Sam Altman LIVE on Sora, Hollywood, & the Future of Ads | Bill Peebles, Dylan Patel, Elad Gil, Robby Stein, Morgan Housel, Misha Laskin

(02:32) - 𝕏 Timeline Reactions (16:29) - Softbank Pursues $5B Loan (28:18) - China Races to Buy NVIDIA Chips (33:06) - 𝕏 Timeline Reactions (56:31) - Sam Altman, CEO of OpenAI & Bill Peebles, Head of Sora, discuss the advancements of Sora, OpenAI's AI-driven video generation platform, highlighting its enhanced physics understanding and user-friendly creation tools that have led to a high user engagement rate. They emphasize the importance of continuous innovation and the potential for AI to transform content creation, while also addressing the need for responsible management of AI-generated content and the protection of individual likenesses. Altman also touches on the challenges of scaling AI technologies and the strategic decisions involved in resource allocation to support ongoing development. (01:28:19) - Elad Gil is a prominent entrepreneur and investor, known for co-founding Color Genomics and investing in companies like Airbnb, Coinbase, and Stripe. He discusses the transformative potential of AI in professional services, emphasizing how AI can automate repetitive tasks, enhance productivity, and significantly improve profit margins. Gil highlights the opportunity to acquire traditional, labor-intensive businesses, implement AI to streamline operations, and use the increased cash flow to scale through further acquisitions. (01:57:37) - Robby Stein, Vice President of Product at Google Search, discusses the integration of advanced AI technologies into Google's search engine, highlighting features like AI overviews and AI mode that enhance user experience by providing quick, relevant information and enabling natural language queries. He emphasizes the importance of accuracy and quality in AI responses, leveraging Google's extensive search history to improve results, and addresses trust concerns while encouraging businesses to adapt their content strategies to align with AI-driven search advancements. (02:17:32) - Morgan Housel, a partner at Collaborative Fund and author of "The Art of Spending Money," emphasizes that spending is more art than science, as individual preferences and life experiences shape financial decisions. He discusses the importance of distinguishing between internal and external benchmarks of success, noting that while external achievements are visible, true contentment often stems from internal satisfaction. Housel also highlights the significance of minimizing future regrets by focusing on meaningful experiences and relationships over material possessions. (02:44:38) - Misha Laskin, co-founder and CEO of Reflection AI, a startup specializing in AI tools for automating software development, discusses the company's recent $2 billion funding round led by Nvidia, which has elevated its valuation to $8 billion. He emphasizes Reflection AI's commitment to developing open-source AI models in the U. S. for global distribution, aiming to provide enterprises with compliant alternatives to existing models. Laskin also highlights the company's focus on co-designing algorithms with advanced American chips to enhance performance and competitiveness. (02:58:03) - Dylan Patel, founder of SemiAnalysis, discusses the launch of InferenceMAX, an open-source benchmarking suite that evaluates inference performance across various hardware platforms and models, aiming to provide up-to-date and realistic insights into LLM inference performance. He highlights the industry's need for standardized, transparent benchmarks to assess hardware efficiency and cost-effectiveness, emphasizing that InferenceMAX addresses this by benchmarking popular models on major hardware platforms nightly with the latest software. Patel also notes the significant support from major industry players, including NVIDIA, AMD, Microsoft, OpenAI, Oracle, and others, underscoring the collaborative effort to enhance AI infrastructure evaluation. (03:17:53) - 𝕏 Timeline Reactions TBPN.com is made possible by: Ramp - https://ramp.com Figma - https://figma.com Vanta - https://vanta.com Linear - https://linear.app Eight Sleep - https://eightsleep.com/tbpn Wander - https://wander.com/tbpn Public - https://public.com AdQuick - https://adquick.com Bezel - https://getbezel.com Numeral - https://www.numeralhq.com Polymarket - https://polymarket.com Attio - https://attio.com/tbpn Fin - https://fin.ai/tbpn Graphite - https://graphite.dev Restream - https://restream.io Profound - https://tryprofound.com Julius AI - https://julius.ai turbopuffer - https://turbopuffer.com fal - https://fal.ai Privy - https://www.privy.io Cognition - https://cognition.ai Gemini - https://gemini.google.com Follow TBPN: https://TBPN.com https://x.com/tbpn https://open.spotify.com/show/2L6WMqY3GUPCGBD0dX6p00?si=674252d53acf4231 https://podcasts.apple.com/us/podcast/technology-brothers/id1772360235 https://www.youtube.com/@TBPNLive

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00John Coogan?

  You're watching T B P N. Today's Friday, October 9th, 2025. We are live from the T B P N. Oh, it's October 10th. I forgot to change the date on my sheet. Good. Thank you for catching that. We are live from the T B P N Ultra Dome, the Temple of Technology, the Fortress of Finance, the Capital of Capital.

• 0:17John Coogan?

  And we wanted to open with this post by Jira Tickets. G A T says, "Don't worry about the bubble. If it pops, we'll just make a new bubble." We got some guys who are really good at making new bubbles. Bubble talk is all-

• 0:31Jordi Hays?

  We used to pray for a bubble like this.

• 0:32John Coogan?

  We did. That was how we started the show. We said, "Lever up." We said, "We're praying for a bubble." Well, it's here. People are starting to lever up, and it's time to double down and support our strongest soldiers. Those who are holding up the global economy. And we are joined by some folks who are going to be holding up the global economy. Sam Altman's joining in just 55 minutes.

• 0:54Jordi Hays?

  Bill Peebles.

• 0:55John Coogan?

  Bill Peebles is joining, the head of Sora. We also have a lot. Gil, Robby Stein from Google. Morgan Housel is coming on to talk about a book. We have a couple other folks joining.

• 1:08Jordi Hays?

  Which was a $2 billion round that got announced yesterday.

• 1:11John Coogan?

  And we have Dylan Patel from Semi Analysis, talking about Inference Max, which is already putting the timeline in turmoil. Folks are taking shots at AMD, but Dylan Patel says he has the data that can, that shows that AMD in some cases can be a lower total cost to own. There are certain models that favor AMD, G P T O S S might be one of them. This is all from his new benchmark called Inference Max, where he's going to take us through it. It's a fascinating project. I think something like $50 million of capital was kind of marshaled just to run the GPUs, to run the tests, to run the benchmarks. Because they run them every single night, and they vary different models.

• 1:53Jordi Hays?

  It's incredible that Dylan's been able to marshal this amount of resources for effectively a test.

• 1:58John Coogan?

  Yeah, and he makes no money from it. It's free. Obviously, people will work with Semi Analysis at some point, and it's amazing. But basically, all the different AI companies are in helping out with this. So we'll dig into that.

• 2:12Jordi Hays?

  Boston in the chat says, "Bubble made of steel." Hopefully.

• 2:16John Coogan?

  A steel bubble.

• 2:17Jordi Hays?

  What about a diamond bubble?

• 2:19John Coogan?

  Yeah.

• 2:19Jordi Hays?

  A diamond bubble.

• 2:21John Coogan?

  I like it.

• 2:22Jordi Hays?

  Something, something there.

• 2:24John Coogan?

  You can still see through it. In the meantime, let me tell you about Ramp. Time is money, save both. Easy to use corporate cards, bill payments, accounting and a whole lot more, all in one place. Mark Cuban, Dylan Eberscotto on our team says, Mark Cuban is the greatest marketer of all time. Every video generated from his cameo includes brought to you by cost plus drugs. Even when it's not in the prompt, he baked this into his cameo preferences. So every Sora post he appears in is an ad for cost plus.

• 2:51Jordi Hays?

  I love how shameless Cuban is about promoting cost plus drugs. A lot of people become a bean air.

• 2:57John Coogan?

  Yeah.

• 2:58Jordi Hays?

  They they lose the ability to just be shameless.

• 3:01John Coogan?

  Yeah.

• 3:01Jordi Hays?

  Not Mark Cuban. He, at every possible chance, even on our show, I think he was promoting cost plus drugs.

• 3:08John Coogan?

  Totally.

• 3:08Jordi Hays?

  And I do think the the beautiful irony here of him, you know, not too many months ago saying, you know, we need to make sure that ads aren't in L L Ms. He's the first person to incorporate ads into Sora. Of course, not a language model, but still brilliant.

• 3:28John Coogan?

  I I had this idea too. I'm I'm bummed that he scooped me, did it first. I did go into my prompt and I put, always depict me as a bodybuilder and.

• 3:38Jordi Hays?

  And it works really well.

• 3:40John Coogan?

  Yeah, I didn't really think about it.

• 3:41Jordi Hays?

  To your credit, you don't look that much different.

• 3:43John Coogan?

  Thank you.

• 3:44Jordi Hays?

  The the OpenAI team was playing around. They made it made a video with John and Bill yesterday and they texted Ben. They were like, by any chance, did John like do some type of prompt that depicts him as having very large muscles? Because I guess they were trying to.

• 4:01John Coogan?

  In a suit and they're trying to make it as accurate as possible, of course, represent me appropriately. And they just keep getting results of this like extra burly businessman. But it's having a lot of fun. So, yeah, I mean, if you're playing around on cameo, I highly encourage having some fun with that with that prompt. Throw brand in there, throw a description. I saw someone that said that they always want to be depicted with an Adam Arpegay watch on the wrist.

• 4:25Jordi Hays?

  There we go.

• 4:25John Coogan?

  So no matter what you, what you prompt, they get an AP on the wrist, which I love. If you want me, you can go to bezel.com.

• 4:31Jordi Hays?

  That's right.

• 4:32John Coogan?

  Get bezel.com. Your bezel concierge is available to source you any watch on the planet. Seriously, anyone.

• 4:36Jordi Hays?

  Tom Osman in the chat says, gents, how's the horse? The horse is fantastic. Can we pull up the horse cam? Checking in on the horse.

• 4:43John Coogan?

  Yes.

• 4:44Jordi Hays?

  Never been better, folks. Thriving after its first full week in the Old Show with us.

• 4:51John Coogan?

  The horse is streamed live to all platforms, thanks to Restream, one livestream, 30+ destinations, multi-stream and reach your audience wherever they are.

• 4:59Jordi Hays?

  Lots of good questions coming in from the chat.

• 5:04Jordi Hays?

  Fannus says there's a downgrade on the quality Sora generates the last few days. Have you noticed that?

• 5:11John Coogan?

  I haven't.

• 5:11Jordi Hays?

  It's hard to really tell.

• 5:12John Coogan?

  I haven't. I generated a few collabs with Sam and Bill last night. I thought they were fine. They were good. They take a minute, but it's not noticeable to me at least. Interestingly, I have noticed that the Sora app sometimes can't just load normal videos. The generation actually works fine for me. Interestingly, it feels like there's CPU poor because just the loading the actual feed sometimes loads and then just doesn't play. So there's something going on there where they're just scaling all parts of the system, I'm sure, because I've seen some videos on Sora that now have like thousands of likes, which is clearly an indication that there are a lot of people watching.

• 5:51Jordi Hays?

  Consuming video on the platform. Palantir says that the channel, Palantir, of course, says OpenAI dropping $25 billion on a data center in Argentina deserves a triple

• 6:01John Coogan?

  Let's do it.

• 6:02Jordi Hays?

  I hadn't seen this. This came out this morning. OpenAI and Sora Energy weigh a $25 billion Argentinian data center project.

• 6:11John Coogan?

  Wasn't there also a bailout of Argentina or something?

• 6:13Jordi Hays?

  Well, yeah, so while OpenAI and Sora Energy are working on a $25 billion data center project, Besen is like figuring out how to bail out the Argentinian government for just $20 billion.

• 6:25John Coogan?

  Yes, yes. There's this hilarious post by AlphaPics. This was sent into our group chat like five different times. This is Besen, wake up, espresso shot, 13th on Bloomberg quiz, bail out Argentina. And it just says it's a shot of a screenshot of a Bloomberg terminal. And I guess this is from the quiz that goes out. He got a 242 score. He's 13th. It just says anonymous US Department of Treasury. Of course, it could be someone else, but it's very funny to imagine that it's him. I like that a lot.

• 6:55Jordi Hays?

  Anyways, this, I guess, news leaked of OpenAI and Sora Energy. They signed a letter of intent, an LOI.

• 7:02John Coogan?

  Yes.

• 7:02Jordi Hays?

  Let's give it up for LOIs carrying. A lot of weight these days for a data center project in Argentina requiring an investment of up to 25 billion. The project would involve a large scale facility with a capacity of up to 500 megawatts to support advanced AI computing, according to a government statement. Structured under Argentina's re-R-I-G-I tax break scheme, which went into effect last year, the project, if completed, would be one of the largest technology and energy infrastructure initiatives in the country's history. So I'm sure we'll get more news here, but another day, another multi-billion dollar announcement from.

• 7:40John Coogan?

  There was a, there was a moment when.

• 7:43Jordi Hays?

  Whoa, Taylor Hodge in the chat, Buenos Aires, AI race, nominative terrorism is going crazy.

• 7:50John Coogan?

  There was a moment when the, the sovereign AI initiative was very much about building a data center and then running open source software on it. But I do think that it's not that unreasonable to say that it is critical to your geopolitical strategy as a country to just have an open AI data center in your country, because then you have access to the open AI API at lower latency potentially. Chat GPT runs better in your country. That could, you know, be not just profitable from like a business perspective, but it's also a matter of like going where the energy is. Like if you're a country that has cheap energy, it makes sense to kind of set up infrastructure there instead of trying to manufacture all of the energy in America, all the build all

• 8:34John Coogan?

  the data centers in America and then just have all of the tokens flowing over the internet backbone. I don't know. Doesn't seem that great to me, but the, the market is selling off. It's very sad. I wish we could be wearing white suits today, but it's a rough day in the market. The Dow is down 1.25% and the NASDAQ is down like.

