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You're watching TVBN. Today's Monday, June 15th, 2026. We are live from the TVBN, the temple of technology, the fortress of finance, the capital. Let me tell you about ramp.com. Time is money, save both. Corporate cards, bill pay, accounting, and a whole lot more, all in one place. The chat wants me to pronounce Leon, and it's going to be a fun day. Obviously Mistral is in the news. Incredibly bullish for Mistral. Obviously very unfortunate drama happening in the Anthropic world. We'll go through all of that. But if the sovereign AI thesis could not get any stronger right now, this weekend really showed a lot of countries, hey, maybe we do want a national champion. Hey, maybe we do want someone that will provide us models forever. We're also going to be going through SpaceX IPO. We have Gavin Baker joining in 30 minutes, and we're recapping UFC Freedom 250. It happened at the White House last night. Jordy, take us through your reactions and introduce our first guest of the show.
Okay. Quick intro on the event overall. I am a UFC fan.
It's one of the few sports, maybe the only sport, where I actually know the names of the people that are competing. Our guest in just a few minutes is one of those people.
And are you more of a fan of the UFC or more of a fan of the government? Because a lot of people were watching just because they're fans of the government, and they said, "Oh, I will watch any. I watch C-SPAN all day long. I watch anything that happens if it involves the government." This was an interesting cross.
No, more seriously, as a UFC fan and as an American, I'm excited for the UFC to do well. I'm excited for the fighters to have a platform. I was a little bit wary of this event overall, just because the aesthetics of putting on this crazy party, high stakes in this moment when there is a ton to blackpill about.
Not after all this other stuff going on.
Yeah. So war raging, gas prices are high, house prices are high, rates are going up, a lot of people in America are not having a good time.
And it really felt like a bread and circuses moment.
Sure. But the bread and circuses, John, it worked on me.
It worked on me. Some of the best ever.
Why was it so good compared to a normal UFC event?
Well, you didn't watch, so I guess it's hard.
Was it the aesthetics or the actual fights?
Well, one, the production value. The card was absolutely stacked. It was eight fights, no filler.
Wall to wall. Really, really fights that carried a lot of weight. The main title fight, Gachi versus Ilia Taporya, changed both fighters' careers, full stop. And even with Bo Nickel joining in just a few minutes, that was the biggest possible stage that any athlete could be on, especially in the UFC here in America. So anyways, going into it, I thought the aesthetics were bad. I was excited to watch the fights. Turned out, it was just really cool. And sure, there's still going to be people that are upset that the president and the admin are platforming something like this. Turned out to be really fun. It was a cool night, and I think America kind of needed it.
Yeah. A lot of people are saying it's not unprecedented because Teddy Roosevelt held a boxing match in the White House almost 100 years ago, and apparently he fought in the boxing match, which is crazy.
Yeah, he was a big boxer. So this is like a light craziness.
But anyways, the event was incredible, and I came away thinking that big parties and sporting events are potentially the most underutilized political strategy. I would actually expect the admin's overall popularity approval rating to go up based just on this event because there were so many iconic images. Funny enough, the most iconic image is of a Brazilian named Diego Lopez, which we had up on the screen there standing up. But anyways, really wild. Let's bring in Bo.
Let's bring in Bo Nichol. We've talked about it many times on this show. Welcome to the show. How are you doing, Bo?
Doing great, guys. Thanks for having me on.
Thank you so much for taking the time. Long overdue. So, backstory here is Bo somehow was like one of the first 10,000 people to discover TBPN. You're an entrepreneur outside of the octagon. And somehow you were in between camps or maybe during camps, you saw a funny clip of a couple guys in suits. I remember getting the notification like Bo Nickel has followed you. And I was like, "Oh, who's this? Who's some troll?" It was you. It was a funny moment because I probably hadn't even shared that I was a UFC fan on the show. So, first off, congratulations. A lot of the fights last night were high stakes, but yours was the highest stakes because I was watching, and I can't imagine what you were going through in the lead up to the fight. But you had a perfect performance, and it was really fun to watch. I wanted to first off ask what it was like leading up to this event, the highest profile UFC event ever by far. I want to know what that was like.
Yeah, it was pretty interesting. I think my experience was a little bit different than a lot of the fighters because I knew immediately after my last fight seven months ago that I was going to be on the card. Most guys didn't find out till probably 10 or 12 weeks out. I knew seven months that I was going to be on it, so I started prepping immediately. It was just a lot more media, a lot more attention, a lot more buzz. I tried to take advantage of that as best I could, first and foremost by being prepared to whoop ass, but secondly, the opportunity with the viewership and stuff like that, maximizing that.
Is that an advantage or a disadvantage? Because in some ways you're probably more locked in, you're taking every moment more seriously, but on the other side, I know there's been moments where I know I'm going to be doing public speaking. I don't really love public speaking. Usually I'm thinking, "Ah, it'd be nice to just get this over with." But nine months out, that's a lot of time being like, "I want to get in there."
Yeah, it definitely goes in waves. There's certain times where you feel a little more stressed, certain times you feel really relaxed. For me, it was just staying focused on the process, focused on my systems, refining everything that I do and improving every day. I knew if I kept doing that for that period of time, I'd be as prepared as possible. Riding those waves was big, and just being able to stay focused on the process and my systems and refine those rather than thinking about this big moment 24/7.
Was the crowd any different? Was the vibe in the stadium any different? Does that affect you during a fight?
It was way different. I come from a college wrestling background. When you're competing in a home match, you got 10, 20,000 people that love you, want you to win. Since transitioning to MMA, I've had a little bit of mixed emotions towards me. Some people love me, some people hate me, which is good for me at the end of the day. But this one definitely felt more like my college days where it was a home match. I felt like everybody was on my side. President Trump was actually positioned around the ring like he was right next to my corner. He was almost in my corner. It was sick.
That's crazy. What about the prep? I saw folks doing walkouts from the Oval Office. Do you have enough space to get in the right mindset? Are you stuck in a trailer? What is your day of the fight like?
Day of fights, I try to just keep it loose. They have you report a few hours early, but I'm just hanging out with my friends, everybody that's visiting to come watch me. Once you get in, you get warmed up, get your gloves on, get taped up. What was really unique for this one is the walk out being next to a Medal of Honor recipient and another military member. They're walking out with you. I showed up and the guy that I was next to was just a total badass older guy and was like, "You ready to do this?" And I'm like, "Hell yeah, let's go." That just got me hyped up and just had to have fun with it.
I feel like every UFC is a Super Bowl in some ways. It's the top every time, but this was a particularly special moment. Are you optimistic that the UFC will find other ways to create even more special events in a calendar crowded with special events that happen fairly regularly? Not necessarily it's going to be 250 at the White House lawn, but you can imagine that there's just something that breaks through and goes into the mainstream media even bigger like this one did.
I don't know. I don't know how you go bigger.
I don't either. In space on the moon, we'll talk about later. Top of the Eiffel Tower.
Yeah, top of the... Who knows?
Who knows? They're going to figure out something. They always do. There's always something that comes along. But I was told this actually did more viewership than the Super Bowl, which doesn't surprise me. It was unbelievable. They're going to figure something out. I'm just going to keep getting better at fighting. So I focus on that and take care of business on my end.
Where were you watching Ilia from? So what they did was they had us go back to the hotel, do media, and then they had a little room set up for us where we could have all of our families and stuff. Post-fight, they had the presser with all the winners, and we had to wait until the main event was over to do the presser. They set up a nice little area with food and stuff for us, but it was all the fighters in there together. It was a pretty cool environment. It was insane.
That was John. John, given that he didn't watch even though he was cheering for you.
No, it's okay that you're locked in. You're probably reading for tech. But I was explaining that to me, that was the most insane UFC moment. Gachi Ilia, going in as an underdog. He's lost to a bunch of guys that Taporia has wiped the floor with. For Gachi to do that in that moment felt like, what a way. I was just really happy for the guy, one of those guys who's been on top. As an American UFC fan, I bet that fight created a bunch of GIs and a bunch of Bo Nicholls.
