cut over. Yeah. But you know, the bot didn't understand that it needed to tell the humans that it was doing this. Okay. So it's a very real issue. Everyone should read the Claude safety reports, which are for sure the most fulsome. Although I do agree with what Elon said, that Tesla is the safest car and they don't have a safety team because safety is everyone's job. And so I think like having that ethos at a lab is very important. But yeah, it's a very real issue.
I mean, the thing I might add to this, I think I think Kevin's right. Is it unlike maybe a knife or a gun? Right. The model itself has values, right? The models are imbued with the values of the creators. We see that again. It's very important. The models are imbued with values. The creators. So when you look at the people that are building these models, and you ask yourselves, what is your optimization function? If the optimization function is, for example, consumer morality, AI, OpenAI, you might get, you know, a recursive learning loop that creates confirmation bias and it's called commit suicide, which there are lawsuits about this today. What happened if it's right or not with the lots of others today. You be careful with this. The reason we went so deep on AI is its optimization is truth-seeking. And I think that's the best way to figure out if something is going to be safe for you to use. Is do you... are you identifying with the values of the people building it? So one might be marginally better than other. Ultimately this is all going to be very compatible with the other. I think the world where we go out into who cares about what. So do you care about truth and you probably use... as you did. Right. You had Claude and Grok together, right? By the way, thank you for the fish. Thank you for the business, the tokens, I appreciate that. Happy. Thank you very much. But I think that's interesting. That's a very interesting... You do. Right? You use two of them to kind of balance each other, you know? Let's check one against the other. I that's really smart because you want to make sure you have, at some level, an intellectual balance in the models that are telling you the truth. And, look, anything could be wrong ultimately. But what is the optimization and who designed it? If it's designed to be, you know, something you don't like, you should be careful with it. And in service of that optimization, Grok 4.2, which I highly recommend everyone try, it's the first broad institution of multiple agents. So every time you use it, even on the first year, it spins up four different agents and you can see them checking each other. Yeah. Because it wants to be grounded in reality and truth. And I think that's very good for humans as a species.
