Bending Spoons Buys Airtable, Snap Rips, Ads in BMW | Grace Li, Samir Kaji, John Quinn, Nikhil Reddy, Art Levy & Russell Kaplan, Brendan Carr

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You're watching TVPN. It's Tuesday, August 4, 2026. We are live from the TPPN Ultradome. The temple of technology, the fortress of

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Easy as corporate cards, bill pay, accounting, and a whole lot more all in one place. We gotta work on that intro, but we've been having fun making intro songs, mixing it up. We got John Quinn, the most feared lawyer. The lawyer the lawyers all fear coming on the show live, in person, in the TVP and Ultradome. You know him from Quinn Emanuel. He's the founder, a legend, a legal legend. When John Quinn stands, everyone kneels. That's what we say about him.

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That's right.

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No, we're very excited for the show today. Lots of guests coming on, lots of news. Big deal. The big one that's tearing up the timeline right now is that airtable, founded in 2012 and once valued at $11.7 billion, is getting acquired by Bending Spoons, founded in 2013 at 2.7 times ARR. Once hot startup, now an unfortunate victim of the SaaS bust, says Dee Dee D Doss, it raised $1.4 billion, but only to be sold for 1.285 billion enterprise value because they had almost a billion dollars in cash on the balance sheet. And so the total equity value was 2.25 billion equity value. Just clearing the preference stack. So early employees, founders probably got something. Later investors probably got 1x their money back, but probably had it tied up for a few years. So good outcome. But there's some interesting silver linings here. Obviously it's good for. Could be good for Bending Spoons if they got a good deal and they turn it into a mammoth cash machine. Also, there's some nuance to where different pieces of the. Where different pieces of the business are going because they're sort of dividing it up. But of course, Bending spoons is a public company now. And if you want to back Bending Spoons, head over to public.com or short it. Invest in.

0:53

Get financial advice. Yeah, do whatever you want.

2:23

Stocks, options, bonds, crypto, treasuries and more with great customer service. Go long, go short. Whatever you do, just don't use too much leverage. That can be risky. Matt Levine has a great piece today.

2:25

Yeah, it really sort of exemplifies the current moment where a company can sell for over $1 billion and everyone's like wow, that's yeah, yeah but and in a wake up call to the, to the many maybe younger companies that are at a lower revenue run rates that are raising at much higher valuations.

2:37

Yeah.

3:02

And basically signaling to them like you've, you've got some, many, many years of compounding to do.

3:03

Yeah. It's interesting. There's a SaaS apocalypse narrative which is like these companies are going away. Software won't exist, you'll just prompt it. And I think there's a lot more nuance to it than that. But one thing that it does feel like the, the underwriting the financial trajectory of these single point solution SaaS products, single player somewhat sticky, maybe not that sticky, maybe replaceable. It's not that they're going to zero Bending spoons wouldn't be buying it if everyone was churning and it was going to be a zero. But at the same time you can't grow. Right?

3:10

It's growing 20%.

3:47

Yeah, yeah. But you can't underwrite it at 40x revenue, 100x revenue anymore. And it feels a little bit like what happen happened with DTC E Commerce. Honestly there was a moment where E commerce brands were venture backable and you could underwrite them or they were being underwritten similarly to venture startups that had true moats, true compounding advantages. They would get the same multiple as a SpaceX or an AI company or a social media company. And that never really made sense. It was sort of, you know, just a weird quirk in the system for a couple of years and then go forward a few years when there were some pullbacks. Some of the IPOs went out. They didn't do that well. They traded down and all of a sudden it was like okay, well if we're doing, if we're doing, you know, in my case like food on the Internet and we're going to VC back a food company. Like has Nestle been disrupted? Like no. And that would now or Unilever is Unilever trading down like crazy because they're facing so much pressure and that's usually what happens when there truly is disruptive innov. Like you see this with. I saw some crazy post about how people were bearish on Starlink for a while and the company that they were competing with just went bankrupt. And you see this with social media came out and yes the newspaper and the Internet actually the newspaper stocks did actually trade down. That never happened in e commerce, D2C e commerce, any of that. And we're now in this new regime. So I Think that there's actually a pretty safe path if you just build the business. And if you're saying look, I AM in this SaaS industry, it is going to be more competitive going forward but I'm setting myself up to have a reasonable multiple so that at every point if I'm trading at 3 times ARR, I'm happy because the cap table set up right.

3:48

Yeah. One thing I will say is I started using Airtable shortly after it or it was 2015. Right. So I probably started using it a few years in. But the way that I used the product back then for my first business, I would 100% just vibe code a solution today because I was using very basic dashboard functionality. I wanted dashboards that we could use internally share externally. Now it'd be very quite easy to just do all of that in Codex or your favorite agent. So I do think that business is very much under threat over the long run, but still has sort of compounding that it can do. Just given how deep it is into the Fortune 500 and the Long tail of small businesses.

5:42

I'd be very interested to know what is new user, new logo growth like versus just expansion within an organization. Because if you have some company that's already sort of running on Airtable, they're growing so they're adding seats, they're adding functionality because they're sort of bought in and they're not going to rip it out, what does that growth rate look like versus new companies actually going and signing up and saying yes, this is the best tool for the job because you do get a lot built for free and it's not like they don't have access to AI agents that can improve their systems. You might be doing a lot of maintenance on your Vibe coded solution, but at the same time a lot of people, especially in smaller organizations were using this as just one small dashboarding tool, one small database that is sort of replicable. So interesting to see where it goes. And yeah, just like an interesting data point in the saaspocalypse. Late stage growth. Like is it a zombie corn? What term are you using for it? Jared Sleeper has some more thoughts. 480 million ARR growing 20% it's a unicorn exit. Many very satisfied customers including Jared Sleeper for years. Fantastic run. Never underestimate how much VCs love products that make quote everyone a builder. The wrinkle is that one player products are high. Churn was Airtable. I feel like the whole pitch for Airtable was that it was multiplayer, but maybe that wasn't the way that people were actually using it that often, a lot of people would just be like, oh yeah, that guy on the team is using airtable for that thing. But I mean, certainly from very early on the.

6:29

I think by one player he means that you can. It's more like product led like one person at a company. Because I've only used it in a team capacity. Right. But one player can sign up, start using it, invite other people to the team.

8:12

Yeah, but it's an advantage because you're bottom up. You can just ramp into a different company so quickly. But at the same time, if you're not like going through the CFO and being like, there is a mandate that we're using the ERP system.

8:26

200 seats at once.

8:37

Exactly. Yeah, it is a little different. Three his third point, gross retention remains the single greatest predictive variable of terminal value for any business that doesn't have a scale effect or network effect. It dictates somewhat mathematically what folks like bending spoons will pay. Great to see employees get liquid, but perhaps sad that some are learning about liquidation preferences SaaS multiples to their disappointment. So of course if you had mentally marked your stock at 11 billion, but then this deal happens, the investors that put in that money at 11 billion, they're going to get their money back first and then you're going to have to fight for whatever's left over the scraps. Silicon Valley can do a better job talking to employees about what stock is worth in various scenarios, but no one is incentivized to do it. Well, I mean, you can also just look it up. There's a whole bunch of blog posts about it. You can ask judgment and get a whole deep dive on. Run this whole scenario and play out every possible option. But yes, I agree, no one likes to oh, we're closing a big candidate. Let's tell them about what's going to happen if bending Spoons comes in.

8:38

Let's tell them what happens if we get our spoon bent.

9:46

Bending Spoons is emerging as the Constellation software of the prosumer higher churn. SAS is a fascinating turn of events and a good thing for pref stacks everywhere. Just because there's more liquidity for systems.

9:49

Well, it's a buyer of last resort.

10:04

Yeah.

10:06

Whereas like no founder setting out, hey, I want to be, I want to, I want to go on this generational run and then get my spoon bent. But it's still great because it allows again, it is real liquidity. This is a win.

10:07

I think.

10:25

Bending spoons. Bending spoons will obviously end up. I would, I would say like right. Sizing the company. They're not going to continue to run it the same way that it's been run.

10:26

Yeah.

10:35

But at least it allows everyone to get out and go on to do new things.

10:36

Yeah. In an interesting twist. Speaking of getting out, SHIELD Monot shares this about the Airtable acquisition. They spun out their AI business Hyper Agent prior to the acquisition. So the company lives on and likely some cash with it probably can be recapitalized. Seems. Seems like a fantastic outcome. Shed the old business and focus on AI So I would be very interested to see who is going to be working at Hyper Agent. Is this something where the founders didn't want to exit the business entirely and then just start from scratch. They wanted to take a whole bunch of the team with them and they wanted a bunch of the resources and learnings and so they were able to package everything up and this will be something that's very founder led or was this just okay? That is a more expensive piece of the business. Bending spins. It's earlier in its ramp. Maybe it's working, maybe it's not. But that's not the business that's bending spoons in. And so this is more like a bending spoons look.

10:43

We've had, we've had both founders on the show. Bending spoons is like hey, let's take a great product and just basically

11:35

right.

11:45

Size the team, run it efficiently and we're not trying to get. We're not, they're not ever in the business of trying to get growth back to 200, 300% a year. Howie's been on the show. He talked a bit about Hyper Agent. That's a product that if they execute well can grow 10x year over year.

11:45

Right.

12:03

And so I could imagine again leaving some of the team to just continue running Airtable indefinitely and then again like you said, taking some of the talent out and saying like let's take another big swing.

12:04

Yeah, yeah. It's a fun twist on like post acquisition. What do you do in this scenario? Like the team doesn't necessarily need to stay on. That's not the Benny Spoons thesis. There's not some crazy earn out probably for most of the team members. And so you have the opportunity to go do something new and if you're already all set up it's like yeah, just put everyone together before the deal happens.

12:15

Yeah. The other thing that's notable is notion I think just did a tender.

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They just did a tender or they did a tender. A While ago I thought well, at

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some point, at some point within the last year really at 11ish billion, they're at 600 million.

12:45

No, no, no, you're right. This January of 2026. Yeah I saw this quoted as like,

12:51

oh, do you have any idea how quickly they're growing relative to Airtable? I imagine they're growing significantly faster.

12:56

So the news was that on January 26th of 2026, Notion, which very much feels like easily comped to Airtable. Airtable was like modern Google sheets. Notion was modern Google Docs. Of course there's a ton of overlap in the capabilities and there's a lot more to it, but Notion sort of feels like a similar shaped business. But gic, Sequoia and Index purchased Notion shares in a private tender offer January 26th of this year. The total tender was $270 million and $11 billion valuation, which was the last valuation I believe they say we waived a one year vesting cliff on options for current employees. So I think everyone got to participate. There's a whole bunch of returning investors. In 2025, Notion's growth rate accelerated on the back of AI adoption within our platform. As of last year, more than 50% of the ARR came from AI enabled customers. The growth over the last 12 months is happening globally. They don't share an actual growth rate but I don't know, they must, everyone must have been optimistic at the time because they did the deal at the full 11 billion. So anyway, Bryce Roberts is laughing at the VCs I guess who were able to play the markup game and were able to raise one, maybe two funds on the airtable markups alone. I'm sure there are some, but I mean most of the funds that were in Airtable were in a bunch of stuff so I don't know how true that is. Maybe the really early stage people, I don't know.

13:03

Yeah, Airtable did enough rounds back to back to back that pretty much every fund is in it.

14:38

Yeah.

14:45

And they also have a bunch of other investments that are high performing during that era. I don't think he's making fun, he's just pointing out the Silverland.

14:45

I don't know. Liquidity is laughing about the fact that Bending Spoons has a very soft, friendly brand. Bending Spoons branding, very, very simple. And it just sounds like such a simple name. It's not like Cerberus Capital, you know. And yet when they negotiate, they're presumably difficult to negotiate with.

14:55

I don't know.

15:17

I mean in a certain situation you can Be very friendly and amicable and just sort of say like yeah, we're, we're a buyer at 2.7 ARR. We're not going to like screw you over here. We're just going to give you. This is a fair price, take it or leave it. And you can take it. You don't necessarily need to be this like crazy werewolf of like a shark, you know.

15:17

Yeah, there's just not, there's just not that many, there's not that many buyers for a company like airtable.

15:34

Yeah.

15:38

And it's a, just sort of in this economy, a slow growing enterprise software business. Right. There are not that many buyers. If Airtable had wanted to sell in 2020, I'm sure they would have gotten meaningfully more. They probably did have offers at different points. You could imagine Airtable ending up at a Salesforce as an example. But now Luca is saying the buyer of last resort is like maybe unfair.

15:39

Yeah. Just like a value based buyer.

16:19

Yeah.

16:21

I don't know.

16:22

Yeah, I mean it is, I guess it's like yeah, the first resort would be like the hyperscalers.

16:22

But yeah, ideally you never sell. You go public and just keep compounding. Second best would be a strategic.

16:30

Right.

16:40

And it just feels like the enterprise tooling market is pretty mature amongst the hyperscalers. Like Microsoft's not going to replace Excel with this. Google's not going to replace Google Sheets, Meta, Amazon, they don't really want to get into this particular thing. A whole email suite like the office productivity suite. And so you get to this price and it's like IPO or sell. And so they chose sell. Anyway, let me tell you about Shopify. Shopify is the commerce platform that grows with your business. Lets you sell in seconds online, in store, on mobile, on social, on marketplaces. And now with AI agents, Snap earnings happened. And Evan Spiegel was on CNBC talking to Sorkin. And it's a very interesting storyline because people are, people are obsessed with the specs. I mean the job, job completed in terms of like getting more attention for the company. But it's been sort of a weight around the company because the question is like okay, is everyone going to be buying $2,200 smart glasses from you anytime soon when that's not really the story. The story is actually like the revenue growth, the profit, the operating leverage that coming back into the business. So I mean overall it was a good quarter for Snap Clear Beat. Revenue was up 19% year over year with profitability and cash generation rising even faster. So that's that operating leverage. They're growing revenue faster than their growing costs. And so they're increasing their margins. Advertising revenue grew 9% to 1 point, roughly 3 billion in the quarter. But the really interesting number that was surprising to me was they're making $316 million a quarter in subscriptions and paid services, up 85%. So just subscribing and being a paid power user, it's only 3% of the user base. Something like that. That's. That's now a billion dollar line of business. Obviously very high margin working. Really plays to the strengths of what SNAP offers. And usage is up globally, but they're losing a step in Western markets. So the North America, I think, fell 7% and Europe fell 2%. And so that's not great for long term ad monetization because you want to be on the. The richer countries generally, but still revenue is accelerating. They are monetizing better. And that's probably an AI story. It's just like a boring AI story because it's like the ad recommendation system got a little bit better. Nobody really cares. People want to focus on specs, but they're $2,200 and they're bulkier than competing smart glasses.

16:40

Well, it felt like in that interview Spiegel was talking about specs, but he wasn't wearing them. And so.

19:19

Yeah, does he need to wear them?

19:27

I think he kind of needs to wear them all the time.

19:28

I mean, you're gonna hold Apple to that. Tim Cook's gotta wear a Vision Pro everywhere he goes. That'd be hilarious.

19:30

No, but, but the Vision Pro is

19:36

not meant augmented reality. It's augmented reality. It's meant to be worn 24 7. If you're a serious person, let's actually pull off.

