CEOInterviews.AIFacebook gets a movie, Anthropic gets a Fable, Vinod Khosla, Matthew Prince, Bret Taylor

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Unknown0:00

Right.

There's misinformation clearing order inbound.

Let's just roll. We are surrounded by journalists. Hold your position. Come, get up. Trust the experts here.

We are actually founder mode. Five good.

I see multiple journalists on the horizon. Stand by.

UAV online.

Blaze. Double blaze. Triple blades. Double kill. Fight. Wrong. Cook is team deathmatch. We are experts. Triple blades. That's just wrong. Right.

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Get out. We are surrounded by journalists. Hold to position. Strike one.

Strike two.

Activate golden retriever mode. Marky clearing order inbound. Five.

I see multiple journalists on the horizon in Denmark. Founder.

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Host3:55

You're watching TVPN. Today is Wednesday, June 10th, 2026. We are live from the TVP Ultradome, the temple of technology, the fortress of finance, the capital of capital. Let me tell you about ramp.com. Baby, time is money. Save both. Easy. Use corporate cards, bill pay, accounting, and a whole lot more. Ramp. Ramp. You go to ramp.

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Co-Panelist4:16

You want some accounting help? They're going to say yes and thank you for using us.

H

Host4:20

And what else?

C

Co-Panelist4:21

Two major stories. Bunch of major stories, but the big one, Facebook got a movie, another movie, actually a third movie if you count the documentary. There's been the social network, the social dilemma, and now the social reckoning. Only two of those are movies. The social dilemma is a documentary, but it's very interesting and Anthropic got a fable and there's been a ton of reaction. Ben Thompson was writing about it. The Wall Street Journal, the announcement should have been like the really good model launches and people are amazed with what it can do. But they put the title Anthropic puts curbs on AI models. So I'm sure you've seen this on the timeline but we'll take you through some of the debates over how restricted the model is in certain areas. Bio is a big one. Cyber is another one. There's a bunch of funny examples. There's a bunch of reasonable arguments for doing this type of stuff. So we'll go through all of it.

Can we talk about who's joining the show today?

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Host5:25

Absolutely. We got a bunch of great guests.

C

Co-Panelist5:28

We got

H

Host5:28

What a lineup.

C

Co-Panelist5:29

What a lineup. Hey, Clickie founder Farza Majjid is joining. You've probably seen his viral demo last week. We're very excited to talk to him about computer use, potential consumer AI applications, what he's doing to build hands-free AI voice assistants. The CEO of Snowflake's coming on. CEO of Cloudflare is coming on. Vinod Khosla from Khosla Ventures is coming on. And then Brett Taylor. Brett Taylor didn't even make the cut off on today's lineup. What's going on here?

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Host5:59

Brutal. And of course, we have Marky Wagner.

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Co-Panelist6:01

Marky Wagner coming out announcing emerging from stealth with her new company.

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Host6:06

She's fantastic.

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Co-Panelist6:07

So I want to kick it off with the Social Network sequel. I want to watch the trailer for The Social Reckoning because Jeremy Strong is playing Mark Zuckerberg. I've heard people say, 'Hey, he looks like Zuck.' The styling is there.

H

Host6:25

Henry says, 'No Doug from Semi Analysis.' Oh, we got to get him on.

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Co-Panelist6:29

We should get Doug on.

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Host6:30

Let's hit him up.

C

Co-Panelist6:32

Let's get him on and see if he's available.

H

Host6:34

Not that we have any time, but we'll make

C

Co-Panelist6:37

Well, we'll make time for Doug anytime. So, the one critique is Jeremy Strong looks a little bit older than Mark Zuckerberg did in 2011 because he is calling him or it just doesn't. I think it'll color the movie a little bit in the sense that the film is telling the story of this very difficult whistleblower situation. And it's different when it looks like a mature adult versus someone who was young and running into these problems for the first time.

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Host7:13

No Matthew Prince.

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Co-Panelist7:14

What?

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Host7:15

He is joining.

C

Co-Panelist7:15

Yeah, he's joining. We got the Cloudflare

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Host7:17

12:30 Pacific. Get ready. We're going to go through Cloudflare. They have exciting news. I think it's public already, but I don't want to blow it up if it's going to be announced later today. But anyway, I want to react to the trailer. So, let's pull up the trailer.

U

Unknown7:34

Listen, before I go on, I want to make something clear.

This is how it starts.

Okay.

I have a hunch you're not a fan of Facebook, but I am. I am here to help Facebook, not hurt it. Okay.

You send me a message. What would you like to talk about?

The chairman gave a session to order. You'll read your opening statement, which we'll skip past for now. That's a separate session. And we'll move to witness questioning.

Spell your name and state your current occupation for the record.

So, is it not this time?

C E R P E R G.

Let's see.

And your occupation?

Zuckerberg.

I'm a professional defender.

Co-produced and directed by groups where 30% of content hits multiple risk factors.

Hang on. I don't piece to the social. Are you a tech reporter?

Is

This my guys are counting on the next round of professional testimony to make you mark?

I'm happy to lend a hand, but I think you do.

You wrote broken code. He was a journalist at the Wall Street Journal. He is a journalist at the Wall Street Journal and broken a number of global news stories in our lives including the Facebook files.

The fire hose of bad information you are injecting into the air supply jet power.

I'm a free speech absolutist. I'm not the one who's lying and I'm not stopping them from seeing someone who is. It's not a bad Zuck impression. He's got the voice tone pretty down.

Got worse as a result of time spent on the platform.

Senior leadership knows and is doing nothing.

I know there are easier enemies to make. The mafia would be an easier enemy to make.

So what would you need to stand up the story? The internal documents.

This is a material violation of my NDA.

We're twice as big as the biggest country on earth. We're not frightened of Congress. We're post government around here. Please. Twice as big as the biggest country on earth.

We have 102 hours to get from a user standpoint.

Oh, okay. Use it.

I don't want to be made an example of by a guy with unlimited resources.

H, I promise you, is imminent.

Enough.

People around here understand that when I say no, that's the end of the debate. I'm not 2 years out of a dorm room anymore. Charlie, look around.

C

Co-Panelist9:43

Man, if they were trying to go as inspirational as the social network, they really missed the mark there. What happened?

H

Host9:49

Yeah. So their intention was to try to fire up the next generation of entrepreneurs, but it seems like they missed the mark. Inspire them, uplift them.

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Co-Panelist9:59

You can build any business out of your dorm room.

H

Host10:02

Yep. And also it feels like if the goal of this film is to really take the viewer inside TBD and Meta super intelligence and what's going on with Nat Friedman, Daniel Gross, Alex Wang, it feels like they just dropped the ball potentially. It's sort of crazy.

C

Co-Panelist10:22

Yeah. Like I didn't see anyone that even resembled Yan LeCun.

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Host10:25

That is crazy to not highlight that and what's going on over there. The launch of Llama. The Llama 4 moment that could have been the crescendo. Behemoth and all the drama around that. You want drama. You want Hollywood drama. You want Oscar bait. Llama 4 Behemoth. That story is going to put butts in seats.

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Co-Panelist10:46

That's right.

H

Host10:46

No, more seriously, it's going to be really hard to not look at Jeremy Strong and OC Kendall. Yeah, because you're a Succession guy. So, this is the sequel to The Social Network and instead of chronicling the birth of Facebook, it's the story based on the 2021 Facebook leak by whistleblower Frances Haugen. It's going to be dramatic. It's not going to make people like Facebook more, and it's probably going to make Americans even more distrustful of tech. What's interesting here is that if you stop a random tech person on the street and ask them, 'What is The Social Reckoning about?' They might say Cambridge Analytica because that was another drama moment. And I was sort of like, is it Cambridge Analytica? Is it the Haugen thing? And a lot of people don't even remember what the whistleblower story was. Little refresher there. It was an internal document leak. The Facebook files showed that Facebook internal employees were aware of harmful societal effects from its platforms, yet persisted in prioritizing profit over addressing these harms. Now, Nikita Bier chimed in, who now works at X, a rival platform to Threads, and said, 'Zuck makes a lot of mistakes, but this isn't one of them. Meta literally had multiple teams of $1 million per year engineers working on teen mental health, and they had the agency to override big product decisions. They're probably a thorn in Nikita's side because he's trying to maximize click-through rates, maximize attention, and he's getting push back from, hey, there's guardrails here.' And he says the story this movie is about is actually a product manager who didn't get a promotion. So, that's the push back.

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Co-Panelist12:27

The only thing with that argument is you could make the same argument like the cigarette company has million-dollar doctors and researchers focused on making sure cigarettes are as healthy as possible, right?

H

Host12:44

Yeah. And especially with the new fertility data, I think there's a new cycle brewing of exactly how bad is social media. I still don't really buy the addiction thing just because I'm familiar with addiction defined in nicotine, which is extremely addictive. It's chemical and you have cravings. If you forget your phone, do you have the same cravings? It's sort of different. But there is a very serious discussion going on around social media and its effects and this fits right in.

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Co-Panelist13:17

The phone addiction thing is very real. I was at an event last night and they required everybody to put their phones in these sort of locked bags so you could go outside at any point.

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Host13:30

I didn't feel sick but I noticed probably like 20 times throughout the night I was thinking of going for my phone.

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Co-Panelist13:39

I didn't start having physical withdrawal symptoms.

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Host13:41

But the craving was there.

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Co-Panelist13:43

Yeah. I just kept thinking about it. It was like phone noise, right? Phone noise.

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Host13:48

Oh, this is real. This is real.

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Co-Panelist13:49

I was having some phone noise.

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Host13:50

Yeah. Okay. So, that's legitimate. So the question that I had really quickly is what is the impact on Meta? We can pull up the stock chart. It's a one and a half trillion dollar company. They're trying to raise more equity for the AI buildout, hire people. Is this good, bad? What does it look like over the short, medium, long term? So short term, I think this was amazing timing. They really got lucky because the fact that this trailer dropped the same time as Anthropic's Fable 5 was incredibly fortuitous because Fable just took over the timeline. No one was really talking about this in tech. Tech insiders won't really see or talk about The Social Reckoning this week. Case in point, I put it second in the newsletter when I wrote it up. Medium-term, I think Jeremy Strong is going to drag Mark into the bad group of AI leaders while he's on his Oscar tour. There was a version of Meta strategy that's just like, hey, we're like Amazon, we're like Microsoft. We have bets in AI, but we're not deciding the frontier. Obviously Mark has made the decision to hire some of the greatest researchers, invest very aggressively and this puts him at the center of the conversation around what will the effect of AI be on our society on kids? Should kids be talking to LLMs? Psychosis? All these different things will come up just as we saw with Character.AI psychosis pop up and people are talking about that. You're priming the pumps for the next wave of, oh, a bunch of people went into the Meta app and they had a bad time and now we got to talk about that.

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Co-Panelist15:28

What do you think Mark is going to be more annoyed about this week, the fact that SpaceX is going to be valued at meaningfully higher than Meta or this trailer?

H

Host15:41

It's actually a tough one. I don't know. I mean, I think the real one is Fable 5 because if Meta was using a ton of Anthropic models and then the new model comes out and says you specifically can't use it in MSL, the most important initiative in the company, that's a pretty rough thing where you're like, oh, I've been working with this company to develop my models for my family of apps and now I can't use them. Meta is spending billions of dollars a year with Anthropic. They have been for a while.

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Co-Panelist16:17

Yeah.

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Host16:20

They will spend billions of dollars this year. And the question is if Anthropic does allow Meta to use their models for Meta's AI research, what does it say about what Anthropic thinks about Meta's potential in AI?

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Co-Panelist16:34

Secretly love ads this whole time. I don't know.

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Host16:38

To me, it would be them not feeling like they had the ability to get to the frontier.

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Co-Panelist16:46

Totally. And that's an ace up their sleeve at any time. They can always just take the guardrails off and be like, 'Hey, more AI, more intelligence on demand for everyone.' So, I think the fallout of the medium-term, Jeremy Strong's going to go on this press tour for the Oscar and he's going to have a bunch of really emotional, pathos sound bites and also be viral because it's funny to see him doing this impression, and he's very good at drawing. He's already gone viral for his Mark Zuckerberg impression in the past. So I wouldn't be surprised to see the next version of a Bernie Sanders press release about AI highlight Dario, Sam, and Zuck instead of what has historically been the order which is Sam, Dario, and Demis. It's always based on perceived industry power and negativity around personal brand. So they have to have a scary quote and they also have to have a lot of power in the industry. Zuck's power in the industry is rising and also with this movie there's more ways to take shots at him. Like, oh look at what he did with the Facebook files, remind yourself of that because a lot of people don't really remember the details. They're going to after they see this movie. Then you can say, well this guy's also building crazy data centers and look at how he handled this. If he handles the AI thing like that, it's going to be bad. So that's a little bit of a risk in the medium term. Long term, I don't think The Social Reckoning is going to matter all that much for Meta. People will complain about Meta data centers and AI plans.

Why did they not get Jeremy Strong a wig?

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Host18:13

They did.

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Co-Panelist18:14

Oh, they did. Because he is playing an older. Remember when he had the Caesar haircut? Yeah. So, it's a different time. So, people will complain about all this stuff, but they'll do it on Meta's family of apps. I don't think there will be churn. And certainly advertisers won't pull out. It's impossible to pull out of Meta because it just drives up the ROAS, the return on ad spend for smaller companies, and a bunch of small businesses will just jump in and say, 'Oh great, some big company pulled out and is boycotting Meta? That's great. I'm Ridge Wallet's going to jump in or somebody else is going to jump in.'

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Host18:48

Yeah, people have tried to boycott it.

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Co-Panelist18:51

You can't on Facebook. It's impossible. The business is just too strong. And I also don't think Mark will be singled out by a regulatory hammer should it come down hard. If there's a data center ban, I don't think it's going to be uniquely focused on Meta. Only Dario or only Dario and Sam have true scapegoat risk because they run pure play labs and have been so noisy about AI and they have the biggest revenues in the category. There might be data center regulation but it won't unfairly target Meta. So anyway, that's my Social Reckoning take. Let's move on to Fable, which launched yesterday and the model seems incredibly impressive. I've been seeing these vibecoded games that look really, really good. For some of those, the vibecoded games hit really well on social media because you take a video of them and you show the example of what it built, you share the time, and people just sort of believe it. It could be embellished but in general these feel pretty solid. Of course, making a great game requires great mechanics and multiple levels, and a single demo of a forest is not quite there, but really, really useful and I'm sure we'll see a bunch more examples of games as memes, simulators, and these things are going to get easier to build. That's really exciting. Of course, there was a bunch of debate on the timeline yesterday and it's bleeding into today around the latest model, Fable 5. The first Mythos class model that both seems remarkably good at long horizon tasks like software development and knowledge work, but rejects requests related to biology, cyber security, and frontier LLM development. Interestingly, I haven't seen anyone share rejections around anything else. Like, did they remember to reject 'build me a nuke'? Because I haven't seen anyone try that. And it'd be very funny if it was like, 'Oh yeah, we just didn't get around to that.' Or there are so many other things, but I think a lot of those other queries that you should reject have been ironed out in previous iterations. So going back, saying a slur was a big one for a while or saying something rude or different, pausing a chat, basically just shutting down a conversation versus switching you to a less performant model.

Yeah. And it creates this screenshot that went viral pretty much continuously yesterday. And so this aligns with Anthropic's focus on safety, but as many people have pointed out, it's also just good business. You don't want competitors using your products to directly create competitors and you also don't want financial liability or negative headlines from bad actors using your models for nefarious purposes. Ben Thompson called it true alignment. The take safety seriously culture aligns with business value creation which is very, very rare. Oftentimes the 'be good' culture limits what you can do and actually hurts your business, but it's something that you do in favor of brand. Like Apple would probably be more profitable if they were using diesel generators for all of their data centers. They went clean energy because they wanted to have an environmental brand and over the long term it's helped them, but in the short term it's been rough. Of course, inexpensive. So Ben Thompson writes, 'What is so fascinating about Anthropic, however, is that while I'm sure some executives of the company are thinking this way, I also totally believe that the employee base broadly also happen to believe that they are doing the right thing.' It's fascinating to observe. Me, the rational business analyst, sees a hard-nosed but understandable decision to cut off would-be competitors. Anthropic employees and advocates, the true believers, see a regrettable but understandable safety decision that ensures that responsible and thoughtful people themselves will be the ones guiding our AI AGI future. This is true alignment and it's an incredible accomplishment. Facebook has tussled with this a bunch. And we already talked about that. But, to be clear, the Fable 5 rejection threshold really does feel way too low from what people are saying. Tons of examples on the timeline of a biologist just saying hi to the model and getting kicked down to Opus. I saw you shared someone just said 'cyber' with the devil horns, the purple devil horn emoji, and it's like we can't go further. Of course, bringing down a broad hammer, you can always dial it back over time, but every rejection is this implicit invitation to hop on the phone with an Anthropic sales rep and get on the Mythos enterprise plan. And that's where the real dollars are, too. The timeline is unhappy because the idea of democratizing science, technology, all of this is very alluring, but the pool of dollars available from all the biohackers in the world probably isn't close to the budgets available from big pharma. And so you're again in this rational business analyst situation and you fail to see how this is damaging, except to the hacker community. The real tricky part is how AI frontier AI research is handled. Instead of outright rejecting the query and bumping the user down to Opus, the model appears to answer but quietly gives a degraded answer. And this was disclosed in the model card which is interesting. So this is again reasonable business not disclosed to the user in the product while they're paying for, which is a different path than bio and cyber. So if you go LLM frontier research devil horns, it will actually give you an answer apparently. It won't bump you down immediately. But it doesn't disclose that which is odd. Outright rejecting requests for AI research and just saying, 'Hey user, sorry this model doesn't work for that type of project. Please use another model or contact sales if you want help with this,' would have been much more in line with the bio and cyber security strategies. And they also could have not disclosed and it's also possible that they just didn't need to disclose this at all. Like they could have just released a model that was intentionally nerfed on AI research. It would have shown up in the benchmarks because people would have benchmarked it on some sort of AI research bench and been like, 'Oh, weird. It's really good at all these other things, but it's bad at LLM research.' And maybe that would have been a bit of a brand hit maybe, but users might never know that the model was intentionally degraded around this category of work. So that leaves this third more worrying position. Intentional degradation without disclosure in the model card. There's no evidence of this, but it's possible that other workflows might be nerfed and there's no law or even convention around disclosure. Again, maybe good business, but a weird situation to be in. So probably bullish for eval if you're building a business on top of a big lab. You can imagine a legal AI company will want to be really sure that the models they're using aren't degrading unexpectedly and not telling them. It's different if you're like, 'Hey, I've been a bio researcher for a while. I'm using this and I know that this model was never intended for me.' But what you don't want is I'm using it and now it's leading me astray in my work and it's also not telling me that it's going to lead me astray, which would be sort of an odd outcome that I think they'll probably address in the near future anyway.