• 8:53Jordi Hays?

  One member of our team who, who we won't name was using.

• 8:59Jordi Hays?

  leverage and opened up their brokerage this morning and immediately said, I'm chopped and cooked in a very, in a very Gen Z way. We, at the team breakfast this morning, everybody got a, got a good laugh. So hopefully he'll be so back very soon.

• 9:16John Coogan?

  Yes.

• 9:17Jordi Hays?

  Rough one out there.

• 9:18John Coogan?

  Yes. And the reason that most people are, you know, describing why the, the stock market is falling is because of a news from Donald Trump. Before we get into reading Donald Trump's statement, let's tell you about Privy, wallet infrastructure for every bank. Privy makes it easy to build on crypto rails, securely spin up white label wallets, sign transactions, integrate on-chain infrastructure, all through one simple API.

• 9:41Jordi Hays?

  DJT should put ads in these posts. So long. I mean, he's really actually maxing out the word count on some of these. But, but yeah.

• 9:50John Coogan?

  Yeah. So we, we talked about this yesterday.

• 9:54John Coogan?

  It made it to, made it to the front page of the journal today. Yesterday, China squeezes the United States in rare earth move. So China's newest restrictions on rare earth materials would mark a nearly unprecedented export control that stands to disrupt the global economy. That does not sound good. Giving Beijing more leverage in trade talks and ratcheting up pressure on the Trump administration to respond. So we talked about this yesterday. We went through some of.

• 10:19Jordi Hays?

  Isaac, Buster in the chat just says, just needs more leverage to come back.

• 10:23John Coogan?

  100%.

• 10:24Jordi Hays?

  Get the, get the intern more leverage.

• 10:27John Coogan?

  Yes.

• 10:27Jordi Hays?

  Make it all back.

• 10:28John Coogan?

  Always, always lever up. So yes, yesterday we read through Dean Ball's analysis of the rare earth move by China. There's, there's some green shoots there. We do have, America does have some leverage, but it's all in the backdrop of this larger trade negotiation. Now the United States government has responded. Donald Trump has responded with this letter or this post on Truth Social. I think they're just called Truths over there. And Kobe, and the Kobe essay letter, uh, kind of breaks it down. Breaking the S and P 500 falls 70 points in seconds after President Trump publishes the below paragraph about China. Trump says he is calculating interest, uh, increased tariffs on, uh, Chinese products.

• 11:11John Coogan?

  Trump also says there is no reason to meet Chinese President Xi Jinping anymore. And so, uh, we can read through a little bit of this. It's a very long post. He's, he's, he's become the thread boy over there. Uh, Trump says some very strange things are happening in China. They are becoming very hostile and sending letters to countries throughout the world that they want to impose export controls on each and every element of production having to do with rare earths and virtually anything else they can think of, even if it's not manufactured in China. Nobody has ever seen anything like this, but essentially it would clog the markets and make life difficult for virtually every country in the world, especially for China. We have been contacted by other countries who are extremely angry at this trade hostility, which came out of nowhere.

• 11:54John Coogan?

  Our relationship with China over the past six months has been a very good one, thereby making this move on trade an even more surprising one. I have always felt that they have been lying in wait, and now, as usual, I have been proven right. There is no way that China would be allowed to hold the world captive, but that seems to have been their plan for quite some time, starting with the magnets, in quotes, and other elements that they have quietly amassed into somewhat of a monopoly position, a rather sinister and hostile move, to say the least. But the U.S. has a monopoly, has monopoly positions also, much stronger and much more far reaching than China's. I have just not chosen to use them. There was never a reason to do so, until now, he says.

• 12:38John Coogan?

  Uh, the letter they sent is many pages long and details with great specificity, each and every element that they want to withhold from other nations. Things that were routine are no longer routine at all. I've not spoken to President Xi Jinping, uh, because there was no reason to do so. This was a real surprise, not only to me, but to all the leaders of the free world. I was to meet President Xi in two weeks at APEC in South Korea, but now there seems to be no reason to do so, so pulling out of the talks. Uh, the Chinese letters were especially inappropriate in that this was the day that after 3,000 years of bedlam and infighting, there was peace in the Middle East. I, I, I wonder if that timing was coincidental. Putting on the tinfoil hat. Just noticing coincidences.

• 13:22John Coogan?

  Depending on what China says about the hostile order that they have just put out, I will be forced as President of the United States to financially counter their move for every element they have been able to monopolize. We have too. I never thought it would come to this, but perhaps, as with all things, the time has come. Ultimately, though potentially painful, it will be a very good thing in the end for the USA. One of the policies that we are calculating in this moment is a massive increase of tariffs on Chinese products coming to the United States. There are many other countermeasures that are likewise under serious consideration. Thank you for your attention to this matter. And so, it's a, the trade war is returning and we will continue to monitor the situation.

• 14:02Jordi Hays?

  And again, don't need to freak out. The S and P's record high was just a couple of days ago.

• 14:08John Coogan?

  Yeah. And with all of these, you know, the tensions can ratchet up very quickly. We saw this with the tariff tantrum, that Liberation Day, the massive sell-off, and then quickly things were negotiated and largely reversed in many ways. A lot of companies got through that. I mean, we just experienced this with Base Power, where we were like, so you're in a lot of trouble, and then they got through it entirely, very quickly, and raised a billion dollars.

• 14:36Jordi Hays?

  Yeah, raising a massively oversubscribed round.

• 14:38John Coogan?

  Yeah. But in the backdrop of like permanent tariffs.

• 14:41Jordi Hays?

  I don't necessarily think that it changed their strategy.

• 14:42John Coogan?

  It was rough.

• 14:43Jordi Hays?

  Well, yeah, I don't think it changed their strategy. I think they always intended to set up a factory in Austin.

• 14:47John Coogan?

  Of course.

• 14:48Jordi Hays?

  But I'm sure it certainly accelerated.

• 14:50John Coogan?

  Yeah, but they have, you know, they have to get certain, the supply chain is so global all over the place that it was certainly a cause for concern, but.

• 14:59Jordi Hays?

  Well, speaking of energy, Oaklo, the.

• 15:02John Coogan?

  What's going on with Oaklo? Sam Altman backed.

• 15:04Jordi Hays?

  Nuclear company that Sam Altman backed years and years ago. I think he's no longer on the board now.

• 15:09John Coogan?

  2014.

• 15:10Jordi Hays?

  But Oaklo is up almost 10% today. So, a little green in the midst of all.

• 15:19John Coogan?

  Well, let me tell you about cognition. They're the makers of Devon. Devon is the AI software engineer. Crush your backlog with your personal AI engineering team. Pedro Domingos has a chart from the Financial Times showing the number of years after release to scale the internet versus just scaling ChatGPT. And the internet took 13 years to get to 800 million users. ChatGPT took a little over two, maybe three. So really remarkable.

• 15:49Jordi Hays?

  The internet is the greatest distribution engine for products in history.

• 15:54John Coogan?

  ChatGPT, yeah. And so it is a very acceleratory effect.

• 15:59Jordi Hays?

  Tron Aries is getting some reviews. The Telegraph had a headline today. They said Tron Aries is so bad, it makes you wish AI would hurry up and destroy Hollywood.

• 16:10John Coogan?

  Long case for Sora.

• 16:11Jordi Hays?

  One out of five stars.

• 16:13John Coogan?

  I was so excited for Tron Aries.

• 16:15Jordi Hays?

  Film populated by some of the most aggressively charmless characters ever seen in a blockbuster. Almost makes me want to see it now.

• 16:22John Coogan?

  I agree. I agree. I want to see it. I loved the first Tron. I'm optimistic that the second Tron will deliver in one way or another. Either way, should we go to SoftBank? Masayoshi Son is seeking $5 billion in a margin loan backed by Arm stock. We know that he's flush with Arm stock. It was the way he made his second $100 billion. He made his first with Alibaba and his second with Arm. So SoftBank Group is in talks to borrow $5 billion from global banks, refilling its coffers at a time Masayoshi Son is accelerating the Japanese investment firm's bets on.

• 16:59Jordi Hays?

  We've got to pause for one second and give Misha credit for not top ticking OpenAI. He invested earlier this year somewhere around a $330 billion valuation. A lot of people were saying, this is crazy. They thought it was bearish. Now, OpenAI just closed a secondary or tender offer at 500 billion. So, nice little markup for Misha. Hopefully, he's been able to actually fund the entire investment. I think there's a number of OpenAI investors that have been working to pull capital necessary together.

• 17:36John Coogan?

  It was also a. It was, it was a big jump in valuation at the time. I feel like it was more than like a 2X step up or something from the previous round that everyone was talking about. And so it was like, oh, okay, this is, this is a big jump in valuation. But of course, the business had grown. And it was also, there was also that funny picture of Masayoshi Son holding a crystal ball and then dropping it. And you could read all sorts of things into that. But if you read too much into it, you would be wrong because it's been on a tear and he's done quite well. But now he is levering up further. So SoftBank is close to signing a deal with a handful of lenders for a margin loan secured by shares of its chip, of its chip unit, ARM Holdings. The capital will fund additional investment

• 18:18John Coogan?

  in OpenAI this year, the people said, who asked not to be identified. A margin loan is a type of facility where you borrow money using your investments like stocks as collateral. A representative for SoftBank declined to comment. SoftBank shares slid 4% on Friday, the most since September 26.

• 18:34Jordi Hays?

  And ARM is down 8% themselves.

• 18:37John Coogan?

  I wonder how much that is tied to the other stuff.

• 18:39Jordi Hays?

  Part of it's Morgan Stanley lowered their price target based on the 2027.

• 18:44John Coogan?

  For SoftBank or ARM?

• 18:45Jordi Hays?

  ARM's 2027 guidance, so that's a factor, but.

• 18:48John Coogan?

  Yep. So Son has embarked on a spending spree this year to try and position the firm as a linchpin in the global AI boom, most recently pledging as much as 30 billion towards OpenAI and buying ABB's robotics arm for 5.4 billion. I had no idea he bought an entire robotics division. That's, that's pretty cool. ARM's 38% rally this year has in turn granted SoftBank the confidence and leeway to grow its investment war chest. SoftBank has raised a total of 13 billion in margin loans from ARM shares with 5 billion still under, undrawn. I wonder how much Elon took in margin loan during the Twitter buyout? Because I feel like some of that was backed by Tesla stock. He was saying he wasn't going

• 19:31John Coogan?

  to sell Tesla stock, but then I think he got a margin loan against it. Maybe? I'm not exactly sure.

• 19:35Jordi Hays?

  All I know is that, that X, the social media platform or Twitter, what was originally Twitter's, like annual interest payments were north of a billion, which was part of what, what created urgency to.

• 19:49Jordi Hays?

  You know, merge with XAI.

• 19:51John Coogan?

  Yeah.

• 19:52Jordi Hays?

  Had a, had a, obviously, larger valuation. And again, still putting pressure on the combined entity. But at least the equity overall is marked up substantially.

• 20:03John Coogan?

  Yeah.

• 20:03Jordi Hays?

  I think if I remember correctly, yeah, there was like something around, I think it was like very levered. It was like something like they had like 30 billion.

• 20:11John Coogan?

  Something like that. There were a couple of different tranches and I, I don't remember the exact details. But, I mean, he was able to roll it into XAI and, you know, raise more money. And so, you know, these things can, can kind of like, you can, you can move the chips around the board for, for years and, and try different things to, to piece together value. Well, if you want something that you won't have to need, you won't have to go into debt to sign up for, because you can sign up for free. Figma.com. Think bigger, build faster. Figma helps design and development teams build great products together. The group had secured about 8 billion in margin loans ahead of ARM's initial IPO in 2023.

• 20:51John Coogan?

  Eleven banks, including JP Morgan, Barclays, BNP, Credit Agricole, Goldman Sachs, provided the facilities by linking mandates for ARM's IPO to loans. Earlier this year, the group also raised a $15 billion one-year facility to help fund AI investments in the United States in what is among its largest borrowings raised. Zhone's insatiable appetite for deals has extended far and wide.

• 21:18Jordi Hays?

  I thought, I thought I was gonna say insatiable appetite for leverage.

• 21:21John Coogan?

  For capital.

• 21:22Jordi Hays?

  This is also true.

• 21:23John Coogan?

  Deals. I mean, when, when should you have a satiable appetite for deals? Everyone should have an insatiable appetite for deals.

• 21:31Jordi Hays?

  Yeah.

• 21:32John Coogan?

  Centered on ideas to capitalize on the, on the expected exponential growth of AI technologies. His most ambitious projects include the $500 billion Stargate initiative. That aims to build data centers across the United States in partnership with Oracle and OpenAI. SoftBank is also exploring the feasibility of a large-scale industrial manufacturing hub in the United States. That's cool, which would encompass production lines for AI-powered industrial robots. That's probably a little bit further out, but but pretty cool. SoftBank joins a wave of big tech firms and investors plowing unprecedented amounts of capital into a technology with the potential to transform industries and economies. But the flurry of deals and partnerships, many involving Nvidia Corp. and OpenAI, are escalating concerns that an increasingly complex internet.

• 22:14Jordi Hays?

  Something that I want to understand better is how much chatter there was about the circular telecom deals in in like 1999 and early, early in the first quarter of 2000. Because.

• 22:28John Coogan?