19:38

You should do a full show if you love. I could Apple Vision Pro so much,

19:45

not be a problem.

19:50

Do the full show.

19:51

Okay.

19:52

Do the full show.

19:52

Okay.

19:53

This Friday we'll test run it with Tyler.

19:54

So here's an interesting tidbit. Specs, it feels like, oh, my God, they're spending so much money. It's like so crazy. I think the rough estimate is like 300 million a year, which is a lot, but it's only 5% of their cost. It's like 20% of their overall R and D budget. Maybe something like that. These are very rough numbers. But it's not like if they just spun out specs or cut specs and they were just like, we're not doing anything there. All of a sudden the business is wildly profitable. It's not that big of a stone around the neck. It's more just a distraction, a question. And it's also not great that on the earnings call they ask, how many pre orders have you sold? And he sort of danced around it and really give a straight answer on that. Because if it was good, you'd probably be like, yeah, we sold.

19:58

Yeah, you'd lead with things.

20:51

Yeah, yeah, yeah, yeah, yeah.

20:52

And even, even meta selling what I think now is millions of devices.

20:54

Pretty good.

20:59

Is not exactly like shouting. They don't want people to necessarily focus on that.

20:59

Totally.

21:04

Even though it is a proof point that there is a market Totally, totally. For camera glasses.

21:05

Basically.

21:09

The crazier thing with Snap is that this is a business even after it's traded up 13% today, the. The business is at a $6 billion a year run rate and it's trading at under 10 billion.

21:10

Right?

21:22

Yeah.

21:23

So which just goes to show how even, even with some momentum across the business, people just do not have faith in the company.

21:23

Okay, let's play a little bit of Evan Spiegel on CNBC.

21:35

I want to hear him snap reporting Q2RE results after the bell on Monday. They scored an earnings beat with $1.6 billion in revenue. It's 19% higher than just one year ago. And joining us right now for more Snap CEO Evan Spiegel. He did not bring his glasses on the set, but we're going to talk about those glasses in just a minute because I think that's been a big

21:39

part of the story.

21:57

But you beat across the board, not just by the way, on the revenue piece, but on the margin piece, which is what I think the market was actually looking for.

21:58

Yeah.

22:05

Well, first of all, thanks so much for having me on, Andrew. It's such a beautiful, beautiful morning here in Aspen. It was a great quarter for Snap. And I think what folks are seeing is that the free cash flow in the business is really starting to inflect, which is allowing us to offset dilution, to strengthen our balance sheet and of course, to continue investing in the future, which is so important to us.

22:06

Forward to the future. 230 pieces of that story.

22:22

I mentioned Glasses. We'll get there in a second. I think Glasses, I want to hear him talk about about 2200 bucks right now. 2100 bucks is what they're going to come in 195. Okay. So the question I keep $5 under, how quickly those can come to market in a way, at a, in a way and at a price point that people buy them you know, en masse and how you think about the competition coming from whatever you think Apple is ultimately going to create, where everything Google is working on and whatever you think Metta is going to do next.

22:24

Well, we've been working for more than 12 years to reinvent the computer and make it feel overnight. I think people are spending more than seven hours premature staring at screenshots. Specs represent the opportunity to bring computing into the world, to make it a shared experience and ultimately to help bring all the productivity gains we saw in desktop computing and laptop computing to the real world and to real world jobs, which is the vast majority of jobs, about 60% of jobs. So I think this computing transformation is incredibly exciting. We're certainly the leader in the space. I think specs represent a totally new category. Right. If you look at the landscape today, you have very bulky but capable headsets and then you have very limited but lightweight glasses. And specs represent, you know, the capability of some of these VR headsets in terms of the immersiveness and the ability to really have a full workstation experience, but with the wearability of some of these lighter weight glasses.

22:52

But do you say to yourself, apple's going to come and do the same thing and that is going to go. I mean, so how do you think about that, given the cost of putting this all out there and the amount of money that some of these big companies can actually throw it?

23:42

Yeah, Well, I think, you know, as we look at the history of innovation, I actually think one of the things that helps power innovation are constraints. Right. And one of the things that makes Snap so unique is that we've been so laser focused on specs for such a long period of time. So I think this focus, our history of innovation, you know, in our first mover advantage in this space, it should

23:53

be a different company. If you want to be laser focused, it feels like the benefit would be like, do the Elon thing, start a separate company that is laser focused on it. The investors in that company are laser focused on that. The employees.

24:11

Yeah. Have a distribution deal with Snap.

24:25

Yeah. You know, like, just have this, like, you know, get, we're good on this video. Just get Snap to a really polished, oiled machine. You own all the equity, you have the founder control. It's your, you know, your financial backstop, your, your credibility to actually go and truly laser focus. Because it's weird to be laser focused on a thing that's not your core business. And then everyone's just constantly asking you, like, we'd love for you to laser focus on the main business that's making

24:27

billions of dollars every year seems pretty solid.

25:01

Yeah, it's like making $6 billion. What do you think, Tyler?

25:04

Yeah, I mean, earlier this year they did spin off the AI video company and that seems like much more related to the main, like, you know, app.

25:07

That would have been the glasses. Right. What is the AI video company?

25:14

I think it's called dotmo. It was like their internal generative video team.

25:17

Interesting. Yeah, I feel like having in house.

25:22

Yeah. It also. He was talking about enterprise use cases for the glasses. I mean like workplace use cases. It's so hard to imagine. It's, it's as an independent company, you make a really great device. I can imagine that company having its own go to market motion saying, hey, Amazon, we want you to use our devices across your workforce and maybe they do a pilot. But trying to sell in like Snapchat glasses into the enterprise feels like just going to be a tough sell.

25:26

I also wonder, I mean, I don't know if this would actually be a good strategy for such a big company, but I would be interested to see if there's an opportunity just for another physical product that could actually get to scale. That's way cheaper. I'm thinking like some sort of like disposable camera that doesn't have a screen on it. You take the photos and then they upload to snap in the app. And it's like this special way of like disconnecting more on theme, but way cheaper because it's just like a basic camera in a shell or something or going into like, you know, a ring or a wristband. Like there's been so many companies that have figured out out how to get a wearable or a hardware device actually in the hands of millions of consumers, like maybe do that first and then grow from there as opposed to taking like the straight shot. I mean it's a straight shot to, to full immersive augmented reality. The most challenging thing, which is, which is just. It's a really, really tall order.

25:54

Yeah.

26:53

Anyway, let me tell you about MongoDB. What's the only thing faster than the AI market? Your business on MongoDB? Don't just build. I own the data platform that powers it. Well, Open Air is firing back at Apple a little, little glazy. They say Apple is one of the greatest companies of all time. What a funny way to kick off a blog post, firing back in a lawsuit. Apple just cooked open.

26:54

I just, they say and built a reputation for obsessing over the smallest Details.

27:19

True.

27:23

And then they go on to. To say maybe there were some details that were missed.

27:24

Yes. So what were the key things that they said? Apple accused OpenAI of ignoring them. Turns out the lawyers emailed the wrong Asian guy because two Asian last names look similar. They claimed you discussed the allegations with OpenAI's general counsel. They admitted that that conversation never happened. Accused ex. An ex employee of improperly accessing physical files. They forgot to mention Apple employees were allegedly asking him to access those same files after he left. So there seemed to be some scenario where like the guy had left, but he had so much internal knowledge that someone at Apple was just like, hey, like can you remind me where this thing is or something.

27:29

Yeah. When reading through the initial complaint, Apple made it seem like the employee, or the former employee was just running wild through his old laptop.

28:08

Yep.

28:20

He had sent a message to someone at Apple saying something to the effect. I'm paraphrasing, but I still have access to my computer. Lol. But the reason that in the text messages that they shared, you can imagine the reason that he was there and sending that message. Why would he send the message if he was doing something that he was. That he, that, that, that that was wrong, that he would feel guilty of. Right. He was helping his former teammates. And they say there's 10 other people I could ask you, but you're the smartest or something like that. Yeah. And, and so when you have all this context, the story looks quite a lot different.

28:21

Yeah, they're sharing a lot of text messages. You can go read the blog post, but there's like full back and forth imessage between Chong Liu and Apple employees where Chang, whose last day at Apple was January 22, 2026, is being asked by his former colleagues to help them locate files and information to assist them with their Apple work. Note other individual names. And Apple confidential information has been redacted. So certainly another. Another wild.

29:04

Yeah. I'm still, I'm still just very surprised that Apple, during the middle of a, you know, a year long talent raid, would know that someone significant had quit and that would not go through the process of actually taking back their laptop and making sure that, you know, the separation was, you know, really finalized. People have been saying stories how historically, you know, maybe call it 15 years ago, if you quit Apple, someone would show up to your house immediately and take back any prototypes that you may have had or anything. Anything of the sort.

29:32

Yeah, I'm excited for Prediction Markets to get on this. Honestly, it was very helpful during the, the Elon Musk Open Air case currently call. She has a few here. Will the OpenAI Jony I've device have a screen no is at 82%. When will OpenAI release Astra? There's some dates here. What else are they? Will OpenAI increase the cost of ChatGPT? No at 87%. No market on the Apple lawsuit because it's still very early. There's not even a court date yet. But we'll keep tracking it because it's an interesting story. Let's move on to the next story. But first let me tell you about Railway. Railway is the all in one intelligent cloud provider. Use your favorite agent to deploy web app servers, databases and more. While Railway automatically takes care of scaling, monitoring and security. So is BMW forcing owners to watch a Spider man brand new day promo when they start their cars up? That's the question. A lot of people were upset about this. Jordy this morning is like, this is awful. There's some nuance here. So BMW. BMW owners are debating the company's latest in car promotion after videos spread across X showing a Spider man brand new day animation appearing on their vehicle's infotainment screen at startup.

30:16

And the reason why this fake news triggered me was back in the day in college I was getting a Kindle and on the checkout page it was like do you want to save $10 and get the ad supported Kindle? And as a college student I was like saving $10 sounds pretty nice. And then I had to live with a Kindle that would sit on my bedside table just blaring ads in my face constantly. And it wasn't like I would have actually appreciated ads. Can you just flip it upside down? True one, one simple trick. Jordy hates this one simple trick. But it wouldn't be ads for like Spider Man. It would be ads for random books, right?

31:40

Yeah, books.

32:22

That and the targeting wasn't good. So again, people don't like ads.

32:23

That target was good.

32:27

Anyways, what happened here, John?

32:29

Okay, so venture capitalist Shield Monot wrote, quote, when you start a BMW, it shows you an ad for Spider man really cheapens the BMW in my opinion. A16Z partner Josh Elman added, of all the brands I thought I might I thought might bombard you with in car ads on screen right when you start the engine. I had BMW pretty dang low on that list. This seems the opposite of luxury and performance. Is BMW a luxury brand? Thought they were premium.

32:30

Yeah, I think it's a premium brand.

33:01

Premium brand.

33:03

Even Paul Graham weighed in though. Reposting Monad's video and saying, I'm never buying a BMW. He's never buying a BMW. What about an old BMW? They can't show you ads in a E39M.

33:04

Wait, but what actually happened? You have to opt into this community.

33:16

Notes Added important context According to one note, the Spider man promotion is an optional startup banner available on compatible BMWs from July 27 through August 10, 2026. The banner does not automatically play a full screen ad. Instead, owners must tap in to launch a themed animation featuring music and synchronized vehicle lighting. BMW has offered similar limited time startup experiences in the past, including holiday themed animations.

33:19

Jordyn. Very, very, very different. You can just see the pop up there. Surprise. Spider man just dropped into your BMW and that's an ad.

33:48

You press the button. You have to actually turn it on. It's not.

33:57

Yes, yes, but I'm saying there's a banner ad.

34:01

Oh, there is a banner.

34:03

It's just a banner. Look at the video. Start it over.

34:04

Start it over.

34:07

Let's see. Let's be the judge of this.

34:08

Look at this banner. It's a banner.

34:10

Oh, okay.

34:12

And then you click the banner. Then it plays an ad. So it's a pop up that you click, okay. And it's like, wait, what is this pop up? Why does my car have a pop up?

34:13

It should probably be popped up. And then it plays an ad in to a setting. Somewhere there should be an icon that's

34:21

like promotions or themes that didn't look tucked in anywhere. That was the main. That was the main.

34:26

Because I'm fine. If you, if there's a, if there's a theme and you're like, I want red lighting in my car. I want blue lighting. I want Spider man theme. I want Christmas theme.

34:32

Go over saying, surprise, a Spider man ad. And they're not even like, they should just say, hey, we have an ad for Spider man here if you'd like one.

34:41

Okay. This is right on the line.

34:51

But this, this is, this is, this crosses my line. This crosses your line because you're like, what does Spider man have to do? What is, what does Spider man have to do with my car? And then you click it and you get an ad for Spider Man.

34:53

But I just think of the consumer surplus. This is making BMWs cheaper. This is making, this is bringing, bringing BMW.

35:05

Let's look at the price of inflation.

35:13

Yeah. Also not necessarily the best deal.

35:15

Yeah, let's look at BMW inflation anyways. Yeah. Really, really bad move. I wonder how much they actually made.

35:17

I think you're just judging it. Because I think you would feel completely different, completely differently if you saw a banner and it was Nitro Circus and it would just take over your car, or if it was just a full takeover of Sam Suleik at the Arnold Classic, something like that, that would be much better received. It's not.

35:24

It's not a surprise. Spider Man™ just dropped into your BMW.

35:45

Okay. The ultimate driving machine. Yeah, not, not super well executed. But BMW has been going back and forth with stuff like this pretty consistently. Like, aren't they the ones that have the subscription to the heated seats? Isn't that BMW? You know what I'm talking about. So they put the wires to heat the seats in every car and then if you want to use it, they charge you monthly. And this is just like, it's basically just a nerd snipe. Or like, I don't know, like a treasure hunt for hackers. Because if you're a DIY hacker and you can get into that and unlock it, jailbreak it, you just get, well, not free because you already paid for it. But you don't have to pay the subscription.

35:50

Yeah.

36:39

Techno Chief says, wait, I thought we loved ads here. I do love ads.

36:40

That's true.

36:44

But I think buying unless. Unless BMW, I think if they gave the option at purchase, saying, do you want to buy the ad supported manual transmission BMW M2 or do you want the ad free premium version? And there was a bit of a price difference.

36:45

Yeah.

37:03

Then it just feels, it feels wrong. They didn't do that.

37:04

Sort of like a Ferrari tailor made program. Oh, like what stitching did you get? Oh, did you go ad free or ad supported? Like, oh, you went, you went manual, Cool.

37:06

Yeah, I went manual. But ad supported.

37:17

Yeah.

37:19

Manual,

37:19

Yeah, I got a manual SP3 ad support. I mean, the ads in an SB3 driver are probably very hard to reach, so pretty valuable. I would love ads there. But it's got to be ads for the most elite products. It's got to be. You're getting your SP3 and it shows you an ad for Amangiri or something. Spider Man's doing well though, so the ads are working. So maybe the BMW owners showed up in droves because the new Spider man movie scores Hollywood's second biggest debut ever. That's actually huge. The Sony film grossed $932 million through Sunday, topped only by 2019's Endgame. That is massive. Did you realize that this movie was making that much money?