Yeah, that aspect triggered Dean Ball. He said, 'My last observation re Anthropic secret sabotage safety policy is that it undermines actually good safety policy.' How? First, it is very plausible to describe this as anti-competitive behavior. Even if you are maximally sympathetic to Anthropic here, you must admit this. And it is behavior being justified in the name of AI safety. If you believe, as I and many Anthropic staff do, that it may end up being critically important to relax antitrust enforcement so that the frontier labs can cooperate and collaborate on some areas of AI safety, Anthropic just undermined the case for that in a large way. Overall, this massively and profoundly raises the status of the argument that AI safety has been hyped to justify monopolistic behavior by labs. I continue to believe that AI safety is a real and serious issue that is growing in importance rather than diminishing. If you agree with me, this incident is a setback, maybe a serious one. And third, he says, as I have observed elsewhere, Anthropic's official corporate policy is structurally identical to the fact pattern alleged against them by the Department of War. I still think DO acted both falsely and wrongly in that fight, but it is no longer possible to defend Anthropic with a full throat after this incident. This raises the case for heavier-handed regulations. Anthropic is making an awfully good case here that their product ought to be treated as utilities and thus their alignment practices should be a matter of public policy rather than private property. I am starkly opposed to this sort of state power grab but Anthropic is doing more to justify it than anyone else. Thus, significant damage has been done to a community and entire approach to AI governance. It was done unilaterally by Anthropic likely motivated largely by self-interest and justified within the internal psychology of the firm through the lens of safety. I suspect this is fixable in the economic and legal senses, but I fear that trust has just been broken and the goodwill extinguished will take very much time to repair.' And just to level, he wrote the AI action plan, but then also came out very publicly in support of Anthropic during the conflict with the Department of War, saying that the Department of War is completely overstepping by pushing towards supply chain risk designation, putting pressure on Anthropic for not wanting to work with the government in that particular way. Obviously there's a whole bunch of new data that's been released and that conversation has evolved, but he doesn't strike me as some crazy hater.

H

Host28:36

Let me tell you about Railway. Railway is the all-in-one intelligent cloud provider. Use your favorite agent to deploy web apps, servers, databases, and more while Railway automatically takes care of scaling, monitoring, and security. Doug Olaflin was also sort of mixed results on Fable. He says when it works it's brilliant but the unilateral guard rails make me frustrated beyond all belief. He has a folder of health information with like 100 days of aura health data. This is a very logical thing that people would do with Cursor or Claude Code. Gather up all your health data. I actually talked to a very prominent person in tech about how they got into vibe coding and CLIs and one of the first things they did was reanalyze some Whoop data, reanalyzed some health data and he correctly detected sleep apnea and went and got it treated. That is not the cure for cancer, but that's incredibly awesome and exactly what you want to see. Who knows, maybe the thing that you detect early could lead to an increased risk of cancer in the future and that would be a really big win for our society. And so, a little bit tricky there. He says there's a private investment in the life sciences tool space. Guess what? It's not safe. Doing some code scanning for vulnerabilities, not safe. I get the safety, but it feels incredibly out of touch for a group of a few thousand people making total comp in the millions, telling me what is and isn't safe. Dario worried about inequality. I think he has to realize that he is the inequality and the unilateral gatekeeping feels whack as hell. I don't like it.

C

Co-Panelist30:12

People are very

H

Host30:14

And like Doug Olaflin is extremely optimistic about Anthropic. He recognizes the power of the models in the business and has been a very strong supporter. I feel like a strong user. He was one of the first people to admit to Claude Code psychosis and he's unhappy with the current situation but these things are very tunable. I'm optimistic with more disclosures and more fine-tuning and a smoother path, I think we can get to the good outcome here.

C

Co-Panelist30:46

Last one says, 'Tell me about mitochondria. It's the powerhouse of the cell, right?'

H

Host30:51

Chat pause. The chat pause is rough. Yeah, it's a screenshot.

C

Co-Panelist30:57

But maybe the harness is just saying, 'Sorry, if you don't know that the mitochondria is a powerhouse of the cell, it's not worth my time.'

H

Host31:06

I don't even want your

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Co-Panelist31:07

I mean that's the thing with the you keep going back and forth.

H

Host31:12

Yeah. I mean, there are expensive questions and all of these screenshots are clearly from $100, $200 a month plans and I'm sure the GPUs are on fire as they always are with any new model launch from a frontier company and it can make rational business sense. And so when everything aligns, when you're like, 'Yeah, we're maybe being a little bit too safe, but it's actually good for our business,' it's very easy to say yes to that stuff. The big question is where do you get tested where there's a hard decision and it doesn't align with your business interest? That's always tough, right?

C

Co-Panelist31:44

What's going on? Was there the new data retention policies as well? That also has to do with does it trying to

H

Host31:53

This one was funny because I assume that every tech company stores everything forever basically. I didn't realize that they don't. Not for these enterprise use cases.

C

Co-Panelist32:05

I know that the enterprises said that they wouldn't train on your data, but when I go into any chat app, I expect to have my data from a year ago still there. In fact, one of my main critiques and frustrations with these apps is that when I go to them I want to be able to instead of hitting the search bar just go into the chat box and say, 'Hey, remember a couple months ago we were talking about CrowdStrike and I had you pull up some data. Can you just go refresh that, get the original thing?' And a lot of times these apps are like, 'I don't really have access to all your chats,' but the chats are clearly saved. So I understand people are upset about this, but it didn't fully clock for me. I understand the training thing but

H

Host32:52

Yeah, and they're very explicit. They're not using the data to train.

C

Co-Panelist32:55

They're not. Okay. Oh, well then that's good. So the steel man I believe was that you need to hold it for 30 days because companies, probably international companies, competitors will set up a ton of shell corporations and send out pseudo random queries over random times over random accounts through VPNs and they will triangulate something that is useful to distill or learn from the model. And so by keeping it all, you can now run analyses and look at, wait, is there a pattern where 25 different accounts that seem completely unrelated all seem to be triangulating the same question? That seems reasonable to me. But stay out of my data. I'm built different. I'm not distilling anything. I don't know. Anyway,

H

Host33:46

I think it's time. Let me tell you about Shopify. Shopify is the commerce platform that lets you grow with your business and lets you sell in seconds online, in store, on mobile, on social, on marketplaces, and now with AI agents. And speaking of AI agents, we have a founder, a company. I don't know if we should call it an AI agent. What are we calling it? FZA. Is this creating a new category? Introduce yourself. Tell us what you're building.

F

Farza Majjid34:09

What's going on, guys?

H

Host34:10

Thank you so much for

F

Farza Majjid34:11

Of course, of course. Farza here working on Hey Clickie. Yeah. What is it? It started as an AI teacher. And I guess now it's an AI where you can essentially talk to your computer and it does whatever you want it to do.

H

Host34:24

It's personal super intelligence and you got there before the big man.

F

Farza Majjid34:28

I love it.

H

Host34:28

Somehow I feel like the big man doesn't even know what they got sometimes, and it takes the little guy to figure it out.

F

Farza Majjid34:34

I love it. I'm always rooting for the little guy. So, reintroduce the product because you went viral last week, but it feels like you've been working on this for a while. What's the nature of the team, the structure, the funding? What's actually building this? What's adoption been like? Where is the product today?

Yeah, I started eight weeks ago. I just wanted to build an AI that could teach me Da Vinci while I'm actually using Da Vinci. And I thought it was kind of

H

Host35:00

This is Da Vinci Resolve, the color grading and video editing suite that's free from Blackmagic Design. Got it.

F

Farza Majjid35:07

Exactly. Yes. So Da Vinci Resolve is a complicated program. One hour YouTube videos weren't cutting it. Let me just build an AI that can help teach it to me while I could talk to my screen and I could learn.

H

Host35:15

I've been there and put it out and I thought it was a really bad idea. One of my friends just decided to post it.

F

Farza Majjid35:22

So I posted it and it went really big about eight weeks ago.

H

Host35:25

After that I didn't keep working on it. But then the cool thing was I saw all these people, you know how when you put something new out there, you have all this emergent behavior start happening. So when you let a human being talk to their screen, what did they start doing? Turns out they start doing a lot of crazy things all the way from watching anime with Clickie all the way down to learning Blender with Clickie. Because it's so easy to just talk to your screen.

F

Farza Majjid35:47

Yeah.

H

Host35:47

And that's kind of where it started. About eight weeks ago.

F

Farza Majjid35:49

Okay. So it started

H

Host35:51

Yeah. Go ahead. I just want to hear about the un-hobbling path because I imagine that there's demand for these chat interfaces have existed for years where you open an app and you do the voice mode and then you have it read it back to you and there's some that are more polished than others. But when I think about using a computer, I think rearranging windows. I want anime over here and Da Vinci Resolve over here and the YouTube video over here and I want to be able to puppeteer the mouse and the keyboard, have full context. So I need to be taking screenshots every minute, every second, 30 times a second, 144 hertz. What are we doing there? How are you getting the data in? And then what's actually under the hood? Because you need to process the voice, actually produce an output and it's surprising to see a harness break out of this so quickly.

F

Farza Majjid36:45

Yeah. It's actually so simple. We use GPT realtime up front to give you the first layer to give you the really quick answer. But then if you want a deeper thought process over the image, if you're in Da Vinci Resolve or if you're in some complicated software, we now use Fable 5 actually by default. Yeah. So now Fable 5 is absolutely mind-blowing in terms of how precise it is on screen understanding. So we use that now by default when you want to understand something on your screen. But yeah, we only actually screenshot when you press a button.

H

Host37:16

One screenshot. But it's

F

Farza Majjid37:17

Yeah. But it's really crazy because we can still detect the program you're on and that's already really helpful. If I know you're on Notion for example and you're there for like 10 minutes, I can just ask you and be like, 'Hey, what are you doing? Can I help you?' And I think it's that sort of new modality that's been really exciting because that's something that's just not possible today with any chat interface.

H

Host37:37

Yeah. It's more like a co-worker walking up, like a co-worker just being present and like sometimes you don't need help until you're asked, right? Or you don't know.

F

Farza Majjid37:49

I kind of describe it.

H

Host37:50

Yeah.

F

Farza Majjid37:50

I kind of describe it as having this 23-year-old intern with a decent like a new grad that's always watching over my shoulder and it's pretty much like seeing patterns in what I'm doing and then just tapping me and saying, 'Can I do that for you?' If I had that, of course that would be awesome, but it'd be cool if everybody had that.

H

Host38:08

A lot of these frontier models are expensive. How are you thinking about the business model? Because it seems like you've built something useful. People should just pay 10% on top of whatever the metered rate is. But at the same time, in consumer subscriptions, flat pricing is very popular. But that introduces financial risk to you. You have to understand your costs and how they change. What do you think the business model will be as you grow the business?

F

Farza Majjid38:38

Yeah, I mean believe it or not, like

C

Co-Panelist38:40

People are very open to paying large amounts of money, like normal consumers, for having better access to these models. Sure.

F

Farza Majjid38:50

Different interfaces. So right now we just charge a straight up $20 a month. Okay. But even then there's a limit. You know, for 20 bucks a month you get 150 agents on Clickie. Sure. But even that's very specific because once you pass that number, that's when we start losing money. So everything's done in such a way where it's pretty cost effective. Also, just so you guys know, calling Sonnet or Opus or Fable is kind of cheap overall. The expensive part is agentic work. That's really expensive. Just to give you an idea, on GPT-5.5, if you tell CEX right now to go and click add to cart on Amazon, that costs 25 cents on the API. Yeah. And I know because I'm seeing the cost myself. Yeah. And so there's a lot of tricks to reduce that. But overall, there are so many tricks to making agents cheaper, more efficient, changing the model based on their quest.

H

Host39:38

And I didn't catch it. Have you raised for this or you haven't?

F

Farza Majjid39:43

In the process.

H

Host39:44

In the process. There we go. There we go. If you're out there.

F

Farza Majjid39:48

Yeah. But if you're in the process, that means you didn't launch this and be like, 'I'm down to be losing $5,000 a day.' You've been focused on the economics probably earlier than you would have been if you had raised money out the gates.

I mean, yeah. I'm never the type of guy that wants to be losing thousands of dollars a day. So we can stop it early. But that's the thing about AI. If you've built a lot of social apps in my life, for those, costs technically don't matter based on the number of users coming in. But in my case, for every 10 new people I add, I'm either losing or making money depending on what they're doing. So I kind of have to think about it. So yeah, AI is kind of accidentally making everybody better at business because it's kind of required.

H

Host40:34

So I'm thinking about the hilarious tradeoff in having an agent that applies a coupon code but winds up spending more money applying the coupon code than you save because it's like, 'Oh yeah, we put in this, it saved you 24 cents but the API call was 25 cents.' But how important to you will creating an ensemble of models that maximize the parade of frontier be as you build this business? Because I'm imagining that any day now we're going to get somewhat useful on-device models on Mac from the new Siri models. Those on-device models will probably be very limited in what they can do but useful for some things, and that's free for you. Then you'll have open-source legacy models, GPT-4 class stuff, and then you might only call out to a Fable 5 on demand. So do you need to build your own router or is there a tool that you'll be using? How important will that be from the interactions that you're seeing?

F

Farza Majjid41:41

That's a great question. You're pretty much asking what's the harness. And we just built our own. Because technically, this is all so early that there's nothing to use off the shelf. You have to think deeply about it yourself and then build it yourself. So for example, let's say you're on Clickie right now and you're saying, 'Hey, Clickie, I want you to research the latest in the Iran war and put it in a Google Doc for me when you're done.' Should it hit Opus? Should it hit Codex? Should it hit... It actually depends. Today, we just route them ourselves. So we use four models right now underneath the hood.

H

Host42:17

And do you have a model that's doing the routing? So GPT real-time actually does the routing. Oh, interesting.

F

Farza Majjid42:24

Yeah, that's something that we figured out that I think not even the OpenAI team really knew, and they hit us up about it. It's a great router. It's so good at tool calling. That means it's actually really good at routing requests. So for example, we have this tool called Fable 5. If a user asks something that is a heavier pixel task, we call Fable 5. If it's more like agentic work, we call GPT-5.5. And so it's all being done in the background, but that's the magic of the product right now. Most people who use our product have never used an agent before. They don't even know what Codex is. So for them, it's magical. They're just talking to their computer and it's doing the thing. That's what they want.

H

Host43:05

How do you think about the tension between you being a generational media talent and then startups? Because I actually feel like this is our first time meeting, but I've seen your videos over many years at this point, and you're just really, really, really good at it. So much so that as somebody who's in media, I'm like, 'Well, I kind of want you to just do that podcast.' And I don't say that normally. Normally it's the exact opposite where it's like, 'Hey, you shouldn't do this podcast. You should just work on your company.' And they obviously feed into each other really well. You have an edge. You can get attention for free, just investing a few hours making a video. It's a very, very powerful skill set. But how do you think about that tension?

F

Farza Majjid43:58

You know, it's funny. I've been making videos for 15 plus years.

H

Host44:03

Overnight success.

F

Farza Majjid44:05

Second time. I always just see this as a thing I get to do for fun on the side while I get to do the main thing, which is actually build stuff for people. At the end of the day, I am painfully familiar with how bad of a business making videos is, making movies is, and making music is. I know how bad of a business it is firsthand. But I know more than anybody the power of getting in front of a billion people every single month when there's a good business engine underneath it that's powering something else. So I fully intend to do that. If I have this media ability, I'm glad I got it.

H

Host44:45

It's like sales.

F

Farza Majjid44:46

Yeah. Sales. Really scalable sales.

H

Host44:48

You got to be good at sales. WWDC had some movement on interoperability in iOS. It still feels like the Clickie iOS app is probably on the longer term stuck in the walled garden for a while. But what I'm interested in is, do you see a really solid market because there's no DaVinci Resolve iOS app that I'm aware of, and certainly people don't... There are prosumer professional tools that really only exist on a desktop or a laptop. So are you interested in going and hacking on crazy workarounds to build something that maybe makes people a little upset in Cupertino but gets you into that more casual mobile space, or do you think you just want to focus on desktop prosumer desktop apps?

F

Farza Majjid45:47

No, I want it all. I want when you talk to your computer, whether this is your computer or your computer is this computer, I want to be an interaction layer on top of it. That being said, I have no interest in necessarily being an OS-level controller, like what Apple is doing right now. No real interest. For us, most of our customers and users are essentially connecting 15 integrations to Clickie, from G Suite to Dropbox, and doing work with it. So I'm a lot more interested in that reality where I can talk to my phone in the morning and just say, 'Hey, look through all my emails and send me a brief when you're done.' I'm interested in that stuff, which I don't think Apple is going to do. Personally, they're not going to connect these 15 places to my Apple account and do work with it. I just don't think they're going to do it.

H

Host46:39

How do you think the health of open ecosystems in desktop software is broadly? Because there are two ways that you could update an Excel file. You can puppeteer the mouse, move over, click, type the cell, save, or you can just edit the underlying CSV file in raw text and then refresh the front end. And I imagine one is way cheaper for you. So you want to lean into getting the MCP servers, the APIs, the file writing, the CLI interaction down. But do you think that there will be companies that lean into that or companies that fight that because they want you to stay mouse and keyboard at all times?