  Oh, I mean, by the first quarter of 2000, it was like front page everywhere.

• 22:33Jordi Hays?

  Well, things didn't really correct until March.

• 22:37John Coogan?

  Yeah, but in 1999, The New Yorker ran a profile of Mary Meeker that's called The Woman in the Bubble. So like, The New Yorker, which isn't in the business of like calling bubbles early, was just describing it, you know, like, everyone agrees that this is a bubble and we're profiling someone who's at the center of it.

• 22:56Jordi Hays?

  Yeah.

• 22:57John Coogan?

  At in The New Yorker, which I feel is still like six months below.

• 23:00Jordi Hays?

  You know, over the last couple of weeks, you can't scroll three posts.

• 23:04John Coogan?

  Yep.

• 23:04Jordi Hays?

  Without seeing somebody, you know, posting some type of graphic or meme or just general concern for the circular nature of some of these transactions.

• 23:14John Coogan?

  Yep.

• 23:15Jordi Hays?

  The, you know, and Doug's point is like from some analysis from Monday's interview is that, you know, the next leg up in the bubble is leverage. But here, Morgan Stanley in this article is estimating the amount of debt tied to AI has ballooned to 1.2 trillion, making it the largest segment in the investment-grade market.

• 23:37John Coogan?

  So remarkable. Yeah, we were talking about like, when does the number actually get big in terms of total debt? Because if you look at like, the market for treasuries, that's obviously way bigger. Or the market caps of all the hyperscalers combined, that's, you know, 10 to 20 trillion. It's really, really big. But one trillion of debt feels like a lot. That feels like a lot. And so I wrote-

• 24:01Jordi Hays?

  And it, but, but the notable thing here is, is understanding who is actually on the hook for the debt, right? A lot of, I think, OpenAI broadly has done, has, has made a, a extremely, uh, made it, uh, had a focus of not tying the debt to the actual for-profit entity, and then obviously not the, the nonprofit itself, right? So, the question is, they can be at the center of all this, but they're not necessarily directly on the hook for any of this, you know, 1.2 trillion.

• 24:34John Coogan?

  Yeah, yeah, yeah. Where, where, where does the actual debt live? What is it entitled to? Does it have warrants over equity? Like, all of that matters a ton. I wrote about, uh, the bubble talk in today's newsletter. You can sign up at tbpn.com. And I was reflecting on, 10 years ago, in 2015, Sam Altman was also being, you know, talked about. There were a lot of people were talking about the bubble. Vanity Fair ran a, uh, an article at the time that said something to the effect of like, uh, like, we talked to multiple experts in financial bubbles and they say it's gonna pop any minute.

• 25:13John Coogan?

  And so Sam formulated this bet and said that, uh, like, look, I'm the, I think he was the head of YC at the time. He was like, I don't think we're in a bubble right now. And he framed it in three propositions that all had to come true. So the first one was Uber, Palantir, Airbnb, Dropbox, Pinterest and SpaceX. They were worth under 100 billion at the time in 2015. By 2020, five years from then, he said they have to be worth more than 200 billion. And second, he said, mid, mid-sized companies, Stripe, Zenefits, Instacart, Mixpanel, Teespring, Optimizely, Coinbase, Docker and Weebly together had to be worth over 27 billion. They were worth less than nine back in 2015.

• 25:55John Coogan?

  And the brand new YC winter 2015 batch needed to be worth over 3 billion. And what's crazy is that if you, if you just think about those, those three- Those three buckets, which one? So Sam got two of them right. He missed on one. Which one do you think he missed on?

• 26:13John Coogan?

  The big companies Uber, Palantir, SpaceX. Those ones needed to double. The mid-tier companies Stripe.

• 26:20Jordi Hays?

  I'm not going to pretend I know that he missed on the big, the public company.

• 26:23John Coogan?

  He missed on the big companies, which is crazy because today Uber's a $200 billion company. SpaceX and Palantir are both at 400, 500. So you're have over a trillion dollars now. But he missed because a couple of those companies had kind of traded down that particular year. But he hit on the second one. Coinbase obviously went huge, Stripe as well. And, uh, and in the third, in the, in the, uh, in the YC winter 2015 batch, there was a company called GitLab. That's already worth something like seven or eight billion dollars in the public markets. Uh, and so he hit on all, on basically all of them. I still regard it as like, he was very, very close to being just completely correct. He did lose the bet.

• 27:05John Coogan?

  But as we talk about another bubble, I was, I was thinking about like, should we have another framework for like, where we expect things to go in five years to assess it? And I feel like energy is where we should go with this. So in the newsletter, you can go read it. I tried to formulate like, how much energy OpenAI will be consuming in, in five years in 2030? How much energy data centers globally will be consuming? And how much energy will the United States be producing? And there are obviously linear projections of all of these, but I think Sam is, uh, is bullish on the idea of like, we're going to destroy those, uh, those estimates. And we're going to see significant build out. And he's certainly doing deals to make that happen. Um, but I wonder how he would quantify it. So I'd like to dig in there.

• 27:51John Coogan?

  But first let me tell you about Vanta. Automate compliance, manage risk, improve trust continuously. Vanta's trust management platform takes the manual work out of your security and compliance process. Replaces it with continuous automation.

• 28:02John Coogan?

  Whether you're pursuing your first framework or managing a complex program.

• 28:04Jordi Hays?

  There's an article in the New York Times today.

• 28:07John Coogan?

  Let's go through it.

• 28:07Jordi Hays?

  On a Singaporean firm called Megaspeed. The CEO has socialized with Nvidia's Jensen Huang. Now the company is being scrutinized by US officials for its ties to China. So on a humid June night last year, Jensen Huang, the chief executive of Nvidia, held court with several of his company's major Asian customers at a bar with sweeping views of Taipei. They stood and toasted the booming artificial intelligence industry. Next to Nvidia chief was a woman named Huang Lei, or Alice Huang, an executive of Singapore-based data center company called Megaspeed, great name, which was poised to buy 2 billion of Nvidia chips. Though Ms. Huang and Megaspeed are little-known players in the AI industry, their association

• 28:51Jordi Hays?

  with Nvidia and its CEO has recently become a preoccupation in Washington. Commerce Department officials have been investigating whether Megaspeed, which has close ties to Chinese tech firms, is helping companies in China sidestep American export restrictions, according to more than a half dozen current and former officials and other people familiar with the companies who spoke on condition of anonymity to discuss an examination that is not public. The inquiry, which is active, calls into question how closely Nvidia is tracking where its AI chips end up and highlights the possibilities of American export laws easily being sidestepped. Megaspeed is also facing scrutiny from Singaporean police, who told the New York Times in a statement that they are investigating the company for breaching local laws without elaborating further.

• 29:33Jordi Hays?

  As the dominant provider of AI chips, Nvidia's annual revenue has soared. I'm going to skip over this because you already know this.

• 29:40John Coogan?

  Yeah.

• 29:42Jordi Hays?

  So.

• 29:42John Coogan?

  While you skip over that, let me tell you about graphite.dev. Code review for the age of AI. Graphite helps teams on GitHub ship higher-quality software faster. Continue, Jordy.

• 29:49Jordi Hays?

  Megaspeed illustrates the challenges facing US government officials trying to keep China from assessing powerful AI chips. After splitting off from a Chinese gaming company in 2023, Megaspeed set up a subsidiary in Malaysia that quickly snapped up nearly 2 billion worth of Nvidia's most advanced products. Most of those ships came from the US branch of a Chinese company that has already been sanctioned for providing technology to the Chinese military, according to records obtained through Import Genius, which is started by Ryan from Flexport.

• 30:17John Coogan?

  Yes, that's right. And his brother.

• 30:19Jordi Hays?

  That was his first.

• 30:19John Coogan?

  David. That was his first, yeah, his first company. It's so funny that the whole pivot to AI is not just a Silicon Valley American meme. Like, it's definitely happening in China, too. They're like, yeah, we're doing gaming, but like, you know, this AI stuff is way better. Let's just pivot to AI. Or like, high flyer, being like, we gotta, we gotta get on the large language model.

• 30:40Jordi Hays?

  High-frequency trading is cool.

• 30:41John Coogan?

  Yeah, it's cool, but like, let's just, let's focus on AI.

• 30:44Jordi Hays?

  Yeah, so anyways, this, this story is evolving. I'm not surprised to hear that, that, I mean, I think it's actually good that the Commerce Department is like, trying to figure out what's actually happening here. I think there's been a lot of rumors floating around of like, you know, data center companies in Malaysia and Singapore, you know, having, you know, an extreme demand for chips and this sort of uncertainty of like, okay, who's actually paying?

• 31:11John Coogan?

  Remember one of our first episodes, we read a Wall Street Journal article on Malaysia, the Switzerland of AI, because everyone was building a ton of data centers there so that they could sell inference or build token factories that would sell to both American companies, Singaporean companies, Chinese companies, and it was kind of like this neutral territory. But as the trade war heats up, people are going to want more answers, more, more analysis. They're going to want to understand exactly, you know, are any of these things, does every deal fit perfectly within the current restriction framework, right?

• 31:48Jordi Hays?

  Yeah.

• 31:48John Coogan?

  Because obviously diversion is, is a natural thing. I mean, we've heard, we've heard stories of this in the Ukraine-Russia conflict, where companies will go, you know, entrepreneurs will go buy DJI drones and then go deliver them and. You know, what are the actual restrictions on that? It all gets, when the economic stakes are high and things are trading at a premium, you can literally, I mean, we've heard this from, there was one account of someone loading the training data onto hard drives, flying to another country, doing the training run, saving the weights onto hard drives and then flying back. And it's like, that's kind of hard to predict. That definitely is a run around on the chip controls. It's not the stated goal of those chip controls.

• 32:31John Coogan?

  But you know, when there's huge dollars on the line and training runs are extremely valuable.

• 32:35Jordi Hays?

  And I think it's fair to kind of try to understand Ms. Wong, the CEO of MegaSpeed's background. She spent much of her career in mainland China, including working as a television reporter for Chinese state media.

• 32:47John Coogan?

  Let's hear it for television reporters. One of us, one of us, one of us.

• 32:54Jordi Hays?

  From being a television reporter to creating a new hyperscaler.

• 32:59John Coogan?

  I love it.

• 33:00Jordi Hays?

  Do anything in this world.

• 33:01John Coogan?

  Who knows? I think we'll stay out of that game, but good to see that you can start to contact.

• 33:06Jordi Hays?

  We'll leave it to our.

• 33:07John Coogan?

  Go anywhere.

• 33:08Jordi Hays?

  We'll leave it to our friends.

• 33:09John Coogan?

  Yeah.

• 33:10Jordi Hays?

  Good post here from High Yield Harry.

• 33:11John Coogan?

  Okay.

• 33:12Jordi Hays?

  Says A16Z and Sequoia co-leading around.

• 33:16John Coogan?

  It's the Crips and the Bloods, is that what this is?

• 33:19Jordi Hays?

  Uniting.

• 33:20John Coogan?

  Uniting. Is that what's happening? This is about Kalshi?

• 33:23Jordi Hays?

  Referencing Kalshi, who followed Polly Market, who announced their $2 billion financing earlier this week, from ICE, not the immigration.

• 33:35John Coogan?

  No.

• 33:36Jordi Hays?

  Branch of the government.

• 33:38John Coogan?

  And not the International Commodities Exchange, the Intercontinental Exchange.

• 33:43Jordi Hays?

  That's right.

• 33:44John Coogan?

  That's the name.

• 33:45Jordi Hays?

  But Kalshi raised 300 million, backed by Andreessen Horowitz, and the prediction market wars are heating up dramatically. Coinbase, Google's capital G, A16Z, and Paradigm were investing in this new, as well as Sequoia, were investing in this new round. And so by this point, everybody's sort of picked a side.

• 34:13John Coogan?

  Yep.

• 34:15Jordi Hays?

  And I would not want to be a net new prediction market company getting started today. I think there's going to be an insane, the capital war is just sort of starting in the category.

• 34:27John Coogan?

  I mean, do you remember the capital war between Lyft and Uber? There were, there were like three or four, probably 10 other companies that were in the ride hailing industry. And they like they aren't public companies today. They they either sold or pivoted or found some other niche. But when you're, when you're in this like duopoly world and this capital fight and there's maybe one that's running away one way or another. It, yeah, it's painful to be number three.

• 34:58Jordi Hays?

  Kalshi is on track to do 50 billion in trading volume, trading volume.

• 35:03John Coogan?

  Says Kalshi.

• 35:04Jordi Hays?

  300 million last year, so a pretty wild jump, so.

• 35:09John Coogan?

  Yep.

• 35:09Jordi Hays?

  Competition is certainly heating up. This will be an interesting one to watch.

• 35:16John Coogan?

  Yeah.

• 35:18John Coogan?

  Brandon Jacoby is putting another app in the truth zone. What happened here? Brookwell launched a, an app, I guess. And Brandon Jacoby says, hey, Brookwell app, great design. I was proud of it when we designed it for capital in 2022.

• 35:35Jordi Hays?

  So this company, Brandon and I obviously worked together to design the app that you can see here. Brandon is an incredible designer and spent hundreds of hours developing this experience. And ultimately, I think Brookwell seemingly

• 35:53Jordi Hays?

  pretty much copied it to a T and then even doubled down and said like, yes, and.

• 35:57John Coogan?

  Wait, really?

• 35:58Jordi Hays?

  Like the founder replied.

• 35:59John Coogan?

  It was like, yeah, yeah.

• 36:01Jordi Hays?

  Basically saying, yeah, I mean, I think it's like.