37:22

I mean, if you had asked me an hour ago, is there A new Spider man movie coming out, I would say. Haven't heard of anything.

38:15

Yeah, I haven't seen that much energy about it. I've been aware of it, but I have not, I've not seen like a massive takeover. But also I'm not driving it at support of BMW, so maybe that's the problem. Spider man spun a massive weekend for movie theaters, flouting superhero fatigue and giving a major boost to Hollywood summer box office. Sony Pictures Spider Man Brand new day open to an estimated.

38:26

We got some good ideas here in the chat.

38:51

Yeah. What we got.

38:52

So ad supported cars that get you free self driving where they. The ads take over the whole entertainment system in the car. So you're sitting there relaxing, you know the car is driving itself but then it's just blaring high volume. Every.

38:54

I'll take it a step further.

39:12

Every five minutes, 1-32-ad.

39:13

What if there was a volume, what if there was a whole company dedicated to building self driving cars that was funded by an advertising company. Like a company that just prints billions, hundreds of billions of dollars in advertising. Like their DNA is advertising and then they go into the self driving car.

39:15

Why has no one done this before?

39:32

They would have a huge advantage in

39:33

terms of, of why has no one done this before.

39:35

Yeah, they could even have a video platform where they're making a lot of money running video ads and they could take that.

39:37

Almost like a YouTube.

39:44

Yeah, exactly. So you could have like, you know, a huge ad network, YouTube ads and then you could have a self driving car company put them all together. That's synergy.

39:45

Right.

39:54

And maybe you could spin the company out at some point and raise some venture capital too.

39:54

Spin the company out secretly still advertising? No, I don't think Waymo will do crazy ads. I think, I don't know, maybe a

39:58

major streaming executive just text. A major streaming executive just texted me and says okay, going to get Tubi to build a car right now.

40:10

You gotta build a car, you gotta do it. What else is going on here? Okay, let me tell you about Crowdstrike real quick. Your business is AI. Their business is securing it. CrowdStrike secures AI and stops breaches. The owners of MySpace say they're planning to relaunch the once dominant social media platform. And I feel like this has happened multiple times. I'm having deja vu here. But we'll dig into it. In a recent documentary called MySpace about the company.

40:19

We got another app, Lovin Cars. Axle.

40:52

AI Axle. Axle.

40:55

No, it's a self driving car but you have to play mobile games in order to keep it going.

40:58

That's a feature. I mean, you get a Tesla, you

41:04

can play Polytopia there, the Steering wheel.

41:07

Why not Clash of Clams?

41:09

If you have a big iPad and you're just playing mobile games, but if

41:10

you stop 90% of the way there,

41:13

if you stop leveling up, the car just pulls over.

41:15

You got to keep playing. Okay, we're getting somewhere. This is good. So in the recent documentary MySpace, Chris and Tim Vanderhook, the brothers who acquired MySpace in 2011 after its decline, said they intend to relaunch the platform with a new vision. There's no launch date that's been announced, but they say they want to build a social network that feels different from today's algorithm driven apps. They don't believe in preference falsification. They think when people say they don't like algorithmic feeds, they actually don't like them. We'll see how it pans out. So MySpace launched in 2003 and quickly became one of the world's largest social networking sites. It became famous for customizable profiles, music discovery, and its iconic top friends feature before Facebook eventually overtook it in users and became the dominant social platform. At its Peak, though, MySpace attracted roughly 150 million monthly visitors worldwide. That's not necessarily people that had profiles, but just visitors you'd land on a MySpace site. So huge for the day, but not huge by modern standards. So the platform's ownership history mirrors its dramatic rise and fall. In 2005, Rupert Murdoch's News Corp. Acquired MySpace's parent company for $580 million. It was like, I'm pretty sure it was a fantastic outcome at the time. Now, by social media standards, it's like, what are you doing just six years later? In 2011, News Corp. Sold MySpace for roughly three $35 million. Though so completely, you know, got racked to Specific Media. Led by brothers Chris and Tim Vanderhoek, Justin Timberlake invested in the company and became a prominent creative advisor during the acquisition. In 2016, Time Time Inc. Acquired Specific Media's parent company in a deal valued at about $87 million. Three years later, Meredith Corporation acquired Time Inc. Briefly inheriting MySpace before selling its stake back to the Vanderhook brothers that same year. All told, MySpace went from a $580 million trophy acquisition at the height of the social media boom to a roughly $35 million distressed sale just six years later. Today, MySpace.com is still online, primarily serving as a music and entertainment website, while its parent, while its Owners prepare what they hope will become a second act. Are you bullish? What do you think they should do? What's the advice for the owners of MySpace.com? nostalgia. You gotta call bending spoons, right? Is it making any money?

41:18

That's the issue for bending spoons.

43:48

You gotta get one Italian teenager to run this whole thing.

43:49

They're like, if you were making $500 million, we would love to buy you for 1.2 billion, but since you're making less than.

43:53

I don't know if they're making any money. They must be making some money just as a website with some ads on it or something, who knows? Anyway, let me tell you about Cisco. Critical infrastructure for the AI era unlocks seamless real time experiences and new value with Cisco. Our next guest is here already, I believe we have Grace Lee from Intelligence, the co founder raising a seed round from Index Ventures. Brought you in a little bit.

44:03

What's going on?

44:29

How you doing, Grace? Good to see you. Great to meet you. Thank you so much for taking the time to come chat with us. Please introduce yourself and the company.

44:30

Well, I'm Grace. I'm the CEO of Intelligence. We just launched yesterday. We've been the team behind Design Arena. Actually the company started because we were making games. We're trying to make a game engine. We noticed that the models could make playable games, but the games were not fun at all. Like nobody wanted to play them. And we thought building Harness probably doesn't seemed like the right move. What if we could turn it both into a product for people to build games, but also a product for the models to figure out what it is that humans like to play? Like what are playable games that are fun? Then we started that. We just. One of our friends linked it on Reddit. He didn't even tell us about it. And it got like 3,000 users overnight. We're like, well, that's more than the game engine has ever gotten. And since scaled that to, oh man, 5.6 million people across 192 countries. So every country in the world except for North Korea, we've been told that there are sanctions there so we can't go in there yet. And then on the Frontier Lab side, we pretty much work with all the major players to help improve their models and hard to verify domains.

44:38

Amazing.

45:36

Can you walk me through how Design arena works? The various incentives that happen to actually get people to review designs for models and just the whole, it feels like a, a product that would have sort of like a cold start problem. How did you Solve that. How do you scale it? How does it function? Like in equilibrium?

45:37

Oh yeah, like really good question. So we, we took a look at the optimal form factor for these cases where users are trying to do something, but you don't really know what the optimal and state is. So designers, right, what do they show their clients? They actually, they get the client prompt and then they show the client multiple, multiple versions of maybe what they might want to see. That's exactly what the user interface looks like for our users. So they don't actually need an incentive because it's a design tool for them that does what they want because they show them multiple versions, just like in the real world. Like how does a singer figure out if a song resonates? It's not that they cook in a room, really study, they just release multiple songs, right? They see what hits work. How does a game developer figure out what games are playable? They release multiple games and they see what works. So for the user, they actually don't need an incentive to be on the platform. They want to design something or make a game or make a website. And the form factor perfectly fits that. The models, the intelligence doesn't exactly know what the user wants, but then they'll get multiple versions and through feedback you can get closer to the end state and that just happens to be in the perfect shape that the intelligence layer needs to improve more to what it is that humans want in the first place, the preference signal, the user behavior, etc.

45:57

Little bit of like, I don't know, philosophical question, but how do you think about optimizing design for the user and what the user thinks looks good versus what is good for the business? Because I've been like, I've just been bombarded with products and websites that feel like they're horribly designed, designed, but I understand that they are economically valuable. Jon Gruber was on the show yesterday. He wrote a blog post recently about the Temu app being a mess. And if you go to Temu, it's like so many pop ups and spinning wheels. It is the epitome of terrible design in the aesthetic sense. But I'm sure every design decision that they've made has been economically justified. And I don't think that they like never thought to make it clean. Right. And so how are you thinking about those two tensions, like actually instantiating themselves in the work that people do when they go to an AI model and ask for a design?

47:10

Yes, very good question. So it is our job to figure out what better means for this person if you are on the platform to make a beautiful portfolio, then you are going to give us feedback that hints us in that direction. Through a couple of interactions we can figure out, okay, this person is actually just in it for the visual preference. But if you're on the platform to build a highly performing website like a TEMU website, for example, you're probably optimizing for dollars converted at the last screen. And so the end signal that you're tracking is different. The way that we like to think about it is we're almost doing the work of a pm. What a PM does is they sit in the product and they took a look at the analytics of what people are doing and they have an end goal in mind. The PM's job is to figure out what is the right KPI to be optimizing for and then to bring that to the table of engineers and to the resource allocation and should try to get it in that direction. So it is our job to figure out for this particular user what does better mean for them and then measure those bright signals to then label correctly and then provide that as feedback to improve the models.

48:19

How do you. Jordy, please.

49:17

You had a follow up. I have a.

49:19

Just following up on Design Arena. How are you balancing the various downstream business opportunities that come from having a product, a platform like Design Arena? Because I could imagine you can sort of become a model router in many ways. You can do forward deployment work and be an expert and partner to companies that are picking tools like there's services as a software, there's going down the financial stack. Like there's so many opportunities. It must be hard to like you're sort of stuck in the idea maze longer than usual. Even after you have traction and fundraising and revenue, there's more opportunity. What have you looked at? What's not interesting? What has stuck out as the obvious.

49:22

Oh, that is the best question, by the way, to be asking in this space. Like there are so many downstream opportunities that come from figuring out what it is that people want. What we found to be the most interesting actually is an intelligence marketplace, right? There is some. This is a little bit kooky, but I do believe that there will one day be as many suppliers of intelligence as there are currently suppliers of information. This feels like the early days of the Internet, right? Like where anybody can, can make their own intelligence. I don't care if that's a foundation map lab with a, with a main API or something that's post trained or something that's totally off the shelf with a skill, but there's like a million different suppliers of information. And if you can be the person that best matches the supplier of information with somebody, a supplier of intelligence, I should say somebody who's asking for intelligence. The same way that page rank for Google search was the critical bottleneck to get the Internet into everybody's hands. That is the position that we actually want to be in. So whatever the work it is that we do, we want it to fit into this flywheel that we have. And we want to make sure that we're not just good at value creation, like not just good at improving the models, but also good at value capture. Once the models get better at design, it's not like our work becomes less useful. It actually means our product can reach more people because they're better at design. So we care about doing things in the opportunities that are coming our way, which we're lucky to have a ton of inbound from, from yesterday, that it feeds into this overall flywheel, that if the models get better, we also get better.

50:10

Yeah,

51:41

almost $60 million of revenue, I think, I think a lot of people were quite surprised. Not because the company isn't like significant and at the center of this, you know, explosion of creative intelligence, just because it's. You guys had kind of flown under the radar. So first I want to hit the gong for 60 million ish of revenue.

51:44

There you go.

52:09

Great hit. I like the ratio of the fundraise to the revenue. You know, normally when somebody comes on with this much revenue, they're like, you know, raising a billion. I'm sure that's up next for you. But I wanted to ask, like, what, what do you think creative superintelligence looks like? Because with like images, I think, I think images are going to be solved, right? At least, like photoreal images are pretty much here. You can imagine with a couple more turns, like, at least making images with AI will be solved and, and it's getting a lot easier to prompt and harnesses will get better at editing and modifying and getting better outputs and all these things. But like photoreal images will be solved. What does, like, what does creative intelligence look like in one year or two years down the road?

52:09

Creative superintelligence to us is whatever you can think will exist. In fact, things that you can't even have the scope to think of can exist. So one, one thing that the distance between an idea in your head and it being in the real world right now, it's like very far. Let's say you have an idea for a new pen. What a new Pen might look like there's a very long distance that you have to travel. You have to know how to design the pen, you have to know how to process cad. You have to find a manufacturer to, like, build. Like, there's a very long. There's a very long. And because of that, we have to localize on a couple of pen form factors that everybody uses. It becomes standardized. But what if creative superintelligence makes it such that you can sustain infinite varieties? Kind of like how you can have infinite versions of the same information being represented in different formats. That's the way that we view creative superintelligence, which is any idea that you have. The instant that you have it, it is visible in the real world, and there's no latency and friction between your ideas and them being born in the world.

53:05

That sounds different than the models coming up with the ideas, which is interesting. I don't disagree. I think you're right. We were debating this yesterday about will a model be.

54:15

Yeah, yeah.

54:28

I think for you even think of it, what is the timeline for that? That's the next thing.

54:29

Yeah.

54:35

We were talking about this because it feels like mathematicians have been having somewhat of an existential crisis for a while now, but especially over the weekend. And I was just thinking, I was joking to John yesterday, just saying, like, you know, they're coming to us. Right?

54:35

They're coming for us.

54:55

Not great.

54:56

Like, we're like. Like, I'm. I'm, you know, I consider myself a creative person. And right now, when I look at AI generated outputs, the ones that really resonate are ones where there was, like, a fundamental creative idea.

54:57

Yeah.

55:13

That then the model did a good job of instantiating it. But it's not like the original idea was that complicated. The example we always use is like, Harry Potter, Balenciaga. Right. Like, not a complicated idea. But to me, to me, what will be interesting, and I'm surprised no one has really built some type of effectively loop around this, which is combining two random ideas and then creating the visual sort of output and just doing that over and over and over, because it will end up mimicking the full pipeline of human creativity, which is like, original idea, which is combining two things. Harry Potter, Balenciaga. Combining these two things and then just creating the output. And then once you get that, then you're just running on this loop where already it feels like there's no real new ideas in the world. Like, for 100 years, we've just been as humans recombining different things that already exist. And it's sort of sad that we can't come up with very many new ideas, but then eventually the machines will have just created every possible variation of every idea that there could ever be. And a human will have an idea and then they'll be like, oh, well, actually the machine figured this out like two years ago and here it is on a website.

55:13

I mean, I think something that's pretty incredible is people don't know what they want until they see it. And oftentimes it's not even the new idea that is like it's showing it to a dozen people and then two dozen people and then 100, then a thousand and seeing what sticks. Again, this is kind of the creative process, right? Like you, you will draft up 100 version versions of the same script and then see what are the gem moments that actually resonate with people and the resonating with people. Like that's the verifier part. Like that's where humanity comes in, right? Like if you're trying to give something to people, you need a way to measure whether or not it actually resonates with them.

56:29

That said, company simile who just raised a big round might make humans unnecessary to even judge what will resonate with you?

57:05

I think we're safe. Every AI lab I talk about is working on this thing called super intelligence. I haven't met a single AI researcher working on room temp intelligence. They're not even trying to displace me. It's ridiculous.

57:16

Actually, there's probably a neolab called Normal Intelligence.

57:28

Probably, Probably. Last question. Gaming arena, we got Design Arena. You have gaming DNA. What about models building games? The games go up against each other. Which one did you play longer? Which one did you have more fun. This feels like the next thing. Is this you? Is this another company?

57:31

This is us.

57:48

That's you.