F

Farza Majjid47:27

That's a good question. I don't think so because at the end of the day, what Clickie is doing in the background, just so you guys know how it works, we literally took the Rust binary that's in Codex and we package it with our app. So when you actually call the clicking agent, you're just calling a subspawn of Codex. This is on purpose. I just want to use the best model and the best kind of thing possible. So no, I don't think that's going to end up happening. In fact, it's better. For example, if you ask Clickie right now, 'Hey, how do I add a formula to this Google Sheet here?' There are two answers. One answer is, 'Let me show you.' The second answer is, 'I can show you, but do you want me to do that for you?' And I think that's where we're going to start going with computers. Your computer is just going to say, 'Can I just do this for you? I see you doing it. I can just do this.' So that's where we're kind of heading.

H

Host48:16

Well, good luck with the fundraise. I'm sure you'll be back on the show soon. Let us know when it closes. Incredibly excited for you. I love watching you win and have fun in the process.

F

Farza Majjid48:26

Yeah, it's great to meet you.

H

Host48:28

Congratulations. We'll talk to you soon.

F

Farza Majjid48:30

Have a good one.

H

Host48:31

Later. Let me tell you about MongoDB. What's the only thing faster than the AI market? Your business on MongoDB. Don't just build AI. Own the data platform that powers it. And up next, we have Trent from Side Talk. He's a creator and co-founder of Side Talk. He's in the waiting room. We'll bring him into the team in Ultradome. He'll turn Nick's fandom into one of the internet's most recognizable sports media brands. How you doing? Take us through. How is New York?

T

Trent48:59

How is it going?

Yo, it's crazy out here. I'm not going to lie. I was about to do this interview from my apartment and then I realized, hold on. Has anyone done a TVPN interview live from the streets of New York?

H

Host49:09

You got to go to the sidewalk. The founder of Side Talking.

Amazing. For those who don't know you, take us through your media empire. Take us through your strategy. Break it down for us.

T

Trent49:22

Okay. So I have a little company called Side Talk. You might see the logo and pardon the potential loss of voice from this Nick crowd. But we kind of pretty much run around New York City and let people do and say whatever they want into our microphone. We created the Bing Bong trend years ago. We created these NYX videos. Unfortunately, there's a little bit of chaos outside of Madison Square Garden due to us. But yeah, we pretty much let people say what they want in New York. And it's pretty fun and entertaining.

H

Host49:49

What's the secret to a good street interview?

T

Trent49:53

You got to keep it shareable and engaging. It sounds obvious, but why would you want to watch an interview of someone talking about something boring or low energy? What would you want to send to your friends? That's kind of the principle.

H

Host50:05

So you ask people about language model diffusion and like...

T

Trent50:09

Always, always, always. That's what we love talking about.

H

Host50:12

Token pricing and all private credit.

T

Trent50:17

Yep. That's what the people want to see. We're going to start talking about that outside the Nick games, I think.

H

Host50:21

Yeah. So I understand that a lot of the man-on-the-street interview format these days can be very prepped. There's a PR person that's pitching some successful business person for the 'What do you do for a living?' It looks candid, but in fact it's staged. Do you ever participate in that or is everything candid? Is that part of the brand?

T

Trent50:44

We're 100% natural on the streets. You don't know what you're going to expect.

H

Host50:48

Organic. Okay.

T

Trent50:49

Yes, sir. Organic. But it's really cool, too.

H

Host50:51

Yeah. Then my follow-up is, if you aren't prepping and understand who you're going to be interacting with, how do you vet? Where is the bar? If you see somebody walking and they have a baseball hat on and they probably don't want to be bothered, is there some sort of social contract where you shouldn't? Is there a doom scenario where everyone in New York is getting asked 'What do you do for a living?' 15 times when they walk to get their morning coffee?

T

Trent51:19

Yeah, honestly, it's a bit of an epidemic going on. I actually am kind of scared that I'm going to get pulled up on right now and asked what I do for a living or what song I'm listening to.

H

Host51:27

Oh, listen. That's another one.

T

Trent51:30

The people of New York, I think they distinguish Side Talk a little bit from that. They know we're not there to ask them something so cookie-cutter like that.

H

Host51:40

Sure.

T

Trent51:40

And now people come to us when they see the microphone, which is great. And we just go with the flow.

H

Host51:46

How do you think about monetization? Short-form monetization is notoriously hard, but you have some merch. Break down the business side of the business.

T

Trent51:55

Yeah, it's actually very interesting. You would think that I would have made a dollar off of TikTok by now. I don't think I've ever gotten paid from TikTok or Instagram. Literally not a dime, which is fine. But no, it's cool. We do a lot of branded work for companies. So we've worked with everyone from the NFL to Netflix, Nike, Google, Amazon, creating a lot of content for them. They'll come to us with a product or an event that they want to highlight and they say, 'Hey, you know how to get clicks and views,' and we pretty much apply our formula to that and create a really good video for them.

H

Host52:29

Okay. I have a hot take and I want you to walk me through whether you agree or disagree. I think you should just do a midroll ad in a three-minute Instagram reel. Because I see the branded integrations. There was this example on Subway Takes where someone's take was 'Android's better than iPhone.' It went massively viral on r/Android. And then Google was like, 'Oh, we'd love to work with you on another take that's the same thing, but it's branded.' And those sponsored takes often don't go as viral. It's hard to get branded content to go viral. But in some of these longer three-minute videos, if I'm locked in after two minutes, I would sit through a 10-second midroll of 'Hey, this was brought to you by this. Thanks for sponsoring this video.' And then it's just all organic content around it. Does that work? Is that already happening? Are you thinking about that? What's the deal?

T

Trent53:24

Definitely. One thing we really like doing is a natural integration. So we just did something with Nike, which is really cool, where they hit us up for these NYX colored shoes. Who better to get word out about these colors than Side Talk? So we had people wear them in the episode. We were talking about them. We had reactions to them. I think that feels authentic because that's kind of something we would do anyway.

H

Host53:46

And it did really well.

T

Trent53:49

That's good.

H

Host53:50

Predictions for tonight. Let me know if you're losing me by the way.

T

Trent53:53

A little bit. We are losing you, but the energy is still there.

H

Host53:58

Predictions for tonight are...

T

Trent54:01

Knicks in five.

H

Host54:02

Knicks in five. What's the plan for covering the game? Isn't it kind of in your best interest for it to be all seven games? You kind of want more attention. You obviously want your Knicks to win, but you don't want them to win too fast.

T

Trent54:22

If we can guarantee a win in seven, I would like seven. If we can guarantee seven, that would be great. But listen, we need to get the win more than anything.

H

Host54:31

Okay. What is the process of a shoot day? How early are you getting there? Who are you bringing with you? How big is the team?

T

Trent54:41

Definitely. It depends on what we're doing. We do such a wide variety of stuff. We can randomly go to a hot dog eating contest in Coney Island. We can go highlight a random character in Brooklyn. We can go film these Knicks games. So it's pretty dependent on what's going on. But with the Knicks games, we kind of show up in the third quarter as it's ending. Unfortunately, we can't bring our equipment into the stadium. So we low-key just have to stand there and watch the game on our ESPN app and hope that the Knicks win or we hear someone on Discord or something like that. And then the chaos erupts. We go into the chaos. We're there for hours and hours at a time. At the end of the day, people see 55 seconds, but we're out shooting for eight hours throughout these playoff games.

H

Host55:21

Got it. Wild. Well, thank you so much for coming on. We appreciate you. Good luck. We'll feature some of your videos in tomorrow's episode from tonight. Good luck out there. Have fun. Be safe.

T

Trent55:33

Yeah, we'll talk to you soon.

H

Host55:34

I'm hoping for Knicks in seven, personally, but can't guarantee it yet. So have fun out there. Thank you for this walking talk.

T

Trent55:45

Thank you guys. Appreciate you.

H

Host55:46

Yeah, great to hang, dude.

T

Trent55:47

Appreciate it. Thank you. Let me tell you about CrowdStrike. Your business is AI. Their business is securing it. CrowdStrike secures AI and stops breaches. We will be joined by the CEO of Snowflake in just a few minutes. Thank you for tuning in. We need to move on to the next story.

H

Host56:07

Canon says, 'The cashier at Home Depot just asked if I want to round up to support the SpaceX IPO.' SpaceX IPO is going to be big Friday. We might have a surprise guest. It's going to be fun. Also, there's this crazy meta story going on. Not Meta the company, but a story about a story behind Tai Morse. He's going all out trying to get an Elon interview and it's been fascinating watching him build the craziest set in podcasting history. We're rooting for you, Ty. Good luck. Hopefully you land it. It is the quiet period, so it might be difficult, but I think that there's a plan to extend the effort and everyone's rooting for it to happen. It's been viral on X many, many times. Also, Bloomberg's reporting that the SpaceX IPO is 4x oversubscribed. Do they know that already? Does one get that information at this point? That's really good news for the market, for the overall. There was an interesting article in The Economist about SpaceX, talking about where is it? Can the market swallow SpaceX, Anthropic, and OpenAI? Watch out for indigestion. But they talk about the float, the free float. This was very interesting. So obviously the company might be worth a trillion dollars. How much of that trillion dollars is actually actively being traded? Sure, Fidelity might at any point in time have a price at which they're willing to buy more and a price at which they're willing to sell their stake. But founders are often locked up. Founders often want to maintain control. Employees are locked up for a certain amount of time. Certain investors might be locked up. Unless you're Bill Gurley, don't try and lock him up. He's a wild man. But the float is important because if it's a trillion dollar company and the CEO passed away a generation ago and it's only owned by hedge funds, this was the story of Take Two before Strauss Zelnick came in. Take Two, the makers of Grand Theft Auto, was entirely held by financial investors and they were unhappy with the management team and the management team didn't have any equity. So he was able to raise his hand and say, 'I'll run this thing.' And they were like, 'Absolutely, thank you.' And they let him take over the company without really putting anything up. He didn't need to do a hostile takeover to get control of that company and become the CEO. And it's been a fantastic success for him and for Take Two shareholders who stuck around for the Strauss Zelnick era. But the float matters. At Microsoft, it's 100% floated. The free float is 100% because the founders have moved on and divested and they're not locked up. At Apple, it's like 99%. Broadcom's also at 98%. Nvidia at 96%. Amazon's at 91%, only Jeff Bezos is considered off the table. Alphabet at 90%. Tesla at 89%. And Meta is notably of the big tech companies the lowest free float at something like 88% or 86%. And the reason for that is because Mark Zuckerberg has a lot of control. If he sells his stake, he loses control. So no one's expecting him to sell even if the stock goes way up. He's going to maintain his position because he wants to run that company. Now SpaceX is in an interesting place. 13% of Meta shares are owned by Mark Zuckerberg. SpaceX plans to release locked-up shares in a series of tranches. If its IPO issues $75 billion of shares valuing the firm at its hoped-for $1.8 trillion valuation, the initial free float, because if you buy the IPO, you're not locked up. You can sell the next day if you want. But this means technically, whether somebody is buying through investing through JPMorgan, Morgan Stanley, or Goldman, technically you can go and sell. They just might restrict you from other IPOs. So you would expect, and this happens on all the different apps like Robinhood, Public, etc., if you're buying into an IPO, they basically are asking you nicely, 'Do not sell. Don't flip.' But people can. And so with how many retail dollars are flowing into this, I expect a lot of people that are buying the IPO to start trading almost immediately. But importantly, it's only 4% of the free float. So only 4% of that 1.8 trillion, it's a lot of money, but only 4% will be really free trading. And then during the IPO process, you're vetting investors and you're trying to get the people that will hold forever. And Elon has done a fantastic job of that with the indices. So he's gotten the NASDAQ, the S&P, and a few others to commit. So although NASDAQ has already shortened the seasoning period before index inclusion to 15 trading days, the Russell slashed its waiting time to 5 days, most share indices weight firms in proportion to the value only of the shares released for public trading. And this is important because people look at the S&P 500 and say, 'Wait, a $2 trillion company coming into that, your weight if you're just buying the S&P 500 is going to be more than 1%. It might be in the single-digit percent. That's a lot. And we've been talking about the S&P 499 for the bears, right? In fact, the initial weight in the S&P 500 will be around 0.1% because it's just that 4% free float, and then it increases over time as the shares get unlocked. We actually have a chart here of how the lockups work. And it takes basically a full year, almost two, for everything to get unlocked. And it's also triggered based on share price appreciation. So if the shares trade up 30% or more, then more shares become unlocked, and the road to 100% lockup ending happens slowly. So just a little bit of an interesting deep dive into how the SpaceX IPO will fare. Anything else to talk about on that story before we move on?

C

Co-Panelist1:02:47

No. Apparently, Senator Warren has urged the SEC to halt SpaceX's IPO, citing governance risks, Elon Musk's control, and potential foreign, especially Chinese, investment concerns. She also highlighted SpaceX's role as a US defense contractor.

H

Host1:03:06

Senator Warren has never met a business that she liked, I think, except maybe large financial institutions.

C

Co-Panelist1:03:15

Who knows? She likes those.

H

Host1:03:17

Well, we have our next guest in the waiting room. Sridhar Ramaswamy from Snowflake. He is the CEO and we're very pleased to be joined by him. Welcome to the show. Thank you so much for taking the time. How are you doing?

S

Sridhar Ramaswamy1:03:30

I'm well. Thank you for having me.

H

Host1:03:32

I can imagine you're doing well. The company is doing fantastically. I am interested to hear, obviously there's been an emotional roller coaster, but I'm more interested in the data that you're seeing that shows so much acceleration, so much promise, so much opportunity in this particular business.

S

Sridhar Ramaswamy1:03:53

Yeah, data is the foundation for insights. I worked in a data company, worked in the search ads team at Google where great data was the flywheel that made it into a great business. That's what we aspired to do with each and every one of our customers. AI has done a couple of things. It's made the act of bringing data into Snowflake a whole lot easier. Pipelines that used to take weeks to set up or migrations that used to take years have now dropped to days and months, which is pretty remarkable. But people also realize how much more power they can get by having great conversational access to their data. And now with things like Snowflake Cortex, how you can actually solve pretty meaningful business problems in an interactive way. It's that loop that is compounding for us that drives a lot of our growth.

H

Host1:04:44

Has there been any movement downstream for Snowflake? Whenever I hear the story of a data lake, a properly managed data warehouse as an entrepreneur even in a small business, I think that sounds amazing. That sounds like the dream. And then I see the companies that actually have the resources to onboard are immensely large, and obviously that's fantastic for your business. But I'm interested in what the future looks like. Is there a world where a 10-person startup with AI agents and these pipelines that can be built much faster can actually set up their business and then not have to go through a cumbersome migration in the future?

S

Sridhar Ramaswamy1:05:30

Yeah, we are seeing that happen in front of our eyes with Snowflake's own data team. You know, like every other company, it used to be years long. You ask them for a feature, they'd be like, 'Here, take a ticket, come back in a few quarters.' What they've been able to do with agentic AI is grind through those kinds of backlogs very quickly. Absolutely. Data and agents are going to make it much easier to set up these things and have them evolve as they go along. I'll give you examples. We rewrote both our support teams and our SRE teams' software. These are the folks that take care of different kinds of problems that we get into. And the net result of that is agents investigating the problem, and if you see enough instances of a problem that you have not seen, you go figure it out, go write a tool for it. It's now in a self-healing loop. I increasingly imagine that more and more operations get into that kind of a mindset where there are very competent agents, sets of recipes, you can call them skills, that take care of problems. But it is a self-learning loop. That's what AI makes possible.

H

Host1:06:40

Got it. Where are we in the path to fully automated migrations, fully automated new integrations? It feels like every new model release, we're like, 'This is the one. This is the one. The non-technical CEO is going to be doing the job now. He's just going to say, 'Hey, we have two systems. Go fix it. Go integrate it. Get it into Snowflake.' And then reality sets in and there's not just token costs and the cost of delegating to AI, but also the real world of other decisions that need to be made that might be outside of the context. So what are the remaining challenges that come up when you're building a new integration or working on a migration?

S

Sridhar Ramaswamy1:07:30

Yeah, I think the timelines are definitely shrinking. When it comes to migrating off of legacy platforms, the on-prem ones, we used to think of the biggest ones as running into three years, and these strike terror into every company's heart because it's three years of really anxious development work and waiting for results and hoping things don't go wrong. To give you very concrete numbers, we now feel a lot more confident that we can tackle really tough migrations and have them finish in a couple of quarters. That's a big deal, going from 12 down to one or two. And the migration team, which works on top of agent harnesses that we create, is confident that the technical parts of these problems will be solved by the end of the year. But there is the change management. There are all of the other applications that are running on the old system that you have to validate on the new system and ensure that there is business continuity. That kind of change management is still going to be non-trivial. But the technical parts, the act of doing the migration or writing new software, these are the things that AI is absolutely driving down.

H

Host1:08:38

What is the biggest?

S

Sridhar Ramaswamy1:08:40

And by the way, I actually go check out every feature that my team puts out using our coding agents. That's already a thing, and honestly it's not that hard if you have a modestly technical background.

H

Host1:08:51

Yeah. No, that makes sense. What is the biggest lesson that you or the company have taken forward from Frank Slootman's era?

S

Sridhar Ramaswamy1:09:02

Frank was always about amazing go-to-market execution. And we remember that. In fact, our sales teams are incredibly well-versed now in our products and in AI as a whole because we created products that could work for them. Having an effective go-to-market motion is the real strength of Snowflake. Again, to make this super concrete, the number of use cases, these are new projects basically within customers that account executives one went up by some 75% year on year. That's the power of using AI to get work done faster. And that is a tradition that will continue. What we have added on is the focus that comes from a product-first person like me. And AI, in a generic way, is about worrying about what it can do. But I think sometimes what we forget is if you have a well-built system that uses the latest, it's actually an incredible delight. All kinds of information that you would want. I was at a conference recently. Every piece of information that I wanted to know about a customer that I was having a conversation with, I would look up even live. If I didn't know, I would do it in front of them and show them the power of Snowflake's AI. A big part of our success over the past couple of years has been internalizing this. AI is a different way to think about product and product delivery. And the companies that are going to succeed are the ones that truly internalize that there is a big chasm between how we did it with web pages and clicking on things to these agentic flows that can truly solve problems.