I love it. What does the next week, month, rest of the year look like for you now? What is it like off this?
I texted Bo last night like, "So happy for you, blah blah blah." You texted back in like 30 seconds. I was like, "What are you doing right now?" I would have just thrown my phone.
Post-fight for me, I probably take like a week or 10 days to do a little media tour just to maximize that. It's kind of just like business. But I got a couple things planned for the summer. Of course, a bunch of training. Going to take a two-week trip to Japan, which is going to be dope. Usually post-fight, I try to take advantage of the media buzz and then maybe work a little bit on some of my businesses while I'm not directly preparing for a fight, and a couple weeks for vacation if I can slip that in. But always staying busy.
You're going to Japan. Anything we can do to get you to stop over in China and get in the ring with one of those humanoid robots? I want to see you clock it so hard.
Yeah, we need to explode all the humanoid companies. We need to create Bo Bench, and it's like, how long can you last? With 10 milliseconds.
Easy money for me. I might break my hand on that, but I'll destroy it.
Padded gloves or something.
I don't know. Awesome. Well, enjoy the moment and come back on next time whenever you want to talk about some of your businesses. We're very proud, and yeah, enjoy the moment.
To have you as a fan. Thank you so much.
Let's do it. Thanks, guys. Appreciate you all.
Have a great rest of your day. We'll talk to you soon.
Let me tell everybody 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. So the other big topic over the UFC was the fact that Daario Amade was not in attendance. He wasn't front row. Mark Zuckerberg was. And it sort of underscores this odd situation that Anthropic's in where they just got dealt this weird hand where they're doing so well and the admin could not be more misaligned aesthetically with Anthropic.
Yeah, with the whole brand. They're very different. I read the article yesterday that Anthropic staff were going to Washington DC. Some people were like, "Oh, this is bad." If they could solve the issue easily, they could do it over the phone. Not how this works. You would obviously go. But flying to Washington DC to try to solve an issue on a Sunday, there was not a worse time.
No, I know. But you can imagine you land there, you're like, "Okay, where is everyone? Let's meet. This is a big issue. Let's figure this out. This is important. National security is on the line." And they're like, "Where is everyone?" If you take safety seriously, cyber security seriously, bio security seriously, export control seriously, UFC could not be less aligned with the stakes there. There is this big gap between the administration and Anthropic. I think every American should care about bridging this gap. Private enterprises should be able to flourish in the United States. Everyone agrees with that. And the government should be able to enact reasonable regulations to protect America's interests. Both of those need to find a way to play together, but there is a really broad gap between these two organizations. Everyone's hoping that things resolve quickly. It seems like the right wheels are in motion. The flights have been booked or already taken, and things are moving along. Just a recap on the play-by-play. March 4th, Anthropic received a Department of War supply chain risk letter that of course got rolled back eventually. April 7th, Mythos preview announcement alongside Project Glass Wing. June 9th was the Fable 5 launch last Monday. Mythos with guardrails around cyber, bio, and AI research. On June 12th, just 5 days after the end of the week, Fable 5 gets suspended after the Commerce Department issues an export control directive. Anthropic explained in a blog post that the US government is restricting both Fable 5 and Mythos 5 from being used by any foreign national whether inside or outside the US, including foreign national Anthropic employees. That's a huge compliance burden, very sudden. That led Anthropic to completely suspend the use of those models for all users, not just foreign national employees, because they need to comply with this, do all the KYC, understand how different organizations are using the model, who at those organizations has access, if something's being vended through an API and it's showing up in another product, does that product do all of the proper authorizations? It's a big wrench in the gears of the rollout of this model. Then the information reported that Andy Jassy at Amazon had raised concerns with senior administration officials about jailbreaking, the risk of jailbreaking Fable and getting access to all of Anthropic. Anthropic countered in their blog post saying, "We reviewed a demonstration of this specific technique being used to identify a small number of previously known minor vulnerabilities. These vulnerabilities all appear relatively simple, and we have found that other publicly available models are able to discover them as well without requiring a bypass." So they're saying this isn't that big of a jailbreak. This isn't that big of a deal. We can move forward safely. We've taken safety seriously. But that is the debate going on between the admin and Anthropic. As everyone knows, the rollout of Fable 5 has been a bit rocky. Incredible demos, incredible benchmarks, but offset by the odd decision to silently degrade the quality of answers related to frontier AI development. Instead of just refusing the request like cyber and bio prompts, which was the main thing everyone was really confused about, the actual rationale behind AI development refusal is pretty sound. People are upset about that if they're working on machine learning systems, recommender systems, anything that requires instantiating an AI product, let alone if you're just doing open source AI research and you'd like to use the latest and greatest models to help you. Now it's not an option. But at the same time, just think about the logic. If a model doesn't let you hack a system, just have the model build you an unrestricted model that does let you hack that system. Clearly in that scenario, it makes sense to restrict if you want to restrict hacking or bio, you also have to restrict the tool that makes the tool that hacks the system or develops the bioweapon in theory. But the choice to silently degrade responses was not well received. These are important issues, and there's another timeline where AI leaders are cut from the same cloth as America's elected officials. But we're in a world where Anthropic has to make their case for safety in an age of RSI during a UFC fight on the White House lawn. It's a very bizarre timeline, but here we are. Most of the big tech CEOs have figured out how to work with the administration effectively, showing up to large dinners, photo ops, the occasional movie screening to make their case about hot topics. Many of these CEOs also have business relationships with Anthropic either on the customer side or on the investor side. That's what's really complicated about the Amazon relationship. Obviously Amazon uses Anthropic models, is also an investor in Anthropic, also provides compute to Anthropic. They have a very hairy, complex, circular relationship. That clouds the discussion over whether Anthropic is going to try and help Anthropic get through this. Are they doing everything above board? At the same time, people were sort of putting out that, "Oh, did Amazon spike the ball on this?" If the government comes to you and asks, "Hey, you're a big tech company, you've been using this model a lot, your close partner, were you able to jailbreak it at all?" And your security team just issued a report like, "Yeah, we actually were able to jailbreak it a little bit." You're not going to withhold that from the government. You're going to turn that over. That's different than calling and saying, "Hey, I really think it's dangerous. You got to put pressure on them." There's a wide range of levels of interaction that can go both ways. A lab partnered with a big tech company, that big tech company can have a really established government regulations group that is actually helping you get through to the admin. On the flip side, you could have a big tech company that is competing with you or frustrated by your business and is actively trying to put their thumb on the scale the other way. I'm sure we'll learn more in the future. Many of these CEOs have business relationships with Anthropic. So we'll see how all of this develops. They're always renegotiating these contracts, too, which makes things more complex. And they're competing across multiple markets. So expect the 4D chess to be on full display all summer long in Washington. Anyway, UFC, Anthropic, what else is going on? Meta is doing a 180 according to Ayer over at The Information, trying to be the vanguard of token minimizing. I think the token maxing, token minimizing thing is so silly because do you know where maxing comes from really? It comes from gamer lingo usually.
Adopted by the looks maxing community. I don't know if looks maxing community was the first one. They certainly made it really popular through Clav's clipping.
The idea of like doing anything like, "Oh, I'm computer maxing today."
Yeah. I mean, isn't it from min-maxing?
Min-maxing. And that's what I'm getting at. You shouldn't be token maxing or token minimizing. You should be token min-maxing. The idea of min-maxing is when you're in a video game, you want to get the most resources for the lowest cost. If you're playing League of Legends, you're going to put just the right amount of gold into this particular item or this particular stat point in an RPG, and you're going to try and find the optimal build based on your resources. You have confined resources. Somehow it feels like these tech companies went through some sort of hallucinatory period where they lost sight of that. They should always have been min-maxing because that is the goal of business at all times in all things. You would never say, "Oh yeah, we're ad maxing this quarter. We're going to buy as many ads as possible." "Oh no, it didn't work. We spent way too much on ads. They were not effective. We need to spend as little as possible on marketing." You always want to be getting the most return on ad spend, the highest leverage output.
There was an unsubstantiated post.