57:48

This is us. So we've actually been working on this for a while. Game dev is incredibly hard to verify and that's why it's so much fun. Right, because you don't just need a really good storyline, you need a way to verify if something is fun, do you know, without people on the other side. Exactly. So for a while now, we've been helping companies try to get better at this domain. And it doesn't just involve like the strategy and then being able to save game state. You've also got to have beautiful graphics, you have good multiple processing. It's a very hard frontier.

57:49

Yeah, yeah, that'll be a lot of fun. Yeah. Very, very interesting to think about. Like, oh, I'm going to go and review models on gaming arena. See you in 400 hours. Because I need to decide which game is better, this hundred hour game or that hundred hour game. Yes, that's kind of what's gonna happen. Yeah, yeah.

58:19

You literally just need to put it like the way to think about it

58:42

is you need to put it on

58:44

the equivalent of the Internet and you need to see if it gets picked up by people.

58:44

Yeah, yeah. Like the algorithms, like the Steam Store, the Instagram algorithm. These are the final bosses of the arenas. Perhaps in many ways. Very interesting to think about. Well, congratulations on the round. Congratulations on all the progress. Thank you.

58:47

Yeah, amazing progress. And thank you for. Thank you. I think you're doing a public service. Right. If you can get, if you can get all these AI companies to make better outputs, the world will become a more beautiful place. And I think it's important.

59:00

Well, have a great rest of your day.

59:12

Great to meet you.

59:13

We'll talk to you later. Goodbye. 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. Our next guest is Samir Kaji from Alec Bates. He's the co founder and CEO Sameer.

59:14

How are you doing?

59:31

What's going on? Good, good.

59:32

Guys, how are you guys doing?

59:33

We're doing fantastically. Fun day. Do you drive a BMW? Have you been getting bombarded with Spider man ads?

59:35

I wish. No, I don't drive a BMW.

59:43

No.

59:46

You're lucky.

59:46

You're lucky.

59:47

You're lucky.

59:48

You're lucky. That's the.

59:48

They're all ad supported. They're all ad supported.

59:49

Yeah.

59:51

Apparently.

59:52

Apparently it's not even opt out.

59:52

Does allocate take a couple weeks off in August as a company?

59:54

No, no, there's no taking any time off. Like, unfortunately, like a lot of our clients are taking time off.

1:00:00

That's what I'm saying. If you wanted to plan like a. Like, I think it can be good to. For it at least for smaller companies to say like, hey, we're all going to take vacation in this general window sort of collusion. Yeah.

1:00:05

Well, I will tell you though, I did go to Cafe Venetia the other day, so I don't know if that counts as a vacation, but it was, it was nice to kind of get away. But yeah, no, it's. It's crazy busy right now. As you guys know, so much is happening in the market. So many funds are raising, so many companies are raising and having been in this market for 27 years. This is like the craziest I've seen it.

1:00:18

Yeah, so talk.

1:00:38

Does that scare you? Because obviously it's good, it's obviously great for your business, which we should let you introduce, but maybe introduce Allocate first and then I want to get into.

1:00:40

Yeah, why don't I give. I'll give you the quick sort of 30 second pitch on allocate. So having been in the venture market, working with private funds, kind of realized a few things. Private funds are now more numerous. We went from 3,000 asset managers to 30,000 within 15 years.

1:00:50

Wow.

1:01:08

The amount of capital that's being raised

1:01:08

by these funds is enormous too.

1:01:10

Right. Like you had Andreessen raised $15 billion, you had Thrive raised 10 billion. So these companies are staying private so much longer. So the private markets grew from 1 trillion to 17 trillion. And when you look at that, where is that money going to come from? Well, historically the funds were capitalized by pension funds, endowments, foundations. And then it became clear that they needed to find new ways to capitalize themselves. And one way was family offices and high net worth individuals. The problem is it's kind of a headache to operationalize those small checks. And for the people investing, they can't write $10 million tickets into name your top fund. And so they go through the wealth advisor. So we create basically the bridge between the wealth advisory world and private funds. And for the wealth advisors, they have one place where they can discover, access, execute and report on private assets. So there's $10 trillion of capital being right now managed by these independent wealth advisors. If you guess what percentage is in alternatives, less than 5, 3%. 3% guess. Well, endowments, foundations, pensions. 20 to 50%.

1:01:13

20 to 50%.

1:02:26

Yeah, yeah, exactly.

1:02:27

The Yale model. Yeah, we got to get everyone on the Yale model.

1:02:28

Yeah, well, you know, you got to be a little bit careful on that for sure. But you know, look, I mean the reality is like you can't ignore the private markets. You had anthropic open air, almost a trillion. SpaceX goes public for 1.77 trillion. Like it's crazy.

1:02:33

Yeah, yeah, yeah, yeah. And it would be, it just feels like from just like a. Not even the financial numbers, but just the idea of just being in the American economy and being bought into the next iteration. Like there's been this discussion of going going public earlier, it's very onerous, etc. Etc. But there is another world which is just broader exposure through funds. And that's a lot of what's happening here.

1:02:48

100% agree?

1:03:12

Yeah.

1:03:13

Okay. Once a week, maybe twice a week, sometimes three times a week or four times a week or even five. There's a company that I've never heard of that comes on and raises half a billion dollars and they're maybe like one or two years old that I get a little bit wary because I sort of, like my career came online, let's say, in 2018. I'd been paying attention to startups prior to that, but, like, really was paying attention in 2018. And we went through this sort of crazy period and then we saw a pretty massive correction. I got to sort of be on that roller coaster. And so now, while we're back in boom times, I'm just like, much more wary than I was before because I was young and maybe overly optimistic. Right. And so today I'm just. When, when you look at the public markets, there's a lot of. A lot of valuations seem relatively reasonable in the private markets today. There's, you know, we saw Airtable, if airtable was a. Was a. Was just like, I know a. I know a SaaS company that has a tiny, tiny, tiny fraction of Airtable's current revenue that. That is doing a new round well beyond airtable's valuation. And it's just because they're squarely in serving other AI companies when ultimately they're just as much of a software company as airtable was. And so you see this, like, massive kind of disconnect between exits and private valuations. And so I have a lot of alarm bells going off, but I'm curious how you see it. And LPs on the platform are seeing it.

1:03:14

Yeah. One of the most dangerous things to say in the investing world is this time's different because rarely is it completely different. So, you know, similar to you, I've had some scar tissues built up. I actually, you know, started my career in 99. I was at Silicon Valley Bank, I was at SVB and I was lending into the dot com. And back then, you know, companies were going public based on one metric, which is eyeballs. Right. Like, how many eyeballs. How many people are visiting your site? Well, today it's ar, which, you know, as we know, can be a little creative in terms of. Of how people are actually saying ar, what's actually true right now. So I think we have to disassociate, you know, AI as like, this technology innovation, which I think is going to be bigger than anything we've ever seen. Bigger than the Internet, bigger than mobile and cloud, and maybe the biggest innovation since the railroads. The challenge though is when you have a new technology of this size and scale, especially moving this fast, the supply and demand for those companies changes. So you have so much capital being raised, people are incented. Like if you're a VC, you're incented to invest in the next hot AI company which has grown from, let's say 1 to 10 million to 100 million in revenues, knowing that full well that if you catch the tiger by the tail and you get the anthropics or you get the open air, your career is minted. And so a lot of capital goes into these companies. And every single time that I've been through one of these, the companies that do win are bigger than ever by a massive degree of magnitude. The issue is so many expensive mistakes. You mentioned Airtable. That was like 2021. I think their peak valuation was $11.7 billion. They raised almost one and a half billion and they sold for two bending spoons for $1.25 billion. Right. That means common shareholders get nothing. And the people that came in at the end, they may get a return on capital, but that's a horrible common.

1:05:01

I thought common shareholders were getting something because the actual.

1:06:52

The total price.

1:06:55

Equity value 2.6 something. Billion.

1:06:55

Yeah, 2.2.

1:06:57

Roughly 800 million.

1:06:59

There was a. But again, it's like a billion.

1:07:00

Tiny fraction of what. What they would have probably marked it themselves.

1:07:02

Well, if that's.

1:07:06

If that's the case, that's great. But that's not the case for a lot of those 2021 companies that raised at sometimes I was seeing 50 to 100x multiples for these companies. Now the multiples aren't that crazy this time around. And these companies grown, the bigger challenge is like, which one of these companies is actually durable? Like, I mean, is a big frontier model going to subsume you what happens with open weight and open source models? Still too early to tell. So I think you're right in that you should be somewhat nervous. But at the same time, venture has always been a parallel industry. Right. 6% of total companies actually return over 60%. That's historical. I think it's even more amplified right now. But I'm in the mindset right now that I been through these periods and people always have short memories. Like 2021 was what, five years ago? And you know, it's almost like we forgot 2022 and 23. Things do not go right when you just plug so much capital with such speed. And so I expect the same thing to happen. I don't know when this changes and when gravity comes back in the private markets. Six months, 12 months, two years, maybe it's even five years. Maybe we're all wrong. But I would, I would actually be willing to bet that within the next few years we're going to see some kind of pullback and then we'll kind of see. You know what they say when the tide goes out. You say you see who's wearing the swim trunks and I think we'll see that next year or the year after.

1:07:07

Don't you see? Oh, okay. Yeah, that's a better way to put it. Yeah, he's wearing the swim trunks. Well said, well said.

1:08:31

I want to know how, how are, how are new venture firms changing in their construction? You mentioned the boom from 3,000 managers to 30,000, but what are you noticing over the last few years that might look different in the way a new fund gets built? Maybe it's more interns or more or less banker, crossover types or more operator, more founders. Are there any trends that you've noticed that you're seeing, okay, that's clearly working at certain funds, more people are following this even in the way they're structuring or the, or the pacing or anything, anything trend wise around new fund formation?

1:08:39

Yeah, new fund formation slowed down for sure over the last few years. Right. It was at a fever pitch in 20, 19, 20 and 21. In fact. Everyone felt like it was cool to be a VC without understanding that it takes forever to know if you're any good to get paid all those things. Fundraising is really tough and you know, a lot of it. What came down to when you have so many funds in the market, everyone's searching for differentiation and so they create these things, which is like, I'm going to create a talent team. I'm going to, going to create, you know, a AI sort of way to vet things. And I think these are all around the edges. But any venture firm, at the end of the day all that matters is, you know, sourcing, picking and winning. And you got to do two of those three things really well. If you're a really small firm, it's sourcing and winning candidly. Like I have no clue if you're a good picker. And there's so many false positives, right? So I think people sometimes lose the plot a little bit and say, let me create something really unique that I can tell my LPs versus focusing on. Am I going to see the greatest companies or the right entrepreneurs in the thesis? And once I see them Am I going to win? Given sort of the competitive arena? And I think that it's really tough to be an emerging fund. I mean, raising capital. I think it's a great time to start if you have like a reason to win and a reason to exist. Now, big funds are different. Like, let's. They're playing a different game. You know, somebody raising a $10 billion fund is just trying to get into the very best companies and plug a billion dollars into that company has.

1:09:24

How often do you see someone coming across and pitching sort of a new firm that feels like an old firm in the sense of we're going to go and compete and win $20 million Series A's and B's or something around there, as opposed to the early fund manager, 50 million solo GP. They're going to do 100K, check into this and like little add on that feels more, more winnable. To your point about the importance of winning, the Mount Everest of winning and picking is probably you're going to go, you know, lead that major, that major round without the signal from a tier one.

1:10:52

Yeah. I mean, look, if you're going to do a $20 million Series A, which is not going to be like a big Frontier Lab type of company or one of the big mega rounds, you have to, I mean, to raise them in a fund, you probably want to raise 350 to 500 million dollars. Right. And who is going to give you the money? It's people, whereby you have a track record somewhere else. So we've seen a few. And, you know, this is all public now, but chemistry is an example of one where you get three people, one from Index, one from Andrew and one from Bessemer. Right. They come together, they are clear, Series A will lead and they kind of sit in the middle between the seed funds and the big mega shops who are doing different types of series or different types of Series bs. I see very few of those because the bar for those is pretty high.

1:11:33

Yeah.

1:12:24

And if we look at 10 funds, maybe one falls into that bucket.

1:12:24

Yeah. Yeah. It does seem like it's maybe an underrated white space because there's so many funds that they're so big at this point, even though they might be able to win, they're also not that upset if they lose that round because they're like, yeah, okay, we'll just come in with 100 million later and get our position. Like, it seems fine. Anyway.

1:12:28

What. How have you. How did you. Looking back, like, what's the takeaway from the solo gp? I'll call it Meme because it's interesting because it was something that became like, very desirable and it was something that I think LPs were interested in. It's something that certainly people that aspired to be venture investors, I think a lot of people have this idea of like, oh, it'd be amazing to be like a solo founder, solo gp, right? You get all the glory, all the economics or whatever. But it's interesting because it just feels like a solo GP when it works. It's amazing, right? I think of a lot gills of the world as, you know, the top of the mountain there. But there's so many cases where for LPs, it's like, well, it'd be great if you had like a solo GP would be cool, but what if you had three or four partners that were all fantastic and it just increases your luck surface area. And then for a founder, it's like, yeah, you want to basically pick one partner at a firm to partner with, but it's awesome if there's a few other partners at the firm that can maybe make an introduction or open up their network or whatever. So it feels like something that in practice, like, is, it was like a cool idea and there was this moment around it. But now if you want to win, why would you even like, brand yourself in that way?

1:12:48

I mean, look, I think it can still work and I'd rather back a solo GP than somebody that, you know, decides they want to start a venture firm and decides that to raise capital, I just need to bring on a partner and then never worked with that partner partner. Because, you know, the problem with partnerships too is like, there's a lot of politics, right? Like, you know, do we really, you know, are we aligned? You know, how does decision making work? If a deal is not consensus within the partnership, does it get done? And those can actually create, you know, Bessemer, for example, has this great, you know, anti portfolio. If you go to their website, all the stuff they miss. And I guarantee some of those misses were, you know, one person had a ton of conviction, but they couldn't get it through the partnership, right? And so, you know, solo GPS at least can move really quickly. They don't have to go through a committee, even a lot. Gale, who you mentioned, he has a team, actually, right? So he's solo GP from an investing standpoint.

1:14:12

Oh, stolen Valor. Stolen valor.

1:15:00

He has an amazing team, but like, you can't, I can't name any.

1:15:04

And also the solo GP branding was very much like foisted upon him. He Was not like, I will never hire anyone. It was more just like something that was fun. Fun to talk.

1:15:08

There is a guy like Oren Zev. Right. So Oren. I don't know if you've. Oren has been doing. And he will say, I'm a solo gp. I have no admin. I have no other partners. I have no one on. It's just me, and that's what you're gonna get. And, like, he's done, you know, annually very well for himself. You know, you've seen everything's public on him. And so I look at it and say, the bar is higher. And a lot of solo GPS realize it's pretty damn lonely. Right. So you're. You're basically doing the raising. You're. You're working with companies, you're trying to do everything. You're running the firm, and then you're like, four years into it, and you're like, wait a second. My fund is trading at a 1.1x because I went crazy in 2021. No one's giving me money. I'm pulling a salary of the $20 million fund that I could probably get in a quarter working somewhere else. And you're like, why bother? What's the purpose of doing this?