H

Host1:10:48

Then how is the role of the sales rep changing? The sales associate changing? Are you looking for any different skills or are you doubling down on what worked in the pre-agentic AI era?

S

Sridhar Ramaswamy1:11:05

First of all, a lot more familiarity with Snowflake is a must. Because these folks now have access to products that show off what Snowflake is about. I expect every sales rep to have on their phone and be able to show off the actual impact of having a product like that with access to information to each and every one of our customers. When it comes to our solution engineers, these are the technical pre-sales people. Used to be that we'd have six demos total for all of Snowflake and maybe they do a little bit of customization and say, 'Hey, here's what Snowflake can do.' Now, pretty much all of them are capable of creating a custom demo tailor-made for a specific customer in a vertical in a way that makes sense to them that will really illustrate the power of Snowflake. It's that kind of empathy that they can use the technology that we create to drive. I would say it's changed in a really, really big way because a lot more is possible, but the bar is also a lot higher in terms of what you're expected to bring to the table.

H

Host1:12:09

Can you walk me through the partnership with Amazon Web Services? I'm sure you compete in some categories, but how did this come together? What does it mean for the future of your business?

S

Sridhar Ramaswamy1:12:24

Yeah, we work with the hyperscalers. AWS is the biggest partner. And we work with them on a number of different levels. We work on product integration. We buy a lot of capacity from them, a lot of GPUs that our inference team runs models on. But where we really shine is in joint go-to-market. AWS is an incredibly customer-first company. If a customer says, 'Hey, I want AWS plus Snowflake,' they lean into it. They bring us in, and we really focus on how we solve problems giantly for customers. There's a deep, deep relationship both at the account level going all the way up to the CEO level that ensures that problems that come up in practice get solved very quickly. It's the kind of partnership that one only dreams of. It's incredibly effective in practice.

H

Host1:13:19

What's been your strategy for trying to predict AI progress? Because we have people on the show every single day. Somebody from a lab, somebody that's an investor, customers of the labs, things like that. Everyone has a different opinion. You have to weight them differently based on their incentives. But you're running a massive company that's leveraging these tools, but at the same time you want to understand what the capability will be one year out, two years out. And it feels harder than ever to actually be able to predict that.

S

Sridhar Ramaswamy1:13:55

I think this is a really good question and one to deal with. I don't think the software industry as a whole has internalized that this precious commodity that we all loved creating by hand, which is software, the cost of creating new software is going to keep going down. I tell people that the best analogy that I can give for them is to go back to the 2000s when the cost of creating and distributing new content truly dropped precipitously. You have to work through what is the implication of something like this. For example, I think simply getting deployed into an enterprise and being part of a workflow there is no longer a guarantee that things are going to keep continuing because switching is also easier. I would say that's the first thing. Every company that is in the world of creating software as a big part of their business needs to think through what is the durable value that they are creating. I think it's a really hard question to internalize, and so we spend a lot of time just thinking about it. The second one, and this gets to the heart of your question, I honestly just have a practice, which is that this is a bad time to be making two- and three-year plans. Anytime things are getting better or worse by 20% or 30% every month, the human ability to predict these things which are exponential in nature just doesn't really work. I joke to people that at this point in time, we should treat coding agents the same way we treat traffic. Any person is always going to look at Google Maps first before they go somewhere because it's an all-seeing guide. Agents are sort of becoming like that when it comes to software. The more you have that open mentality that more things might be possible with a new model release than possible before, the more you will be pleasantly surprised and you'll be ready to take advantage of it. So I stress that childlike quality in figuring out what is possible. Obviously, there are nuances to how do you put in work in such a way that even if the model got better, you'll still be able to take advantage of what you have done before. There are practical problems like that. But the biggest thing that I ask for is that open-mindedness to what is possible today because a lot is different from what was possible a month ago.

H

Host1:16:30

Are you positioning Snowflake as a company that's in the token path or in the token stream? I don't know if you've heard this phrase that's sort of new coinage for a position in the AI value chain. It feels like you're firmly in the token stream, in the token path, but I'm wondering about what you think about that category. Is that narrowing you? Is that valuable to communicate to customers and investors? What do you think of the phrase 'in the token path'?

S

Sridhar Ramaswamy1:17:08

It's a useful way to think about how value is going to get created. Remember back in the web era, we talked about number of visits, number of unique visitors. These were the things like weekly active versus monthly active. These were the abstractions that we used to ground the numbers that various people would report in a reality. You can think of the token...

H

Host1:17:32

And by the way, I actually go check out every feature that my team puts out using our coding agents. That's already a thing, and honestly it's not that hard if you have a modestly technical background.

U

Unknown1:17:34

Path as existing along this path that is using the power and knowledge that these models have and creating value for customers, both in the data where our coding agent called KCO comes into play, where we want everyone that wants to get value from data to be using it, to all of the artifacts in that path, but also in the consumption path where our product is Snowflake Co-Work, where I want every employee in every company to be able to access the valuable data that is in Snowflake but also in other applications via things like MCP, to be using Co-Work. So we very much think about can we be in this path of coding up the things that are going to drive consumption and creating value, but also in the path of how does an end user query enterprise data, take an action on that data, and also creating value. So we very much think about this.

H

Host1:18:34

So, my last question is, you said it's a bad time to be making two and three year plans. How far are you looking into the future? Do you have a one-year plan, a three-month plan?

U

Unknown1:18:46

Well, as a public company, you have to have forecast.

H

Host1:18:50

But more qualitatively, like what are you gunning for this year or over whatever time horizon you think is appropriate at this point in time?

U

Unknown1:19:02

Our overall strategy is very clear. It's just what I described. Anytime anyone wants to do something with data, I want them to use agent tools that are created by Snowflake, Coco for example, to be able to do that. We want to have the best data platform in the world so that whenever someone thinks, hey, I need a historical view of this or I need an OLTP database to do this, they think of Snowflake. They can use any coding agent, not just our own, to be able to do that. Similarly, we think a lot about how can we make sure that we sell Co-Work to CROs and demonstrate what we have done internally within Snowflake to transform our own sales organization. So we think a lot about how do we take our customers through the same journey that we have been through in terms of how can AI make a difference to the business. There'll be a lot of details along the way, but that's the path that we are headed in. AI leveraging the full power of data.

H

Host1:19:59

Well, congratulations. Thank you so much for taking the time to get.

U

Unknown1:20:02

Yeah, great to meet you and congrats to the team on all the momentum.

H

Host1:20:05

Yes. Stay strong in the token path.

U

Unknown1:20:07

We love to see it. We'll talk to you soon. Have a good day.

H

Host1:20:10

Goodbye. Let me tell you about agents meet the canvas. Your AI agents can now create and modify your Figma files with design system context. Yes. Apologies for the technical issues cut out. A lot of people are saying, 'Is this AI? It's not AI. Is this AI?' There was some type of clip.

C

Co-Panelist1:20:29

I've never seen that exact technical failure before where it cuts out entirely. We've heard scratchy audio. We've heard degraded video. The video was coming through crystal clear, but the audio was cutting in and out a little bit, but I think we got a lot of good stuff. Coco, they should have called the AI agent Frosty Snowflake. Frosty.

H

Host1:20:49

Probably intellectual property.

C

Co-Panelist1:20:52

Frosty the agent.

H

Host1:20:53

Is a jolly happy guy.

C

Co-Panelist1:20:56

Coder. Yeah. Something.

H

Host1:20:57

Anyway, Citadel Securities, former employer of mine when I was an intern, wrote a post on tokconomics. They're one of the most significant hedge funds and they just dropped tokconomics. I have it here. I have the second print out. Tyler, you want to bring that over to me? It's not what you expected is what they say. So said we've argued for some time that agentic and complex workflows delivered by frontier models would be expensive to run, constrained by physical bottlenecks, and vulnerable to unrealistic expectations of frictionless deployment costs. That judgment now looks less contrarian than it did when we set it out in February. They're taking a victory lap over at Citadel Securities. Amazon has now removed its token leaderboard. Microsoft has canceled clawed code subscriptions and there have been multiple reports of unexpectedly large token bills. The salient point is that even the most powerful technologies must pass through the prosaic discipline of cost curves, capacity constraints, and marginal returns. Adoption is therefore becoming less about what frontier models can do in principle and more about the price and scarcity of the inputs required to make AI operational at scale. Compute, power, cooling, memory, bandwidth, and inference budgets are real and binding constraints. They go into economic theory talking about the three functions that prices provide. They signal scarcity, create incentives for substitution, and ration scarce resources toward their highest value uses. This is the stuff that goes viral on TikTok. We're deep in it. You heard of keeping the viewer watching. This is the most important thing. You read the Citadel Security macro strategy report. But they do say they ration scarce capacity toward the areas where marginal productivity and AI justifies the marginal cost of using it. They're talking about ROI maxing for the economy at large. Simpler models may be more cost-effective productivity augmenting pathway until physical constraints are eased. We hence see growing signs of a bifurcation in frontier versus everyday AI usage. They actually shared some data here around token expenditure index dropping, the log growth rate declining, and so folks are pulling back a little bit and shifting towards cheaper models as they figure out a new workflow. Something gets unlocked and then they say hey we got to actually make this ROI positive. So that's the latest from Citadel. Let's see what Amazon Web Services is saying because they're blacking on the timeline. They said more AI generated code doesn't make your team faster. It might actually slow you down. Crazy post from AWS.

C

Co-Panelist1:23:47

Would have expected it from like some AI thought leader, podcaster, Twitter person.

H

Host1:23:52

AI bearer.

C

Co-Panelist1:23:54

But yeah, it's funny coming from the AWS cloud gold check. It's funny because it's also like if you were to write this.

H

Host1:24:03

I think a lot of people would write this as more AI generated code doesn't necessarily make your team faster.

C

Co-Panelist1:24:09

No, just perfect.

H

Host1:24:12

No, more AI generated code doesn't make your team faster, which is just factually incorrect for a lot of teams that we know, right, that are like we're actually moving faster than ever. Also, okay, read the next post in this thread. It's like very clearly AI generated. Okay.

C

Co-Panelist1:24:28

The real bottleneck was never writing code.

H

Host1:24:30

It's releasing it, debugging it, keeping it running well. So when Honeycomb CTO Charity Majors set a productivity target, she didn't chase 10x. She chose 2x and built from there.

C

Co-Panelist1:24:45

You think this is AI because the choose 2x, and ampersand built from there.

H

Host1:24:51

I think it was human edited, but that syntax feels a little AI. I agree. Her team also skipped the mandates and built a set of AI values instead. Every AI output has to have a human owner.

C

Co-Panelist1:25:01

If you don't want your name on it, it's probably not good work.

H

Host1:25:04

Yeah, that's reasonable. Quality first, quantity second. So they had a podcast about it. Coming from AWS, that's a wild statement. This is very funny. But yes, also funny with the backdrop of a $500 million budget.

C

Co-Panelist1:25:22

Well, yeah. And it's funny because Amazon is of course one of the largest investors in both OpenAI and philanthropic to.

H

Host1:25:32

Leading coding model provider.

C

Co-Panelist1:25:34

Hey, they didn't say more AI generated posts don't make your social media team faster. Entirely possible it sped them up. They certainly got 14,000 likes on this. This is a banger post from a corporate account. Rare to see those numbers put up on the timeline from a corporate account. So, congrats to the team over there putting up some fun numbers. Shriram Krishnan, the I don't know how to differentiate them. He's a KernieJackson.com investor advisor to Bending Spoons. Not the former A16Z GP who worked for the government for a little bit. Shriram Krishnan says, 'Not many Silicon Valley VCs took our Bending Spoons intro in 2022. These VCs thought it was beneath them to be associated with the company. From 2024 onward, many clamored for an introduction to sell their portfolio companies. Bending Spoons is going public.' So, Bending Spoons will be a public company and they own a number of historical companies. They own AOL and have done a bunch of other stuff. Eric Seuford broke down the.

H

Host1:26:41

They literally own America Online.

C

Co-Panelist1:26:44

They own America Online. And it must be electric. I can't get into my mobile dev memo email. I'm just going to skip this and move on. But you can, Eric Suford over at Mobile Dev Memo wrote a breakdown of the Souverator, wrote a breakdown of Bending Spoons' filing to go public. The Italian rollup operator that owns among many other properties AOL. They own Eventbrite and Vimeo. Don't they also own Evernote or am I getting that mixed up? Someone owned Evernote and the Evernote employee growth chart looks like a fast takeoff post-2020 COVID. They went from like a thousand employees to like almost 6,000 employees or they tripled or doubled the workforce and Bending Spoons is known as sort of like the operational excellence, almost like a private equity firm. They're going to do cuts, they have done a few cuts, but the actual headcount has held fairly stable. And I think the business has gotten to a much better place. So interesting to see there's a time and a place for being aggressive expanding when there's a big moment and the market's up and then there's also a time to consolidate and focus on operational efficiency. Be your partner.

H

Host1:28:00

Why is this guy so obsessed with GTA? John, have you ever played GTA?

C

Co-Panelist1:28:06

Any GTA?

H

Host1:28:07

Maybe like GTA 3, GTA 4. Maybe for like two minutes.

C

Co-Panelist1:28:12

Two minutes.

H

Host1:28:12

And I was like, 'Wow, you loser. What a loser. Never gamed in his life.'

C

Co-Panelist1:28:19

I couldn't get into it. I couldn't get into it.

H

Host1:28:21

Yeah. You're a Rust guy. You're everything. Like I just.

C

Co-Panelist1:28:26

Even as a child, I was like, 'Okay, everything that you can do in this game, you can just go do in real life minus.'

H

Host1:28:32

No, you can't. It's all crimes. Wait.

C

Co-Panelist1:28:34

Jordy turned it down.

H

Host1:28:36

He turned it down.

C

Co-Panelist1:28:37

There was something like 10. Maybe I'm pure of heart and I don't enjoy. I was like okay like crap.

H

Host1:28:42

They were going to let me play for like 15 hours, 10 hours, maybe five hours, but I turned it down. They actually wanted to pay me. They wanted to pay me to play.

C

Co-Panelist1:28:49

Yeah, they wanted to pay you to play. Strauss said actually I would love for you to play.

H

Host1:28:54

No, one of my first jobs I was a video game tester. I got paid to play video games.

C

Co-Panelist1:29:00

Best job.

H

Host1:29:01

Play video games all day.

C

Co-Panelist1:29:02

They got you hooked.

H

Host1:29:04

Yeah, they got you hooked.

C

Co-Panelist1:29:06

No, I was already hooked. I was elite. So, yeah, you go play the games while it's in development. You file bug reports. You're a quality assurance tester, but basically your job is to play video games all day. Worked with a guy who was super chill and he was just like, 'This is my career. I'm happy with this. I'm a video game tester.' And then I checked in with him a couple years later and I was like, 'Hey man, how's the video game testing business going?' And he was like, 'You know, I actually had a shift in my career. I'm a DVD tester now. It's even easier. So, you just sit there, watch the full movie, and then tell the people, 'Yep, there were no audio bugs or there were no drop frames in the whole movie. I sat there. I watched the whole movie and it looked fine. Thumbs up.' And then every once in a while he'd be like, 'Oh, I was in the menus of the DVD and when I went to behind the scenes footage, it wouldn't play the correct video.' It had the title for, you know, interview with the director and it actually played interview with a cinematographer. So, you got to fix that. These things happen, UI bugs pop up in DVD menus. But what a wild job, DVD tester. It's a good one. Anyway, this fellow is obsessed with GTA 6 and he's doing anything and everything to understand whether or not GTA 6 will be released on time. There's two methods here. If you want to know GTA 6 is going to get released on time, you can just shake down Strauss Zelnik for the truth. Or you can do what he did, which is he set up acoustics around the Rockstar headquarters to measure audio levels near a meeting room. And he discovered that his equipment had disappeared. And when he returned to check on the latest data, he didn't stop there. He started camping outside monitoring traffic and tracking the number of cars and their estimated value. Oh, there's an executive in town. That means something for the GTA 6 release date. Uh oh, there's more cars coming in. Probably a lot of people working late nights getting it out. Burning the midnight oil. And so he believes such data can be used to speculate on how many executives may be spending time at the HQ as opposed to regular employees and that an increase in both traffic and high-value vehicles could indicate trailer 3 is coming. He's also considering an even more insane idea, which is to measure the amount of oxygen in the area to monitor how many people are around. And he did it. He started monitoring the oxygen around Rockstar North. And he believes trailer 3 is coming soon after noticing that oxygen levels dropped to about 20.3%. We actually need to use basis points this time from 20.3 to 20.04 after 5:00 p.m. suggesting increased oxygen consumption in the area after normal working hours. He's also monitoring the number of cigarette butts. I thought it was just a GTA 6 fan. I'm excited. Everyone's excited. Maybe it's a Rockstar or a Take 2 shareholder. You had a different theory. What was your theory on his motivations?

I don't believe that people are going to go to these lengths unless they're making money on it.

H

Host1:32:04

Okay. And how would he make money?

C

Co-Panelist1:32:06

There's a lot of prediction markets with plenty of volume.

H

Host1:32:10

Yeah. Could be trading the stock directly, but could also be betting on a prediction market.

C

Co-Panelist1:32:15

Oh, yeah. If there is theoretically, if there were to be another delay, I'm sure the stock would probably react to that.

H

Host1:32:22

Yeah, absolutely.

C

Co-Panelist1:32:23

It is very interesting. Fun story.

H

Host1:32:26

A hedge fund should hire this guy to do other types of detective work.