• 36:03John Coogan?

  It's sort of fair if it's not like.

• 36:05Jordi Hays?

  It's fair game.

• 36:06John Coogan?

  Yeah, fair game for, to pull a design off the shelf that's not actively being used as much, like, you know. But usually.

• 36:14Jordi Hays?

  But it's still, it's still.

• 36:15John Coogan?

  Go further back in time, like.

• 36:17Jordi Hays?

  You can still bring your own ideas to it, you know? I think Brandon's frustration is probably just that you didn't bring many new ideas. Just kind of copy and paste it.

• 36:26John Coogan?

  Yeah. A lot of that going on.

• 36:28Jordi Hays?

  John Tider is quoting a post that says, this is a camera. It's 200 by 200 pixels, 30 frames per second. I didn't know they made cameras this small. John says, there are certain things you just can't learn about if you're prone to paranoia.

• 36:44John Coogan?

  This is actually crazy.

• 36:45Jordi Hays?

  Yeah.

• 36:46John Coogan?

  Uh, so the, I mean, the, uh, the, the community note gives a little bit more context here. It does say that this is the camera module. It is capable of producing an analog video output, but it needs a power supply, battery or storage. And so.

• 37:01Jordi Hays?

  Yeah. And the concern here is the implication is that this camera could be built into effectively just like a dot on the wall and you could store the power.

• 37:11John Coogan?

  Oh, it's only 200, 200 by 200 pixels. I was thinking, should we get these and put them all around the set? And so you just walk into the T V P and Ultra Dome and you don't see any cameras moving. Like we have a slider cam now. We have a lot of different cameras around and you kind of trip over them. And, you know, you got to cable manage them, but imagine if we could just put one little dot on that turbo puffer fish there. One little dot on the microphone. You can just get any, any image from any place. Uh, maybe.

• 37:37Jordi Hays?

  Big debate on the timeline over whether you should have shoes on or on in the office. Ben Lang over at Cursor says, no shoes at Cursor NYC. Will O'Brien says, if Ulysses ever ends up like this, you have permission to shoot me in the face.

• 37:53Jordi Hays?

  Very aggressive, uh, response. I, I, uh, I, I can see why companies that are just, you know, want to, want to be cozy. Want to have a, uh, uh, I think wearing, uh, shoes in your home is insane.

• 38:08John Coogan?

  Yeah.

• 38:08Jordi Hays?

  I'm very against, uh, walking around the house with shoes that you wear out in the world.

• 38:13John Coogan?

  Sure.

• 38:14Jordi Hays?

  Plenty of studies that just show you're just tracking in.

• 38:16John Coogan?

  All sorts of stuff.

• 38:17Jordi Hays?

  Things.

• 38:17John Coogan?

  Makes sense.

• 38:18Jordi Hays?

  Um, and.

• 38:19John Coogan?

  Do you do slippers in the house then?

• 38:21Jordi Hays?

  I, I enjoy slippers.

• 38:22John Coogan?

  I feel like if you, if you don't do slippers, then you need to keep, keep the whole house warmer. You need more carpets, but, um, I wonder, I wonder what else went into, uh, the plan to make sure that Cursor HQ in New York City is fully cozy. Cause you don't just want to take off your shoes and then be around. Like we have concrete floors here. We are shoes on facility. Uh, no one takes off their shoes. But, uh, if we were to go to shoes off, I think we would need to get some carpets, uh, keep the place a little bit tostier.

• 38:53Jordi Hays?

  Yeah.

• 38:53John Coogan?

  Right? Or, or maybe give everyone a pair of slippers.

• 38:56Jordi Hays?

  What's going on here? This account Toys XYZ is sharing a Nano Banana watermark. Have they, how, do you know how this works functionally?

• 39:03John Coogan?

  Yeah. So, um.

• 39:04Jordi Hays?

  You have to like turn, like, uh, do you have to basically? Increase the saturation of the photo.

• 39:10John Coogan?

  Exactly. So this pattern that you see are subtle changes in the saturation. And if you go to the next image, you can see what it looks like on an actual Nano Banana image, not just the watermark. And so this is, this is a, a, a, a black and white image. This was generated as black and white, but Nano Banana uses slight variations in the colors to just have a little bit of saturation. So normally, if you're looking at like a grayscale image, basically the saturation is turned down to zero and there is no color whatsoever. There's only, uh, there's only brightness, right? You're, you're going from zero to one just on the black scale. Nano Banana, even if you ask for a black and white image,

• 39:55John Coogan?

  it will output an image that does have a little bit of color and it will vary this pattern. So there's little bits of red, little bits of green, little bits of red, little bits of green. And, uh, and so this is being put in every Nano Banana image. Of course, as soon as you discover this pattern, there's probably some ability to remove it. Even just a slight edit might change this. Um, like you could just go in and actually reduce the saturation to zero and then the watermark's gone. Um, and I'm sure people will do that, but it's just.

• 40:23Jordi Hays?

  Yeah, there will be, somebody will make an app where you just upload an AI photo and then it figures out which, which, uh, which model generated it and then figures out how to remove whatever hidden watermark is included.

• 40:34John Coogan?

  Totally.

• 40:34Jordi Hays?

  You have a clean image.

• 40:35John Coogan?

  Totally. There's already a ton of Zora watermark remover tools out there. It's, I think this is still just more useful for, uh, you know, having a reality check on like, you know, was someone dumb enough to not even remove the watermark? At least you can just automatically flag that. And a lot of, and at least it injects an extra step, an extra cost into generating, um, you know, like spam images or whatever you would want to do that's like malicious, that would, you'd want to discover the watermark. Um, but fortunately, I feel like even with Nano Banana, uh, you can still just look at the image and tell. Um, but if you want to generate some generative media, head over to Fall, the world's best generative image, video and audio models all in one place. Develop

• 41:17John Coogan?

  and fine tune models with serverless GPUs and on-demand clusters.

• 41:21Jordi Hays?

  Let's fall.

• 41:24John Coogan?

  Jared Kushner?

• 41:25Jordi Hays?

  Jared Kushner, uh, they, they, uh, Matt, uh, Steebe, uh, said, uh, in an article a while back, Jared Kushner claims he can solve Israeli Palestinian conflict because he's quote, "read 25 books on it." Uh, and of course, uh, seems like that was hopefully-

• 41:42John Coogan?

  No, the real reason is what Will Manite has said, which is that-

• 41:45Jordi Hays?

  The New York real estate.

• 41:46John Coogan?

  Yes, yes. He's been doing New York, New York real estate deals. And so he's ready to broker another real estate deal, effectively. Um, but, uh, I mean, we, we haven't really covered the, the, uh, the, the peace deals. Uh, the, the Journal's writing about it a little bit. Um, there's, uh, I guess there's going to be a vote, but there's plenty of, uh, there's plenty-

• 42:04Jordi Hays?

  In other news, uh, Barry Weiss asked everyone, uh, uh, at Across CBS News to send her a memo by next Tuesday explaining how they spend their workday and what's working, not working.

• 42:16John Coogan?

  Is this a, "What did you get done this week?" Basically?

• 42:18Jordi Hays?

  It's a, it's a, "What, what exactly do you do here?"

• 42:21John Coogan?

  You think it's that?

• 42:22Jordi Hays?

  I, I, I think, I mean, as, it, it's great asking, "Hey, what's working, what's not working?"

• 42:27John Coogan?

  Yes.

• 42:27Jordi Hays?

  But as a manager and you're coming into a new organization, or a leader, you're coming into a new organization, you want to get a pulse on, okay, what, what are people actually doing here?

• 42:36John Coogan?

  Yep.

• 42:36Jordi Hays?

  Because I think the question is, with this, with, with everything that, uh, David Ellison is doing, is, is he trying to turn these into media companies that can create massive cash flow?

• 42:50John Coogan?

  Hmm.

• 42:50Jordi Hays?

  Is, or are they strategic enough? Like, I don't think when Jeff Bezos was buying the Washington Post, he was thinking, "I'm buying this to make money necessarily."

• 43:00John Coogan?

  Hmm.

• 43:01Jordi Hays?

  And so the question is, I think Max Tawney here, I, I, my, the way that this has been written, I think, uh, the question is like, are they going to let a bunch of people go?

• 43:11John Coogan?

  Oh, interesting.

• 43:12Jordi Hays?

  That's kind of how I would, I would read into it, but-

• 43:13John Coogan?

  Yeah, I mean, at the same time, like, if you're coming into, uh, a, if you're coming in as a CEO or, you know, editor in chief of a new organization, and you're like, "Uh, my, my view on it is that they're actually severely understaffed, and the first thing I'm going to do is, is triple headcount." It's still reasonable to ask what everyone does. So you understand, like, "Oh, okay, this person's doing five different jobs, and they're working 200-hour weeks, like, maybe we need to get them some extra support." But I agree with your, your, your general assessment. Uh, and it certainly would be a little bit stressful to get this email from Barry, but, uh, you know, she says, "Please be blunt, just break it down." Recommendation, don't use AI.

• 43:53Jordi Hays?

  Any M dashes?

• 43:55John Coogan?

  Uh, there is an M dash, but we know Barry uses M dashes. He's been using them for decades. So there's no, maybe not decades, but um, for, you know, her career. Uh, it is, it is the, the reason that it's in the model is because it's a popular writing tool. Anyway, uh, CloudFlare did a new, uh, rebrand powering 20%.

• 44:13Jordi Hays?

  And I guess, uh, Ty, uh, former, uh, member of the Party Round team.

• 44:19John Coogan?

  Oh, really?

• 44:19Jordi Hays?

  I guess who was behind this.

• 44:20John Coogan?

  Oh, no way.

• 44:20Jordi Hays?

  And why else he'd be sharing it.

• 44:22John Coogan?

  Uh, wow.

• 44:22Jordi Hays?

  He also was co-founders with Dylan on CTG, which they.

• 44:25John Coogan?

  Oh, no way. That's very cool.

• 44:27Jordi Hays?

  Tyler.

• 44:28John Coogan?

  A little bit of lore.

• 44:29Jordi Hays?

  Ty is a legend, extremely talented designer. When he, he was, he had reached out to.

• 44:37John Coogan?

  I like this.

• 44:38Jordi Hays?

  Us at Party Round.

• 44:39John Coogan?

  Yeah.

• 44:39Jordi Hays?

  And we didn't, we, I talked once with him. I remember correctly, we didn't immediately make an offer. We were just kinda like, yeah, let's keep talking. And then he built an entire game, like a simulation of a, of a, of a Game Boy game. Uh, that you could play on your phone and he just sent it to me. He like built it. This was like pre, pre-vibe coding. He just built it and sent it to me.

• 45:03John Coogan?

  And it was like, it was web-based, basically?

• 45:04Jordi Hays?

  It was, uh, no, it was mobile.

• 45:06John Coogan?

  Okay.

• 45:07Jordi Hays?

  And I just immediately called him and I was like, okay, we're bringing on the team. This is amazing.

• 45:11John Coogan?

  Very cool, very cool. I mean, it seems like good response. A thousand likes. No one's, uh, people are very opinionated about branding, launches. Uh, you know, uh, launch videos, all sorts of stuff. So.

• 45:22Jordi Hays?

  Yeah, he, it was, uh, I, I found the original post. Uh, it was a Pokemon style game where you could build like a cap table, basically.

• 45:30John Coogan?

  Perfect.

• 45:31Jordi Hays?

  Uh, collect investors.

• 45:32John Coogan?

  Exactly what you want, for sure.

• 45:34Jordi Hays?

  Great stuff, great stuff. Um.

• 45:37John Coogan?

  Um, if you're just tuning in, Sam Altman will be joining in about 10 minutes. Uh, he's on for half an hour and then we're talking to Elad Gill.

• 45:45John Coogan?

  Before we move on, let me tell you about TurboPuffer. Search every byte, serverless vector and full text search built from first principles on object storage, fast, ten x cheaper and extremely scalable. Um.

• 45:55Jordi Hays?

  Did you see this Reddit?

• 45:56John Coogan?

  Yes.

• 45:56Jordi Hays?

  Circulating that lists OpenAI's top 30 customers by token consumption and apparently Duolingo.

• 46:03John Coogan?

  Is that number one?

• 46:04Jordi Hays?

  Uh, second is OpenRouter, but of course their platform.

• 46:06John Coogan?

  Sort of doesn't really count, yeah.

• 46:08Jordi Hays?

  Routing, uh, routing.

• 46:09John Coogan?

  Yep.

• 46:10Jordi Hays?

  Uh, uh, consumption. Uh, surprising to see Indeed at the top of this list.

• 46:17John Coogan?

  Do you see number nine, baby?

• 46:18Jordi Hays?

  Number nine.

• 46:19John Coogan?

  Let's go, it's ramp.com.

• 46:21Jordi Hays?

  Um, see Warp Dev on there, Shopify.

• 46:23John Coogan?

  Sure.

• 46:24Jordi Hays?

  Also.

• 46:24John Coogan?

  What, so, so I, I, when, when this came out, uh, because of their, uh, I, I, I don't know if there was, this table is like a leak or something, but, uh, at Dev Day, uh, OpenAI put up a list of names of people that had been using over a trillion tokens, right? And they're, and people kind of reverse engineered that to understand what these, what, what the people who, like, what companies they work for, right? And I was trying to make a meme that I was sending you and I, it wasn't quite hitting, but it was like the, the Atlas holding up the world meme. And it was like the entire global economy. But instead of like OpenAI, which is the current meme, it's like 30 companies in wildly different markets that are all using AI.

• 47:07John Coogan?