1:15:15

Have you seen anyone try and tap the traditional venture capital backers, the LP base for something that looks like more competitive with a Thrive eternal? Like, I'm gonna go buy a baseball team and I want to tap Yale for that or something like that. You know, as an exact. As an example.

1:16:03

I mean, not. Not that much. I mean, Thrive is pretty unique in everything they do. I think they're really progressive. And Josh and Seema done a, like, fantastic job. I mean, GC is also general catalyst. They've done some pretty interesting things. I mean, they've gone into hospital systems. Right. So they've done things like a PE and credit.

1:16:25

Yeah.

1:16:42

And, you know, that is more like private technology, finance and going into these adjacent areas to create competitive advantages. Because when you're raising $10 billion, guess what? There's about 15 firms that you're going to compete with. So what is the differentiation outside of your partners?

1:16:42

Yeah.

1:16:57

Do you think the situational awareness story changes? Ria continues consideration.

1:16:58

I don't think so. I mean, look, I mean, you know, that was a very unique thing. I mean, the guy had. I mean, the guy is incredibly smart, and, you know, he still is up, you know, overall from, you know, the day of. But when you drop that much and use that much leverage, like, it's going to be a big blow up RAs in themselves. Like, you know, are we talking about areas from the asset manager side or areas from the wealth manager side?

1:17:05

It was just. There was just a conversation while ago about oh, VCs like they often have really great deep understanding sometimes board seats in these public companies, they take the company public, then the stock trades down. But they know that there's a really great thesis maybe they should be holding on behalf of their LPs instead of distributing the area. Sort of sets you up for that. I'm less talking about RIAs is like going along crypto or going long secondaries. I'm talking about playing in the public markets. Someone in the tech community just got their hands were burned. Does that change like the appetite from LPs to allow venture capitalists to play in the public markets at all?

1:17:26

Yeah, I don't think most LPs want their VCs to play in the public. Obviously Sequoia, everyone knows, you know, has a long haul only then there's crossover funds that do it. But it's just a different skill set, honestly. And like, you know, if we're an lp, right? Or somebody else is an lp, you're at the end, they're paying the GP to, you know, invest in private companies and then exit those private companies at some portion where we can make the decision on what to do with the public stock.

1:18:02

Yeah, you were at SVB in 1999. Any good stories of venture capitalists using leverage?

1:18:28

No, but what people.

1:18:38

I'm surprised. Like we hear, John, we're talking about this yesterday because like you know, the venture capitalists, or at least there was some that were kind of doing a little grave dancing on Leopold last week and we were talking yesterday after the show being like, yeah, it's funny that VC funds can't blow up. You know, it's just like a slow death.

1:18:39

If they die.

1:19:01

Yeah, if they die. But I'm wondering if there was ever a period in Silicon Valley history that Silicon Valley was like, you know, we should be using leaven.

1:19:01

I want to re.

1:19:10

Leave.

1:19:10

And then some sort of set of events that led to. To that not being very common now.

1:19:11

Fortunately not too much. Right. So not in terms of true leverage. Now there are people that have used nav lines but you haven't been ra. Most VC firms are exempt reporting advisors, so they're not able to do those things. What we did see, and this is less than 99, but 2008, right before kind of the GFC started, there were some funds that did warehousing and what they would do is they would go to a bank like SBB and say, we're raising a $200 million fund. We are going to start making investments before our first close. Can you lend us the money to make those first few investments? And guess what? There was a couple that did that, more on the fund to fund side than the direct side. And guess what? The market changed. They couldn't raise capital and they had this huge warehouse sort of facility that they had to pay off with no capital.

1:19:17

Interesting. That is a crazy scenario. Yeah. So it has happened technically. Thank you for the history lesson. This is exactly what we were looking for. Perfect guess for our earlier debate.

1:20:03

Very cool. Well, it's super fun.

1:20:13

Really, really fun.

1:20:15

Hanging.

1:20:16

Great to finally meet. And let's. We're trying to get a pulse on what's happening. We think what's happening in your world ends up sort of echoing, echoing later on with a lot of the coverage that we do.

1:20:16

So.

1:20:32

Yeah. So we'd love to do it again.

1:20:32

You guys do. You guys do a great job. Big fan of the show. Great guest. Actually, my board member was on your show recently, Carter Reen. Oh, yeah, yeah. Carter from M13. Great guy. And whenever you want me back on, I'm happy to do it.

1:20:34

That'd be amazing. Thank you so much.

1:20:47

Great to hang out.

1:20:49

We'll talk to you soon. Let me tell you about the New York Stock Exchange. Want to change the world? Raise capital at the New York Stock Exchange. Up next, we have John Quinn, the most feared lawyer. Welcome back to the show. Great to see you.

1:20:50

So we. We have a video that we'd like to play.

1:21:05

You want to play this?

1:21:09

I want to play. I want to play it for John. Play it for John.

1:21:09

We made a heavy metal song about you. The most feared lawyer.

1:21:12

About time. So many.

1:21:15

About.

1:21:16

About time. Can we get it up on the big screen?

1:21:17

Play. Play the Play. The last 45 seconds.

1:21:19

Maybe this is what John was spending like probably an hour last night working on.

1:21:22

Burning the Midnight Oil.

1:21:26

Burning the midnight oil for.

1:21:27

Here we go.

1:21:28

You can turn around.

1:21:29

And we got the full. The full AI rendering version of it.

1:21:29

Let's get it louder, please.

1:21:33

Here we go. Still in the air the room goes still that the verdict. In true heavy metal fashion. It's extremely long, but I think this really captures the spirit of what you bring to the courtroom, what you bring to the legal profession. Just total fear and chaos. Yeah.

1:21:39

The firm.

1:22:13

Of course.

1:22:14

Of course. Thank you very much.

1:22:14

Yes, we'll send it. You can. You can Circulate it with the team.

1:22:18

So we're going to talk about agentic AI.

1:22:22

Let's do it.

1:22:25

Law.

1:22:25

Yeah. I want to talk about.

1:22:26

I have some news this morning.

1:22:26

Give us the news.

1:22:28

Do you mind if I do? If I reveal something?

1:22:29

Please.

1:22:31

The general press doesn't have you.

1:22:32

Absolutely.

1:22:33

So it's a case that our firm has.

1:22:34

Yes.

1:22:36

And that I personally have worked on.

1:22:36

Okay.

1:22:37

Within the last two hours, I got the opinion from the Ninth Circuit Court of Appeals.

1:22:38

Okay.

1:22:42

The case is Amazon versus Perplexity. And it's a very interesting case Right at the intersection of agentic AI and E commerce.

1:22:42

Yeah.

1:22:52

So we represent Perplexity. Amazon sued Perplexity because Perplexity has an agent. The comment that users can deploy, go shopping and doing whatever. Amazon didn't like Agent's Comet going to its website and buying stuff.

1:22:53

Yeah.

1:23:10

I think because it doesn't have eyeballs.

1:23:11

Yeah.

1:23:13

Can't see ads.

1:23:13

Yep.

1:23:14

Can't be, you know, can't be upsold.

1:23:14

Can't be manipulated.

1:23:16

So Amazon sued Perplexity under the Federal Computer Fraud and Abuse act, which is that you can bring a civil claim under that for damages. It's also a criminal statute. What it requires, the elements are that you access a computer without permission, that you take information, you get information and you cause damage. Amazon Perplexity saying your agent is being deployed. We don't want that to happen. We've told you. We don't want your agent on our website, shopping and whatnot. Very unfortunately. And they moved for a preliminary injunction to shut it down immediately. Very unfortunately. The district court up in San Francisco entered a preliminary injunction a few months ago. I mean, we lost at the trial court level, but there's nothing a trial court can do wrong that a court of appeals can't fix.

1:23:18

Okay.

1:24:06

And just two hours ago, we got the opinion from the Ninth Circuit and the Ninth Circuit understood that Perplexity is not accessing the Amazon's computer.

1:24:07

The user.

1:24:18

The user.

1:24:18

The user. Yes. The user downloads the Comet, deploys it and tends it to go shopping. So justice prevailed. But that, I mean, it's an interesting question at the intersection of agentic AI. There you go. Thank you.

1:24:19

All right.

1:24:36

Yeah. Very, very interesting.

1:24:36

How foundational is this? Because Perplexity is just one company that is trying to do this type of thing. I think there's a lot of consumers that want the ability to deploy AI, whether it's self hosted, open source. There's not even a company behind it. They want to be able to do these types of things at the same time there's going to be corporate interests that don't want.

1:24:38

Of course, I mean we were very early stages in trying to understand how traditional legal principles. Sure. You know, apply to agents and agent. Okay, yeah. I mean, take the subject. It's something very basic. Contracts.

1:24:59

Yeah.

1:25:11

I mean it's well known, established that, you know, you can establish a contract between electronic interaction of agents. Doesn't have to be a human being. You know, you can have a binding contract. Okay, but things can go wrong.

1:25:11

Yeah, of course.

1:25:25

I mean, the agent may not follow instructions or optimize for the wrong thing. For example, you tell the agent, well, I need some cloud computing time. You know, go out and buy some compute for me at the cheapest possible price. And the agent does that and goes and enters into a long term contract

1:25:25

to get a cheater price, which is

1:25:43

a huge cancellation penalty.

1:25:44

Sure, sure.

1:25:45

I mean that's, that's a problem.

1:25:46

Nightmare.

1:25:47

Yeah, so. And just the sheer number of contracts entered into by agents, agents can enter into thousands of contracts before somebody's realized there's been a mistake, you know, something's gone wrong, it is a real disaster. So I mean, what do you do? I mean, if you find out your agent has gone out and entered into a contract, that's not, not what you're interested in, not what you intend. And one thing we know is you can't say it's the AI's fault. Okay, it's not my fault. I mean, there's even a law in California, I think it was enacted this year, civil code section 1714, that says you can't blame the agent, you know, it's your agent, you're responsible.

1:25:48

What's the human precedent? Because big companies, I'm sure for a long time have had issues with an employee entering into a contract, you know, signing. Maybe they have, maybe they have.

1:26:25

And it's kind of the same concepts I think they're going to apply in the agent context. That is, did the employee have authority? And even if they didn't have authority, did they have a parent authority? If you deployed the employee, they had a job title, they had the card, seemed like they had the ability, the authority to enter into that contract. You're probably going to be bound by that. Similarly with an agent, I mean, the presumption is the agent's out there in the marketplace buying things. The presumption is going to be that the contract they entered into is binding and you're stuck with it. But there is a concept of mistake that can come to the rescue. If the agent goes out there and buys, because of a parsing error or something in the software, buys 10,000 of something, which historically you've only been buying 100 of, that may put the counterparty on notice that, wait, something's gone wrong here. And if the counterparty is on notice that this is a mistake, the counterparty you may be able to get out of the contract. I mean, so that's just kind of a. Kind of an example. So these traditional legal concepts about authority, apparent authority, I think, are going to come in play in agentic AI as well.

1:26:36

Yeah. Are there any. What precedents are people drawing on to understand where electronic contracts go? Are there any learnings from like smart contracts and what the whole discussion around cryptocurrency or is it more like what's been built up over terms of service? Because, yeah, this is like an almost an entirely new paradigm. And I don't know exactly.

1:27:43

I mean, I call it the problem of new wine in old bottles.

1:28:08

Okay.

1:28:12

And whenever there's a new technology, we see this. We have traditional concepts about contract, how you form a contract, what is agency.

1:28:12

Yeah.

1:28:21

And then we have to adopt it to this new era where you have electronic agents that are interacting with each other.

1:28:21

Yeah. What do you think the equilibrium is? Do you think that there's going to be a flurry of lawsuits and settlements and then sort of a new, new establishment of like, standards norms, default contracts? Because Silicon Valley has been through a whole turn of contracts where there used to be equity financings, then there were a lot of convertible notes, then there was eventually the safe contract, which is a much lighter version of a financing that moves a little bit faster but can still hold some of the weight. And so like, is there a. Do you think there's a. There's going to be demand for some sort of standard contract that agents can sort of execute, that. That builds on the shoulders of all the contract law, but still allows for.

1:28:27

I think we are going to see contracts like that for sure.

1:29:14

Yeah.

1:29:17

I mean, but still we're always going to have the potential for the rogue agent that does something that does. It exceeds the permissions. But that's all the problem is what's built into the software. So it's important to build in safeguards like caps, spending limits and the like, and for important and novel transactions, getting a human in the loop, the transaction can actually close. Money can't change hands until some human being has actually looked at it. So I think that's very important. And then also people need to audit the history of transactions. As I said, you can have thousands of these contracts being entered into and performed before somebody realizes anything's been going wrong. You need a system where you're actually auditing them and catching those errors.

1:29:17

Do you know where DocuSign came from?

1:30:01

From?

1:30:05

Was that a legal innovation? Because we think of it as this software company that says a lot of employees, they've built this program for E signatures. They have a lot of employees, but

1:30:05

what would we do without it?

1:30:17

But was there a moment where e signature was illegal, was not binding and then it flipped, or did they sort of adapt to the conventions of what counts as a binding leg, legal signature and sort of slot in and then establish themselves?

1:30:19

Yeah, I don't know the specific history on that. I mean the guy who founded that company. I'm blanking on it. Is actually a client of ours.

1:30:35

Oh, no way.

1:30:42

Yeah, so I'm blanking on that. So I don't know what the history of that is actually.

1:30:43

Yeah, I'm just wondering if there's like learnings from like other times when we've had to take something that happens in the real world and adapt it to the Internet and thinking through, through like the other foundational cases, maybe net neutrality, these different debates. Because you have to imagine that consumers will want AI to go shopping for them. And that's going to happen, but they're going to want it to be safe. And then companies are going to.

1:30:47

They don't want surprises. They don't want to realize they got 10,000 toothbrushes instead of the 10 that they wanted.

1:31:12

Sometimes that happens just on, you know, Instacart. You order one, but. And you get one truckload of bananas. It happens.

1:31:18

I think there's also going to be issues in tort law. If you deploy an agent that causes harm or causes damage, how does tort law apply to that? Concepts of negligence, products liability. I mean, it's an unsettled question in the law whether software is a product. Like we talk about products liability for defective features in cars and the like. So there's a whole body of law surrounding that.

1:31:25

Yeah.

1:31:50

Should that apply to, you know, agents that go out and do something that causes damage? I mean, we're seeing cases being filed where, you know, the allegation is that the, the agent persuaded somebody to engage in self harm. Sure, the model did.

1:31:50

Yeah.

1:32:07

You know.

1:32:07

Yeah.

1:32:07

And so is that a defective product? That's the question. So concepts of negligence, products liability and the like one apply and then people, you know, like in this case Amazon tried to keep the Perplexity out from its site saying, you know, we don't, you don't have permission. We're not permitting that. But I mean we've all read about instances now where agents have gotten loose, entered at sites.

1:32:08

Yeah.

1:32:32

So what are the legal ramifications of that? There's a concept called trespass to chattel, like, you know, trespass on land. A chattel is a thing. So there's also something called, and this is a traditional concept in the law of trespass on a chattel. Chattel. Whether it's trespass on a server computer and the like hasn't gotten very far. But there's some cases where those types of claims are being raised as well.