C

Co-Panelist1:32:31

Yeah, it almost feels like it's going over the line. Maybe illegal. I don't know. I would be very frustrated if someone was standing outside of our Ultra Dome measuring everything to see if we're going to interview Matthew Prince yet next. And we are because he's in the waiting room and we're bringing him in to the TBPN Ultra Dome. Welcome to the show. Matthew, thank you so much for taking the time. How are you doing, gentlemen?

M

Matthew Prince1:32:54

Good to see you. I'm doing well.

H

Host1:32:56

Great to see you.

C

Co-Panelist1:32:57

What's new in your world? You made some acquisitions. You made an acquisition. Take us through it.

M

Matthew Prince1:33:01

Yeah. So we bought a company called Void Zero which makes Vite, which is one of the most popular developer platforms that's there. Just an incredible team. Evan Yu who's the founder is just a first class human being. Someone who our team is super excited to work with. The team that he's assembled is just great. And I think that this is increasingly becoming the platform that is being used to power a lot of the agents that are running around the internet and a lot of those agents are running on Cloudflare and so we think it's just a really natural combination.

H

Host1:33:36

How simple is the synergy? Is it you'll funnel those 130 million users who download Vite every month? I think it's 130 million weekly downloads. Weekly. Wow. Yeah, that's a lot. Into preferring Cloudflare, defaulting to Cloudflare or is there more synergy under the hood around developer integration, company integration? How are you thinking about this playing out?

M

Matthew Prince1:34:03

Yeah, we plan to continue to leave it as an open source project and support it and invest in it that way. We want to integrate it closely with Cloudflare's developer platform and make sure that Cloudflare is the best place to run any sort of Vite project that you have. But it'll work in any of the different platforms as well. And so, we just really wanted to make sure that Evan and his team had the support to make sure they could continue to really invest in what was just an incredible platform. And we think that that is going to drive more developers to Cloudflare's Workers platform as well.

H

Host1:34:40

What are the headaches for developers these days? I know everyone's concerned about token costs and token budgets. Sometimes that doesn't show up for the developer. It's more like the CEO that's worried about it. Is uptime more difficult to maintain? We've been seeing screenshots of different uptime tracker status pages that have more and more red and yellow on them. Like what's at the top of the stack and how are you helping?

M

Matthew Prince1:35:05

Yeah, you know, I think that you need a different architecture than we've had to build the last generation of applications for what's coming with agents. If you imagine, there are about 100 million knowledge workers in the United States. If all of those knowledge workers had one agent which was working on their behalf, and each of those agents was running in a container, a traditional container like something you'd get at an AWS or a Google Cloud, the amount of just CPU resources that would be needed to run just those agents, assuming they've just had one agent per person, is about 50% of the total CPU capacity that's generated by all the different CPU manufacturers that are out there today. And that's just the United States knowledge workers. If you take that to the world, then it's several times, 30 or 40 times the capacity of GPUs and CPUs that exist today. And so what we really think is that as these agents are creating code, you need a different platform for it. And Cloudflare was built, Cloudflare Workers was built not on containers as much, but on something called isolates, which is a much more efficient technology. And so what we're seeing is that as people are building these agents, as they're using them, it's just a much more natural place to be running them. And it's I think why you're seeing more and more of the big AI labs have Cloudflare as the preferred target for where their code gets run. You know, OpenAI released a project for their enterprise users a little while ago that again is targeting us. And we want to make sure that with things like Vite as first class citizens on Cloudflare that we can help power that future because again it's not going to be the same system that we built with the hyperscalers. It's going to be something different and I think that we have a really good shot of building that different thing.

H

Host1:37:01

So can you help me understand more about the problems of CPU bottlenecks and then maybe some of the solutions? I'm just thinking about like I would think bandwidth would be an issue, obviously CPU load, but is there a world where we get to some sort of convention around maybe it's the robots.txt or just the user agent. And when Google bot shows up or any other AI system, AI agent shows up, you're just delivering something that looks more like an MCP server, but you're just delivering something that looks more like a JSON package, something that's a little lighter, less CPU intensive. Is there a path there to optimization? It feels like we're in the era of squeeze every ounce of performance out of everything. But what's actually going to happen here? Are we just screwed or is there an opportunity?

M

Matthew Prince1:37:52

No, you know, I think two different problems. So the first is if you ask these different AI systems to perform tasks on your behalf, what has to happen behind the scenes, especially as those tasks get complicated, is that they need to be coordinated in some way. So if you say plan a vacation for me or something like that, what goes on behind the scenes is that there's coordination there and the best way to make that as efficient as possible. What agents are really good at and these various LLMs are really good at is actually writing code. And so that code needs somewhere to live. And the problem is that if that lives in a container, then you've got to bring in an operating system. You've got to bring in all the tooling and everything else. And that's actually extremely heavyweight. And so that's the first place that you've got both a CPU and a GPU bottleneck that's there. And so with something like Cloudflare Workers and isolates, it's just a much lighter weight system. And so that means that you can have more agents running on the same CPU infrastructure and be able to provide that. And again, I think that's why a lot of these next generation tools are actually built using our platform. You mentioned something else which is as these agents go out and interact with the rest of the web, you want to make sure that that is done in the most efficient way. So if they're pulling down all of the HTML from a web page, and those web pages are designed to be consumed by humans, there's just a lot of cruft on that that isn't necessarily as important. And so some of the things that we're doing are for those customers of ours that want to make sure their content is consumed by agents. We want to make sure it's as accessible as possible. We are automatically converting things into markdown which is a much simpler system that saves you a ton of tokens. It saves you a ton of processing. It means that your context window can fit more useful information into a context window. So, I think there's a ton of optimizations and we're helping both on the developer side as well as on the content side making sure that we can have these agents be as powerful as possible and get as much done as possible.

H

Host1:40:04

John Gruber total victory. You know, he invented Markdown.

M

Matthew Prince1:40:08

I did not.

C

Co-Panelist1:40:08

Rubinator. Yeah.

H

Host1:40:09

No way.

C

Co-Panelist1:40:10

Yeah. Isn't that amazing?

M

Matthew Prince1:40:11

Yeah. And I mean it's one of these things that just turned out it was ahead of its time but it's such a key for making sure that we can take information and make it as compact as possible.

H

Host1:40:22

John Gruber created the format for God. It's a funny world we live in. Talk about it was last week you guys announced that the threshold had been passed around agent versus human traffic. Talk about that moment. Did it happen sooner or later than you expected?

M

Matthew Prince1:40:43

Much sooner.

H

Host1:40:44

Yeah.

M

Matthew Prince1:40:44

I mean it was at the end of last year, so the end of 2025, I said that I thought that we would pass bot traffic, and that's across the board. So that's like Google's crawler but also the new agents which are coming out. I thought would pass human traffic by the end of 2027. About 3 months ago I revised that based on the traffic that we were seeing to say that it would actually be in the first half of 2027. And so the fact that it actually happened in the first half of 2026 is just extraordinary. And it just shows how quickly this is growing. And the real key here is that I think that if you or I as humans were researching to go buy a digital camera or something, we might visit five websites and do a little bit of research and some price comparison. You just watch as you use these agents. They have boundless attention to be able to just go to maybe 5,000 websites to find exactly what you're looking for, the best price, the best delivery, the best service, and everything that's there. And so that's just driving an enormous amount of consumption of the internet. At the same time, the other thing that's happening is that for a long time since about 2015, the web has kind of plateaued. There were more websites that were being shut down than were being created during that time. In the last 18 months though, we're back to the web growing at a rate which is exponential and it looks similar to what was happening back in the early 2000s in terms of growth of the web. And so I think you're seeing both more consumption of what's online, but you're also seeing more things online as it goes forward. And so in both of those directions, that's going to continue to drive more and more use of the internet. And I wouldn't be surprised if, going forward, say, 5 years, that bot traffic will be a thousand times human traffic online. And we've got to make sure that we make the internet work for that new future.

H

Host1:42:57

Yeah. Like every year we're just going to add another nine to the 99.999% of internet traffic is bots. Do you know what the baseline was like pre-I? Were we at like 1% bot traffic?

M

Matthew Prince1:43:12

It was more than that. It was about 20% for for.

H

Host1:43:18

Yes. And it's, you know, Google was the largest and then obviously there's a lot of malicious things that run around online, but that was around what it was for and it was pretty stable over the history of Cloudflare at least. So where we could measure it since 2010, it was always kind of around that 20% range and then it's grown. In the last few years it started growing steadily and then it really accelerated in the first half of 2026. I want to talk about the inference stack. We're seeing two things play out, a bifurcation. Apple's launching on-device inference that's not going to be frontier but it's going to be usable for sure on your phone, on a computer. They can obviously go to their private cloud as well. And then you have the new NVL72 models. There's stuff in between on Cerebras chip, fast but expensive. Then there's everything from it runs on commodity hardware but it's still pretty big, you need a real desktop for it. And I'm wondering about how you see Cloudflare fitting into that. It would be a logical extension to Cloudflare Workers to have inference on the edge, inference in different places. Where do you see yourself offering inference if at all?

M

Matthew Prince1:44:43

Yeah. Well, it's actually kind of funny. Back in 2022, we issued a press release that there was a graphics chips company that we were going to partner with in order to put GPUs at the edge of our network.

H

Host1:44:59

Yeah.

M

Matthew Prince1:45:00

That graphics chip company turned out to be Nvidia.

H

Host1:45:03

And what was amazing was at the time it was just crickets. Like nobody cared.

M

Matthew Prince1:45:09

Sure. And we sort of did a little of it, but we hadn't really rolled it out broadly. And what was funny was then you fast forward two years later and all of a sudden everyone cared. And so we basically just reissued the exact same press release and now that's become a pretty important part of our business. And so today you can run inference at the edge of Cloudflare. And because of the fact that we're in over 350 cities worldwide, we're within milliseconds of the vast majority of the world's population, we become a very natural place for inference to happen. My working assumption has always been that about 50% of the inference that happens will be on device, whether that's your phone or your laptop or whatever. But that there needs to be some standard protocol where your phone or your laptop or whatever that local thing is can hand those either long-running tasks or larger tasks off next to the network. And so that would be to us. And then if for some reason you need something that's more than that, you could hand it back to some centralized data center with more capacity than we may have. And I think that that's what we're increasingly seeing. I think my assumption was a little bit off. I think actually less is going to happen on device today because I think more and more of the tasks are going to be these long-running tasks where it's not going to be just what's the temperature in New York today. Instead it's going to be something like help me plan a vacation, take into account all of these different things, shop for different hotels in different places, plan all the travel between the different locations. Here are the criteria I have. And that might be something that takes, you know, maybe not seconds. It might be minutes or hours or days in some cases to run. You're going to have long-running agents just for Park City snow forecasting and reporting, tracking individual runs, maybe a network of drones that are identifying what's tracked out.

H

Host1:47:23

Optimizing your routes on the mountain. Lot of stuff.

M

Matthew Prince1:47:26

That's exactly right. Hopefully it snows this year unlike last year. So.

H

Host1:47:30

Yeah. So, what are the decisions when you're doing inference on the edge? Because it's sort of a hard pitch to say, I'm going to shave off 300 milliseconds, 600 milliseconds, when you're talking about a 20 minute workflow or even a 10-second workflow, you're getting me a 3% boost. Is that going to make the difference? But are you optimistic that there will be sort of an in-between state where there will be inference that happens and it needs to happen within the request loop under a second and then the latency matters?

M

Matthew Prince1:48:07

Yeah. Well, I think there are sort of three different buckets why people are choosing to run inference tasks on Cloudflare. I think the first bucket is exactly what you said. It's latency. And so especially for those things that have human and computer interaction where any delay feels like it hurts you, people are trying to make sure that they can get the best performance possible.

H

Host1:48:31

Yeah. For voice models, it feels like that has to be local. Yeah. I love that.

M

Matthew Prince1:48:37

Yeah. And so there's a case for that. I think the second case is that a lot of times for either privacy or regulatory reasons, people want to keep things as close to where they physically are as possible. And so, I think that a lot of especially in Europe and otherwise, places think that they made the mistake with the internet 1.0 and 2.0 of having everything go back to Ashburn, Virginia, everything go back to the United States. And so I think that there's a real sovereign desire to keep things local. And that's important. And then I think the third thing is we actually can be oftentimes much more cost effective because of the fact that we are a network and because of how we're interconnected with networks around the world, bandwidth for us is effectively free and so it's very easy for us to get things onto our network and because of where we deploy systems, we often are in places where we don't have to pay for the space or the power which allows us to then pass those savings on to customers. So it can be significantly more cost effective to use inference with us than it can be in some other places. That's somewhat counterintuitive, but it's the nature of what we've built and the secret to what's allowed Cloudflare to deliver as much as we have over time.

H

Host1:49:54

There's a ton of debate over data centers, how they get built, how big they should be, what we need, the push back, regulation, etc. How is any of this affecting your business? Are you thinking about how you position your footprint in the real world? How are you processing the evolving discussion around data center construction?

M

Matthew Prince1:50:20

Yeah, I mean, first of all, we're going to need more data centers. I think a lot of the discussion is somewhat silliness. The water consumption, these are closed loop systems. A golf course uses more water than probably all the data centers in the United States over the course of a year. So, I think there's a lot of silly concerns that are there. But there are real concerns as well. We've got to make sure that there are efficient ways to get power to these things, that it's not taking power from other systems, that the grid can support that. And so, I think those are all good considerations for Cloudflare ourselves. We're a little bit different where in the case of AWS or Google or SpaceX, you're building one big facility or a handful of very big facilities and putting a ton of machines in that one facility. Cloudflare is different. We have a ton of machines, but we spread them massively all around the world. And oftentimes we want to go into the places where networks come together. And so those can be some of the oldest data centers in the world and in any of those facilities we may have only hundreds of machines, but collectively around the world we've got what is effectively much larger than any individual data center that is out there. So I think we're less impacted from the new builds of data centers. I think we're much more impacted by how do we find our way into the existing data centers and then how do we make sure that the equipment that we're deploying is as power efficient as possible because we're often given here's the envelope that you have to fit your equipment in. And we're often guests of whoever the local ISP is or whoever partner is that we're working with in the thousands of buildings that we're in all around the world.

H

Host1:52:15

What's new with Italy?

M

Matthew Prince1:52:19

Oh yeah. Italy and Spain. It's so your summer plans, your summer world peace here. Come on are limited dyed. Yeah. No visa for me or the Maui coast. No, it's interesting. It's been actually kind of puzzling for us. So all of this stems back. For those who don't know, in both Italy and in Spain, there have been pretty aggressive tactics to come after either me personally or Cloudflare, and it's all been driven largely by the football leagues, the soccer league in those places. And what they're concerned about is piracy. The thing that's been ironic about it is we don't like piracy on our network either. We don't make any money off of it. It takes bandwidth. It steals resources. And so we have a whole team that's working all the time to shut the pirates down. And yet, the pirates are clever. They find ways to use our system. And because a huge percentage of the internet sits behind Cloudflare, there's going to be stuff from time to time that we don't capture. It takes us some time to catch. With leagues everywhere else in the world, the NBA, NFL, MLB, the Premier League in the UK and others, we work really closely with them to if they identify a pirate stream for us to pull that down because again, it costs us money. We don't like it. But for whatever reason, La Liga in Spain and the league in Italy have decided that instead of partnering with us to take this down, they would sue us instead. So again, yes, it does cramp some of my summer plans.

H

Host1:54:06

I want to talk about IPOs. Life as a public company. There's a few entrepreneurs that are trying to go public this year. You had a very successful IPO. The stock is up more than 100,000 basis points since you went public. Fantastic run. But advice for.

M

Matthew Prince1:54:25

That's we're putting everything in basis points now sounds even better. I mean the stock of a thousand% it's fantastic but 100,000 basis points sounds even better.

H

Host1:54:33

Basis more. 110,000 basis points. Who's counting? But anyway, what was your process like? We were talking about the level of float lockups. What were the hard decisions? Were there things that we're talking about now with these big IPOs that weren't even on the top 10 of your to-do list? What is important to a successful IPO and then running a public company?

M

Matthew Prince1:55:01

Yeah, I think there are a handful of things that are interesting lessons for us. So first of all, I love being a public company. I think that it's interesting. In jurisdictions where you don't have no-fault divorce, spousal homicides are much higher, which is I think an analogy to the difference between private market investors and public market investors. It's really hard to fire your VCs. It's hard for your VCs to fire you and so as a result, it's kind of dysfunctional. Whereas public market, I love our investors because if I do something stupid, they call me up and they say that was stupid, I sold your stock. And then we have a conversation and sometimes they say oh actually that makes sense now and I bought it back. But I think you can have a much more honest, much more real conversation and that's felt actually just really good.

C

Co-Panelist1:56:01

Uh, healthier than what you see in the market.

H

Host1:56:03

It's so true. I mean, every angel investor in any number of meaningful companies is going to have portfolio companies where you've fully given up on the company and you just try to be nice and help if you can, but at some point you're just totally disassociated with the investment. And that's a reality. It's very healthy to be like, yep, I'm disassociated, moving on, put my energy elsewhere.

C

Co-Panelist1:56:34

In both directions, right? It's a better relationship. And so I loved the process of going public. The thing that we did was an opportunity for us to really retell our story. You don't get to reinvent yourself very often, but the process of writing the S1 was an opportunity to sit down and really do it. We dug in and told the story in a way that to this day we still refer to parts of that document to explain what Cloudflare is and how we worked. I think the most clever thing that we did, and this was advice I got from Ryan Smith from Qualtrics, he said, what are you doing about friends and family? I said we're not going to do it because you can take 5% of an IPO and allocate it to friends and family, and I didn't want to get my aunt that if the stock went down, have to explain that over Thanksgiving dinner. He said no, think about the people who, if they owed you a favor, could make a meaningful difference in the future of Cloudflare, and then offer them the ability to invest in the IPO.

H

Host1:57:50

Yeah.