But somebody was saying they talked to somebody at Meta, and there was one engineer that spent $90,000 in one day and was quickly terminated.
Really? Terminated within three days. So again, could just be entirely fake news, but it seems somewhat informed.
The crazy thing is that the lesson from that is this guy's like, "I'm not getting fired. I'm going to use AI more than anyone else in the whole company." $90,000 bill.
The lesson that will be learned from that is don't spend $90,000 a day. But the Super Bowl is literally for a marketer. The Super Bowl is spend $5 million in one day, and it works sometimes, and sometimes Super Bowl ads deliver $20 million value.
But what do teams do when they run Super Bowl ads? We ran our Super Bowl ad.
We trained our own model in order to... No, we made sure that ours was ROI positive, and we only bought the ad in a small market, and we did it before the game. Our audience was, and so for a very low cost, we were able to get a very high value. I believe we got a very high return on investment. We min-maxed the Super Bowl. There were some companies that sort of just Super Bowl maxed and they just spent a ton of money, and when you looked at the data on how they were received by audiences, it seemed like they definitely didn't get $5 million in brand value back. In fact, maybe that ad was poorly received. Some of the AI generated ads.
I got to give it up to the UFC for the level of advertising during the event yesterday. They're running full ads in the middle. I thought UFC was no ads.
No. So, one, the interesting thing... No, with the new Paramount deal, there's a lot of ads. But one, Dana White was in a lot of the ads that were running. Dodge was doing a TRX ad. It was Dana White driving.
There was another ad. I forget the brand. So I guess it was a bad ad, but Dana White was in a fake podcast set where it was with an insurance company, and Dana was having a conversation about business insurance with the CEO of the company. It looks like a podcast. So I thought it was interesting they were casting Dana and all them. Then second, the level of advertising just in the octagon was out of this world. There were so many different ways to gamble. The UFC cannot do a gambling exclusivity deal with anyone because it's crypto.com, Polymarket, Bet365. Any possible way that you could want to gamble.
Bet365. So the only day you're taking off is leap day.
Every four years you take one day off of gambling. That's kind of like the one day off every four years. And then Kalshi's running ads during the event.
So Kalshi and Polymarket are doing... Polymarket is in the Octagon, but Kalshi's running a bunch of ads against it, and they're buying directly through Paramount because you streamed it on Paramount. Is that correct?
Yeah. I don't... Did you have to pay for it in addition?
Okay. So you pay for Paramount on a monthly basis and then you get UFC for free. Got it.
Gambling is just min-maxing done poorly. That's true. Anyway, the news around Meta is Meta is doing a 180, trying to be the vanguard of token minimizing. Two months ago, Meta epitomized token maxing, on track to spend billions a year on Claude, etc. We've seen an exponential increase in AI usage, and we are tracking to spend billions on internal use alone in 2026. The memo said at the same time, individuals and teams have limited visibility into and control over how they use AI. In 2027, we expect Meta will move towards managing AI tokens in a more structured way with bullet budgets, allocation decisions, and supporting tools. That makes sense. You have a marketing budget. You should also have a token budget.
They also saw something like Meta Code, which is their internal... That makes sense. They're catching up to the frontier.
Yeah. I talked about this. There's a bunch of these leaked calls where Zuck is like, "You should imagine that Meta employees are going to be better than the average open source contributor." So the quality of coding data within Meta should be super good. You can train your model on that.
It's the same pitch as take a frontier model, bring them in through some sort of consulting partner. They fine-tune on your business workflow. They automate your business process. But your business process in this case if you're Meta is generating code that makes your social networks better.
Yeah. Especially good because in Meta, all of the internal business data is already in code format. You don't have to scan in a bunch of papers into digital.
I still don't know what Meta is actually building, and I think there comes a time soon that they should probably communicate that to the market.
Personal super intelligence, baby. What's not to understand?
No, it's just a $1.5 billion. What does that mean?
75% as valuable as SpaceX, buddy. Come on.
Well, if things keep going the way they're going, we'll see even more of a divergence. No, but I think it's so unclear.
You should be able to put a lot of the SpaceX bull case on Meta. It's like sure, maybe Colossus was built a little bit faster, but Meta is pretty fast. I think they're wildly... They couldn't be more different with Meta right now. The bull case is it's potentially the greatest business in history that is not threatened by AI.
That actually is accelerated by AI.
Yeah. But I do think I would expect some communication from Meta around what their real strategy is over the next month or so because it's killing them that they just keep saying, "Oh, we're personal super intelligence." But wait, they're building like a coding harness and they're working on coding. Are they going to sell that externally or is it going to be internal? Are they going to try to sell their model on an API and get into enterprise? The big question is, do they take the leap? They kind of did that with Manis.
But that's getting unwound.
Well, let's talk to Gavin Baker about it. But first, let me tell you about the New York Stock Exchange. Want to change the world, raise capital at the New York Stock Exchange. Our next guest is the CIO and managing partner at Atreides Management. You've heard him on Invest Like the Best many times, Gavin Baker. Welcome to the show. How are you doing?
Doing great, man. How are you guys?
Fantastically. SpaceX IPO. It seems like everything went just flawlessly to a tee. To the point where it wasn't even dramatic.
A round of applause for the banker.
The banker. It's like 20% pop almost to a tee.
Yeah. What I mean by that is it would have been more dramatic if it had popped up 70% and then went down 30 and then went up 50 and it was drama, but it was just perfect execution from start to finish. Was that how you interpreted it?
I thought Goldman Sachs and Morgan Stanley did a very good job.
Yeah. What do you think the market is looking for SpaceX next? Is it all eyes on the first earnings report? Where do we go from here? Because there's so much of the SpaceX story pre-IPO that was a decade out, five years out, two years out. But is the market going to be processing quarter by quarter plays like many other companies?
Well, I think the market is always, you know, quarters matter.
The runners on X, they're these reply people on X for any topic or experts.
But somebody once told me a marathon is 26 one-mile runs.
And then all the runners were like, "No, that's not true at all." Running a mile is different than running a marathon. But every quarter matters. At the same time, I do think if you look at how the market has looked at Tesla over the last five, six years, Amazon during the days when they were building out AWS and their retail distribution infrastructure when they'd go through these investment cycles, I do think the public market has a much greater tolerance for investment and a much longer time horizon than a lot of people in the venture ecosystem give it credit for. By the way, this is Foxy in the back. He's one of the analysts here at Atreides.
I was just listening to him on the Brad Gerstner podcast. I think you chimed in on that, right? You brought him in.
Yes, he did. But he did the work on SpaceX, so I thought you guys might want to talk about that. But I do think that I'm not sure the story is as far out as you made it seem to be. I think there are two variables that are going to matter a lot over the next year. The first is just how quickly can they bring on terrestrial compute. It does seem like they monetize gigawatts at a higher rate than anyone else. We know from Jensen that they bring on data centers faster than anyone else per Jensen's words. Everyone in the ecosystem is really incentivized to get land and power in the hands of people who can energize it because everybody starts making more money when the GPUs are energized. If they can... What was the Altimeter figure for how they were monetizing gigawatts, Foxy? Do you remember for which deal?
Well, I think it was like two to three, wasn't it? Like at least two times higher than average NeoCloud pricing, and that's partly due to scale and customer quality and things like that. But it was meaningful.
Yeah. So they're doing $50 billion a gigawatt on the Google deal.
So how quickly they can add gigawatts really matters. If you can energize two, three, four gigawatts in the next year, that's a lot of revenue. Prices may go up, they may go down, but that's really going to matter. So all eyes on Colossus 3, 4, 5, 6, 7, 8, 9, 10, etc. At least in the short term.
Yeah. Macro hard, macro harder, macro hardest.
And then I think Cursor is another big variable. We talked about it with Brad about how Composer 2.5 after three weeks of RL and supervised fine-tuning on Colossus 2 is kind of Pareto dominant. So what's going to happen when it's applied to a bigger, better base model? I do think Cursor being in half the Fortune 500 is interesting. So I think those two things, while I'm super excited for going to Mars and asteroid mining and a city and mass drivers on the moon, all that stuff is awesome and I think there's a decent chance it happens in my lifetime. I just think there are much more tangible near-term drivers here.