1:32:32

Okay. Yeah. How have you been processing all those cybersecurity incidents? It feels like these. They haven't. I haven't seen lawsuits filed. It feels like these will be discussed settlements already. The CEO of Hugging Face was sort of outlining what a non legal recourse could look like. Where do you think this all goes? Do you think there needs to be some precedent setting legal case to create the template for how these things get worked out if they happen more and more?

1:32:56

I mean the way this, you know, we live in a common law country, of course, so we have legislation and maybe there'll be a need for legislation at some point. But until the legislators act, and it's hard to get legislators act act in this country, the courts will be deciding these on a one off basis, establishing precedents. So courts still will look to what other courts have done. Sure. I mean the issue that's been teed up in dozens of cases and that everybody's familiar with is that copyright infringement to train a model on copyright infringement material.

1:33:27

Yeah.

1:33:58

I mean there are dozens of cases that are teeing that up. We have some indications from a couple of cases so far suggesting that that's not infringement, but it's what's called fair use.

1:33:58

Yeah.

1:34:08

I mean ultimately all these new issue issues that are being teed up, we're going to have answers to them, but it'll take time. It'll just take. It depends on the persuasiveness of the judge's opinions and the precedents. And some things will end up in court of appeals and maybe even the US Supreme Court to make new law.

1:34:09

How is the legal industry grappling with questions of liability around AI? If I have a law firm my lawyer uses AI, is there any nuance there or has the legal industry had to grapple with what liability, what the services delivered might look like in a world where there's AI agents that are going off and doing discovery or all sorts of, of different things.

1:34:24

Well, lawyers are going to be responsible for what the, what the AI does. Yeah, I think there's no question about that. You've, you've heard about these cases where lawyers have filed briefs in court that have hallucinations.

1:34:50

Yep.

1:35:02

Cite to cases that don't exist, laws that don't exist, or cite to cases that exist but don't stand for that proposition.

1:35:02

Yep.

1:35:08

Courts don't have.

1:35:09

What do judges think about that?

1:35:09

They're not very happy with it.

1:35:11

It's like when I'm, when I start reading something and I realize that it's just been. Just a prompt, effectively.

1:35:12

No, I mean, lawyers have been sanctioned for doing that. It's something that I think every law firm has to be vigilant about because, I mean, you can't get the models. I mean, you can try to tell Claude, don't make anything up. I only want double check, make sure the case really exists. And it'll kind of be apologetic and say, you know, I'm just an LLM. I can't guarantee that. Seriously.

1:35:19

That's what it says.

1:35:40

It's funny.

1:35:42

How are the lawyers that you talk to at your firms and just other friends in the industry processing just the progress of AI? We had the breakthroughs from one of OpenAI's new models on Saturday that kind of rocked the math world. But I'm curious how lawyers are just processing the model's, you know, sort of broad set of abilities today.

1:35:44

Well, look, lawyers are, among other things, wordsmiths.

1:36:11

Yeah.

1:36:15

I mean, so we have targets on our back. It's amazing how much, you know, how much quicker we can get to a finished product that we'd actually want to use, serve on the other side or file with a court. And, you know, I personally think most of our profession is whistling in the dark that they don't realize what's going to come. There's a bit of an innovator's dilemma here because big law firms are doing really well. Yeah. From all these, why change what's, what's the issue? So.

1:36:15

Well, also, I'm assuming a lot of the most high profile cases are AI related. So at least in the moment, it's creating this sort of surge in demand.

1:36:46

Yes. There's a lot of cases related to AI, these novel legal issues, like this perplexity case we never would have had 18 months ago, the dispute between Sam Altman and Elon, just on many different levels. It's generating new work in addition to new types of issues. But I think it's fundamentally going to change the legal profession and the way law is practiced. I mean, most law firms bill by the hour. And if I can press a button and get a work product that's 80 or 90% there, think of all the time, the hours that have been saved, and that really needs to be passed on. The client expects that, they're expecting to see that savings.

1:36:56

You said Big Law is doing well right now financially.

1:37:37

Yeah. I mean, the law firms, you know, the biggest law firms are doing very, very well.

1:37:41

Doing very, very well. What was the hardest year financially for Big Law or Quinn specifically?

1:37:45

So we only do disputes work.

1:37:52

Yeah. So I imagine it's not very cyclical, right?

1:37:53

There's not, it's not. A lot of people think that litigation is cyclical. There's more litigation when there's a downturn in the economy and less things are going well. I don't think that's true.

1:37:56

Okay.

1:38:07

I mean, you'll have more of a certain kind of litigation when there's a downturn. Distress related reorganizations, bankruptcy related litigation. But when and when there's a downturn, you know, people can't perform their contracts. So you have those kinds of issues. But when things are going well and there are profits, companies will bring claims that they might pass on, you know, they'll pick up the nickel, you know, on the floor and say, okay, we're gonna, we're gonna pursue that. So I mean, the disputes world in America is generally pretty good. I mean, we live in the most litigious country in the world. Our legal culture is, leads the league in that respect.

1:38:07

Is that good?

1:38:47

I mean, it depends on who you ask. I think that it's a feature of our individualism. It's a feature of people's feeling of entitlement that I have rights, you know, I can get my day in court, I can get a hearing. So those are good things about it. But on the other hand, there's a point of view that it's really. A lot of litigation is a tax on doing business. And we know that there's a lot of frivolous claims that are brought as well. So you ask different people, you'll get different responses to that.

1:38:50

Right now you have these gigawatts of compute being brought online and in a lot of instances there will be a hyperscaler that is signing up for a long term contract. And when you look at some of these neo cloud businesses, a lot of people like to look at them and say, well look, you know, this is a contract with a major, you know, trillion dollar company. That trillion dollar company is definitely good for it.

1:39:24

And Nvidia is back there somewhere guaranteeing performance as well.

1:39:51

Yeah, Nvidia is usually usually involved, but in actually playing some of these things out, let's say in the future there's a compute glut and there's, I think you should debate when that will happen. Maybe it happens in 10 years, maybe it happens in one year, maybe it happens in two years. No one, no one knows. There's a lot of indicators that, you know, you're just going to see demand outstripping supply for a long time. But what do big companies do when they're in a contract that they really don't like and they want to get out of it, even though they signed on the dotted line and it's a bulletproof contract because, because it's not like, you know, the biggest company in the world that people are, you know, has amazing credit right now that signed the contract. People are like, oh, it's guaranteed, you know, it's fully guaranteed. But there's a lot of things that companies in that scale can do if they're in a situation that they don't like.

1:39:55

Well, I mean, it's tough. They can. Look, if you're, if there are big obligations on both sides, big commitments on both sides and one side doesn't want to perform, a lot of times that precipitates a negotiation because they need each other. Right. They've each made commitments to each other. So if you and I have one of these contracts and I have a problem, then you have a problem too.

1:40:51

Yeah.

1:41:14

So we got to try to find some way to work that out. And oftentimes that's what happens, happens. But I think a lot of these structures, financial structures, especially for data centers, are incredibly complex. You have a SPV at the middle of it, has a deal with a tenant. You have all kinds of financing, bond financing, securitizations, private credit with cross default provisions so that if somebody defaults, you know, the whole thing potentially goes down. I think on some of these data centers we're probably going to see some reorganizations. You know, everything, everything. Look at all the money that's going into this and all the data centers that are being built, are all of them 100% going to come online when they're supposed to come online and everybody's going to do exactly what they contracted to do?

1:41:14

Yep.

1:42:02

You know, I don't, I don't think that's going to happen. So there'll be some workouts and the challenges that those data centers face from. You know, I've been told by one neocloud that the biggest problem they face is electricians. Just getting the electricians to do the work. So there's a shortage of everything from electricians to power to chips, to compute. So I mean, it's not going to end perfectly for everybody.

1:42:03

Yeah, but you would predict billions of dollars worth of billable hours dealing with all that. Is that a safe prediction? If you have a trillion dollars of this kind of like complicated capex investment, then you're probably going to get at least a billion, couple billion of billables.

1:42:32

Those are a lot, billions are a lot of hours.

1:42:54

I know, but it seems like you have thousands and of thousands and thousands of these projects.

1:42:57

Look, if some of them go into reorganization and the equity gets wiped out, there will be negotiations. There will be what are called liability management exercises. There may be bankruptcies as well. And yes, lawyers will be very involved in those workouts.

1:43:04

There was some reporting recently that one group that is pushing back against the rollout of autonomous vehicles are trial lawyers or not trial or personal injury lawyers who seem to be worried that in a world with, you know, full autonomous driving across the United States, there'd be less accidents. Does that surprise you at all if that were to be true?

1:43:20

I hadn't heard that, but I guess nothing would surprise me about what the plaintiff's tort bar might do.

1:43:49

Yeah. How would you reform if you had,

1:43:55

if you Monopoly so no corporations can sue each other.

1:44:00

How would you, what kind of reforms would you push for if you were king of the United States for the day around. Specifically around personal injury law? Because when you drive around la, it's honestly very depressing. It's like if you look up, you'll see a billboard that's basically saying, hey, do you want to see someone? You know. And that signal to me is that there's just, you know, billions of dollars of revenue.

1:44:05

Look there, there's no doubt. I mean there are personal injury mills, lawyers that process high volumes of claims. I've never worked in one of those factories that I sometimes want. Wonder whether lawyers there's ever lawyers eyeballs on what's filed and the discovery and the like. I think a lot of those are those cases are brought to settle as quickly as possible. So sometimes you wonder whether the client's interests are really number one. But you know, this is. I don't work in that field. So my speculation and it does feel

1:44:34

like it would be a very different situation if every automobile accident involved going up against Waymo with perfect camera footage from every angle for every. There's no testimony of this person said. This person, this person said this. This person said that you have the perfect footage, the gps, everything that happened in that moment.

1:45:11

Well, I. I think. I think AI, I mean, you know, there are early stage companies now. Early stage, maybe somewhere beyond early stage that hoover up all the data available.

1:45:34

Yeah.

1:45:46

Like permits, ingredients.

1:45:47

Sure, sure.

1:45:49

You know, compliance certificates, whatever. Hoover all that up.

1:45:50

Yeah.

1:45:54

And they also ingest all the regulations and rules and they will identify claims and class actions.

1:45:54

Yeah.

1:46:02

And you can subscribe to this and they'll serve it up.

1:46:02

Yep.

1:46:05

So, I mean, AI is in itself generating more of that kind of work as well. But I also have the hope that it'll mean that cases are resolved sooner because there's more transparency. Sooner, as you were saying, like the Waymo situation where you have the record.

1:46:06

Yeah.

1:46:22

So people hopefully will be able to identify the merits of their claims. Everything's more transparent. Identify the merits of the claims. You can underwrite the risk, and people may be able to get together with

1:46:22

settlement sooner on the next generation of lawyers. Do you think aggression can be taught?

1:46:33

I don't know if aggression can be taught. I don't know if it should be taught. Aggression in the law and litigation isn't an end in itself. You know, I generally think it's good to be the first mover. I mean, we have a saying at our firm that the side that figures out first what will ultimately matter wins. So as a default position, I believe you should try to get ahead and stay ahead. Now, that doesn't necessarily mean you're aggressive, but in some cases you don't want to be aggressive. I mean, you might want to adopt a, you know, a rope, a dope strategy, you know, come get me, you know, and let the other side play their cards first.

1:46:45

How can you tell if someone's bluffing?

1:47:26

If you have a sense of what their case is and what it's worth and what the strengths and weaknesses are, you sometimes get a demand that you think either they're bluffing or they don't understand their case. So, you know, it really very much depends on the, I think, on the situation.

1:47:32

How did you. How good. How good were you at reading people early in your career?

1:47:49

Not very.

1:47:55

And how much. How much. How much did you improve? Like, did you have some sort of, like, baseline above average ability, you think? And then you got, you know, Significantly better.

1:47:56

I think with experience, I got better. I think as a younger lawyer, I was probably too aggressive too often and didn't sort of modulate my approach. Over time, I think I got better of understanding not just understand the other side and reading them, but myself as well, where I was coming from and what my strengths and weaknesses were.

1:48:05

Well, thank you so much for coming on the show.

1:48:28

Thanks. Thanks for having me back.

1:48:30

Wish we had more time.

1:48:31

Let's play you off with the final outro to most feared lawyer. The liar. The liar. The liars of fear. When John Quinn stands, the whole room kneels and billion dollar scars appear. We were playing this all morning. Lay hire, John Quinn. The war is on and the verdict burns right here. I think every one of our guests needs an intro like that metal song. I think we're. I think that might be a new bit for us. First, let me tell you about Figma agents. Meet the canvas. Your AI agents can now create and modify your FIGMA files with design system context. We've been keeping our next guest too long. We got Nikhil ready from Kaizen coming on the show. Let's bring him in. How you doing?

1:48:33

What's going on?

1:49:39

What's up, guys?

1:49:40

What's up?

1:49:41

Legendary outro for Dun Quinn.

1:49:41

Yes. Hopefully you have to hire him, but

1:49:43

if you do, honestly, I was going to say hopefully you get a chance.

1:49:47

Yes. The opportunity to work with him on your side.

1:49:50

No, it's. Hopefully you don't.

1:49:53

Yeah.

1:49:54

Have him sending you emails ever.

1:49:55

That's for sure. That's for sure.

1:49:58

Except maybe a client intake form.

1:49:59

Yeah. Well, thank you so much for taking the time to come chat with us. Kick us off with an introduction on yourself and the company.

1:50:01

Yeah, man.

1:50:08

Thank you guys so much for having me. Jordy, John, big fans, Quick background on me. I started Kaizen in 2022. Before that was an early engineer at Anduril. Joined from the Bay. Joined Anduril right out of school in 2019. Spent two and a half years there as a FTE. So worked on the web interfaces for a lot of the early hardware products that are now flying and doing wonderful things. And before needed a UI and UX to sort of power some of those assets. And it was amazing opportunity to just go to a bunch of military bases and build really quickly for the warfighter. And then started Kaizen at the end of 2022, specifically with the Fire to modernize all constituent services. I think that experience showed me how broken and disconnected government application layer systems were. But when you think about it, beyond the context of just defense. I know we're here announcing a Dow project, but globally, across all governments, all public institutions. I think the worst part of everyone's day is that 8:30am when you go to the DMV and you have to use the tech stack to renew your driver's license or pay for a permit really quickly or do the basic fundamental task and if you can make that experience 10 times better in to order, order of magnitude better, then I think everyone sort of leaves those buildings feeling like their taxpayer dollars are being spent appropriately and that they're being taken care of. And that was the vision, was to go to every single public institution and modernize their application layer that citizens and individuals interact with, I think more in a volume perspective, more than any other government service, and make them 10x the quality. And that's sort of what we've been up to the last four years, selling to city, county, state, and now federal government and announcing a big project with the Department of War.

1:50:09

Yeah, congrats.

1:51:45

Okay, very cool. A lot I want to understand on that side of the business. But yeah, talk about the contract and parlay this into what you're announcing today.