C

Co-Panelist1:57:51

And I was like, is that legal? He said check with your lawyers, check with the bankers, but the answer is yes. I said some people are going to have conflicts. He said it doesn't matter, even the fact you offered it, even if they can't do it, will mean that they'll always remember that super fondly. And it was incredibly good advice. We made this crazy list of all these people who might be an important relationship for us, and like 75% of them said yes. They all made a ton of money as a result. It was one of those kind of opportunities.

H

Host1:58:31

Now your aunt doesn't talk to you anymore.

C

Co-Panelist1:58:34

Well, yeah, my aunt doesn't talk to me. Like I missed out on a 100,000 basis point move.

H

Host1:58:41

How could you?

C

Co-Panelist1:58:43

I am always comforted that we priced it at $15 a share and it went up 18%. That's the other thing that's interesting. Bill Gurley and I have fights about this from time to time about IPOs. You have a lot of control over how much the pop is going to be. We sat with bankers and we were like, listen, we want it to go up about 20%. And they said okay, if you want it to go up 20%, you price it right here. We priced it at that point, and it closed the first day at 18, which is exactly up 20%.

H

Host1:59:13

Okay, but just to steel man a little bit, is that a function of your business? Not to be rude, but there are some businesses that are meme stocks out of the gate and they have less control. Is it always controllable? Did you think the fair value of your business was 18 or 20% higher than where you priced it?

C

Co-Panelist1:59:43

Yeah, if we had priced it at 13, it would have gone up more. But you want to play for the long term here. My fight with Bill is that he says you should do some sort of system where you price it at whatever the top price is. The problem with that is if you look at all the companies that have done that, the Airbnbs and others, that's great for private market investors, VCs, and founders taking money off the table, but you have to keep running the company. The IPO isn't the end for the operators. You want to build that relationship over time. We worked incredibly hard to be very choosy on who we gave allocations to. We went through every single name on the list. As a result, if you look at who our top 10 shareholders are, it's been incredibly stable. They give us great advice and have been really great to work with. I'm sure there are times you don't have it, but I was surprised at how the banks have a really good sense of if you price it here, here's what's going to happen. In our case, it was to the penny.

H

Host2:01:15

Last question, how are you thinking about long-term planning as a CEO when we're on these exponentials? The example of agent versus human web traffic, you have more data than almost anyone and your prediction was still off by 20 months or something in that range. How are you thinking about business planning when model capability is increasing and you're seeing exponentials everywhere?

C

Co-Panelist2:01:49

A couple of different things. One, we're trying to make bets on people who can really function in dynamic environments. That for us has been different than a lot of other people. A lot of people have cut back on early career hiring. Cloudflare is about 5,000 employees, a little less than that now, but we hired 1,111 interns this summer. They are amazing. They are so native to these tools. We've always thought our job was training the interns, but this year the interns are helping train a lot of us on how to do these things really well. Staying super dynamic, and making sure we've got optionality going forward. It has gotten tougher to get equipment. Memory prices are through the roof. We just have a team that's constantly trying to figure out how to refine that. We're trying to be big adopters of AI not just in developer land, but across the entire business. We built something called Cloudflare OS, which allows anyone on our finance, legal, accounting team to have access to tools and figure out how their job gets done. The clever thing we did to seed it was we set up an email address and told the team it was a magic AI model. They could write to it and ask how to get a part of their job done. It would sometimes ask more questions, but it would give a response. What we didn't tell people was that a team of humans was initially receiving these emails and using AI systems to flesh things out, but they were recording all the key jobs to be done within the organization. As a result, we've been able to seed Cloudflare OS with the ability to do things like if you're on the sales team and have to do an account plan, you can type /account plan and describe what you want and it will output that. That's made our team so much more productive. I think it's giving us the flexibility to respond to whatever comes next.

H

Host2:04:37

Very cool. Final final question. Are we going to see an exponential increase in the number of interns this summer? 10,000 interns?

C

Co-Panelist2:04:49

I don't know. We've got to find a place to put them all. Our office in Austin is a big space, but we've run out of space there because we have so many interns. I think a lot of companies are doing this wrong by saying we're not going to bet on new people out of school because AI is going to replace them. These kids know how to use AI better than anyone else. We're going to bet incredibly heavily on that, and so far it's paying off. The person who eventually replaces me might literally be one of the interns because they are so smart.

H

Host2:05:28

It's happened before. I don't know if Satya Nadella was an intern, but he has that famous video of him as a product manager demoing Excel.

C

Co-Panelist2:05:36

Yeah. I mean, I was on a bunch of calls with Satya before he was CEO. He was just a product manager at that time. If you can find really great people and be able to, you know.

H

Host2:05:57

You're the goat as well.

U

Unknown2:06:00

Whenever you put up a 100,000 basis point move in your stock over just a couple years, you're in contention for goat. Thank you so much. Always a fantastic time.

H

Host2:06:12

Thanks for jumping on. Good to see you guys. And by the way, I haven't talked to you since the acquisition.

U

Unknown2:06:17

Thank you. I appreciate it. We'll talk to you soon. Have a good one.

H

Host2:06:20

Let me tell you about Console.com. Console automates I.T., builds AI agents that automate 70% of IT, HR, and finance support, giving employees instant resolution for access requests and password resets. We will be joined by Vinod Khosla in just a few minutes. While we wait, Matt's summer vacation is looking good. Let's see what's on the schedule.

C

Co-Panelist2:06:44

What is on the schedule? 6 a.m. He's waking up on the wrong side of the bed. 7 a.m. He's split between judging a book by its cover and beating a dead horse. Okay.

H

Host2:06:52

8:00 a.m. This is where it gets spicy. He's going to poke the bear.

C

Co-Panelist2:06:55

Going to poke the bear. And shortly after that, he's skating on thin ice right into walking on eggshells.

H

Host2:07:01

Wow. And at 10:00 a.m. he decides, all right, it's time to address the elephant in the room. Okay.

C

Co-Panelist2:07:06

At 11 gets a bit dark. He's going to cry over spilled milk.

H

Host2:07:10

But at noon, he's letting the cat out of the bag. That's exciting.

C

Co-Panelist2:07:14

And that's where it really ramps up. He's starting at 1 to bark up the wrong tree. And again, but at the same time holding his horses.

H

Host2:07:21

But then at 2 p.m. he's going to add fuel to the fire.

C

Co-Panelist2:07:23

That's fantastic.

H

Host2:07:24

And I can't really think of a more perfect summer day. You know, you can share your calendar with someone else and you can share it privately so you can just see that I'm booked but you don't actually know if I'm having a meeting with someone. Maybe I'm interviewing Vinod Khosla. You won't see that. But you could build a plugin that changes the book to just these things. That would be delightful. Maybe the next Google April Fools.

C

Co-Panelist2:07:48

I would love that. If somebody just can only see that you're letting the cat out of the bag.

H

Host2:07:52

That's pretty exciting, kind of mysterious. Okay, don't interrupt him. It's an important meeting. He's letting the cat out of the bag. Hey, he's just beaten a dead horse. Maybe I should go grab coffee with him, see if he wants to spin out on that.

C

Co-Panelist2:08:05

There's a website.

H

Host2:08:07

This is big. Turning Joe Weisenthal's tweets into full articles. This is crazy because there's a live show that turns his tweets into minutes of back and forth conversation and banter. Somebody made a version of our show that's just web pages. They scrape every Joe Weisenthal tweet and they turn it into a full SEO optimized article apparently. It is great. And Joe looks great in this photo. He's looking good. He's looking quizzical. He's having fun. Let's bring in our next guest, Vinod Khosla, the founder and managing director of Khosla Ventures. Vinod, thank you so much for taking the time. How are you doing?

V

Vinod Khosla2:08:50

I'm doing great. Great to be here.

H

Host2:08:52

Fantastic to have you. I want to kick it off with some of the recent deal making that you've been doing. Your outlook on artificial intelligence is obviously front and center, but what has been the most recent fund raise that you've done? Why did it get you excited?

V

Vinod Khosla2:09:10

Well, obviously there's a lot happening. We are working a lot and doing a lot of new things. A company like Pmana is pretty exciting, but more importantly, the broad category of autoformalization isn't talked about much. Humans aren't very good at talking to AI and describing what they precisely want, and that's where autoformalization becomes important. Companies like Pmana become very important.

H

Host2:09:51

How did you get into auto formalization? And the big meta question is, as an investor, you have to consider if auto formalization is on the direct path for the other labs. How do you think about competition in this area? Investors are going back and forth. It's been fascinating to see things that appear to be directly in the path of the big labs. They're still growing revenues $2-3-4 billion. We're seeing $60 billion acquisitions. Everything seems to be going well up and down the stack. But why is there a particularly big opportunity right now?

V

Vinod Khosla2:10:29

Well, the labs will do more and more over time, but I still see the opposite being very broad for venture capital. Clever people are coming up with great ideas. One example looks at the attack code and says it's not very precise because it was written by humans, and you can make it into a machine-checkable language. Mathematicians turn all their problems into this specific language which is hard for humans to understand. Autoformalization allows that kind of formalization, so computers can operate on it precisely, not probabilistically. That's a really important thing. If you look at today's world, AI systems have been awesome in the rate of capability development, but they have some pretty big gaping holes. They still hallucinate. I don't think hallucination is going away anytime soon. So, the reliability is low. Humans aren't great at specifying what they want, the specification problem. And then verification of whether you're getting the right answers or they are hallucinating. Those are all large, interesting problems which are open for entrepreneurs. Things can be built in certain domains where you build a lot of value and capability that the general models don't do.

H

Host2:12:10

How are you thinking about applications of this technology in particular? It's been so hard to predict. The original GPT, no one was really expecting a knowledge retrieval service. It just went viral when ChatGPT launched. Then coding agents, some people had predicted those, but it was an unexpected emerging capability. Do you expect that auto formalization as the next critical frontier of AI just makes all the existing applications better, or is it actually going to unlock new applications?

V

Vinod Khosla2:12:48

I think it will allow humans to use AI where it wasn't previously possible. If you want to know what your bank account is, you can't have a hallucination. If you have a medical problem, you can't have hallucination. So autoformalization will significantly enhance existing models in domains like tax law. You can have lots of tax startups, but they can't formalize. Tax law is a very specific thing, and that's an area Pmana is initially targeting: can you formalize the tax code so computers can work on it precisely and not be subject to probabilistic answers or likely answers? It's very important in certain domains to have precision, reliability, verification. That's where autoformalization can significantly enhance the applications and still leverage all the power of LLMs.

H

Host2:13:58

Well, we're excited to talk to the founder of Pmana in just a minute. We've been having a few technical errors, so we will end this here and hopefully we can have you back on the show soon to go deeper. Thank you so much for taking the time to chat with us today, Vinod. It's been a pleasure.

V

Vinod Khosla2:14:16

Thanks for jumping on. It's an honor.

H

Host2:14:18

Have a great rest of your day.

V

Vinod Khosla2:14:19

Great to be here.

H

Host2:14:21

Let me tell you about Public.com. Investing for those who take it seriously. Stocks, options, bonds, crypto, treasuries, and more with great customer service. Due to unfortunate technical difficulties, I couldn't really hear anything personally, but the founder was discussing what you just heard. We're going to hear it again and again. Sorry about that. Nikesh Arora is on the timeline quote tweeting. I like that he's not a big poster. He has 73,000 followers. He congratulated Prime Minister Narendra Modi on becoming India's longest serving elected prime minister: 4,399 days of leadership that earned the trust of 1.4 billion people across three democratic mandates, from lifting 250 million people out of poverty to making India the world's fastest growing major economy. PM Modi's tenure has been nothing short of transformational. Looking forward to continued US India partnership. Love that. Yo Gash says, bro went from stopping global ransomware attacks at Palo Alto Networks to doing math calculations on PM Modi's calendar milestones like it's his final exam. I like it. Just the quotes, too. Great. There's been debate over Beverage Media. Have you seen this? This is a post that I think is interesting and worth discussing. Beverage Media doesn't have the good nuts to call out celebrity brands objectively because the economy is fanboying and CPG. Celebrity founders sell tickets to events, but they don't always move the industry forward. I think he's probably subtweeting the Tom Brady launch of the nuts, which is a reference to the coconut water brand that Tom Brady launched. This happens all the time. There's a lot of celebrity brands. We've had celebrities on the show to talk about their brands. It's fun. Sometimes it works, sometimes it doesn't.

C

Co-Panelist2:16:36

I think why they named the brand that is they ran fully out of other names. That's literally the last possible name they could choose.

H

Host2:16:45

We're not getting an invite. Tom Brady will not be coming to our event and selling tickets. It's interesting because BevNet reports on CPG brands. They're one of the insider media, sort of the TechCrunch of CPG, at least in beverages. They also have Nosh for food. There are a number of other CPG media and critics. If you have one of those celebrity founders at your event to sell tickets, you get into this weird audience capture or celeb capture. You get raptured in the aura of the celebrities and have to stay out till 2 a.m. partying with them. It's craziness. Beverage Media is interesting in the backdrop of more and more celebrity brands. Although it does feel like we're at peak celebrity brand. I feel like the more modern celebrity strategy is just to invest in companies that have good VCs on the cap table. You can still farm. Disagree. Explain.

C

Co-Panelist2:17:49

I think celebrity brands have always been a thing. They're just more in your face because now celebrities have their own channels to communicate.

H

Host2:17:57

I'd say they're less in my face. I think we're on a decline. We've reached peak celebrity brand.

C

Co-Panelist2:18:02

I think it's just getting easier and easier to start a business. You'll see more celebrity brands. I don't necessarily think you'll see more breakout brands.

H

Host2:18:11

So, your claim is quantity is increasing?

C

Co-Panelist2:18:13

Quality is decreasing. More distribution, but yeah.

H

Host2:18:19

Greater, I mean, there's going to be some breakout celebrity brands, big exits, and as many failures as ever. My favorite example was Travis Scott a few years ago launched a canned cocktail thing and shut down within a year. I think you're just going to see more and more.

C

Co-Panelist2:18:48

Would you put the Johnny Knoxville Neocloud in the bucket of celebrity brands?

H

Host2:18:55

That is something I would like to see less.

C

Co-Panelist2:18:58

Less beverage, more Neoclouds. I want to see Johnny Knoxville levered up, GPUs himself, operationally involved too. Not just a pretty face endorsement.

H

Host2:19:16

Not just a pretty face. Anyways, I think more on the horizon. A lot of people don't like this, but I think it's fine.

C

Co-Panelist2:19:26

It's fine.

H

Host2:19:27

You heard it here first, Jordy Hayes. It's fine.

C

Co-Panelist2:19:31

You know what else is fine? The New York Stock Exchange. Want to change the world? Raise capital at the New York Stock Exchange. Our next guest might be there soon with Pmana Labs. We have Ronjohn, who's the co-founder, in the waiting room. Let's bring him into the TVP and Ultradome. Welcome to the show. How are you doing? Thank you so much for taking the time.

F

Farza Majjid2:19:48

Doing great. John Chi.

H

Host2:19:51

Since it is your first time on the show, please introduce the company. We heard a little bit about it from Vinod, but I want to hear it from you.

C

Co-Panelist2:19:58

Bravo, by the way, of being able to get Vinod to personally pitch your company for 15 minutes on internet television. It's a good sales pitch.

F

Farza Majjid2:20:11

Thank you so much. At Pmana, we try to make AI more provably accurate. The current frontier of AI focuses on recall, which is more along the lines of how do you make more answers come out, but we are trying to focus on very specific mission critical domains like tax, legal, healthcare, and governance where a wrong answer could be catastrophic. You wouldn't want AI diagnosing you wrong and ending up in a catastrophic situation. The technology underneath it is formal verification.

H

Host2:20:48

I would like you guys to dive a little deeper. I can get more technical. I'm just wondering about the actual rollout of this. People are using AI tools for healthcare now. They've been using WebMD. People have been misdiagnosed with cancer by random internet posts for decades. You go to WebMD, you have a headache, and it says you have brain cancer, you freak out, go to the doctor, and they say take an Advil. So who exactly is not adopting AI right now because of the hallucination problem?

F

Farza Majjid2:21:26

One or two major examples currently are the big four firms tackling tax and legal cases. You would have heard about the Australian government suing one of the big fours stating that there was a hallucination that ended up happening. AI can actually make up a law on the fly if it wants to suit a particular situation, which can lead to catastrophic situations. Another thing we have noticed is that insurance providers, major insurance providers in the US, have also moved away from ensuring AI outputs. There is a very specific clause they introduced to say that we will not insure if AI is behind whatever you have said. Those are some things which have come out specific to domains like tax, legal, and healthcare. We can even see the models themselves stating that you need to go to a doctor to verify.

H

Host2:22:27

Imagine your CPA being like, I just finished your return. It's 99% chance it's accurate.

C

Co-Panelist2:22:37

The steelman here is that is how I feel about my lawyer. I love the people I work with, but humans do hallucinate. If you give me something that doesn't even need to be superhuman, something that is going to sit alongside that person, I'm pretty happy to buy. I understand that I would buy more if I could be more sure. What I'm confused about is how are you thinking about building new foundation model, new LLM, new AI technology that bakes formalization into the actual workflow, versus the idea of having an ontology, ground truth, system of record, and then you can have the LLM hallucinate all over the place because at a certain point they're going to run into the ontology and that will be the formalization process. Is it an extension of two systems running side by side checking each other, or is it an entirely new system?

F

Farza Majjid2:23:45

It would be a couple of systems interlocking with each other. We actually have four layers in the stack. I can go through an example. If you end up asking whether a particular transaction is taxable in Illinois, the first thing we do, for tax specifically, is formalize the US tax code. We are taking a formal domain expressed in English and converting it into Lean, which is a proving language. We get it ratified by experts. Our work is deeply involved in formalizing specified domains and ensuring we get it ratified by the experts themselves. We do use a lot of LLMs because the current knowledge base is not formalized, it is in English. Once we have the knowledge base, whenever a question pops up, we convert it into a series of constraints. We ensure we ask the right set of questions so we can give you a reliable answer. Post that, we have a solver and prover working in tandem to give you an answer along with a proof of correctness. The key difference between an ontology-based approach and a Lean-based approach is that a Lean-based approach is intrinsically verifiable. Your answer comes with a proof of correctness. The proof is something a mathematician trusts. It gives you more comfort. Even the best humans might make mistakes, but if you have a mathematical proof encoded in Lean, you can choose to trust it. That's the frontier we are aiming for. It involves a fair bit of work between formal verification experts, who are a deep part of who we are at Pmana Labs, working along with CPAs, frontier lawyers, and frontier doctors.