Yeah. How do you think about the tension of the cloud business versus their own application and model business? I think a lot of people were surprised when the initial Anthropic deal happened purely because knowing Michael Truel, he would have been very excited.
Yeah. Get access. Hey, you got to share the only child around here. It feels like you can imagine SpaceX bringing on a lot more compute very quickly. But at the same time, every lab has had to go through this tension of how much compute do we allocate to training versus inference.
A way to interpret that is that maybe the team at SpaceX is pretty confident in their ability to bring gigawatts online.
And the Altimeter figure that they've ordered 20% of the Rubens, and the Ruben is an epic chip. Like Blackwell, it was really hard to get it online. Ruben is kind of a more drop-in replacement. It's a really good chip. You'll have the Grock LPUs integrated at some point in the next six to nine months. So one way to interpret that is they're pretty confident that they can bring data centers online pretty quickly. But I also don't remember all the details, but I do think there was an out in the Anthropic agreement that if they and the Google... The Google deal could be short-term Google. There is a tension there where maybe you want the compute but you don't necessarily have all the revenue yet. Anyways, I'm very confident we can figure it out.
Yeah. On the topic of Elon Web Services, is there a world where SpaceX winds up building out more of what looks like AWS? We've seen between OpenAI and Anthropic, there's this tension of you got to be on AWS because the ecosystem or enterprises just want to be on AWS. They won't even go over to Azure or Google Cloud for whatever. You could imagine, is it enough to just be a token factory, or do you need to have a database and in-memory storage and cloud storage and cold storage and all the things that AWS provides?
My thought is that being a token factory is more than enough for the next 5 to 10 years. We need more token factories. But we'll see, and if they need that stuff, they will build it.
Yeah. How are you thinking about the other hyperscalers, the other big tech companies? We were sort of puzzling over Meta's strategy at this point. Tons of resources, cash flow, data centers. They have experience there. Maybe they're not as fast as SpaceX, but there's a lot there. But it's a completely different motion to go into token factory. And yet there's still a lot of demand. So how do you think all of that plays out?
Well, I think there's many ways to go into the token factory business. You could, if you're Meta, you could just say to someone like Fireworks, "Hey, here are 100,000 GPUs. We'll take a revenue split and we'll see what happens." I am increasingly looking at EV to net PP&E as a valuation metric. Just with the idea being installed atoms on Earth, I think are going to appreciate in value. This is a little bit of that halo trade that I think maybe Goldman Sachs came up with: high asset value, low obsolescence. But Meta's EV to net PP&E multiple is in an interesting place. It just suggests that the market has an immense amount of skepticism about their ability to monetize their own asset base. I think that's warranted given that all we've really got out of management is this concept of personal super intelligence. It would be different if Meta AI was at the top of the app store and everyone you were talking to was like, "Yeah, I'm using Meta AI," or there was a killer feature within Instagram, like people are shopping in Instagram now. I think no one doubts that once Zuck has an AI product with a billion dollars of revenue, he can take it to tens of billions. But it's unclear going into enterprise, what is this API business going to look like? We know they can use the GPUs just on making the ads product better at the end of the day. But there's a lot of questions.
Look, I think a few things. If I look at the way different players are behaving, it feels like everyone thinks we're entering the endgame. Everybody loves to use these chess analogies, and it looks like the endgame may be here sooner than we think. I think that's why OpenAI is cutting Codex pricing, simply because coding tokens are so valuable, and if you don't have enough of them, you may not be able to get into this RSI loop that everyone is pushing for. I think if you're Zuckerberg, you feel that acutely. I thought Muse... What are the... Muse Spark?
It was to me it was an upside surprise, and it made me feel like, what's the quote from Talladega Nights? "So you're saying there's a chance."
Like, yeah. So you're telling me there's a chance?
I mean, the other quote from Talladega Nights is, "If you're not first, you're last." And that's how a lot of people feel.
There's so many good quotes from Talladega Nights.
Yeah. 100%. But I think if... I'm pretty confident Mark Zuckerberg has proven to be a good entrepreneur over time and has been willing to pivot. It's so funny right now, Facebook has... Meta has told investors, "There's no chance that we're going to monetize GPUs externally." Well, 10 days before they announced all those layoffs at the end of '22, they went from saying, "We're not going to do that. We're going to keep investing," to super focused on OPEX in a couple of days. So people meet with Meta and they hear, "Oh, we're not going to monetize our GPUs externally." Well, I don't know, check back in a few hours.
Yeah. It comes down to everyone has a price. You look at Elon and Anthropic's relationship four months ago, and then you look at as the opportunity unfolded, it made sense for them to partner. I wanted to ask how... On the Meta thing, I think there is one point that's important. What ultimately drives behavior for all these big cap companies like getting to AI, that does feel existential for all of them, but the stock price also really matters because if the stock goes down, you gave people a grant at this price, stock goes down, your engineers are unhappy, and it's tougher to get to where you want to go if you don't have these... Forget the 10x engineer. People are talking about the 10,000x engineer. You're not going to get there if you don't keep those 10,000x engineers.
Yeah. How did this IPO update your general framework for the role that retail is playing in capital markets? It was very funny last week to see people say, "Oh, the IPO is only 2x oversubscribed by retail. All these other $3 billion IPOs were 10x oversubscribed." It's like, no, we're talking about an order of magnitude difference here. But it still feels like retail is going to play a very important role over the next 12 months, maybe more so than ever, given that the hyperscalers are now running cash flow negative. You have the conflict in the Middle East, rebuilding efforts that need to happen. So I feel like retail, this is kind of retail's moment now more than ever.
Yeah. Well, a few things. One, people say "retail" in a pejorative way, and I would just say stupid is as stupid does. We track all these indices of retail favorites, and man, they're up a lot. They're up a lot in '25 and they were up a lot in '24. So stupid is as stupid does. I'm not... I think retail is probably outperforming the overwhelming majority of professional money managers, whether they're private equity managers, venture, public equity managers, whatever. So retail, I don't think it's pejorative. I do actually think in the case of SpaceX, I'm not sure where this comes from, but I actually think after the IPO, for whatever reason, some of that retail stock may have gotten allocated to people who were flipping it because my understanding is there was more institutional buying. I don't know where this after the IPO there was retail buying. I'm sure retail is very sensitive to momentum. So maybe what's happening today changes that. But I think another really underappreciated thing about the SpaceX IPO is that over 10,000 SpaceX employees bought in the IPO. That's just... Everybody does all these lockup analyses and "Oh, how much stock is going to come to market?" For sure, there's all these triple layer SPVs or whatever, or maybe there are people who speculate there are, and I'm sure some of that will get unwound. But the reality is that SpaceX employees own a lot of this. If you're an employee or even if you're an investor who has an SPV or you're directly on the cap table, you've had a chance to sell every six months for the last 10 years. If you wanted to sell, you could have sold in the offering in the second half of last year. So I think the supply-demand dynamics here are going to be very interesting. But with retail in general, they've been a more powerful force in the market over the last three and a half years than at any other time in my career, including the year 2000 bubble, which I think this is nothing like, by the way. But yeah, they matter, and stupid is as stupid does.
I'm interested to go a click deeper on the idea that value will accrue to companies that are in the token path. I think that phrase is extremely powerful right now. But I want to sort of expand it and understand the fringes of the token path. We talked to Matthew Prince at Cloudflare, stock at all-time highs. It's delivering tokens at the edge. Obviously there's an immense amount of AI agents that are interfacing with different websites. They need to be distributed. So there's a lot of value there. But is Cloudflare in the token path if they're the one finally sending you the packet of tokens at the edge, or does that not count? How do you think about that?
Every CDN has this business. They signed a $1.8 billion deal with Anthropic, and if you have all these points of presence, you can deliver really low latency tokens to high-value users. I think what's interesting for all these CDNs is they're getting a massive premium for that latency. One of the lessons from Cerebras is people are willing to pay for speed. You see that in the prices these guys are commanding. But I do think, my gut is, in terms of tokens consumed on planet Earth, these CDNs are delivering less than 1% of them, maybe less than 10 basis points. Most of the tokens are happening internally, and then you just get the result. Would I say that these guys are in the token path? I would say they have a path towards being in the token path. They have part of their business that's in it today, and they're trying, like everyone, to move it more and more there.