  And so that like, the, like, you would be more worried, I think, if this was more circular. And this is the Martin Scrawley take, which is that if it was, if you looked at the, the top 30 customers and it was all like AI chat GPT wrappers or something, something very circular, you would be worried. Um, but instead it's companies like Indeed and Duolingo and Ramp and Shopify and all these companies that are touching very different pieces. These aren't competitors, like Duolingo is not a competitor to Shopify. And so it feels like, it feels like evidence that, that this is like less circular. I don't know.

• 47:44Jordi Hays?

  Yeah, the, I mean, the, uh, it is, uh, the, the Groq, C of Groq, G R O Q. Uh, recently said that 35 to 36 companies are currently responsible for 99% of token spending in AI right now. Even among those 35 companies, two are by far the most significant spenders and they're OpenAI and Anthropic. So it's crazy.

• 48:06John Coogan?

  Uh, that, that, that's generation, that, that's buying inference. I'm talking about companies that are buying from OpenAI. And buy from and throw.

• 48:13Jordi Hays?

  That is.

• 48:13John Coogan?

  So one more step, one more step. Because it's like, if I'm fine with, like, it's scary when you hear like, OpenAI is buying ninety-nine percent of AI stuff, but then when you look under the hood and you see like Duolingo and Ramp and Shopify, it's like, okay, well, that's actually like pretty diffuse in the economy.

• 48:32Jordi Hays?

  Yeah. So, yeah, there's two significant spenders, but then in those spenders are thousands of other companies.

• 48:40John Coogan?

  Exactly, yeah. And I wonder, just this idea of like, there's a, there is a trend, we're in a trend right now, the AI wave, and it's holding up the global economy. Like, has, have other trends held up the global economy successfully? Like, if we go back to industrialization, was that, was that holding up the global economy? Did it successfully hold up the global economy? Or like global trade, the containerization, that held up the global economy? And, and like, there were certainly like ups and downs, but like, it kind of successfully held up the global economy.

• 49:13Jordi Hays?

  Yeah, and certainly, the, I mean, going back to that clip from Ken Griffin earlier this week, he was basically saying that in nineteen ninety-nine and two thousand, it was incredibly obvious that the internet would change everything.

• 49:27John Coogan?

  True.

• 49:27Jordi Hays?

  But that still took fifteen years.

• 49:30John Coogan?

  Yep.

• 49:30Jordi Hays?

  Right?

• 49:30John Coogan?

  Yep.

• 49:30Jordi Hays?

  So, I think, even I would say most of the bears, like true AI bears, still believe in the potential of the technology, they just believe there's going to be a, some sort of winter.

• 49:43John Coogan?

  Like a hiccup, yeah, winter. Yeah, and we haven't heard a lot of talk about AI winters, there's been many of those, and we, I had a hot take that twenty twenty-three was an AI winter, which is like, of course, like the most bullish insane time possible, but I, but my, my, my riff on it was that like ChatGPT launched in twenty-two.

• 50:04John Coogan?

  Waymo launched in 22 and then 23 was more just like the adoption of ChatGPT. And I think at Dev Day, they launched maybe GPTs and it wasn't like a wild use case. We didn't have reasoning models yet. And so it was like this magical technology that launched in 22 and in 23, everyone was kind of like processing it, but there wasn't like a massive jump in 23. I mean, I guess we did get GPT four. What do you think, Tyler?

• 50:29Jordi Hays?

  LG, by the way, is quizzing you in the chat.

• 50:31John Coogan?

  Oh, yeah.

• 50:31Jordi Hays?

  John Coogan, how many total tokens have been used on OpenAI year to date? Name every token.

• 50:36John Coogan?

  Name every token. Uh, well, it's odd. It's six billion a minute. Uh, I think we did the math on this. It's, it's in the trillions.

• 50:44Speaker 02

  It's a lot. So, yeah, when I calculated it, I had like around, uh, one quadrillion a month.

• 50:51John Coogan?

  One quadrillion a month.

• 50:52Speaker 02

  That was also the number, I think, Demis, a couple of weeks ago, he said, uh,

• 50:56John Coogan?

  Yeah, Google's doing that.

• 50:57Speaker 02

  One quadrillion.

• 50:57John Coogan?

  Wow.

• 50:58Speaker 02

  Um, but yeah, I, cause OpenAI was like, uh, six billion per minute, uh, but that's just on the API. So if API is like 25% of the company.

• 51:05John Coogan?

  Exactly.

• 51:05Speaker 02

  Yeah.

• 51:06John Coogan?

  Yeah, yeah, you have to do a lot of like dancing, but yes.

• 51:08Speaker 02

  In 2023, I mean, GPT four, I think is like, I don't think you should be following product releases. You should be following.

• 51:13John Coogan?

  But GPT four was, uh, was trained in 22 and was released in, uh, Bing in 22. So it doesn't count. I'm kidding. Of course, 2023 was a phenomenal year for AI, not, not, not a winter at all, but, uh, it's, it's, it is interesting to see like, like where the growth spurts come, how much of it is just a smooth curve of adoption and diffusion into the economy. What's the rate at which it's diffusing? Where are companies and individuals actually getting value? Uh, should we move over to the huge news in creatine?

• 51:47Speaker 02

  Yes.

• 51:47John Coogan?

  Dan McCormick says, work with your brother, go into debt if you have to, because Paki McCormick is giving a shout out to Dan, the founder of Create. Uh, he says, my brother Dan has been writing the weekly dose of optimism for three years. That's, uh, Paki's second newsletter, aside from the one that he writes. Uh, last week was his last. Dan McCormick is stepping down from writing the weekly dose of optimism because his company Create.

• 52:11Jordi Hays?

  Absolutely ripping.

• 52:12John Coogan?

  Is ripping eighty five million dollars run rate.

• 52:15Jordi Hays?

  I swear, I swear gummy vitamins are just an infinite money glitch.

• 52:19John Coogan?

  There's a couple of categories that are just doing so, so well. Stick packs and, uh, powdered supplements. I don't, what's, what's hard? Hard is, hard is liquids, right? Hard is

• 52:31Jordi Hays?

  Do not try to sell liquids on the internet.

• 52:34John Coogan?

  That's hard, but gummies must have a great economic density.

• 52:39Jordi Hays?

  I invested in Create, I think at a six cap. I met Dan before the launch. He was raising it even less than that. I didn't, I didn't see the vision right away. And his execution in the first like five months was absolutely wild. And I capitulated and it's been a wild ride. The execution is insane.

• 52:59John Coogan?

  Well, Dan, if you want to keep a hold on that, your creatine monopoly, you gotta get on profound and get Create mentioned in ChatGPT.

• 53:10Jordi Hays?

  That's right.

• 53:10John Coogan?

  Reach millions of consumers who are using AI to discover new products and brands.

• 53:15Jordi Hays?

  This post from Frog is a banger. Please make sure you are only drinking as much water as you really need. We need that for the data centers. If you're thirsty, Grok is thirsty too.

• 53:29Jordi Hays?

  Completely agree.

• 53:31John Coogan?

  I completely agree.

• 53:34Jordi Hays?

  Reply here, installing a low flow showerhead out of concern for Grok.

• 53:38John Coogan?

  I love it. I saw someone else was trying to put the, yes, this is it. Andy Masly, a couple of slides later, he said, every day I find a new way of trying to get across just how ridiculously fake the problem of AI water use is. We've talked to a number of NeoCloud CEOs, data center builders on this show who have built data centers and they've told us, yeah, we use, we use a decent amount of water. But once we have the water, we actually have figured out how to just recycle it in, in, in the system. And so we're not actually using that much water.

• 54:11Jordi Hays?

  Even the new iPhone has a single drop of water.

• 54:14John Coogan?

  And they sell a lot of iPhones. So, I mean, millions of drops of water, you got to answer something.

• 54:19Jordi Hays?

  No, but, but, but it just proves a point that.

• 54:21John Coogan?

  Oh, yeah, you can recycle it for heat.

• 54:23Jordi Hays?

  Yes.

• 54:23John Coogan?

  Yes, that's a great point. I hadn't even thought about that.

• 54:27Jordi Hays?

  It's not like you're, you're, I gotta go refill my iPhone.

• 54:30John Coogan?

  Can you imagine how upset people would be? It was like, yeah, I need to charge my iPhone. Oh, I forgot to refill it with water at the gas station. So he, he, he shares some data here. So this is a quote post from someone else. Yeah, but the form of AI that uses the most water and electricity by far is ChatGPT. You can start somewhere, the whole, I can't do it because I got cut off is just an excuse I don't care for. And so here is some evidence, some new ways to think about the amount of water used by AI. Have you ever worried about how much water things you did online used before AI? Probably not, because data centers barely use any water compared to most other things we do. Even manufacturing most regular objects requires lots of water.

• 55:11John Coogan?

  Here's a list of common objects you might own and how many chatbot prompts worth of water they used to make them. Leather shoes are 4 million prompts worth of water. Smartphones are 6,400,000 prompts of water. Jeans, a single pair of jeans is over 5 million prompts of water. This is such a silly metric, but I love these silly metrics. T-shirt is a million prompts. A single piece of paper is 2,550 prompts. If you want to send 2,500-

• 55:44Jordi Hays?

  Imagine trying to give up all the things on these, on this list because they use water.

• 55:48John Coogan?

  But you'd have Grok. You'd just be naked using Grok. But you'd have, you'd have, you need a smartphone and that's 6 million prompts.

• 55:54Jordi Hays?

  Chad is going crazy right now. We're, we're being told to not ask him anything about Trump or crypto. They've got money on it. It's because there's prediction-

• 56:04John Coogan?

  Oh, no. Okay. We, we, we are not paying attention to-

• 56:07Jordi Hays?

  We haven't looked at any markets.

• 56:08John Coogan?

  Prediction markets. We will not be steering the conversation if you happen to have a bet one way or another. Well, I believe we have our guests in the Restream waiting room, but before we bring them in, let me tell you about Julius. What analysis do you want to run? Chat with your data and get expert level insights in seconds. Julius is the AI data analyst that works for you. Connect your data, ask questions-

• 56:30Jordi Hays?

  Data super intelligence.

• 56:32John Coogan?

  It is. And we are joined by Sam Altman and Bill Peebles. Sam, Bill, how are you doing?

• 56:38Jordi Hays?

  What's going on?

• 56:38Speaker 04

  Hey, guys. Hey, guys.

• 56:40John Coogan?

  Great to see you. Congrats on all the progress. I've been enjoying Sora a ton. Personally, I've been enjoying making them. I had a ton of fun making the collab post yesterday and I was wondering-

• 56:54Jordi Hays?

  And prompting your cameo feature. John made it so that he always appears as a bodybuilder if anybody's cameoing him. So you guys got to experience-

• 57:03John Coogan?

  And it led to some, some chaotic results. Do you have favorite Sora posts that you've been coming back to or that have, you know, stuck out to you as particularly, you know, creative uses?

• 57:16Sam Altman?

  I mean, definitely all of the ones of like me stealing GPUs or doing other crazy things to get GPUs have been funny. In the last few days, there are, at least in my feed, there have been these like very beautiful, sort of fantastic scenes that are just not things that could have ever existed without something like Sora, or wouldn't have been easy to make. And watching people build those and watching the trends flow through that has been pretty awesome.

• 57:41John Coogan?

  What about you, Bill? Any favorite uses of Sora so far?

• 57:45Speaker 04

  Oh, man. Mark Cuban came on the platform a few days ago, and there have been some hilarious Shark Tank memes. Those are probably my favorite, pitching some Sora features to Mark.

• 57:54Jordi Hays?

  Also leveraging the prompting function to always include an ad for cost-plus drugs, I thought was especially hilarious, considering he's been one of the most vocal opponents of advertising in AI. He is leveraging the feature to the max.

• 58:11Sam Altman?

  Yeah, I think there are going to be all of these weird new dynamics that we see emerge that just weren't possible in previous kinds of video. And this is like a fun period because it's all going to be so different every few days. Man, I'm watching this poly market ticker go by, ticker go by, and it's so tempting to like say things to resolve these markets.

• 58:29Jordi Hays?

  Yeah, yeah, yeah. To be clear, don't worry about the ticker. I don't think we're including, I don't think any of those markets are being featured in the ticker. But yeah, again, this is the new world we're in.

• 58:42John Coogan?

  Yeah, you can move the market live on TBPN.

• 58:44Jordi Hays?

  But today, people, I'm sure, will be happy or disappointed we're here to talk about Sora, of course. So none of the other topics.

• 58:53John Coogan?

  But I mean, I also want to know about ads. Why no ads in Sora on day one? I feel like you've laid out a really great, you know, mental model for how you think about ads on Stratechery, on the Andreessen Horowitz podcast. I'm bought in. Is it a technical thing? Do you need scale? Do you need to think about it more? Why no ads on day one?

• 59:17Sam Altman?

  This is like a 10-day-old product, right? Like, it's hard to get anything to work at all. And we, like...

• 59:23Sam Altman?

  We don't, we don't assume success. We gotta like go hard earned success and then we can, then we can think about monetization for it. But this is like, it's gone great so far. It's still very early and there's still a lot of work to build something that a lot of people are gonna love first.

• 59:37John Coogan?

  What about surprising capabilities of the model? You mentioned that you've seen some fantastical scenes. I'm interested to know about specific, like, specific breakthroughs that you've noticed that Sora 2, the model, is particularly good at. I noticed one about reflections being great. Obviously, people love the cameos, but what has surprised you in terms of just like, technically, the model can do something now that it couldn't do before?