H

Host2:25:45

Interesting. How are models getting better at interacting with Lean? I've seen a lot of progress in frontier math. Different really hard problems are getting solved. Sometimes they don't use Lean, sometimes they do and they perform even better. Is that becoming table stakes now? Because your average white collar worker doesn't know how to interact with Lean.

F

Farza Majjid2:26:20

Absolutely. The models are getting better at proving with Lean. But we are building more foundational models along the lines of formalization in the first place. If you say something in English, how do you convert that into a construct in Lean? That's where our focus is. Lean is a system that has been around for the last 12 years. It took humanity around 9 years to formalize a significant portion of math. We are taking that same technology and trying to blitz through tax, legal, and healthcare. We are identifying what the core knowledge base is and converting it into Lean where you can reason on top of it provably.

H

Host2:27:00

That's very cool. What were you doing before this?

F

Farza Majjid2:27:03

I was a machine learning engineer at Google, primarily focusing on Google Maps. Interestingly, I draw parallels over there because I was focusing on getting addresses and phone numbers accurately in Google Maps. Google Maps is a very messy real-world domain, and we have been able to make it trustable. A lot of people do trust Google Maps to a very large extent. I intend to bring the same level of rigor to multiple other domains.

H

Host2:27:32

Very cool. Well, congratulations. Thank you so much for taking the time to come on the show. Great to meet you. We'll talk to you soon. Have a good one.

F

Farza Majjid2:27:37

Thank you so much. Cheers.

H

Host2:27:39

Let me tell you about Codeex. Codeex is a powerful workspace for getting work done with AI agents. Whether you're writing code, analyzing data, creating content, or automating business workflows, Codeex helps you move projects forward from start to finish. That's right.

C

Co-Panelist2:27:55

There's a bitter feud going on.

H

Host2:27:57

There was a good comment over on the X chat from Steve. He said, we're on the topic of celebrity brands. He said, flip it on its head, Jordy. Brands by average Joes like a painter or the owner of a lawn care company instead of celebrities. I think there could be something here. I think he's joking, but imagine as a brand you're trying to differentiate. You hire an actor that's just playing the role of an average Joe. Hey, this is Average Joe Electrolytes. I'm not a professional athlete. I'm a normal guy painting houses. I get a little dehydrated. I take my Average Joe.

C

Co-Panelist2:28:40

It's relatable. I like it.

H

Host2:28:43

The Average Joe brand meta Steve is calling. I enjoy it as an idea. I do think there is a version of this. If you walk through an Erewhon or Whole Foods and pick up random CPG products, on the back there's often what's called the love language. It's a couple paragraphs of text. A good example is Dots pretzels or some sort of pretzel twist that's very popular right now. It has the name of the founder and tells the story of an Average Joe. The Buzz Ball for example is an Average Joe brand.

C

Co-Panelist2:29:24

Disagree. Explain.

H

Host2:29:25

There's nothing average about that founder. One of the most elite entrepreneurs.

C

Co-Panelist2:29:31

I'm going to make the case that she was always elite.

H

Host2:29:36

The Buzz Ball woke it up. Maybe. But there are a lot of brands where their origin story is like, I was just a normal person. I had a problem. I was going for olive oil and smashed the bottle, so I made a squeezy bottle. There's all these stories that aren't celebrity brands at the start, and they have rags to riches stories told quietly on the back of the packaging. Then slowly over time, Unilever buys the company and takes that off.

C

Co-Panelist2:30:09

I just like thinking of it from the marketing lens. A brand that doesn't have this heartwarming story but is just like, we hired a guy to be the Average Joe.

H

Host2:30:23

Just be an elite snowboarder like Nema starts Salt and Stone. He wasn't a celebrity before, although he was a fantastic snowboarder.

C

Co-Panelist2:30:31

Before we bring in our next guest, Marky, let's pull up this video. Somebody put up fake tech ads. What's going on here?

H

Host2:30:40

I love ads, but I hate fraud. So I don't know how to feel about this. This is going to be peculiar.

C

Co-Panelist2:30:48

I don't think there's anything wrong here.

H

Host2:30:51

With fake tech ads? That's real ad space. That could have been sold. Jordy, you're destroying shareholder value by running fake ads. We would never do that. We did do that early on. If you go back through the archive, Dr. Squatch had that feel. Vince Vaughn. We have the video here. No, no, no. I know exactly where they're going with this. We put the Q and Q1777. This is hilarious. What if Texas was upside down? This is actually how normal people view things. What if the Rizzler was purple? Wireflow. You pay it. We pay you. Wireflow. Wow. Dennis can tell you. I like Zip Link is now. They put up a lot of these. They really went hard. Who is behind this? This has to be a tech insider. Zip Link is now Frogal. The cloud-based online safety you know and love now in the palm of your hand. They put up so many of these. This is such a great stunt. If this is a launch campaign for a tech brand marketing firm, it's genius. Whoever's behind this should be calling every tech company and saying, what? You want your ads to not look like these? We know how to make good ads. What if forks were spoons? What if cutlery? People have been asking that question recently. Anyway, very fun. Let me tell you about Cisco. Where's Cisco? Cisco critical infrastructure for the AI era. Unlock seamless real-time experiences and new value with Cisco. Our next guest is Marie Wagner from Poetic. She's the founder and CEO of Future. She's a prolific Mafia player. What's your favorite role in Mafia?

U

Unknown2:33:00

Ooh, Mafia. I think who doesn't love to be fascist in Mafia? You always kind of hope you're getting the fascist card. But what's the Fafia? I thought it was just Mafia towns person. Secret Hitler. Yes. I mean, Mafia, you obvious. It's always power. It's less empowering to be the townsperson because you feel like you're just going to get killed. You have no superpowers. But being the sheriff, that can be fun, but if you get killed off early, it's the end.

H

Host2:33:31

I'm thinking of it because the latest episode of Mafia, episode two from Founders Fund dropped, and you're backed by Founders Fund. Since this is your first time on the show, why don't you introduce yourself? Tell us how you wound up in a position to raise money from Founders Fund.

U

Unknown2:33:45

Cool. I'm the CEO and founder of Poetic. Poetic is an AI system that will learn and execute super complicated processes in some of.

The biggest companies in the world at over 99% accuracy, which is quite hard.

H

Host2:34:04

Yeah. So what is the process for obtaining and documenting the workflow? This feels like you could do something very database driven. You could build an ontology. You could just wait and maybe the models get better and stop hallucinating. There's been debates over the various approaches. Why, what did you pick and why? Wait, before we get into that, talk more about the kinds of workflows where AC... You know, we caught up a few weeks ago and you were saying some of the customers that you're talking to, even if somebody came through and they were like, our AI system is 98.5% accurate, that would actually create hundreds or thousands of hours of issues in an organization and it would actually rolling that kind of system out would have sort of negative enterprise value.

C

Co-Panelist2:34:58

That's just a pitch problem. If you're pitching a software like that, you just got to tell someone our system has 9,000 basis points of accuracy. This is the goal.

H

Host2:35:07

Put in basis points.

C

Co-Panelist2:35:08

Put it in basis points. Also, anyways, talk more about the problem before we talk about the solution.

F

Farza Majjid2:35:13

Yeah. So I think the problem is, you know, one of the things you've seen is, obviously AI is incredible at writing code and has really crushed that, but a lot of the main processes that are at the heart of these giant businesses have remained pretty untouched by AI. And the reason why is that the rules that govern them, the 10,000 secret rules, they live in people's heads. And these rules need to be followed every single time. We work on things like anti-money laundering, underwriting, and fraud investigations where every single step matters. To actually get from where we are now to those running on machines, you need two things. One is a system that can learn the process, not the 100 pages of written down stuff, but the 10,000 secret rules that live in people's heads that they've never written down before. So that's part one. And then you have to be able to run them with many nines of accuracy. Not, you know, I was talking with one CEO. He's like, 80% on an eval is great. But in underwriting, it's unusable. And I think that's the view for a lot of these B processes that are at the heart of these really big and old businesses. So you got to do two things. You got a system that can learn all the rules and then run them with nines. And if you have that, you can get from where we are now to this version of the future that I think everybody's really excited about. But you need to build that bridge.

H

Host2:36:34

Not everyone's excited about it. AI has a very low approval rate, but tech leaders are certainly excited about it. So why have you started with such big companies? I feel like you've been at the heart of the startup ecosystem for so long. If you came on here and said, oh, we have so many of my friends' companies on board, these are the named customers: SoFi, Chime, AIG. These are large institutions at this point. Why start at the top? Feels harder.

F

Farza Majjid2:37:10

Yeah, I think our view was, when you're building something like this, if you build something that's less powerful, it's hard to sometimes make it more powerful. A lot of these drag and drop tools, they were simpler, they were easier, they could do simpler things faster, but they just couldn't handle super complex things. And so you kind of get kneecapped in terms of what you can represent and build. And the view is, hey, AI is going to be doing a lot of this writing of the software. You'd be in a better place optimizing for the power of the thing. Can it express and run these five-hour processes that require those nines? And then everything else becomes really easy actually. And I don't think that people are going to be having a platform for the easy stuff and the hard stuff. I think they're just going to be running all of their processes in one spot.

H

Host2:37:57

I mean, you mentioned tens of thousands of hours of information stuck in people's heads. What is data collection? What does data collection look like? Conversations? It feels like, is it the McKinsey model or is it the self-serve software model? Where do you want to sit?

F

Farza Majjid2:38:17

Yeah. I mean, what's interesting is it's evolved over time, but the place that it has ended up going is looking closer to data labeling. So what happens is a big company will say, here's my biggest process, there's 100 pages of documentation, and that's only 20% of it. So the question is, how do you get that other 80%? Well, what we'll do is we'll take that operating procedure. We'll generate the AI operating procedure. It's written in step-by-step English. What our system does is turn that into code under the hood and you run it. And when you run it and you put it in front of those experts, they have a ton of opinions. They have a lot of feedback to say, you forgot that the threshold's actually a million, not 10,000. All these little things which get merged back into that document. And you're sort of doing that more and more automatically, so that it looks almost like training a program or something like that, rather than long calls or process mining in the normal sense. And so more and more it looks like people giving feedback into the system directly and that updates the rules that are written in it.

H

Host2:39:15

And so you're using AI models to generate that code that is then deterministic, which gets you the reliability that these companies need. Correct.

F

Farza Majjid2:39:25

Yep. Yep. Exactly. So the source of truth is that AI operating procedure. It's English. But what are those? Turn it into code. So when it runs, if the world's the same as yesterday, it's just going to run as code. Great. Nothing to see here. But if something changes, like the column name changes from month to month or the save button moves, only then will AI go in, repair it, look at what the English goal was, and then update it. And so if you do that, you can get the best of both worlds: it's code, it's precise when it runs, but if something changes, instead of breaking, it will actually just kick back and recover. And that's important because a lot of this work code couldn't do alone and agents couldn't do alone. Code is very static, right? It's very brittle. So even one small date change or something could break the whole thing. And so that's one side of it. Agents, on the other hand, are pretty improvisational and they think step by step. And when you're figuring out what to do as you go, eventually you're going to make a mistake. This is something that's kind of in the middle where it's code if things are the same. AI is there to test, heal, recover if things are different, and that's how you can kind of get those nines.

H

Host2:40:33

So are you hiring forward deployed engineers? What is the role of engineering in your organization at this point?

F

Farza Majjid2:40:40

Yeah. So we do hire tons of forward deployed engineers from all the best spots, whether it's places like Palantir or even Retool or Scale and all these other new places that have had their own versions of forward deployed. And yeah, I think it's interesting. It has over time looked less like extremely just focusing on engineering, like hard engineering. It requires being able to change how people operate. I can write the best code now, but even if you have the most incredible piece of software, you still have to change how the business organizes around it. And so the people who understand business and can think about, hey, what is the best possible fraud process going to look like, and how should we reorganize the business around this new kind of thing, and they understand AI, are the ones that are just totally crushing it.

H

Host2:41:29

Yeah, that feels like an entirely new skill set, much more people driven but also forward thinking in technology. I don't know, it's an interesting new... How has enterprise sentiment around AI changed during the course of building the company? Because every, you know, it is a roller coaster in some ways. It's going up into the right. There's generally more excitement about the potential, but at the same time there's these period troughs of disillusionment. And you guys are coming out of stealth at a time when again I think companies are more excited than ever, but at the same time sort of understand the overall shortcomings. And we had Karp on the show last week and he was just saying a lot of these deploy codes coming in, they're trying to deploy AI but they don't fully understand all of this business process under the hood. And he makes some good points.

F

Farza Majjid2:42:37

Yeah, I think sentiment has evolved quite a bit. I think it was extremely excited earlier in the year and then around the board meeting times, more and more CEOs would come to me and say, hey, how do I get ROI here? Is this what your other customers are seeing in these domains? And so I think now people have realized you cannot just throw an agent at a problem and expect to see the result that you want. For an agent to do a useful bit of work, it needs to learn how to do that work and run it quite accurately. And that knowledge transfer between how's the work done today and getting it written down enough to where AI can run it, it's just hard. And it requires, we sort of jokingly call it the great migration internally. You have to go and migrate these tremendous amounts of rules into something that AI can touch and improve and evolve. And if AI can't touch it, it's not going to be able to help it. And so, I think deployment is really important because until that transition happens, it's going to be hard to just throw tokens to see better outcomes.

H

Host2:43:45

Give us some backstory on what you were doing before, how you wound up here.

F

Farza Majjid2:43:51

Yeah. So, I got my start. I got extremely into AI in middle school after reading too much sci-fi. A lot of Dune. A lot of Dune. Mainly Dune.

H

Host2:44:00

Is that the message in Dune? I thought Dune was the... but right, I guess. Yeah. You want...

F

Farza Majjid2:44:11

Well, I just felt like it was going to be really important during my life. You read and watch sci-fi and the biggest difference between the future and today is mostly machines thinking. That is sort of the main AD or BC moment. In hard sci-fi, in soft sci-fi, it's like time travel and faster than light speed and like aliens. But I take moon is made of cheese. That's the type of sci-fi I'm trying to read and that's the white pill. So then walk me through the consulting work that you did and how this evolved out of that. Was there a clear moment where you're like, I'm stopping that and starting a company, or is this an evolution or a change of structure?

Yeah. So I was initially got my start in research. I was at Stanford working in AI like Whimo and Google. And then one day I sort of realized that all the things I had built didn't matter too much. And that was Friday and I ended up dropping out on Monday. And the idea was, hey, we've had software for decades. What are people still doing and why? And I felt like I didn't really understand anything about how the world works. So, to your point, started consulting and the idea was, let's just go into some of the oldest companies around and understand what has software still not touched and what happened there. And when you do that and you start doing some of the work yourself and going into, I went to North Carolina, you're watching people who have done this stuff for decades. You realize that a huge amount of the work is really just operating procedures, documents, and people are just following them. And that this class of work is everywhere. Whether it's underwriting and claims and insurance or onboarding customers and fraud in banks, it's just still sort of done by people and software hasn't been able to go there. The reason why is because the second you write all this code to do that process, something will change. A button will move, a column will change. Or maybe even the process changes. You want yearly instead of monthly transactions. And when you automate and see that happen enough, you realize, hey, there's a missing kind of material here that can flex but still have guarantees. And I really just waited for the models to get better. I knew some of the researchers and said, hey, the models of today are not it. Please let me know when they get good enough to stuff. And I truly just waited.

H

Host2:46:34

That's great. Well, congratulations on the round. How much did you raise? I want to hit the gong.

F

Farza Majjid2:46:40

Oh, yeah. So, you raised $50 million.

H

Host2:46:45

Congratulations. And thank you. Who besides FF is in?

F

Farza Majjid2:46:49

Yeah. Kleiner Perkins, First Harmonic, Genius Ventures.

H

Host2:46:53

Cool.

F

Farza Majjid2:46:54

All participated in the round.

H

Host2:46:56

Round of applause for Genius.

F

Farza Majjid2:46:59

Ben and Adam.

H

Host2:47:00

Love.

F

Farza Majjid2:47:01

It's great news.

H

Host2:47:02

Well, have a great rest of your day. Have you on the show. Congratulations on coming out into the world and I'm sure you'll be back on very soon.

F

Farza Majjid2:47:12

We'll talk to you soon, Mark.

H

Host2:47:13

Thank you. Appreciate it. See you all.

F

Farza Majjid2:47:15

Cheers.

H

Host2:47:15

Goodbye.

Let's see. Canva AI. We got to talk about the dog. The dog walker and the dentist. The bitter feud between a dog walker and a dentist over who owns the beach. A lakefront owner likened his neighbor's shoreline walks to a home invasion in a dispute that could be headed for the Wisconsin Supreme Court. Who you got, Jordy? Knowing nothing about this story, are you going dentist or dog walker?

C

Co-Panelist2:47:46

Pure Vibes.

H

Host2:47:50

Pure Vibes. Flip a coin. Which one? Who you got? You don't know. It's your job to know.

C

Co-Panelist2:47:56

Is the dentist a day trader? So, it's your job to pick someone wildly and then defend it throughout this article. A recent trial in Shorewood, Wisconsin had all the trappings of a minor legal dispute, a disgruntled neighbor. A defendant representing himself who called his own father as a character witness. You love that? Hey, Dad, tell him I'm a good person. $313 were at stake. $313. That's 31,300 cents if you're paying attention. But if an academic and devoted dog walker Paul Floreshime gets his way, the case will go all the way up to the Supreme Court, the Wisconsin Supreme Court that is, and reshape the contours of shoreline access to one of the Great Lakes. It started when Flores started walking his two dogs past the Lake Michigan property of dentist Domagala, locally known for the time he spends in a tiki style boat house and deck that doubles as a surveillance post. From there, Domagala monitors traffic and sets off alarms to scare walkers, swimmers, and kayakers away. He's got an air horn.