Yeah. Matthew was talking about co-locating Nvidia servers on the edge specifically for the delivery of voice models because you want those to be very low latency. Maybe you want your coding model to go off and cook in Virginia for 20 minutes or an hour and then come back to you with the final result. But if you're trying to actually talk to a model, you probably want it as fast as possible. What about on the opposite end? Wasn't there that startup that Nvidia just invested in that put a GPU, a four-GPU server, on the outside of your house?
GPUs are going everywhere, going in your bed eventually.
I mean, it's full circle, too.
Wasn't Jensen talking about stuff like that back during the original crypto cycle, being like everyone's going to be mining?
Yeah. The Tesla Powerwall is like a version of that for storing energy. It doesn't store compute, but it stores energy locally on the edge off the grid. There's a lot of powerful things that get unlocked by that. What about land? Is land in the token path at some point on the extreme other end? Because people are obviously searching for going further and further upstream. They found a toilet company that makes a particular material that goes into semiconductor supply chain. People are hunting for the final ingredient. Maybe it's just sand that turns into silicon.
Yeah, I do think the bottleneck bros, as they are called, this bottleneck trade is kind of nearing its end.
The Wall Street Journal had the story about this Japanese company that makes... I forget what they make. It's some tool. Aimoto. Everybody's in this because they thought they were going to raise prices, and then they just said, "We're actually not going to raise prices. This is the wrong thing for us." I almost posted yesterday on X, "Welcome to Japan to all of the bottleneck people." Everybody's having claw run, "What's the next bottleneck?" That was the game for the last year. The next game is what has enduring franchise value.
Yeah. Kind of on the other side of these bottlenecks, whenever that is, as far as land, is land a bottleneck? Man, I do think the math for orbital compute, once they can reuse Starship, I think the math for orbital compute becomes pretty compelling. It's just $60 billion to bring on a gigawatt terrestrially. $25 billion is power and cooling. You don't need that in space. So the right comp for that $35 billion of IT equipment, GPU, CPU, switches, memory, storage, is that $25 billion versus the cost of launch. Once Starship is reusable, I think the cost of launch is $5 billion. So $20 billion means you can put a gigawatt into space for $30 billion and a gigawatt on Earth is $60 billion. And that $25 billion for power and cooling feels reasonably inflationary to me. So I don't know that I would say land is in the token path.
Maybe beachfront property, but that's about it.
Yeah. Beachfront property is beachfront property. Airplanes.
Yep. Firmly in the token path.
How do you think the events of last week with Anthropic and DC update different countries on their own sovereign AI play? Because there's been attempts. It doesn't feel like many of the attempts have... You can have a powered shell and you can have the best GPUs, but if you don't have the talent, it's going to be really hard to get to the frontier. And now if you don't have massive usage, it'll also be really hard to get to the frontier. So do you think the ship has sailed?
No. Well, look, I think every country is going to want to have their own sovereign AI strategy at a minimum for national defense. I think where that ends up is... I saw today that the EU had restricted exports of Mistral's latest. I think that's a joke. I think that's a meme. People have gone so far on the Mistral leash thing that they're saying it's like Mythos is distilled on it and it's breaking all the benchmarks. I think it's a good model, but I don't know that it's quite there yet.
But you can imagine that we get there for sure.
Yeah. So I think what sovereign AI will look like for essentially all countries really other than the United States and China, although I think China is going to fall further and further behind, is just some sort of... You use one of these providers to do some reinforcement learning on your language, your culture, your values. You have a system prompt. You do some supervised fine-tuning, and you run that on whatever the best open source model is. I think that's where sovereign AI ends up, and then you run it in your own data centers so you feel like it's safe, and whatever defense questions you're asking it or whatever defense and intelligence and maybe policing activities your sovereign AI agents are doing 24 hours a day, you feel like they're safe. So I think that's where sovereign AI ends up, and I think there'll still be a big buildout for that, but sovereign AI at the frontier, I don't see it.
Yeah. What do you think the drivers are of the widening gap between Chinese open source models and American closed source models?
China has made a terrible mistake not... It feels like the administration has been willing to let them buy H200s or P30s. I think they're on this crazy belief that their own internal chips are good enough. They're not. And what's making them think that is that Chinese labs are very, very good at distillation. Somebody told me it only took 160,000 reasoning traces from O1 to get the original DeepSeek. They're very clever at industrial scale distillation, running it through multiple APIs, pinging each API from... We've all seen those iPhone farms in China. They've got the same thing for distillation, and they've got 100,000 endpoints distilling these models across every API available. They've gotten really good at that, but all that goes away if people stop releasing these models at the frontier. I think Mythos is a sign of things to come there.
Yeah. It seems like they're getting much better at locking down the reasoning traces, locking down the espionage. It feels like back during the L1 days, the labs weren't even aware that distillation was so possible, that that was such a potential threat.
For sure. Jordan, please.
Is any part of you worried that you'll never see another company like SpaceX?
Worried is the wrong word.
Not worried. But you have to appreciate that a moment like that, it's possible that you have an opportunity to invest in a company like that one time in your career. And thank God you did it because there's plenty of people that had the opportunity and didn't.
Well, I did own 15% of Nvidia when it was a sub-$2 billion market cap, and I owned 10% of Tesla when it was a sub-$2 billion market cap. But SpaceX certainly has been a special experience for me, and I think there is a chance that it is one of the most important, iconic companies of all time. I mean, it already is. Maybe there's a chance it's the most. I think in general, I kind of want to take a step back. All this trillionaire hate from the left... There was a great post from my friend Kevin Mafy saying, "Oh, this is a bond villain who's decarbonizing the world." Last time I checked, people on the left were like, "The environment." Connecting poor people in low-income countries, schools and hospitals to the internet at very low cost, and he's helping blind people see today and interact with the world. That's a villain? There's so many parts of the SpaceX story, all of the blue-collar workers who've gotten super wealthy. If you're opposed to data centers on Earth because of the environment, well, SpaceX is your solution. There was another great post that just said, "The left won and they don't even appreciate it. The world's first trillionaire has done more to solve the environment than everyone else on Earth combined." I saw there was another good one: "Yeah, Elon could solve world hunger by market selling every piece of stock that he has and send the world into a global economic downturn, losing millions of jobs in the process." Somebody said that Elon... The World Bank could solve hunger with $5 billion, and he said, "If you prove it to me, I'll do it." Turns out you can't solve world hunger for $5 billion. But SpaceX is certainly... I would say SpaceX, Nvidia, Tesla, they've all been very special to me in kind of a different way, but there is nothing like a rocket launch. I just don't think... It's a visceral experience. I highly recommend everyone listening, if you have kids, take your kids to a launch. You don't want to go with SpaceX. Everybody's always like, "Oh, get me the special tickets." You could go to a beach at Boca Chica and be where the special SpaceX viewing area is. You can literally be closer to the launch. There are hotels near Vandenberg. Take your kids to see a launch. It's super inspirational that humans are capable of this, and it's much more visceral than you realize. The sound, the blast of hot air, a lot of people cry. So go see a launch. But there will never be another company that delivers a visceral experience like that. And then listen, if SpaceX puts a city on the moon and then Mars and enables, becomes the British East India Company of the solar system, I think this will... There's a lot of hard engineering that needs to happen to go into all that. This will probably be the most important company of certainly my lifetime, maybe of all time. So from that sense, I don't think there will ever be anything else like it. And yeah, I guess that is a little bit sad, but there's so much awesome stuff happening in the world that it's tough for me to get too down there.
I have one last question. We have... You mentioned owning Nvidia sub-$2 billion. What is the health of the sub-$2 billion market right now? Is there anything that you're excited about? Is there anything that the bottleneck bros haven't run up to a billion?