• 1:00:03Speaker 04

  This model is a huge leap forward in terms of physics IQ. So, pretty much all past video generation models really struggled with prompts that, you know, involve like backflips, gymnastics routines, etc. And this is really the only model that exists today, which can reliably handle these kinds of really complicated dynamics. One of the big features that people have really loved on the app so far is the steerability of the model. So, you know, if you give it like a really simple text prompt, that's maybe even only a few words, this model is really good about kind of telling a coherent story with like a beginning, middle, and end, and doing this like automatically in a way that doesn't require like a lot of direct steering from the user. If you wanna like go into, you know, a ton of detail about exactly how your prompt should be laid out and how the story should unfold, it supports that too. So, it can kind of meet you wherever you're at

• 1:00:46Speaker 04

  in the creative process. But really, this model is just like so hyper steerable, and it's like just vastly higher physics IQ, just makes it able to do things that were like not possible a few months ago.

• 1:00:56John Coogan?

  Is that all within the model, or is there some sort of like reasoning step where you're hydrating or unpacking my prompt and writing a bigger prompt or breaking down the problem in some way? Can you share anything about that?

• 1:01:09Speaker 04

  Yeah, it's a good question. So, you know, the intelligence for these text conditional video models kind of lies both in the core model itself, like Sora, and some amount of it also comes in through the text prompt. So, you know, Where however the user decides to kickstart a prompt, you can have like a language model under the hood, add some details in. But for example, you know, when it comes to things like, again, like doing these backflips or any kind of physical interactions, how refraction is modeled, you know, when you're pouring water into a glass. All of these details have to be captured by the core video model itself. So that that's intelligence, which is really innate to Sora. And certainly you can supplement it with intelligence from a language model as well. But it's not necessarily a prerequisite to get kind of amazing results out of these things.

• 1:01:48John Coogan?

  Are there any areas on the physics where you think that the model falls down and you want to improve? I mean, we went through the era of like six fingers. It seems like reflections in water are solved, but someone was saying something about doors being hard or I haven't noticed that one personally, but a lot of the stuff's great. But what have you noticed is like the next version is going to be even better at?

• 1:02:07Sam Altman?

  This is still very early. A thing Bill said that I appreciated is this is this is the this is like the GPT three point five moment for video.

• 1:02:15John Coogan?

  I agree.

• 1:02:15Sam Altman?

  And if you went back to use the actual GPT three point five, you'd be like, okay, signs of great promise can do the occasional impressive thing. But it was really not until GPT four where these text models started providing real value for people. And we know how to go make the GPT four equivalent of video models and we will do that. And then a lot of these things that are currently annoying, like doors, or, you know, once in a while, something goes through something else that's not supposed to. In the same way that the world, you know, loved to complain for a brief period of time about where three point five fell down and, oh, it's never going to be useful. It's never going to do this. It's never going to do that. And then we were able to just keep making it better and better and better and better. The model physics IQ is certainly the best I've ever

• 1:02:58Sam Altman?

  seen, but it is nowhere near as good as it will be in the future versions. And I think, I hope we'll see a similar thing to what happened with the GPT text models, which is people will always demand more and better, and they will always find new and better things to use it for. And the world will just make ever more amazing videos.

• 1:03:19Jordi Hays?

  How quickly?

• 1:03:20John Coogan?

  Oh, sorry.

• 1:03:21Jordi Hays?

  How quickly?

• 1:03:22Speaker 04

  We're so early on the tech for video here.

• 1:03:23John Coogan?

  Yeah.

• 1:03:24Speaker 04

  Um, like GPT one really was Sora one uh for this modality. And the progress we've made kind of in the last eighteen months came to this three point five moment, right? It's really compressed compared to how long it took to go from GPT one to three point five in the language domain. So we're really expecting progress to continue to be meteoric here in the near future.

• 1:03:42Jordi Hays?

  How quickly do you expect the cameo feature to be cloned? That feels like a a equally important part of the, you know, the the model's made a leap, but the product is in the experience and the the the experience of creating uh these assets is uh wildly innovative. We saw stories get cloned. We saw saw uh, you know, algo video short form feeds get cloned. I I expect many other platforms to be looking at this functionality and realizing that this might be uh the future. You guys certainly believe uh that that it could be uh important. So how quickly do you think?

• 1:04:22Sam Altman?

  We're actually totally okay with a world where we do the product innovation and everybody else copies. And I don't think it works for them as well as they think it does. Like the the, you know, a lot of people have tried copying ChatGPT uh in. You can go look at some of our competitors' apps and they even copy the mistakes. They even copy the design decisions we really wish we hadn't made. And maybe it's worked well for them. I guess I kind of hope it has, but it's been fine for us. I I I think like the the the key to this is not any one innovation, but it's repeatedly putting them out again and again and being first to come up with them and put them into a cohesive offering. And, you know, that's what we want to be good at. And if other people want to clone the stuff that works, we also sometimes clone stuff that works. That's fine, but but mostly we want to be able to drive the innovation.

• 1:05:07Sam Altman?

  And I think Bill and his team have done an incredible job of figuring out how people actually want to use these video models, what the models need to do. Really, they've approached this as a full stack problem from how do you train the video model? So how do you make this enjoyable for users? But cameos are one out of many ideas they have from here on the journey to like the product that we hope to eventually build. And so if people take some inspiration from us and copy us along the way, I'm sure they will. It's fine.

• 1:05:38John Coogan?

  How do you think about the like popular claim that we want AI detection? I want AI content flagged. Is that a stated preference that's not a revealed preference? Because personally, I don't want bad AI content, but I don't want bad human-made content either. I want great both, and I'm fine when someone comes up with something genius and they instantiate it with a video model. How do you think about it?

• 1:06:08Sam Altman?

  I think that is the real thing is you don't want slop, you want great content. Different people, one man's slop is another man's treasure for sure. But what you care about is like good, original, thoughtful, new, helpful, whatever content. And whether that is generated entirely by a human or entirely by AI, or what I expect will mostly happen in the future, which is tool-assisted, human-driven generation. I don't think you care that much if the content is great. There's a lot of like, you know, stuff that is technically written or drawn or filmed by a human, but is completely derivative and much less original than what an AI has generated.

• 1:06:52Sam Altman?

  And I think that will be what people really care about long-term. You just want great content. Now, I also do want some human connection with it. When I read a great book, first thing I want to do is read about the author that wrote it and what life experience went into that. I don't think that'll go away, but if they're using an AI as a tool to help them make the writing better, sign me up. That sounds great. Similarly, I would rather watch a video about someone I know than some random AI-generated character, which is part of why I think this was cool to offer. One design decision the team made that I thought was really great, and I was actually pushing them in a different direction earlier on, and then I decided they were totally right, and I thanked them and dropped it, was the fact that the feed is AI-only.

• 1:07:37Sam Altman?

  And not a mix of AI plus some uploaded videos. I think is a subtle but extremely important design decision in how people are relating to this.

• 1:07:46John Coogan?

  Yeah, it was a very weird experience for me. I was I was thinking about the collab post that I was making announcing this interview. And my initial thing was like, well, I'm gonna have to think of a script or I'm gonna have to think of, you know, what I say, or I should record a piece of this and then I'll use it. And it was like, no, I just type the prompt and then I get the front facing videos remarkable.

• 1:08:04Jordi Hays?

  What are you, what kind of indicators are are you guys looking at as Sora can transition from what it was the second it launched, which was a creative tool into something that's more of a consum- like a consumption platform, traditional, you know, social media platform, like what, talk about kind of what you guys are pushing forward to. Because obviously you're seeding seeding the the network with with the tool. But it's it's certainly much harder to turn it into something that people are spending hours a day and purely consuming content and not creating content.

• 1:08:41Speaker 04

  You know, we really wanted to design this from the ground up to be centered around creation. And a lot of the metrics that we've been focused on optimizing here are really aligned with making sure as many people as possible are actually like getting their hands on the Sora two model itself and, you know, able to create content with their friends and like for the rest of the world. One metric that we're really proud of with this launch so far is that 70% of our users are actually creating content even to this day, you know, a week and a half after launch. And that's like vastly higher than on any other social media platform. And I think it really speaks to just how fun creation can be with the right tool set, right? If you look at any of these kind of legacy platforms, there's just like so much friction from like getting off the feed

• 1:09:24Speaker 04

  and like into some creative flow state, right? You have to like put the phone down, you have to go get like a camcorder, start recording yourself, find your friends, like do a dance, etc. It's just like a lot of work, right? On Sora, like you can just pick up your phone, find a like any video you like in the feed, remix it, you know, cameo any of your friends. And I think one insight that was not obvious to us at first, but we've kind of clearly seen as an emergent behavior of this product. It's just like there's all these people out there who would not necessarily want to be like, you know, influencers or something or have like a big social media presence. But the fact that like all of their friends can just access their cameo, right? Put them in all of these crazy situations actually like kind of gets them into the playing field in a way that felt really high friction before.

• 1:10:06Speaker 04

  And so, you know, we're closing in on close to like 2 million weekly active users now. We're really excited that such a huge percentage of that user base to this day is like still creating with Sora and we're going to continue pushing on that direction and making sure people have even more powerful tools in the future.

• 1:10:21John Coogan?

  Yeah, so 70% of Sora users are creating content. The typical benchmark that people kind of quote randomly is like 1% creation, 99% consumption, something like that. And that certainly feels like my experience on Instagram. I post a photo every once in a while, but most of the time I'm just kind of scrolling. And I'm wondering if you think that that 1% will be much higher on Sora in terms of actual time in the app, time prompting versus time scrolling. If you have any data, that'd be super interesting. But then also, does that make it more of like a competitor to video games than traditional social media because it's such a lean forward experience versus just lay back? What do you think?

• 1:11:03Speaker 04

  Yeah, it's a great question. We still need to study this more exactly how creation versus consumption habits kind of change over time for folks on the platform in still pretty early days. I do agree with your point, though, that I think over time, this is going to feel much more immersive in a way that like video games kind of do. Like you have more agency when you're actually using the platform, you know, not just kind of like mindlessly scrolling a feed like hours a day. And like one interpretation of this product, which I think is kind of interesting, especially from the research perspective, right, is cameos in some ways like the simplest way where you can kind of like inject yourself into the model, right? So it's a very low bandwidth communication channel right now, you know? You're only giving like a few seconds of video footage of like any given individual like into the app.

• 1:11:47Speaker 04

  Uh, but like over time, right? You can imagine like these models know more and more about your life. They really like deeply understand your friends, how you wanna like show up in the world. And like over time, this can almost become like a little mini like alternate reality, right? So like you're not just generating like videos of yourself with your friends. Like you actually just have like digital copies of yourself running in the model on this Sora platform, interacting with other people with agency. And so I think over time, we're really gonna see this platform evolve into, you know, something that feels kind of familiar today into something that really leans into like the full intelligence of Sora two in the future and like really leverages all the world simulation capabilities that we're working on internally.

• 1:12:23Sam Altman?

  Yeah, I I would add to that, that if if you think of this like spectrum of the kind of entertainment you can have in front of a computer. At one end, you have like watch a two and a half hour movie and you hit play and then you lean back and you don't do anything at all. Um, and then at the other end, you have like a very intense video game and you're like, you know, sweating and your heart's racing and it's like super, super active. Um, AI is gonna push things to be more in between there. So you'll have, maybe you're still watching that movie, but now you can like say something a few times throughout the course of it and it changes what happens as the movie plays out. Or with Sora, you're seeing this amazing new phenomenon where most users are creating in a, in a world where traditionally only one percent of them did.

• 1:13:08Sam Altman?

  And so you're, yes, you're like watching a video feed, but you're, you're doing a little bit more. And it, at least for me, really changes how fun the whole thing is and how I feel about it. Then maybe you'll do what Bill said and you'll have like, you'll be way more actively participating in a Sora feed. And I, I think you're just gonna see that continuum blur a lot more.

• 1:13:25John Coogan?

  Did you see Bandersnatch by any chance, Sam? Have you seen this Netflix? It's like a Netflix choose your own adventure and it was really cool idea. But ultimately people, it never really took off and became like something that they do again and again and again. And I'm wondering if it was because it was like not customizable enough. Um, or people just want to just sit back and see a director's vision. I don't know. Anyway.

• 1:13:44Sam Altman?

  I never heard of that, but it sounds cool.

• 1:13:46John Coogan?

  Yeah.

• 1:13:46Jordi Hays?

  How do you think, a question for Sam, how do you think about allocating compute to Sora versus the rest of the business? I imagine Bill is constantly in your ear. Always. Every other hour, but how are you thinking about it?

• 1:14:03Sam Altman?

  You know, my real answer is I've entirely changed my focus of how I spend my days to just go get more compute rather than have to make the compute allocation decisions. I still do have to make some short-term compute allocation decisions, but I hope we are heading to a world where I am instead telling people you've got to find a way to use more compute. And we're going to be, we're going to be very aggressive here.

• 1:14:24John Coogan?

  It feels like you're doing a great job of like bringing things within your control, within the supply chain. What is outside of your control at this point?

• 1:14:34Sam Altman?

  I mean, most of it.

• 1:14:37John Coogan?

  But I feel like you have great, you have great partners all up and down the stack, multiple partners in different parts of the chain. Like, when I think about scaling up Sora, I feel like it's crazy to bet against you. Like, you're gonna, you're gonna get the chips, you're not gonna be GPU poor.

• 1:14:50Sam Altman?

  You go try to buy like 10 gigawatts of power for delivery next year, it's not so easy.

• 1:14:56John Coogan?

  It's funny.