1:51:46

Yeah, so we're announcing the launch of the counter drone Marketplace that is run by Jaida 401, the counter drone task force within the Pentagon. The problem that we're trying to solve is that counter drone assets are being manufactured by American OEMs, many of whom that you've spoken to and have had on the show. And the threat profile is changing so quickly, the hardware is being manufactured at lights out pace. But then actually think about the process now that there's an amazing OEM product that needs to be fielded out into a forward deployed region of the world. Think about the paperwork, the process, the structure, the 50 different software platforms that someone within the building needs to use to authorize budget for it. Get contract vehicles established, then go back and forth with the ko, negotiate that contract, then find the right logistics and management partner to get it on a pallet and get it delivered. You're talking about potentially weeks to months of delay when the warfighter needs that capability and that asset delivered on the pallet tomorrow so they can actually use it in the fight. And that was sort of what for us was the most exciting problem to solve. And 401 put us on contract in nine weeks. From a blank slate. We designed, developed and deployed a true two way e commerce marketplace that looks stunning rivals whatever you'll see in the private sector where American OEMs can sign on Establish their vendor profiles, upload their products, sell them directly to three different buying groups, Department of War capability offices, people with budget within the Department of War that want to buy now. State, local law enforcement. Because think about the intra government or intra United States case where you're a state and local law enforcement leader and you're protecting MetLife Stadium for FIFA World Cup. You also need to buy counter uas. So it's a centralized platform for those buyers to log in and purchase those assets. And then partner nations, allied nations want the best technology. American OEMs make the best technology and they want to be buyers on this platform as well. So it's a two way marketplace where buyers can come in, register and validate their profiles. Vendors can do the exact same thing with their products back. And then being able to have the Pentagon have one core centralized source of truth, we've built the entire front end architecture for vendors to post and publish their products, buyers to come in, purchase their transactions. A ton of agentic tooling where even if you're not the expert, you open up our capability planner, you specify in free text that you're protecting a stadium for FIFA World Cup. Here's my threat profile, here's how much money I'm willing to spend and immediately suggests a bunch of assets that you can purchase. Add it to your cart in one click and then on the back end, we're working to simplify all the tough, difficult, very frustrating procurement processes to actually get hardware on a pallet sent to the warfighter and to end up and running in nine weeks.

1:51:58

Uber for drones as, as a tax. Sorry.

1:54:34

Exactly.

1:54:38

Sorry, I had to say, I had to say that. Every once in a. Once a year still, I'll see a pitch that's just like we're building Uber for.

1:54:38

Wait, really? You've seen an Uber for X?

1:54:46

Still see that throwback it's going to be every now and then. Every now and then.

1:54:48

Dutch East India company for drones. How about that? As a taxpayer, do I want you to win or do I want a monopoly in software delivery for the government? Because everyone's run the business and they've had a bunch of different point solutions and there's a different world here where I'm like, ah, like this is cool that you're doing this. It's good that I'm happy for you. But also like, couldn't this just be like one extra module in a Palantir system that that's already deployed? Like why do we need. Obviously, besides the competitive dynamic, just from a technology perspective, is it okay that we're going to have proliferating systems. Is systems integration here not a particular problem? Are you addressing some problem that is too low for other contractors and primes to go after so it would get neglected and so that's why you're doing this project. Like help me understand how you fit into the landscape of other. Other prime contractors.

1:54:53

Yeah, fantastic question. I mean like the answer is actually a little bit of all the above actually from the data layer perspective. Our goal is to build application software that is capable of integrating into a seamless, unified, coherent data fabric. I want to write data to a Palantir or a Databricks or AWS because that fabric is well built, fully constructed, secure, compliant. But then you actually look at the market landscape. You're right, most of the market, I think it's actually dominated by two extremes. When you're thinking about the city, county, state level, largely what we see is super old janky private equity owned point solution for blah that hasn't received an update in 15 years. The engineering team is a bunch of Java developers that found Steel manager.

1:55:58

Some of those businesses are real cash flow machines. Okay, so yeah, let's not take their businesses. No, no, no. But as a user, as a user and not a shareholder, I share the frustration with the DMV system. Every once in a while as a

1:56:43

taxpayer you're asking yourself like what are we doing here? And then on the federal side, most of those platforms are run by a bunch of low margin services companies that are selling hundreds and hundreds of heads and overcharging the government hundreds of millions of dollars. And then we'll spend 18, 24 months trying to build a thing deployed as a pilot, largely accomplish nothing. And I think the model that we're trying to apply is yes, we should own as many application layer solutions as we can and that's obviously sort of why Kaizen exists. But our goal is to charge based on the outcome and quality. And I would actually argue if we can make those application layer systems and order of magnitude better for the taxpayer from a user friendliness perspective, easier to use, more simple to log in, adjudicate your information, have it approved by an administrator on the back end and then for the administrators that are spending eight hours a day logging into these platforms, trying to triage and do all the paperwork for them, if you can make their lives an order of magnitude better, I think we're actually solving the real problem. This is why taxpayer money is appropriated to these kinds of services so that we can actually provide a quality of service for our citizens that they deserve. And so for us, the number one goal is make every application layer product across these institutions as good as possible and move away from the point solution for X model and rather go to our customers and say, what is your need? Are you actually trying to make the DMV licensing process better? Or in Jaida 401's case, they need a Shopify style system for counter drone procurement. And then we should have the technology stack and the set of modules that we can use to rapidly configure against those capabilities and deploy in 90 days or less. And still I think you can move very quickly and build very quickly as we're seeing in the world today, but also hold a high standard for compliance, security, good guardrails, testing. I think we live in a world where I think you can have both things and I think that's sort of what's been super exciting about our federal progress.

1:56:59

Love it. Well, congratulations and thank you so much for coming on the show.

1:58:52

Thank you for your service.

1:58:54

We'll talk to you soon.

1:58:55

Thanks so much, guys.

1:58:56

Yeah, goodbye. Up next we have Art Levy, the new vice president of global partnerships of Cognition. We got Russell Kaplan, the president of Cognition. They're coming in to the TVP Ultra down. Very excited to have some folks joining. Congratulations.

1:58:57

There they are. The trade in the corner office. In the corner office. Fit for a new vice president.

1:59:17

He is a corner office. Office. Yeah. Where are you guys in SF or Bay Area?

1:59:23

We're calling from Austin. Yeah, calling from our Austin, Texas office.

1:59:28

Austin, Texas.

1:59:31

We got a great team out here and yeah, super excited to be having Art on the team.

1:59:32

Okay, what is a global partnership? Does it have to be global? Is it just a sales deal or is there a deeper partnership that happens with these companies like aws, Apple, Slack, Navon, Oracle, Capital One. Break it down.

1:59:36

Don, you nailed it.

1:59:49

Global partnership means it's not just a sell to deal. It's something where we're both selling to the business. Potentially there's an investment. Potentially we're co selling to their customers. We're selling to them. We're selling to their customers. We're doing co marketing, we're doing a press release. Potentially there's a product integration. It's about deeply connecting two businesses who share a common goal around acquiring the same customers. Or we build inside of them a product that is just better for their customers and then both parties win. Classic partnerships. One plus one is three.

1:59:50

I think of Cognition as an AI lab, maybe a NEO lab, a harness developer, a consulting firm. In some world, I think of it

2:00:23

as a source of geopolitical power. Yes, that's just me personally.

2:00:33

It's birthing a new God as well. But what is the conversation that you're having with Fortune 100, these huge companies? How are you positioning your role in the AI ecosystem? In the business ecosystem? What is this full scope of the value that you can deliver to?

2:00:40

Yeah, I think as we've grown up and evolved, I think we've really realized our role is to be the independent agent lab. And so we're an applied AI lab. We're focused on building agents and we want to give every company the best possible agents to, to go solve all of their software engineering problems. And so, you know, whether it's a Fortune 500 or it's a, you know, it's a small, fast growing startup, you know, people have a lot of needs for, for software. And Devon from the beginning has always been designed to work with all the other tools you already use. Right. It shouldn't be, you know, it's the Devon way or the highway. Like Devin should join you like a teammate. And I think that's one of the reasons I'm super excited that Art is joining is Art built an amazing alliance and, and partner ecosystem at Brex over his like very long career there from Employee 30, Chief Business Officer. And we see an opportunity, accommodation to bring not only, you know, it's not just hey, here's the tool, go figure out. It's like how does this work super well with every piece of technology you have inside your organization.

2:00:57

Our large corporations that are, maybe they don't have an in house, a lab, are they generally of the view AGI is real? AGI is soon, but we're going to go through a sort of slow takeoff. Diffusion adoption will be a big problem and cognition can help sort of realize that thesis.

2:02:03

I think the pace of progress in artificial intelligence is dramatically over, over the pace of progress of internal organizational redesign for sure. And so you know, and by the way, this is true, not just that big Fortune 500, even the sort of startups or tech companies we would consider as fast movers, everyone is asking, you know, do I really need to rethink everything now because of AI? And I would say it's actually one of the, one of the things that's been lucky for us at clinicians. We only incorporated in January of 2024, so our internal, you know, team set up and structure is, it's, it's very native. But every company is trying to figure this out for themselves. And I think if you, if you froze capabilities today, you have at least a decade of crazy progress in the, in the full enterprise world just to get this stuff really rolled out and operationalized.

2:02:26

So what are, like when you're talking to an enterprise? Is, is, is, is it better to position as the, the, you know, you're going to help with this diffusion, this value creation or are we still in that sort of. Maybe it was like May, June, July, like, whoa, we went a little bit too far with the token maxing. Maybe cognition can help me rein in this budget, actually make sure that we're getting roi. What's resonating there on the, on the, on the cost of benefit?

2:03:17

I think, I think it's both. I think the third two. So first, you know, all the models have been getting better, right. And so as the models get better, the capabilities keep improving. Yeah. People are starting to ask the question, hang on, like, do I need to drive the Ferrari to the grocery store? You know, can I, can I use an open source model for parts of these workloads? Can I use cheaper model, faster inference? And so that's definitely one.

2:03:50

Driving a Ferrari to the grocery store. But continue.

2:04:11

If only we could all be jordy. But, but you know, I guess one part of it. I also think there's a separate thing that's emerging which is if you actually want to have true frontier capabilities, you know, different models have different spikes. Right. Like we've seen, for example, we've seen the OpenAI models, for example, are, are the best in the world right now for, for recall of security vulnerabilities. Like if you want to catch, if you want to catch as many as possible. The open I'm alters is that there might be others where actually, you know, the anthropic ones are a little bit better on precision, you know, getting it really, really tight in. So, so I think there's, in addition to the price performance angle for enterprises, there's this element of, well, for. How do I use the best tool for the job, you know, for each job to be done.

2:04:18

Yes.

2:05:03

And then there's the people, the people change side, which we try to help with too. I'll give you one, one story on this. You know, we had a customer global, you know, global 2000 customer, tens of thousands of engineers. And they deployed Devon across the entire organization and they were seeing, you know, crazy, crazy productivity gains. But one organization they deployed to was the product management organization. And so every product manager now had Devin and what they were doing was this organization's job is to basically take in customer requests and turn them into JIRA tickets. Roughly, it's like scope out what the customers want term in JIRA tickets. So they were using Devin to, they took those requests and then they had Devin actually go prototype the fix. And then once Devin prototype the fix, they had Devin say. They said, devin, can you summarize this fix in a Jira ticket? And then they deleted all the code. And we asked them guys, like what are you doing? You already had fix. And the product manager we talked to said that's not my job. Like I'm part of the product management organization, I'm not part of the engineering organization. And so I think like for really large companies who've been doing things the same way for a long time, there is like a total rethink that needs to happen. And just literally how do you design, you know, how do you design your structure?

2:05:04

Yeah, how are you guys thinking about M and A? You bought Poke recently? I think it was surprising, but made a lot of sense. It was surprising to me because I figured someone like an Apple or something would, would see Poke's, you know, talent and their kind of consumer insights and all that kind of thing, try to pick them up. But how are you guys thinking about M and A from where the value really comes from? You guys are very good at building software. That's your whole pitch, right? Is we help you build software. So I can imagine a world where product acquisitions are like less interesting because you're looking at your own roadmap and you're looking at what someone's built and thinking like, well how quickly can we build this ourselves? Is it. Is are we, should we expect like more sort of like talent style, acquisitions? What, where, where. What's your general framework and, and maybe what's share as much of your mandate as you can.

2:06:12

Art?

2:07:12

Yeah, I mean I would say all the above. I mean we have today cognition 97 former founders working in the company, two and a half year old startup and we are, we're like aspiring or Apple hiring. Why one team a week probably right now. So if you're, if you're a strong founding team and you want to be part of a rocket ship, you know, get in touch. We love bringing on founders, but we also think there's, you know, there's bigger companies out there with, with products, with distribution, with, with learned insights that are really useful for us that we want to bring in as well. And I think how you do that successfully, a lot of companies screw up M and A. We Kind of learned, learned it trial by fire, acquiring windsurfing, you know, in the course of a weekend as a company that was four times our size and you know, from like first call to, you know, execute a greeting from Friday night to Monday morning. So it's something that I think we're only going to get better at. And one reason I'm really excited artists here is, is to help us kind of level up that, that process and be the best destination in the world to be acquired by.

2:07:13

Yeah, I think one of the things I've seen work well in my career is a lot of times partnerships can be preempt an M and A. So a bit of a try before you buy, you make sure that the cultures really make sense, that do companies build an integration or a partnership and then suddenly in those conversations or after you delight a few customers, you both decide, hey, actually maybe it'd be better if we work together. And I think given the scale of cognition, our rate of growth, the impact that founders can have when they come here is really going to be generational. So I'm really excited, excited to talk to a bunch of founders and hopefully bring a bunch more of them onto the cognition team.

2:08:10

Awesome.

2:08:49

What country internationally, outside of the United States is punching way above its weight in terms of AI adoption, AI diffusion? You always hear that story about Estonia rolling out high speed bandwidth to the entire country and they just went way forward in terms of GDP per capita. What country are you having like surprising success in?

2:08:49

Japan, I would say Japan number one. We love Japan. Look, we're a global, we're a global company, so we have people all around the world, we have customers all around the world. But I got to, I got to shout out Japan in particular. You know, even from, from the beginning of when Devon first became available, self serve, when, when cloud agents were like just at the edge of possible, we had an enormous uptick of users in the Japanese market. And I think there's a few, I think there's a few reasons. I think one of them is, you know, our Japanese customer base. Everyone is incredibly conscientious and detail oriented. And whenever we get a support ticket from Japan, it's a very thoughtful essay of every single issue that has been tried, every piece of debugging information you would need. And like, they just found a bug. They just found a bug. If they could have solved it on their own, they would. And so I think the user base in Japan is super sophisticated, really early adopters and, and it's been exciting to see all the Growth there.

2:09:12

I prefer the American style of just fix it. Fix it. Seems. It seems like really beneficial. Sorry, you were going to say something?

2:10:07

No, I was going to say as I'm digging in. Also, ironically, on the channel sales side, we've actually had the most success with sell through with partners in Japan who seem to just deeply understand the product and the value prop and be able to. To sell it to. To their customer bases.

2:10:16

Interesting.

2:10:29

Do. Do the Japanese love otters by any chance? Could that be a factor?

2:10:30

That's a good. That's a good question. We.

2:10:37

We see that. We see the plushie.