Bros have taken everything under $2 billion, maybe not even... Public companies, but private areas. I mean, we're starting to see the knock-on effects of AI in bio and material science and Neuralink was sub-$2 billion for a long time. So there are more, not in theme but accelerated by AI. There's loads of incredible venture companies, startups under $2 billion. I watch them several times a week minimum. In public, until the bottleneck bros came along, until AI came along, there was not a lot happening in public small cap land. By the way, on this, all these small caps, these bottlenecks, this AI, it does feel a little weird to me that you could have a large following on social media, post about buying stock at something, and then post about your thesis in a $35 million market cap company and send it up a thousand percent. There's a lot of that going on. By the way, this is not a serenity comment. I think that person is smart, but there's a lot of shady stuff happening, it feels like to me.
Well, yeah. You look back at you were a young analyst at Fidelity during the end of the dotcom cycle, and there was a lot of euphoria stuff happening. In the years that followed, there were consequences. People ultimately had to face civil penalties, companies went bankrupt, all sorts of perturbations in the market. And of course, we got a bunch of really enduring generational companies through that period, too.
Although a lot of these accounts are anonymous, and I'm sure they're logged into social media with a made-up email, gone through a VPN. So I don't know. We'll see.
It is different than a sell-side research report that maybe goes a little bit too far, but there's still a whole compliance department around it. We are in uncharted territory. So everyone needs to stay safe out there and do your own research, I suppose.
Anyway, guys, this was super fun. This was great. Let's do it again soon.
Anytime. Let's get the whole team on, too.
Yeah. You know what? That's actually fun.
Let's do that with the whole team.
I would love it. You got a conference room with a nice wide-angle camera. You can just have the whole crew there. That's great.
Partner into a partner meeting. Exactly.
Awesome. Great to hang with you guys. Have a great rest of your day. Thank you so much for coming on. We'll talk to you soon. Let me tell you about CrowdStrike. Your business is AI. Their business is securing it. CrowdStrike secures AI and stops breaches. Our next guest is Leaf Abraham from Public. He's the co-founder, co-CEO. Here to break down what happened on Public when SpaceX went public. How you doing, Leaf? Good to see you. Beautiful background. What's up, guys? Hope you're enjoying New York City. What's up?
It's fantastic. Was Friday crazy for you? Was the weekend crazy for you? Is today crazy for you? Is it all just like crazy in the "wow, this is a historic moment" versus like crazy at the office like the servers are on fire? Does that happen with you?
Yeah, I mean by now it's obviously more kind of business as usual when IPOs happen, but on Friday definitely. SpaceX was the most popular IPO that we have seen on the app ever, by like a wide margin. To give an example, of everyone who bought a stock on Friday, nearly half of people who bought a stock on Friday bought SpaceX. So which is obviously quite crazy. The second most traded stock was Nvidia, and SpaceX was like 533% more trading than Nvidia that day. So definitely one of the kind of craziest IPOs that we've seen so far.
Yeah. What was the resale allocation actually like on the ground? We heard numbers like it's double oversubscribed, but then the number that I saw reported was like $100 billion for retail. And that seemed like way more than what would actually go to retail because so much of it is going to be anchored by the banks and what I would not put in the retail bucket like JP Morgan's client.
And you would think so, but when people talk retail, they think what you and I were just thinking of, basically people who use retail investing apps like Public and the like, individuals making self-directed investments. But retail is still the rich guy who has a JP Morgan adviser and stuff, that still counts as retail. When you see it was first about 30%, then it was down to 20% in terms of retail allocation, you did still see that at the end of the day, when these retail allocations happen these days, it still mostly goes to the good wealthy customers of the big banks and their wealth management arms first. That's why you saw retail brokerages that had some allocation ended up mostly giving people like one share and stuff. That is because most of that 20% still went to the good long-term customer with a very large account of JP Morgan and Merrill and whatnot. So that is still the reality. The main thing there is that the banks who are in most cases also the ones who are underwriting the IPOs, they are kind of managing their process. They will say that to retail allocation, etc. Most companies that go public maybe also don't really have the perfect understanding of the nuances in retail. I think that's why you're still seeing that the banks who are underwriting are pushing their weight around, and at the end of the day, most of that still goes to the wealth management customers and stuff.
Can you talk a little bit about either the research that you're seeing folks do or maybe the research that you're enabling with Public's tools specifically? I read a very interesting report in the Financial Times where they visualized over the next year how the lockup will actually play out. It's a very low float stock early on, gets added to the indices, and there's all these different milestones that I mean you could just say it's all priced in already. But I imagine that many investors will care and want to buy ahead of an index purchase but after a lockup ends or something like that. I'm just wondering about how you can actually help an investor understand those dynamics.
Yeah, I mean I don't have the perfect schedule in front of me right now, but first off, I think this IPO specifically, the banks have done a pretty damn good job. The pop was there. It was sizable but it wasn't ridiculous necessarily. Even now on day two, the stock clearly is holding up. The whole orchestration of the multi-stage unlock of the float at the same time or the lockup at the same time, where obviously the whole renegotiation with adding to the NASDAQ 100 and so on, which then creates more buy pressure on the other side as the other ones get unlocked. I think that orchestration, we'll see how it all plays out as it really unwinds, but it's clearly very well thought out. If you would judge the performance of that orchestration throughout this IPO, I would argue compared to many other IPOs, it has been very well executed. So my hunch is that a lot of smart people have done some good work there. I don't know if you can really play it like that because there's surely smarter people than you and me that have models that have all figured that out.
So there's clearly continues to be more retail demand than allocation for these blockbuster IPOs. On one hand, Elon has benefited tremendously from the power of retail. It helps to have a bunch of people invest at low double-digit billions with Tesla and sort of ride that up. But I feel like one of the challenges for retail to actually get meaningful allocation is just the lack of reliability and the flipping risk associated with allocating to retail. I'm sure Elon in a perfect world would love to say, "Yeah, we're going to give half of the IPO to retail," but then there's going to be that risk that people are not as reliable as the big institutions or certain clients of the private banks that want to make sure they're in the next IPO. So how do you think that gets solved? Is there a world in the future where retail has a true lockup, they cannot sell, versus just saying, "Hey, please don't sell"? What do you think happens?
Yeah, I mean as a broker, what most brokers do and also what the companies who IPO kind of ask for is just what's your flipping policy. In most cases, if you flip within a certain time frame, you basically get restricted from future IPOs. That's one of the forcing functions. From a pure securities law perspective, you can't create this notion where once this stock is common stock publicly trading, every investor has to be treated equally. You can't suddenly be like, "I don't trust you retail investor, so you can't sell, but the other institution I sold it to, they can." Those things can't really happen. But from the retail investor perspective, it really depends on the platform in most cases. In our space, I would also divide it up into trading platforms where they have their focus.
Trading platforms or investing platforms, so trading is basically your chart-based first product, technical analysis very heavy, options and futures and so on. And in that world, you do actually have a flipping culture. There's Reddits about it. There are Telegram groups, etc., where basically people try to find multiple access points to an IPO just for the matter of flipping it. But I would say that is a small sliver of the retail market. Most people are actually more buying and holding. What we've seen with IPOs in our history, our net share retention on IPOs is like 125% roughly, which basically means people actually add to their positions afterwards.
And so they get shares allocated, they didn't get everything that they wanted in obviously, so far always, and then they add to it as it starts trading in the public markets. I think in most cases, what you're seeing is because normal retail investors, the way we're not traders, we're people who build up portfolios for livelihood and stuff, they are mostly people that hold stocks, right? That's what you've seen also with the diehard Tesla crew in the past. These people were tweeting out pictures of their monthly DCA, their monthly dollar cost average into their Tesla stock because they got a new paycheck. I think that is the much more normal behavior than this flipping thing. So yes, it exists, but I think the fear is a little overstated.