• 1:14:57Jordi Hays?

  How are the conversations going with Hollywood?

• 1:15:00John Coogan?

  Oh, yeah.

• 1:15:01Speaker 04

  Oh, actually.

• 1:15:02Sam Altman?

  Yeah, you take it.

• 1:15:03Speaker 04

  Yeah, I was gonna say, we've been chatting actually with a few, you know, very notable folks in Hollywood over the last week. You know, I think people's first reaction to this is like, very understandably going to involve a lot of trepidation and like anxiety. When we've gotten to just sit in a room with these folks, though, you know, and really explain what we're building, I've actually been pretty struck by like how excited folks in Hollywood are about this. You know, we were chatting with, with one actor recently who mentioned that, you know, on Twitter like a year ago, saw like a deep fake of her generated with one of these like open source models, which really had like a lot of nasty content created. And when we really like, we walked her through kind of all of our safety mitigations, right?

• 1:15:46Speaker 04

  How we're making sure that we have this like very well-defined model spec, which dictates the behavior that, that we allow on this platform, and how we are really leaning into like full control of likeness, right? More so than any other platform. Like, you have to come in through the cameo process, you can't just like upload an image of yourself and just like generate a video of it of like any person, you have to come in through cameo. I think it became clear to her that, you know, we're really setting The right standard here in terms of making sure people are in full control of their likeness in Hollywood. I think that's where like a lot of this anxiety comes from, right? It's this feeling that, you know, some random person can just kind of take videos or images of you and do whatever they want with them and create all of this like, like, like terrible content that's like outside of your purview. But we've really been like designing Sora

• 1:16:29Speaker 04

  from the ground up to put users in full control of their likeness end to end. From the moment you sign into the app to, you know, giving cameo permissions to like access any of your friends' generations. So, you know, I think we need to engage more with Hollywood and we're going to continue to do that. But once we really explain the story of Sora, you know, they're very receptive to it.

• 1:16:47John Coogan?

  Do you think there's a world?

• 1:16:48Sam Altman?

  To add something to that, I, I, like, you know, I, the team asked me before launch if they could put my cameo in their open access. And I of course thought about it for a second and said, absolutely yes. I had all these Hollywood celebrities then messaging me on the first day being like, you're absolutely crazy. This is insane. This is like the dumbest thing I've ever said. And then by about the third day, they were like, hmm, that was really smart. You got like a lot of, you know, free publicity. Maybe we need to be doing that. And I think you're now seeing actual celebrities say, okay, I'm gonna do this. And I expect a lot more of them will. Similar thing on other kinds of characters and IP. I can totally imagine a world where our problem in a year or six months or maybe even less is not that

• 1:17:30Sam Altman?

  people don't want their cameos or their characters appearing, but they think we are not fairly having their characters or cameo appearing often enough.

• 1:17:40John Coogan?

  Yeah.

• 1:17:41Sam Altman?

  This may turn out to be a really big thing for fan connection. Now, it may be that kind of the previous generation of celebrities don't want to do this and the influencer celebrities all do. I don't know how that's gonna go, but, but I bet this will be like a pretty deep kind of new connection.

• 1:17:55John Coogan?

  Yeah, it seems like it's been good for DiCaprio in the memes. Like, he's not directly monetizing those when you show the champagne meme or him pointing at the TV, but like, you know, it builds his aura in some way.

• 1:18:07Jordi Hays?

  A friend of ours posted something yesterday. This, uh, this is Jeremy Gaffon. He said, "The reason we're so upset about slop is because it's obvious we're all going to be, going to love consuming it in two to three years. It's not going to be slop for long." Do you agree, Sam?

• 1:18:23Speaker 04

  I mean, some of it will be slopped to some people and some of it won't. I I remember like

• 1:18:29Speaker 04

  there was a real reaction like this in the early GPT days. Where people were like, I can't believe anyone reads this. It's like total crap. It's full of hallucinations. You know, it's like, it's not useful to anyone. And then it became more useful to some people, but they said, I can't believe anybody like ever thinks this thing writes a beautiful sentence. That's insane. And then with GPT five, you have authors saying like, wow, this is a useful tool. It sometimes like writes a beautiful sentence.

• 1:18:51John Coogan?

  Yeah.

• 1:18:52Speaker 04

  Uh, and I kind of think it'll follow a similar trajectory.

• 1:18:55John Coogan?

  What do you think about the fact that people feel at least, I don't know if they actually can, but it feels like you can still clock GPT five writing, you know, it's not this, it's that, the M dash like will we still see these artifacts in three years in Sora five that people are like, oh, if you know, you know, you can tell, but most people can't.

• 1:19:14Jordi Hays?

  Yeah, it's like, what's the M dash of of video? Because I don't think it's like six fingers.

• 1:19:18John Coogan?

  No, no, definitely not. That's the typo, which doesn't happen anymore.

• 1:19:22Speaker 04

  Yeah, I think right now the M dash is like this like slightly wired speech pattern in Sora where it likes to say a lot of words very quickly. You know, these these generations definitely have like a style to them. Um, I I think analogously to GPT, we really want to give users a lot of control over exactly how their videos show up right on the platform. Like if you really want kind of like a very soothing experience, right? Not a lot of shot changes going on. We want to give users the ability to generate that. Uh, we're going to continue to get more optionality to people. So, you know, there'll be some default kind of behaviors and quirks of uh, of Sora, for sure, but uh, we definitely want all power users to be able to be in full control.

• 1:20:01John Coogan?

  Random question, where did the name Sora come from?

• 1:20:04Speaker 04

  Yeah, uh, this is a fun one. Um, so the original Sora came out uh, in February twenty twenty four, the OG blog post.

• 1:20:11John Coogan?

  Yeah.

• 1:20:12Speaker 04

  We uh, did not have a name for it. I think like up to two days before we like revealed the model to the world. Uh, we just could not agree uh, on the team what it should be.

• 1:20:22John Coogan?

  Did you at least have a code word or something?

• 1:20:24Speaker 04

  We didn't. We just called it like video gen.

• 1:20:26John Coogan?

  Okay.

• 1:20:27Speaker 04

  And so, uh, at some ungodly hour, I like just started. Pumping a bunch of crazy ideas into ChatGPT. And then like, we basically ran out of like English words, so then we switched to like Japanese words.

• 1:20:38John Coogan?

  Wow.

• 1:20:39Speaker 04

  Uh, and then Sora came out, I was like, wow, that sounds really nice. It means sky, you know, linked with like imagination, like all the possibilities of creation. And so then we just like last minute, uh, shipped Sora. So.

• 1:20:49John Coogan?

  Yeah.

• 1:20:50Speaker 04

  Yeah, it was kind of a mad dash.

• 1:20:51John Coogan?

  Okay, speaking of Japanese stuff, uh, Sam, you said you were looking for an Acura NSX a while back. Uh, it's kind of this throwback car, very, it's not a Waymo. Uh, what do you think the piece of content or format will be that, uh, remains loved? Uh, in an age where everyone's taking the Waymo of video, the Sora of video generation? What do you think is like?

• 1:21:12Sam Altman?

  Well, first of all, I got that NSX and it lived up to all of the childhood hype. I mean, just incredible. Like, that car is so fantastic. Um,

• 1:21:24Sam Altman?

  and I, I don't know. I kind of think there's going to be a lot of stuff like that for people that generated or not, where you still, you want the real thing. You want the thing that you have the kind of childhood connection to, uh, you know, someone like a kid today is not going to want the NSX, but whatever the, a cool car like that is, they will want. And at some point, like the fact that they can have like a crazy VR experience, they'll still want the real thing and the connection to it and everything they have. So I, I think there will be a huge amount of that. In fact, I think the future looks like much more of that kind of stuff, not much less.

• 1:21:59Jordi Hays?

  How quickly do you want to create an economy on Sora? It feels like there would be a, a number of ways that you could create incentives for

• 1:22:08Jordi Hays?

  creators to create things, for IP holders, for individuals to just be passively monetizing their likeness.

• 1:22:18John Coogan?

  Bill, what do you think for timing on that?

• 1:22:20Speaker 04

  I mean, this is like a top priority for the team, you know? There's clearly such an incredible value proposition for celebrities, for rights holders across the board here. Um, we think Cameo is like a great entry point for this, right? You can imagine, right now we have Cameos for people. Maybe you have Cameos for like. You know, your character or like your brand or something. And so we're actively working on the team right now. Uh, coming up with like the right monetization model here to get this rolled out. But it's really important to us, right? That our creators on the platform are rewarded and that there are clear, you know, financial incentives. Like the incredible work that they're already doing. So this is like top of mind for us and we'll have updates here over the coming weeks. This is like something we're actively working on.

• 1:23:01Sam Altman?

  I, I, I will, I, I think it's super important and awesome. I, I will say, I, I would like to know how many hours of sleep Bill has averaged for the last few weeks, but I bet it's not enough. So we got a lot of stuff. The team's got a lot of stuff they have to do in a short period of time and it's going to take a little while.

• 1:23:14John Coogan?

  Okay, let me put one more thing on your plate, Sam. Uh, I mean, uh, earlier, like years ago, you built looped. Location-based product. Have you thought about how AI and location-based content fits together? Like on most of these social apps, you can tag a location. It wouldn't even make sense in the current Sora app. But what does the AI maps product look like?

• 1:23:41Sam Altman?

  I haven't thought about AI and location that much, but I've thought about like how AI can really change the social experience for people.

• 1:23:52Sam Altman?

  We don't have like a for sure answer yet. We have like a lot of interesting threads to pull on. And I have thought back to like my days running that startup there more. My instinct is it is possible to make a very interesting new kind of social experience. Connecting you to people, helping you find people that is intermediated by AI in an interesting way.

• 1:24:17Sam Altman?

  But, you know, we'd have a lot of exploration to do there.

• 1:24:20John Coogan?

  What advice are you giving to startup founders these days? Uh, I remember in the GPT three point five, GPT four days, it was like, don't build a company that assumes model stagnation. How do you think about in the age of Sora?

• 1:24:34Jordi Hays?

  That's been really great advice.

• 1:24:35John Coogan?

  It really has. It planned out, it played out exactly like that. There's a bunch of great companies that aren't built that way and they've done great. But if you, if you were just, oh, I have a special prompt that tunes up GPT for, yeah, bad times. But how are you thinking about it now in the context of video and Sora specifically? You obviously do have an API, you have Dev Day, there's people that will build on top of this. Is it a different shape of the problem?

• 1:24:58Sam Altman?

  Totally. The, the reaction to, um.

• 1:25:02Sam Altman?

  The API has been nuts positive, like at least the fastest ramping revenue I've ever seen for one of our new models in the API. I mean, maybe there was something faster than I'm not remembering, but the demand there has been just incredible and people are doing awesome stuff with it. Um, Bill and I have not had a chance for a one on one since launch because it's been so crazy. We're doing one later. We're doing one later today. But one of the things I was going to suggest to him was that we, given how much excitement there is to build on this stuff, that we do something we don't usually do and put out our intended roadmap of the things we're going to prioritize. Because I can imagine really cool new startups that simply were not possible, that will be possible if each of these new things will ship.

• 1:25:45Jordi Hays?

  So I, I had a question when you guys released the Sora 2 via API, which was that if Sora has the potential to be a Instagram or YouTube scale business, why release part of your edge for the entire world that they can integrate into other creative tools and then use the model to generate content that doesn't have a watermark, that's not in your feed, that you're not able to get that feedback loop on that you guys do with the Sora app?

• 1:26:16Sam Altman?

  For ChatGPT, we also put out a great model in the API and people can theoretically compete with us on ChatGPT and some try to, but like, we are willing, we're never going to build every cool use of the technology and we want the world to get all that stuff. We're delighted to also get paid on people using our API, but like, we just want AI to flourish out in the world. We're not going to build every great use of what you can do with video models either. We'll build one and I think it's pretty awesome, but people have a lot of other ideas of business and products to go build and we'd like to enable those.

• 1:26:49John Coogan?

  Okay, last question, back to cars. What's wrong with the Porsche 911?

• 1:26:53Jordi Hays?

  Yeah, you said earlier, the timeline was in turmoil. You said if you're worth, uh, somebody said, uh, if you're worth $5 million when you buy a 911, you said no, you agreed with PG. What, what did you mean by?

• 1:27:07Sam Altman?

  Uh, I mean, it was, maybe it was like a tasteless joke. It was kind of like late at night. I was, you know, whatever. But I, I have an unfortunate proclivity for expensive cars. And, and the response was like, would you ever spend 250K on a car? And I took that literally.

• 1:27:23John Coogan?

  That's amazing.

• 1:27:25Jordi Hays?

  Hit the size gong for taking it literally. No, no time for 250K cars, not no space.

• 1:27:32Sam Altman?

  But I probably, that was not my best tweet, you know?

• 1:27:34John Coogan?

  Yeah, no, I, I, I enjoy it now.

• 1:27:37Jordi Hays?

  We all enjoyed it.

• 1:27:38John Coogan?

  I enjoy it now that I have the context. Uh, congratulations on all the progress to both of you. Thank you so much for taking the time to stop by the show.

• 1:27:44Jordi Hays?

  Yeah, really appreciate the update.

• 1:27:45John Coogan?

  And, uh, very excited to see where this goes. Thank you so much.

• 1:27:48Sam Altman?

  Thank you.

• 1:27:48John Coogan?

  We'll talk to you soon.

• 1:27:51Jordi Hays?

  I, I don't think anyone read it.

• 1:27:53John Coogan?

  No one, no one got it that way. That's amazing.