2:10:39

Yeah, we got a lot of. We got a lot of otters. There was a big debate in Japan of the right honorific for Devon. You know, is it. Is it Devin Son, Devin Kuhn. And then we learned that the community in Japan has settled on Devin Kuhn as the right honorific. You know, your friend, your bud, your sidekick who's helping you out. I think it's a fitting name for.

2:10:42

And that came from the community. This was not internal.

2:11:03

Came from the community. Yeah, we were informed. We were informed.

2:11:06

We were told ground up.

2:11:10

Amazing. Okay, well, thanks for breaking it down. That's very.

2:11:12

Love it. Well, I'm excited to see everything that you guys do together.

2:11:15

Yep. Deals, deals, deals. Very excited.

2:11:18

Great to see you soon.

2:11:22

Great hanging, guys. Congrats.

2:11:23

Goodbye. Let me tell you about Codex. Codex is a powerful workspace for getting work done with AI agents. Whether you're writing code, analyzing data, creating content, or automating business workflows, Codex helps you move projects forward from start to finish. We have Brendan Carr from the FCC joining the show shortly. It's his first appearance, but we met years ago. I've always been fascinated by his perspective on everything that the FCC does. They're obviously expanding 5G. We can talk about satellites and space, Internet, what it takes to launch a rocket. I know you've been thinking about the TBPN satellite cluster. He's the guy to talk to.

2:11:25

Perfect.

2:12:04

TBJ over on the X chat says literal art of the deal right there. Wow. Insane nominative determinism of the deal.

2:12:05

While we are waiting for Chairman Brennan Carr to join, we got to go through this crazy historic analysis from Ed Zittran.

2:12:17

He. Ed Zittran, July 29, 2024, gave Sam Altman the perfect roadmap. He said, I am hypothesizing that for OpenAI to survive for longer than two years, it will have to. And then he laid out pretty much exactly what happened, exactly what went down.

2:12:27

But Looking back on them, they did seem like crazy. Crazy things that had to come true.

2:12:46

I think Ed should join an AI lab. And with these predictions, maybe as like a chief strategy officer, maybe because he's imagining everything that could go wrong, but through that, he's imagining everything that could go right.

2:12:51

Well said.

2:13:05

And so if he put his optimism cap on, he might make a great chief strategy officer. Maybe, maybe at a deep mind, something like that. Maybe they could pick him up.

2:13:05

That'd be great. Well, Chairman Brendan Carr is in the waiting room. Let's bring him into the TVPN ultradome. How are you doing, Brendan?

2:13:15

I'm doing great. It's long overdue.

2:13:22

Thank you so much for joining. How are you doing?

2:13:25

I know, I'm so glad to be with you guys. I love the show, love what you're doing. I dress down a little. No tie. I kept one extra button. Compared to you, I didn't go the

2:13:27

full preview, but take three down. The Coogan preview. The Coogan preview. That's an amazing line as a bureaucrat,

2:13:34

you know, someone that regulates broadcast airwaves. Not you guys, but broadcast airwaves. You know, decency still matters where I come from.

2:13:44

Well, we wanted to have you on because we wanted to push for podcast safety.

2:13:50

Yes.

2:13:56

We think that it might be a little bit irresponsible for the US government to allow just anyone to grab a microphone.

2:13:57

Yeah, yeah.

2:14:03

What's it going to take on the airwaves?

2:14:04

I want, I want a, you know, multi year approval process for new RSS feeds.

2:14:06

I do maybe like annual. You should maybe need a million dollar fee annually to sort of maintain my license.

2:14:10

DBPN is doing so well. We need to build a moat around you guys, you know, make it harder for others to do this.

2:14:17

Yeah, I think they call it regulatory capture. That's what I want to know.

2:14:22

Let me talk about podcasts. Regulatory capture.

2:14:25

No, we are here to talk about robots first. Or where do we want to start? China. Different supply chain pieces. What's newest in your world?

2:14:29

Well, probably some of the newest stuff we've done. When we started, we stood up a new Council on National Security. We've been doing top to bottom review of all bad actors, foreign adversaries. The most recent thing we did just a couple of days ago was we added to our covered list. So the fcc. There's no piece of electronics that you can use without going through FCC processes. Putting on the covered list means new models of that thing can't be imported or sold in the us so we've Added a couple things to that. We did advanced robotics. So think humanoid robots, think those quadruped robot dogs. And the idea is, if you look to the future, those advanced robotics are going to be key to our economic security, to our national security. And President Trump is looking around the corner and saying, you know what? Probably a good thing if we don't become dependent from a supply chain perspective on a foreign adversary nation or a bad actor for that stuff. So we're trying to onshore that we've done similar stuff before with drones. For instance, at the end of last year, we added all foreign produced drones, but it's a balanced approach, meaning it's new models. So we're not going to take anything out of your hands right now. You can still buy, quote, unquote, new versions of existing models, but it's a way of signaling to the market like it's time to adjust, guys. We need a safe domestic supply chain. So it's good from an outside perspective, but it's also great for investment in jobs in terms of onshoring domestically as well.

2:14:41

Yes, so you said it's good for the market or the market will adjust. I'm interested to know what is your process for assessing the capability of the American supply chain to actually step up to the call when there's, you know, basically there's going to be a gap in the market around drones, humanoids. Fortunately, it feels like we're not in a situation where I'm talking to entrepreneurs who say, look, I set up this business years ago. I am dependent on buying this particular thing from China or internationally on an ongoing basis. And this ban is going to throw me way, way off, like what might happen with other pieces of the supply chain. So there are, there isn't a whole industry that's dependent yet. But what are you doing to actually understand how quickly and how capable the American industry is to fill the gap that that will be created by this?

2:16:03

Well, there's a couple of ways we take that into account and I'll walk through them. But just as context, for instance, when we added drones to the covered list, we saw something like $5 billion flow newly into US domestic drone manufacturer. They're not making drone motors at scale in the US which we've never really done before. But the balance approach is this. So again, if you're buying a motor or a battery from overseas today, you can still continue to buy that because the prohibition is only on new models and the companies overseas can continue to produce the old ones. And then again, there's also an exemption process. So for instance, on drones, we went through the relevant agencies, went through and exempted toy drones, for instance, from the ban. And so it's balanced. That's forward looking. Let's not develop too much dependency. Okay, maybe there's a couple thousand of these. Not a huge deal. We don't want a couple million. So the entire regulatory structure allows for exemptions plus transition. And then look, we can come back afterwards and remove the quote, grandfathering for existing models. And in fact, we're doing that now for things that were added to the COVID list before 2024. So things like Huawei zte that type of equipment. Again, one, it's not consumer facing as much, but two, you had multiple years to adjust to where we think the market's going.

2:17:02

Do you have any optimism around these frontier AI models have incredible cybersecurity capabilities.

2:18:20

Capabilities.

2:18:28

I could imagine a world where before there was a lot of fear, uncertainty and doubt about certain pieces of electronics that are made internationally potentially having backdoors or spyware. And if you can hammer one of these, you know, one of these systems with every possible test, are we going to wind up in a world where we can more confidently say yes or no? Does something have a backdoor? Or is this just, you know, everyone will just be stuck in a never ending race and we'll be back to where we were?

2:18:29

Yeah, I do think it's helpful from that perspective. And obviously there's telco companies that are on the early release lists for a lot of these models, help identify any patches that might be necessary. But we're doing a couple things that are new as well. So it used to be if you wanted to sell electronics in the US you had to go through a lab and the lab would test it for power levels and interference. Very basic technical stuff. We're now inserting national security checks in that lab process. In fact, we stood up something called a bad labs proceeding because it turns out that something like 70% of all electronics that ultimately arrive in the US are tested at labs located inside China. And some of those labs themselves were linked or controlled by or tied to the pla. Yeah, that's not necessarily the most trustworthy. So we're kicking many bad labs out of the testing process. And again, it's helping to onshore some of that testing process. So we do want to make sure throughout all of this that there's much more trustworthiness checks along the way.

2:19:03

That's very interesting. Jordi, do you have anything else on this?

2:20:02

No. I was very excited to See the news from last week, or maybe it was the week before, just because I even processing the drone industry and even the consumer drones, personally, personally I think drones are great. I've seen drones that have captured some cool footage of snowboarding or surfing and all these things. But the idea of having millions of, if you could ask any foreign adversary government, hey, would you like to have millions of flying cameras in, in one of your geopolitical adversaries within their borders? They would say like absolutely, that sounds great, let's do that. And so the idea that we were going to let the same thing happen, the thing that we let happen in drones, that we would let that happen with humanoids, which are much more of a risk to me, they can actually have, they're not very significant today, but they can have a real effect on the world. And the idea that we would allow, you know, millions, eventually even billions of these into our borders just was very concerning. So personally I'm glad that you guys took action.

2:20:05

I'd love for you to explain the E Rate program. What's going on there with school Internet. I think it's an under discussed story. What it sounds like very good on the face of it, you want students in America to have Internet. How are things changing? What's the history of the program? What's the story going forward?

2:21:21

This one's interesting. So this country over the last couple of years, I think we really experimented with going all in on screen time for kids and the results of that are starting to show themselves and the results aren't great. We have actually gone through one of the most significant losses of human capital from a learning perspective that we've basically ever seen. I mean going back to almost the dark ages. When you look at some of the decline in test scores and to some extent, I don't know if it's correlation or otherwise, but it coincides with this big uptick in screen time. And the FCC has a role to play. We fund Internet connections and to some extent internal connections at schools all across the country. Multiple billions of dollars a year. And so we've done a top to bottom review of our program to make sure it reflects the current research on screen time for kids. And it's not just us obviously looking at a big movement around the country, different states, different school districts are all starting to say, you know, maybe put the smartphones away, maybe put the screens away. I mean, you got young kids, kindergarten, first grade, they're just swiping all day. The idea of this, you'll love this.

2:21:42

The school Nearby me elementary school in PE they spend more than half the time on iPads looking at physical exercise like diagrams. I'm like, these are children. Maybe just let them run around outside, get some exercise. Gone too far.

2:22:49

Get us up to speed on what's happening with Starlink and other space based Internet connectivity programs. It feels like to much to the benefit of the American Internet consumer, the race is heating up. There are more companies launching constellations. What are your KPIs? What do you want to see? Is it faster approval times for new constellations? Clarity around who owns what spectrum? Smoother auctions like what is on your to do list for the next couple of years?

2:23:11

Yes, a little bit there that we're doing on every the points you hit. So for one, President Trump came in and gave a very clear direction. He said he wanted the United States to lead the world again in technology and in space in particular. We're now seeing that. So there's this new technology called direct to device where you can go straight from your smartphone right to a low earth orbit satellite. You don't even need that little Starlink mini or other satellite provider dish near you anymore. It's just starting to emerge. But we're putting the regulatory framework in place at the FCC for that to succeed. One that means more spectrum. You need new airwaves for that technology to work. We've been facilitating many transactions to do that. Starlink now is a big chunk of spectrum. Amazon is buying another company called Global Star to basically take their spectrum and use that for their own version of direct to sell. Then inside the fcc we're taking our Space Bureau which historically process applications for a lot of this stuff. And they would review individual applications and long narratives, be very subjective and we've scrapped that entirely and we've replaced it internally with an assembly line where we give you clear rules of the road. If you hit these targets, your applications will be on the fast track and you're going to go because again, look at the launch cadence, look at the amount of mass going into orbit. We got to keep up with that. And this is someplace that I'm just super excited for the country. This hard tech area, the kids from the Gundo that are now everywhere outside the Gundo as well. I mean what they are doing right now is a, I think a huge part of the future of this country. And we want to make sure the FCC is not sand in the gear when they continue to innovate the way they are.

2:23:45

Does what? Does the FCC have any other roles to play in That, I mean, we've seen like every day there's a, there's a company, a startup that's coming on to announce an LOI or some sort of deal with a different piece of the government. Are there, are there any other ways for the startup ecosystem or the tech community to interface with the FCC beyond, okay, I got approval for this thing.

2:25:20

Yeah.

2:25:45

We're working across the board to make sure that, you know, whether you're big or you're small, medium sized company, that you can get a yes or no answer from the fcc. And part of that is just getting rid of dead wood. So we started this proceeding at the agency called Delete, Delete, Delete, which is about going through every single page of our rule books and getting rid of anything we don't need. We've obviously sort of resulted in, you know, thousands of words being taken out. I think 400 pages have been removed from our code of federal regulations already. Just so that, you know, whether you're small or unsophisticated, it should be much easier to engage with the government. We've cleared the application backlog in space, you know, by about 50%. So we're seeing some good results there. For everyone to engage with the agency.

2:25:45

That's very exciting, Jordy. Anything else?

2:26:26

Not for now, but let's do it again soon.

2:26:28

For coming on the show, have a

2:26:30

great honor to have you.

2:26:32

Have a great week and we'll talk to you later.

2:26:33

Good to see you guys. Thanks.

2:26:35

Good to see you. Bye.

2:26:36

SpaceX had earnings.

2:26:40

Oh yeah? How'd they do?

2:26:43

Let's see. First ever earnings as a public company.

2:26:44

Up 10% right now.

2:26:51

Nope, down 5%. It was up 9%.

2:26:53

It was up 9.5.

2:26:56

Down four and a half percent after hours. Okay, first up, SpaceX announces a new partnership with Nvidia to design its StarMind AI1 payload. Bringing data center class compute into orbit. That makes a lot of sense. Let's find some actual numbers.

2:26:57

So revenue was 7.81 billion versus 6.93 billion billion. Expected loss per share was $0.09. Average analyst estimated a loss of $0.26. Revenue jumped 92% from 4.1 billion a year earlier. So huge, you know, you're even at this scale, still doubling the revenue. And it's the first time Elon Musk's reusable rocket maker will face Wall street in this capacity. And investors are jittery. SpaceX stock has dropped 12, 16% since opening at $150 a share on June 12. And SpaceX lost 4.9 billion last year, largely due to heavy investments in artificial intelligence, which we've discussed. The company merged with Musk's X AI in February, CNBC reports, saying that ask at the time that the vision was to build data centers in space. But the launch business, which counts on large contracts from NASA, is losing money. Most of SpaceX revenue for the year and its only source of profit came from its connectivity segment, which consists of its Starlink Internet service. Starlink is sold directly to consumers. So here's how SpaceX performed in the three key segments. For Space, they brought in $962 million versus 835 million which was expected. So they beat in space. On connectivity, they brought in 4.29 billion. So the Starlink business is four more than four times the size of the actual launch business. They brought in 4.29 billion versus 3.83 billion that was expected. So they beat there. And on AI, they brought in 2.56 billion versus 2.158 billion expected. So beats across the board. And very interesting to see that the thing that they started doing, space, of course, launching rockets is now their third largest line of business. Connectivity is of course bigger and also AI is bigger.

2:27:17

Everything is computer, John.

2:29:23

Everything is computer. That is a good summation of it

2:29:25

and that's a good place to end our show.

2:29:30

Let's play you out with the most feared lawyer, John Quinn. Leave us five stars on Apple Podcasts and Spotify. Sign up for our newsletter@tbpn.com and we will see you tomorrow at 11am Pacific. Goodbye. Flashback still in the air. The room goes still. Then the victory.

2:29:31