There were a lot of people that were upset about SpaceX's inclusion in indices. Maybe they don't like Elon for political reasons. Maybe they don't like the stock because of the revenue multiple. There's a variety of gripes that people have. But I saw Jason Calacanis fire back, say hey, you can create a synthetic index that you want to own the S&P 499, just go do that. And it seemed a little complicated. How complicated is it actually to do that today if you're genuinely so bearish on SpaceX that it can't touch your portfolio? Because you could go short or you could just buy everything else in equal proportion, but then there's reweighting that happens and it's sort of complicated. But where are we from someone being able to just do that with a prompt or a click these days?
Well, I love the question because I can perfectly now put an ad in here. The simplest way is we just go to public.com, sign up, and there's something called direct indexing.
Public.com. There you go.
There you go. Fantastic. So, there's direct indexing, which basically means you can buy the S&P, you can customize it. You can say, you know what, I want to have the S&P 500 without this and that stock. You can have rebalancing built in, even tax harvesting built in, which means you can actually save some money on taxes there as well.
By selling the losers and reweighting over time.
And so that is super easy now, at least on Public, and is something that a lot of people do. I think the main thing that a lot of people got upset with was that people have trust in these indices because of the rigid frameworks that they have.
Yep. Have to be profitable for a certain amount of quarters, have to be a certain size. Yeah, totally makes sense. I understand the critique.
And so the minute it was basically like, oh, now we make an exemption suddenly. I think a lot of people were just getting upset with that, basically being like, hey, what the hell, I put my life savings into this because of these frameworks and I have agreed to them, whatever, I believe in however you structure it. And I think that was mostly what came out.
Yeah, and also when I think about the S&P 500, I think most people mentally think, okay, I'm going to have 0.2% in every company, but of course it's cap weighted. And when you see a two trillion behemoth come into the index, you're like, well, that could be like 3% of my portfolio, maybe 5% of my portfolio if it runs, and I don't want that index exposure necessarily. Of course, everyone has different risk tolerances, different preferences, but good to know that there's an alternative out there. Jordy, anything else?
I was going to say, if you have 30 more seconds to answer, how do you think the SpaceX IPO impacts how bankers and companies are thinking about potentially other IPOs this year? Obviously, retail's quite strong. They want exposure and it's at a level that is pretty unprecedented.
And also the market, I felt like there was one narrative that was like, if SpaceX wins, everyone else loses because there's going to be so much rotation out of everything else, but the market's performed well today and that's not what's happened at all.
Yeah. I don't know. I would argue there's so much money in the world that it's totally fine. When you look at the big institutions that put multi-billion dollar checks into SpaceX, a lot of those weren't even existing investors doubling down their positions. So I wouldn't necessarily think of that argument. I do think that because this IPO, at least so far, has been really executed quite well, it makes everyone very confident on the next ones.
Yeah. And so, if I would be now Anthropic or OpenAI or something, I would look at this one now and be like, okay, fantastic. The market is ready and the bankers seem to be ready as well. So I would argue it's a very good sign of general confidence.
White pill on a suit day.
What else? Sorry, I cut you off.
Thank you so much on the show. Always great to see you.
We'll talk to you soon. Have a great rest of your day. Goodbye.
Let me tell you about Cisco. Critical infrastructure for the AI era. Unlock seamless real-time experiences and new value with Cisco. Fox is buying Roku, the streaming service, for $25 billion. It's in the Wall Street Journal.
25 billion in the Wall Street Journal here. Let me refresh the page. See if they updated it. It still says 25. Weird. Reporting 22 billion.
Somewhere in the north of a billion, subund billion. Let's be very conservative with our estimates.
Yeah, CNBC also 22 billion. Weird that the journal is...
The journal may have inside information given that it's a News Corp property related there, right? Anyway, let's read through the journal piece, which might be wrong. I don't know. Let me just give you some facts and then you can sort of give me some takes and contextualize it with more information. So Fox Corp said it's acquiring Roku in a deal valued around 25 billion. So the Wall Street Journal saying around is 22, around maybe making a major bet on the future of ad-supported streaming. Ad-supported streaming, obviously Netflix pivoted to ads after saying we're not going to do ads, turned out to be a great business. Ads are undefeated and more people want...
They're just down with ads, especially if they're good ads. Anyway, the deal is Fox's largest to date. It brings together a media company known for its live news and sports programming with the biggest provider of streaming platforms for connected TVs. It will add scale to Fox's streaming business, currently home to free ad-supported streaming service Tubi, which the company bought for $400 million in 2020, and subscription-based Fox One and Fox Nation.
Tubi, from my understanding, has been a home run. Yes. Like, I don't remember exactly what the revenue is, but they bought it for 400. It's in the billions now. And all the metrics about actual audience size are huge. And yeah, putting up getting to tens of millions of dollars in revenue, hundreds of millions of dollars in ad sales against a big audience. Tubi viewership when you have the Fox machinery behind it makes a ton of sense.
In addition to distributing other streaming services through connected TVs and devices, Roku has its own ad-supported Roku channel. The combined company will better compete with the likes of Amazon.com and Netflix for ad dollars. Quote, 'Bringing these two companies together will really help define the future of television in the United States and in many other markets around the world.' Fox chief executive Lachlan Murdoch told investors on a call Monday. Fox will pay around $160 per share, $96 in cash and 0.99 Fox Class A shares. The deal is valued at around $22 billion on an enterprise basis. Fox expects to fund the cash portion of the transaction with $12 billion in new debt as well as cash on hand. The combined company expects to cut around $400 million in annual costs. Fox plans to keep Tubi and the Roku channel as separate offerings. Consumers are increasingly opting for free and lower-cost ad-supported streaming options as the cost of subscriptions marches ever higher. Ad-supported streaming plans now represent almost 50% of all premium subscription video on demand signups in the US, up from 39% just two years ago. More than 100 million global households stream with Roku. Roku is the largest streaming platform for connected TVs with 25% market share. Samsung's Tizen is number two at 23%. And then I'm sure Amazon's Fire TV is not far behind. Fox remained on the sidelines during the heady early days of the streaming boom, pouring money instead into programming for its cable channels and buying up sports rights. It launched Fox Nation in 2018 and introduced direct-to-consumer Fox 1, which includes sports and Fox News last year. Fox said last month that Tubi had nearly 100 million monthly active users and its revenue had grown by 23% in the fiscal third quarter. And so Fox's stock is down today. Roku is down 2% something like that. And the market doesn't like it. Calacanis has a take here. We can read through his opinion. He says, 'I don't understand how this Roku deal makes any sense.'
I'll tell you how it makes sense.
I think it makes sense. One, Fox has a great product in Tubi. It's again, there are certain people that are happy with their HBO or Netflix or whatever, but Tubi has a great niche. It's been a great acquisition for Fox. North of a billion dollars of revenue. That is a product. Roku is a platform. They have over 20% market share in connected TVs. I was looking at the data, they have over 40% of the engagement with connected TVs. So when you think about it from an advertising potential, it's not just that they have 20% of the connected TV market, they have over 40% of the watch time effectively. So looking at the potential from an advertising standpoint and how many dollars are still yet to shift from traditional television to connected TV, from that lens, I think it's great. Roku is also a much younger demo. So a lot of media properties, especially television related, are going to be older demos that are eventually going to be aging out of prime consumers, but these are consumers that are in their prime earning years, prime years as consumers. Ultimately, I think it makes sense for Fox. The next thing that I hope that they can do as a consumer is rebundle. We've just gone through this era of unbundling and the fact that you get a new TV and you're like, okay, great, let me log into 15 different services. I would like to see them do something in bundling for a consumer. So again, looking at it from the lens of having north of 40% of watch time, that is a super valuable property and with the right ad-driven approach, I think it'll pay off.