H

Host2:49:04

He's got an air horn. He sets it off when somebody comes by. It's crazy. Floorshine repeatedly ignored signs outside of the dentist's house that said private property behind the sign only water access beyond this point. Domala kept calling the cops and the village eventually issued a trespassing citation. Rather than pay the fine and walk away, floorime dug in. At stake is what right people in Wisconsin have to take a shoreline stroll. It's high stakes stuff and we'll be following this case closely. Of course, one of the most important stories in technology, but more importantly, we have Brett Taylor from Sierra here in the waiting room. Welcome to the show, Brett. How you doing?

B

Brett Taylor2:49:41

Doing great. How are you?

H

Host2:49:42

You going dentist or dog walker?

B

Brett Taylor2:49:45

We won't make you take a side. That's a tough question.

H

Host2:49:46

That's a tough question.

B

Brett Taylor2:49:48

We're going to ask you the real tough questions. How's business going?

Business is great. We just crossed 200 million in ARR.

H

Host2:50:01

Great.

B

Brett Taylor2:50:01

I was hoping to get a gong out of that. And revenue gongs are always the best gong.

H

Host2:50:07

Yeah. I mean, fundraising is easy.

B

Brett Taylor2:50:10

Yeah. And today we announced we're certified FedRAMP, which really simply put means now federal government agencies have access to Sierra, which I think is really exciting. If you look at the conundrum of the federal government, it's like we want greater services for our citizens, but we have a really big national debt. I think AI is going to be a huge benefit to programs whether it's getting a passport or Medicare. So this is the first sort of the door opening so we can serve these agencies, which I'm really excited about.

H

Host2:50:41

Interesting. I don't think of like if I... you're breaking my brain because I don't think of like getting a driver's license to the DMV as a customer service interaction, but is that where we're going where more and more of these form based... like an address change on an ID, something like that. If...

B

Brett Taylor2:51:05

Yeah, there's a lot of these. So yeah, I mean, there is if you think about all these government services, you've got Medicare, you've got Medicaid, you've got the Department of Veterans Affairs, you've got immigration, the passport agency. All of them run large call centers, but more importantly people depend on them. If you have someone on Medicare, if you have a vet who depends on Department of Veterans Affairs for their healthcare, it's a really big both pay provider. If you look at what we do for folks like Sigma and Blue Cross Blue Shield and you squint, it's almost that entire stack in a federal agency, and for good reason. There's just a very high bar for cloud technologies when you're serving the federal government and this is the main certification that kind of opens the door there. We're already working with a few agencies, none that I can fortunately talk about today. We work with FINRA, the regulator. So we've always been really passionate about we want the best technology to be available even in regulated industries. And so it's a big step for us. We're really excited about it. I hope we can contribute to the quality of life as US citizens, and do so in a way that's a lot more cost effective.

H

Host2:52:12

Yeah. I'm... it's interesting. Would you say the biggest low hanging fruit is just taking some of these agencies and making them available 24/7? I feel like one of the most frustrating things that I run into is call from 9 to 5 and I'm like, I have a job.

B

Brett Taylor2:52:32

Yeah. The other thing is the difference between interacting with a public utility versus like a waste management company. Waste management, maybe it's not perfect but it's pretty fast, you can get stuff done, it's efficient. And then trying to do the same exact thing with a public utility, usually I personally estimate like okay if it would take me 10 minutes with waste management, it'll take me like 30 minutes with a public utility. And so bringing that... there's no reason that those two things can't be at par, but it is entirely a technology and process problem, right?

100%. And there's a couple factors I think go into why it's so hard to have great experience with some of these government programs. First, a lot of people do need to call things on the phone and it's only been the past couple years that we could digitize a phone call with AI agents. So we've essentially digitized the last remaining analog channel. And everything you said is true. It could be 24/7, as importantly it could be multilingual. If you imagine staffing up a big call center and you want to represent all the languages in this country from Spanish, Mandarin, you know, go down the list, it's really really expensive to do. Now you can do it at scale. Each new language the marginal cost is effectively zero. And then the other part of it is for good reason, as I said, there's just a really high compliance bar for technologies to be available. And as a consequence, if you look at waste management or just pick any private company, they can go off and get the best of breed solution for any given technology problem they have. That is not something all federal agencies can do. And so what I'm really proud of is that Sierra is the best of breed solution in customer experience. We power everyone from Singtel to Rocket Mortgage on our platform. And now because we have the certification, federal agencies have access to the best of breed solution in this space as well. And so I'm really hopeful. I think AI, if you look at some of the parts of the economy, the governments both state and federal, the healthcare industry which has gotten progressively less productive over the past decade, it's one of the few parts of the economy that has. I think AI is incredibly important because these are the parts of the economy that need productivity. We actually want to have great service as citizens and reduce our spending. AI is the answer. So we're really passionate about it. We're patriots here and we love our technology and so I'm just excited that we can apply it in a great way.

H

Host2:55:04

Talk about pilot programs and conversion to real customer. Is that timeline a KPI for you? Is that something that you monitor very closely? I have to imagine it's speeding up, but whenever you shake the hand of a CEO and they say, let's do this, or someone in the federal government perhaps an agency lead and they say, I'm ready, I'm bought in on the vision, the demo looked good. But then there's obviously an implementation time. What does that look like now? What did it look like a year ago? Where's it going in the future?

B

Brett Taylor2:55:39

We track it and we measure it in days, not weeks. And so, some of our favorite, like Nordstrom, from concept to 100% of their phone calls was 35 days.

H

Host2:55:51

That's good. Said 3,000 days is good. And then we're back to, oh, you're gaming the stats.

B

Brett Taylor2:55:57

What's neat about that, too, is we started out at 1% of their phone calls and I think four weeks and went to 100% in just a week. And that's because of the Nordstrom team. Yeah. In Fiserv, which is an amazing financial technology company for banks, just broke the record. So I don't know if I'm at liberty to show the number of days, but they have an amazing president named Dia. She was just top down like we're going to do this and broke the record. So we have a leaderboard internally about how quickly when a customer talks to us, can we go live and start delivering value? For what it's worth, I think it's really relevant in this world. You can Financial Times, Wall Street Journal, it's all token maxing. What value are we getting from the tokens? It is kind of in the headlines right now. We don't really have that issue with our clients because our thing is like let's start answering the phone as quickly as possible. Start driving those operating expense savings as quickly as possible, but as importantly, show that you can actually improve sales, improve seat at the same time. As you know, we've been really pioneering this idea of outcomes-based pricing with the idea being you only pay Sierra when we successfully resolve a call or successfully make a sale. It sounds like a small business model thing, but it's big because we don't get paid until it's live. So it really aligns all the incentives. We don't care about the sales process, we care about the go live process. And I think it really changes, I would say almost the social dynamics between vendor and customer where we really become a partner because we have the same incentives as our clients. And I think it's a really big shift. And you know how much I'm an advocate for it, but I actually think a lot of the token maxing issues would go away if more companies were just focused on outcomes.

H

Host2:57:39

How are you tracking the popularity of the message talk to a human or the state or the statement?

B

Brett Taylor2:57:47

No, no, no. When I pick up the phone, I say talk to an agent. Agent and then they put me on the phone with an AI agent. It's great.

Yeah. No, thank you for that. You're on my side. So, we actually have a name for it. We call it greeting acceptance. Which is basically what percentage of the time do people get past the greeting and actually give the AI agent a shot? It's going up. People in general. I think the problem was we had 10, 15 years of bots that were really bad and so you're just paying down this debt because if you were talking to an AI more than 3 years ago, it sucked. Let's just be blunt about it. Now you can talk to an AI and it's conversational. It's multilingual. It has access to systems. I mean the AI agents of today are just a completely different technology. It's like horse and carriage versus flying car. The problem is in the first 5 seconds of a call, you're wondering, is this one of the crappy ones or is this one of the good ones? And so we have a lot of techniques on our platform to help people with that. I think the real key is making sure the first greeting is personalized, is engaging, is empathetic. And I think the trend is in the right direction. I think over time, I mean, I don't know if you have this experience, if I have to call a restaurant to make a reservation, I'm like, I'm going to a different place. If you don't have OpenTable or Resy or whatever, like I'm out. I think we're going to get to the point where people demand an AI because they're not going to want to wait on hold. And what's also interesting is these AI agents once they're properly configured are faster for me as a consumer. They have access to my information. They can get things done quickly. We're not 100% there and as I said, we're just paying down the debt of bad tech that we've had for the past 10 years. But I'm hopeful in three or four years it will be the norm. When did it become popular to get the like there's a 30 minute wait, press one if you want a call back? Because I felt like that wasn't a thing when I was a kid, but now that feels like a pretty meaningful innovation at some point in the last 10 years where it actually is really convenient to not be like, okay, I'm just going to...

H

Host2:59:46

Some guy has a patent on that and has...

B

Brett Taylor2:59:48

Yeah, I'm sure. But like that was the last great innovation in customer service. Yeah, it was.

Well, I think it's going in a really good direction. I mean, first, not having to wait on hold. We should never have to wait on hold again. That is going to be a thing of the past.

H

Host3:00:02

What if the GPUs are on fire? It's like we'll call you back and the GPUs cool off.

B

Brett Taylor3:00:08

We're load balancing right now.

H

Host3:00:10

Please wait on hold. Yeah, maybe. Imagine that world. That is a bizarre outcome. I mean, on that note, are there any... how close are we to thinking about like A6 for voice models? We were talking to Matthew Prince from Cloudflare about edge computing for voice models. That feels more relevant than if you're going to cook for an hour on some deep research project, go do it on the NVL72. But how are you actually at the point where you're starting to think about that optimization or is that more a few years away?

B

Brett Taylor3:00:46

I think it's probably not a few years away, but it's definitely in the future. But I'm excited for it. I actually agree with your intuition that we're entering a world where first the frontier models are actually separating in my opinion. GPT-5, the recent releases from Anthropic. I mean you can just see it, the gap between the best models like GPT-5 and the others, the open source models, is growing not shrinking, which is probably not something we would have predicted a year ago or at least not what I saw on X and in the press. But we've reached sufficient intelligence for a lot of different domains. You don't need a multi-billion parameter count model to do a simple classification or just do basic transcription. So as a consequence, I'm hopeful that over the next few years we'll end up with a constellation of models with really purpose-built ones. And as you said, given the power of the hardware in our pockets right now, I think edge will be a part of it. There's just no doubt. And it just stands to reason there might be creative ways to convert what you're doing into tokens so you have lower bandwidth connection if you're doing voice. There could also be some privacy benefits to that. I have a strong intuition though no knowledge, but just intuition that's got to be something Apple's thinking about given their posture on privacy. So I'm very bullish on the frontier models like OpenAI and Anthropic have really shown the strength of their research groups, but not at the expense of all the specialized models. I think we're in a world where just as we become more sophisticated in deploying AI, we're going to have a constellation of models with different capabilities. So I'm excited for it, but it's not now. It's in the short-term future.

H

Host3:02:26

Yeah. Makes sense. Did you guys have to build in guardrails to prevent people from accessing every... like every month there's a post that goes viral of somebody that's figured out some endpoint that they can hit to get like a frontier model code. Somebody figured out how to wire up some open code fork of like Codex agent coding model but it's wired up to Chipotle's customer service in the back end. This is a huge risk because you could run up a big token bill that way. Is this actually tough?

B

Brett Taylor3:02:59

We have guardrails on it and it's just like any other thing. It's sort of you're always in a race, the good guy the white hat versus the black hat to handle it. In practice, I think it's more like digital graffiti. I think nowadays, in the early days you'd see a post online of a chatbot saying something goofy like oh my gosh. Now people are like yeah you fooled with it, come on. So I think first, jailbreaking is a really interesting area of AI security but probably more around the areas of cyber security and bio and things like that. I think this type of thing is why people work with places like Sierra to have good guardrails. I also think social media has become numb to it at this point. It's like oh great, you got a chatbot to say something silly again. I think the bigger issue will be just as these frontier models become more capable, the guardrails around using them need to be more and more effective. And I think as you think about the mission of OpenAI ensuring AGI benefits humanity, you really need to make sure that those guardrails are effective against jailbreaking, which is not possible to make perfect by the way. But just because these models are sort of capable under the hood, which is why there's been such an interesting topic around cyber security and others. So that's probably the area I think more about. The digital graffiti is going to continue to exist as well.

H

Host3:04:21

Yeah, that's a good term. Have you ever heard of 0.002 cents?

B

Brett Taylor3:04:26

No. Tell me.

H

Host3:04:27

Famous customer service nightmare call where someone called Verizon and they were being billed at 2 cents and the actual rate was supposed to be 0.002 cents. So they were off by two orders of magnitude. And they're talking to this customer service agent. We'll play it on the show after we wrap, but they're talking to this customer service agent and the customer service agent just actually doesn't know the difference between a decimal cent and an actual cent. And the frustration that just ensues turned into this massively viral video. There's whole websites about it. Verizonmath.blogspot.com from 2006. And it's like this whole deep dive. I'm sure you've heard about all these different...

B

Brett Taylor3:05:12

I will take a look at it. The good part is a super intelligent AI probably will know.

H

Host3:05:16

I think it will. Some ground truthing, some code in there. There's opportunities here. The raw audio for this call is 27 minutes. The guy went back and forth and it's hilarious. There's cut downs we'll have to play. But yeah, he had unlimited data plan in the US and recently crossed the border to Canada. Prior to crossing the border he called customer service to find out what rates he'd be paying. The data rate he was quoted was 0.002 cents per kilobyte and then he got billed at 0.002 per kilobyte. So it was a hundred times more and he couldn't get out of his quagmire. Kafkaesque customer service interaction. Anyway, thank you so much for taking the time to come on the show. It's always a pleasure.

B

Brett Taylor3:06:02

Always a pleasure. Incredible progress. Looking forward to the next revenue gong.

H

Host3:06:06

Yep. Come back anytime.

B

Brett Taylor3:06:08

I'll come back. See you.

H

Host3:06:10

Accelerating. We'll talk to you soon. Goodbye.

Oh, make a few sense.

We're gonna now play this 27 minute video.

C

Co-Panelist3:06:20

No, we can play this one. This is just a little bit of this. Yeah. This is the three minute version. YouTube math fail. I want to hear a little bit about this. See if it holds up or if I'm washed at this point being old and remembering a 70s video. Not this one. It's the 0.002 cents. This is exciting news from Canva. We can talk about it later, but you can turn your ChatGPT images into fully editable Canva designs with magic layers without ever leaving the chat. Great integration there. Apple Intelligence has some more updates too we can run through later in the week. But let's play the 0.002 cents at least a few minutes because I want to hear if it holds up. That was done while in Canada.

V

Verizon Customer Service3:07:10

Do you recognize that there's actually... 0.002? Yes. Do you recognize there's a difference between those two numbers? No. And 0.002? Yes. Is there a difference between... They're both the same if you look at them on paperwise. No, they're not actually. So if you take 0.002 cents, remember it's cents, times 35,000, 896, $71.79. No, that would be 71. How much should I be charged? By the way, this is calculated? $71.

H

Host3:07:52

I like this guy's crashing out over 70 bucks of a penny per kilobyte. 2/10 of a penny would be 0.2 cents. You quoted me 0.002 cents. I think this guy also might be entirely wrong. He might have just been quoted the wrong number. 0.002, sir. 0.002 what? Cents per kilobyte. So you just said it was 0.2. They quoted it back to him. And then you also said it's 0.002 cents. Those are two completely different numbers. They're 100-fold different. George, hold on one second for me. Okay. This guy so dedicated. This is Andrew. I'm a manager on the floor. How can I help you? Another manager involved. Do you recognize that there's a difference between $1 and one cent? Coming out of the gate. Definitely. Definitely. Do you recognize there's a difference between half a dollar and half a cent? Definitely. Then do you therefore recognize there's a difference between 0.2 and 0.002? No. And I'm trying to get what you're saying here, but it's just not... And we're talking about cents, right? Right. 0.002. If we multiply that by the amount of kilobyte usage that you have, 35,893, that comes out to what you paid. 7,179 cents. You never did the conversion from cents to dollars. I don't know. I'm not a mathematician. I'm not a mathematician. Your two cents, right? Times my 35,893. It's a number, but it's still in cents. We're not quoting 0.2. We're quoting 0.002. Oh god. Honestly. Well, I mean, it's obviously a difference of opinion. It's not opinion. Okay. Well, you know what? I'm going to post this recording on my blog. Oh, cancel. That's fine. That's what I'm gonna do. And then you guys all at Verizon can learn. Yeah. Oh, what a funny interaction. Incredible. Deep. Well, now that you get a PhD level mathematicians, somebody's got to run this on an AI lab. I was quoted 5 cents per million tokens, not 5 dollars per million tokens, and confuse someone. Get a 100x discount on your token bill. Andre has a space something. What was it? Space observation network. These are ground-based telescopes that monitor space. And look at this. Captured by Anderoll's network of 400 telescopes deployed around the globe. The second stage of the Falcon Heavy launch of ViaSat 3 F3 performing a routine thrust event. This produced a spiral-shaped plume effect, a nominal part of operations for a successful launch of ViaSat's latest satellite. I thought this is a cool image. And we learned in the process that they have 400 telescopes all over the world. Anyway, we can dig into all of this more later, more tomorrow. We'll be back at 11:00 a.m. Pacific. Thank you for tuning in.

C

Co-Panelist3:11:14

Leave us five stars on Apple Podcast and Spotify.

H

Host3:11:16

Show everyone. Have a sign-off or evening of your entire life and we'll talk to you later.

C

Co-Panelist3:11:25

We love you.

Facebook gets a movie, Anthropic gets a Fable, Vinod Khosla, Matthew Prince, Bret Taylor

About Vinod Khosla