I wonder how windowing fits into this. When I grew up, I didn't have cable, but you would get a prestige movie played on ABC like once a week. And for a while, that was the flow on Netflix. And HBO was like its own premium subscription. You open up the HBO app, it's all premium series and movies. And then some of that would trickle down, but then it feels like the ecosystem sort of branched a little bit where Netflix stopped getting the James Cameron library for a while. And Disney started hoovering up some of that, keeping some of the really popular movies, the Marvel franchise off of Netflix even for later run a year or two after because there was more competition from the different studios. So I wonder if Roku will be able to provide some sort of neutral territory in some ways where viewers can pick up something that's in the premium end, something that's a sequel to a franchise that they know and love, but it's not seen as competitive as Disney versus HBO or whatever. We will see. The history of Roku is interesting. We got to take you through this briefly. It was founded by Anthony Wood, born in 1965. When he was a teenager, he published Lunar Lander in the AOY magazine. He earned a bachelor's degree in electrical engineering from Texas A&M. He met his wife there. Now they have three children. Congratulations. They live in Palo Alto. But in college, Wood founded his first company, AW Software. What do you think the AW stands for? He's putting his name on the line.
Oh, you did? Wait, really? No way. That's awesome. So he was selling computer programs. He founded Sunrise Industries while studying engineering, developing software for the Amiga, the original Amiga system. After graduating, he founded his third company, Sunrise version two. Later in 1995, he launched another company, iBand, and iBand sold to Macromedia for $36 million in 95. That's a lot of money. And Macromedia of course was the makers of Adobe Flash. He left in 97 after two years to launch Replay TV, which was a digital video recorder, a DVR. You would have something coming in over the antenna and you would be able to record it and watch it later, much like TiVo was their main competitor. In 2002, he founded Roku, his sixth startup, to market home devices. Roku means six in Japanese, and he's just like, it's the sixth time I'm doing this. Imagine being on the sixth startup. I'm number four or three or something like that. He also worked at Netflix, but the Roku history is sort of interesting. He founded Replay TV. Replay TV was not successful. So he worked at Netflix. In 2007, Wood's company began working with Netflix on Project Griffin, a set top box. Netflix was thinking about getting into hardware and it would allow Netflix users to stream Netflix content to their TVs. They were working on like the Apple TV basically. It was a crazy fork in the road. A few weeks before the project was due to launch, Netflix's founder Reed Hastings decided that it would hamper license agreements with third parties. All of our third-party license agreements, they're giving us content, they're going to be super upset about this. We're shelving this product. We're not doing it because we want to keep Netflix on all the other platforms. When the Apple TV comes out or whatever other box is out there, we want Netflix there. We don't want Apple cutting us off because they say, oh, you got your own box, you can live over there, you're not on ours. Not that Apple would necessarily do that, but that type of set top box would not integrate or the smart TV would say, we are not integrating. Fast Company cited the decision to kill the project as one of Netflix's riskiest moves. Netflix then decided to spin off the company and Roku released their first set top box in 2008. In 2010, they began offering models with various capabilities which eventually became their standard business model. And so they went on and on and wound up as a very successful company now owned by Fox as long as this deal clears.
Yeah, they already have a product that sits on top of it. Tons of advertising potential and I think that regardless of whatever the market reaction is today, I expect that people will get it over time.
Well, Roku is ad supported and we are too. So, let me tell you about Console. Console builds AI agents that automate 70% of IT, HR, and finance support, giving employees instant resolution for access requests and password resets. Tyler Cowen shared some more thoughts on the recent Mythos brew. Haha. It's a good term. We talked about this earlier, but he says according to not yet confirmed but likely true reports, it was shown that the model could be jailbroken. There's debate over this now. The released Mythos already restricted bio and AI improvement queries rather than strictly in fact. So now we are back to the model not being available. Here are a few of the constraints on the US government, not the only ones, I might add. One, it needs for the main companies to stay in business. On top of that, it wants their IPOs to go reasonably well. And it's now much harder for the top companies to recruit foreigners, which is a significant share of their highest quality workforce. Demis, Ilya, Andrej for a start, are all international engineers. It is much harder for the main competitors to drum up foreign business in a credible manner and sustainable manner. That's interesting. We haven't seen many breakout charts of how much revenue is domestic versus international, but we have seen reports of OpenAI and Anthropic doing big deals with international companies. Some of these companies, Fortune 500s, they just have global footprints. So they got to use the models everywhere ideally unless they do all of their software engineering in Silicon Valley. 1B, how are American multinationals operating abroad supposed to use top systems moving forward? That's literally what I just said. I just predicted the next line. Whoops. I am a stochastic parrot. It wants to use model access as a tool of both hard and soft power. So model access has to be possible at some level, but it is very hard to control what foreign agents will do with partial model access when they get it in the future. Three, the US needs to stay ahead of China in the AI race. This is a big question. We have Aaron Gin from Hydra Host joining in just 10 minutes. We'll ask him for his perspective on this. Four, the US needs to issue restrictions that are actually enforceable and US citizens only doesn't fit that bill. That's a good point. You might have some KYC, but it's very difficult when these APIs leak into other products. All of a sudden, you're prompting a model within a piece of SaaS. We've seen this with Slackbot in Slack, Salesforce product. There's an AI model under the hood that's vended in by Anthropic or OpenAI depending on the deal, depending on the product. And that now needs to be passed along to understand, is this a US citizen on the other end of the line? Let's find out. Furthermore, markets and everything. It is easy enough to hire a traitorous American to access tools of wrongdoing. That's a really good point. How can you verify that every American is loyal? Or for that matter, it is not that difficult to fake citizenship in various ways.
Yeah, there's been people over the last 50 years that have gotten caught passing on or basically selling secrets around our various military aircraft, for example.
Yeah, there's a very controversial story of Virgil Griffith, a cryptocurrency researcher who I actually met once. He worked at Caltech, was deep in math and very excited about cryptocurrency, and he went and gave a talk on cryptocurrency in North Korea explaining how cryptocurrency works and how cryptography works, and that was seen as a violation of export controls and he was sent to prison. The crypto community is very upset about that because they maintain that math should not be illegal, this information should not be illegal. The government side says they were helping defense.
Was he thinking that he was going to liberate the North Korean people by giving them access to effectively or explaining how code can be used to create a store of value that is unsanctionable essentially, and so it was seen as a violation of sanctions by the US government.
And more importantly, have a North Korean stable coin.
I don't know, they had a lot of...
Calling it the most sanctioned stable coin.
Potentially, potentially. This one number five by Tyler Cowen was a little bit controversial. He says the US government cannot nationalize these companies and then proceed to run them effectively. And people were debating that, saying that it might be possible for the US government to own the labs in some way and leave them to their own devices to actually roll these things out. What do you...
Yeah. I mean, if you're like super RSI, right? You don't need the employees at all because the AI just improves.
So the government just says continue to improve.
Yeah. And that's it. So you don't actually, you know, the extreme scenario. And then on the other side, it's that okay, these systems are actually extremely complex. You look at the uptime of some of these systems, the guardrails, the research taste. In fact, you need so many employees to make these products effective. You actually need the international employees as well because they come up with great ideas. And so yeah, those are the two sides of the debate.
Six is Chinese and open source models do in fact improve at some reasonable pace even though they are right now considerably behind the best proprietary models, and that's something that I want to dig into more. It does seem like the pace of open source development in China is slowing. I'm not entirely sure what's driving it. It feels like there's a number of different things. Gavin Baker said it's about compute and they're turning their backs on the Blackwells that they had the opportunity to buy. I think it might be research ideas that are more locked down now in tighter controlled circles in San Francisco. It also might be the data, but you'd have to imagine that they have lots of people that are writing code, lots of people that are inferencing those models and then full data and information capturing of those rollouts. There are a number of different reasons why that pace might be slowing and we'll see. Maybe there's a big jump in the graph. Maybe we have another DeepSeek moment in the next couple months. We'll see.
I think everyone should expect some type of update hopefully today from Washington or Anthropic or both. Hopefully today. Anthropic had originally said I think 24 hours. Obviously a lot more time has passed but partially due to the events on the White House lawn yesterday making things a little bit harder. One person potentially impacted is...
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One person potentially impacted is Karpathy.
Theo went to Google and said, 'Is Karpathy a US citizen?' and AI overview seemingly pulled, went to Grok and said according to Grok, Andrej Karpathy is an EB1 extraordinary ability green card recipient, not a US citizen.
This is a loop. This is a loop from Gemini to Grok and back and then he goes back into Grok now because the screenshot's been shared.
This is RSI for sure. For sure. Where next, Jordy?