• 1:27:55Jordi Hays?

  250K? How about two and a half mil?

• 1:27:59John Coogan?

  Uh, anyway, we have our next guest joining in just a few minutes. In the meantime, let me tell you about Linear. Linear is a purpose-built tool for building, planning and building products. Meet the system for modern software development, streamline issues, projects and product roadmaps.

• 1:28:13Jordi Hays?

  You all know that OpenAI builds on Linear.

• 1:28:15John Coogan?

  Yes. Oh yeah, that's right. They're a customer. Uh, well, we have a lot Gil coming into the TBP and UltraDome from the Restream Waiting Room. Let's bring him in now. Thank you so much for joining us a lot. How are you doing?

• 1:28:27Jordi Hays?

  Finally.

• 1:28:28Speaker 06

  Thanks for having me. Good to see y'all.

• 1:28:29Jordi Hays?

  We have wanted to do this interview since probably the very first week that we did guests. Took us a while, but you have your own show.

• 1:28:37John Coogan?

  Yes.

• 1:28:38Jordi Hays?

  But, uh,

• 1:28:38John Coogan?

  But thank you so much for taking the time. Um, what, uh, what, what, what this week has stuck out to you? I'd love to just get a state of the union on how you're thinking about the market broadly. And then we can zoom in on, uh, on individual startups and trends and subcategories that you've been focused on. But have you had a reaction to this like bubble talk that's going on? Have you been thinking about this? Uh, what, what's been, how have you been processing the information? How do you even research whether or not when something is going viral like that?

• 1:29:08Speaker 06

  Yeah, I mean, I've been looking at this stuff for a while because if you look at the 90s as a sort of precedent or antecedent, the 90s internet bubble.

• 1:29:17John Coogan?

  Yeah.

• 1:29:18Speaker 06

  I think there was something like 450 companies that went public in 1999. There's another 450 that went public in the first couple of months of 2000. And so about 2000 companies went public. And then you ask how many of those are still alive, like how many survived? And there's probably a dozen, two dozen that that are still up and running. There's probably two or three of those that are really important to Amazon as an example, et cetera. And then 1,980 out of 2,000 probably died, right? Went to zero.

• 1:29:44Jordi Hays?

  And they were being priced on eyeballs.

• 1:29:46John Coogan?

  Yeah.

• 1:29:47Jordi Hays?

  They're being priced on eyeballs, not, not, not even account creation.

• 1:29:51John Coogan?

  It was, it was such a different time, like IPO-ing was like doing your series B. I remember there was a guy, Bill Gross, at a Dia Lab in Pasadena, my hometown. And I believe he took 100 companies public. And he ran an incubator, it was like the Y Combinator of the day. One company I believe was AdWords that went to Google and became the backbone there. And he had a bunch of great outcomes, but it was like a bit of a machine. If the IPO is no longer the metric that you, we should be watching, is it, is it these revenue ramps? Is it churn? Like, how can we dig into understanding like where true value, durable value moats are accruing versus froth? We, we often call it like the barnacle economy.

• 1:30:32John Coogan?

  Like if you're, if you're, you know, a toilet cleaning startup, but you have Anthropic as a customer and they 10x their office footprint, you 10x revenue. That's not exactly the type of business we want to see long term.

• 1:30:44Speaker 06

  Yeah, I think durability is a great question and it's a really hard one for this era. For two reasons. One is things are changing so rapidly from a model and underlying capability perspective. That if you look at every prior technology wave, you look at, for example, Microsoft OS, right? They forward integrated into the Office Suite, up of using Windows OS. Or Google forward integrated into vertical searches. So they killed a bunch of companies or really hurt a bunch of companies that are providing those services. So we should see the same thing with the foundation model companies, right? It's most likely if they're going to forward integrate, they're already doing it in code. Maybe they end up doing it in customer support and sales or all the big categories. There'll probably be some effort at some point. Now, they may or may not succeed with that. Which is a different thing, but there's durability in the face of competition from the big folks. There's durability in terms of like, well, people keep using your product

• 1:31:29Speaker 06

  or we get subsumed by a startup. And then there's just things that are just running up that clearly are never going to really work. And the real question is, you know, how do you identify each one of those classes of companies? And how do you think about them as either a founder or an investor?

• 1:31:43John Coogan?

  Right now, we've been, we've been noticing there's sort of like three types of, three buckets of companies that are trying to like, you know, craft an AI narrative around whatever market they're in. If we're talking vertical markets, smaller markets, not the foundation model layer. You have the legacy Fortune 500 company, you know, career CEO in the seat who's maybe paying a consulting firm for some AI transformation plan and maybe the stock's not doing so well. Then you have the startups that are, you know, we, we, we go to YC demo day, we talked to five companies that are building in the same space and it's their complete greenfield project, amazing place to be, must be super fun to just have be puppeteering 25 Claude code instances and codex and agents to build your thing.

• 1:32:26John Coogan?

  But then we talked to a lot of founders that have, they started their company five years ago, 10 years ago. They have a serious business, but they're still in founder mode. And we always find it a little bit hard to bet against those guys who are like coming back in, re-energized. They have the balance sheet, they have the customers and they can kind of take a second crack at it. Do you, like, what nuance would you add to that framework? Do you think it's on a per industry basis? Is it all about the founder? How do you think about that?

• 1:32:54Speaker 06

  Yeah, I think there's basically three of your points on that. I think there's a very small number of singular founders who just make amazing things happen. And that's Elon Musk, right? Like who else would go to space and build cars and do all these things? Honestly, I think Arvind and Perplexity is one of those where in anybody else's hands, I think perplexity would be a dramatically smaller business. And I think most other companies in his hands would do better. He's very good, right? But that's very rare. So I kind of put, you know, amazing founder aside because even great founders out there in a terrible market tend to get crushed. And so I think there's a second piece of it, which is there are a bunch of these AI markets that have recently really crystallized where, you know, I used to say a year and a half or two years ago, the more I learn about AI, the less I know. It was the only market that I ever felt that way because,

• 1:33:37Speaker 06

  you know, you learn new stuff and you know more, right? You do better, you can predict stuff. And I think that changed over the last six to nine months where suddenly, at least for certain areas, it's really clear who the finalists are. We may not know the winners, but we know who the final contenders are. We know that for the foundation model market. We know it's Anthropic, OpenAI, Google, perhaps XAI, Meta, a few others, Mistral, whatever. But you know, it's a small list. Yeah. We know for coding, it's cognition, cursor, and then the foundation model companies and then Microsoft. And you can go through sort of vertical by vertical. There's a bunch of verticals now we know. A bridge for healthcare and maybe career, you know, there's a handful for each thing.

• 1:34:14Speaker 06

  But then there's a bunch of markets where it's clear the market's going to be important. And there's tons of players, but we don't know who the winners are. That's financial tooling. Maybe that's sales enablement. Maybe that's accounting. You know, you can come up with the list.

• 1:34:26Jordi Hays?

  Legal, legal feels like, legal feels like it's already solidified, except a handful of these more vertical specific, you know. Specifically, we, we, we were joking, there, there's people doing injury, you know, personal injury, law, agents, you know, ambulance chaser agents, but it feels like the categories are solidifying. I guess the question I have is you've backed winners and basically all these categories. Where do you feel underexposed from an investment standpoint? What do you think you didn't quite anticipate? Is it, is it like energy possibly? I'm sure you have bets there, but where do you feel underexposed?

• 1:35:07Speaker 06

  That's a really good question. I feel like the two big trends of this era so far have basically, and by era, I mean like two years. You know, it's not a ten year era, you know, of recent, last two weeks, you know. Modern millennia. Last two weeks. Yeah, exactly. The last two weeks of this era. Yeah, exactly. I think that there's, the two big things are basically defense. And, you know, I was very early involved with Anduril and Mother D and participated basically in every round of that company. And then I'm an investor in Saronic and Helsing and then Kayla in Israel. But very, very little defense actually over like a 10 year span of investing, right? I did it under only for like seven years because it was like the only company that I thought was just going to keep going forever. And I think it's the, the, you know, a generational winner there.

• 1:35:50Speaker 06

  But uh, and then there's AI. And AI means everything now. It means consumer, it means rollups.

• 1:35:56John Coogan?

  It means electricity.

• 1:35:58Speaker 06

  It means, yeah.

• 1:35:59John Coogan?

  Natural gas, turbines, AI index.

• 1:36:02Speaker 06

  Yeah, exactly. Yeah, trains have to move GPUs across the country.

• 1:36:05John Coogan?

  Yep, yep, yeah. FedEx, maybe. Throw that in there.

• 1:36:08Speaker 06

  Yeah, I love it. Yeah, FedEx is my favorite AI company. So I think, you know, those are the, the sort of two obvious trends now. Six or seven or eight years ago, they weren't obvious. Now they are. And, you know, honestly, obvious trends often go longer than you think. I remember with the social networks, there was a bunch that didn't work out of me in MySpace and Friendster. And eventually you had Facebook and LinkedIn and Twitter. And then at that point, everybody said it's over. Everything and social saturated, but then we had WhatsApp and we had Instagram and we had TikTok. And, you know, it just, it just kept going. AI is in a much earlier version of that right now, where I think we're at the very, very early days of this massive wave. And so to some extent, I'm underexposed to AI in general, because I think it's the biggest thing that's happened in, you know, 20 years or longer.

• 1:36:53Jordi Hays?

  A lot Gil says he's underexposed to AI.

• 1:36:56John Coogan?

  You're very, very humble. The chat says, everything important, a lot is in.

• 1:37:01Speaker 06

  Yeah.

• 1:37:01Jordi Hays?

  What is, what is, what's not AI? When do you get a pitch where they use the word, the letters AI on their website a lot? But you're just like, hey, guys, this is, this is just, this is just regular enterprise stuff.

• 1:37:13Speaker 06

  Well, I actually bring this back to like, what's durable in the face of AI? And a good example of that is Rippling, right? Rippling is an amazing company. They cross-sell a dozen different HR products. And AI can make some stuff better, but nobody's going to do like the AI first Rippling.

• 1:37:31John Coogan?

  Yep.

• 1:37:31Speaker 06

  And suddenly win, right? Now, the, the main threat maybe to a Rippling or deal or sort of related companies is if company headcount actually goes down because of AI, then they have fewer seats they sell, right? And so that's maybe how there could be a headwind from AI for these companies, but.

• 1:37:45Jordi Hays?

  But maybe that means more companies. Maybe that means you just get a lot more companies, smaller teams, right?

• 1:37:50Speaker 06

  Yeah. It's quite possible, yes. So I just think like that's the, when you see that, you're like, okay, this is very durable in the face of AI and that's great, right? And so a lack of AI means AI can't displace it. And so as long as it's working, it's actually more interesting in some ways.

• 1:38:04Jordi Hays?

  Yeah, the question I sort of ask myself is, you know, using a company like Rippling, for example, even if companies start needing less people, they're still, they can, they, I could see them transitioning to kind of value-based pricing around what is it? What's the value of like running your HR department, right? Is it 3% of revenue? Is it 5% of revenue? Is it 1% of revenue? Like, either way, they're going to make money if they're providing like infrastructure for that function.

• 1:38:36Speaker 06

  Yeah, it's a great insight because I think one, there's two or three things that are underappreciated about this AI wave. I think that the first thing is that the capability set has shifted dramatically, not just in terms of what these models can do, but the fact that you can just ping them with an API and something's accessible to everybody. And I think that's actually very under discussed, right? Relative to the prior world. I think a second thing is that the markets are oddly open. Like, legal never bought any software. It was really hard to sell into legal, but because of AI, suddenly Harvey can exist, right? And then the third thing is that a lot of this is about what you're saying, which is the TAMs of markets are shifting from seat-based pricing or seat-based value to labor. You're replacing human labor.

• 1:39:19Speaker 06

  And so you're looking at, for example, customer support. It's not Zenda's, how many seats can you sell the customer support reps? It's how much can you augment and do work for customer support reps? It's the labor market versus the software market. And I think that's very underappreciated when you think about market size for some of these things. You're really going to miss the size of these markets and how big they are. You know, the services economy that we looked at on my team in terms of like where AI could intervene is about $5 trillion, right? So it's a lot of GDP is accessible to this. And so then you ask, okay, is it, is it a workflow that's specialized to customer support, legal, whatever? Is it a roll-up where you're buying assets and changing them? Is it a different approach? Like, how do you sort of span all the change that's coming because of this?

• 1:40:05Jordi Hays?

  Ken Griffin gave a talk earlier this week and he was saying that in 1999 and 2000, it was very obvious that the internet was going to change the world, change the way that our economies run, yet it still took 15 years for it to actually have an impact. He was comparing that to today. The difference of today is that we have the internet, so we can deliver these products instantaneously to the entire world. Do you think that this time can be different and we can, as an industry, unlock the value of this technology on a shorter timeline than the internet took because we just didn't have, you know, the internet is the greatest distribution engine in history?

• 1:40:48Speaker 06

  Yeah, that's an excellent question. And I think both things can be true simultaneously, which is, we're seeing real revenue for these companies, right? Cursor is rumored to be in the high hundreds of millions of revenue. You know, Azure added something like two or three billion of AI revenue per quarter from sort of a cold start two, three years ago, right? That's amazing. That's like $10 billion run rate plus to some of AI revenue, right? So it is working. It is being adopted. But the flip side of it is it'll probably take a decade, right? And so I think both of those things are true. And I think the biggest impediment to adoption isn't the technology. We could do so much stuff with the technology right now. It's organizational process, it's workflow management, it's

• 1:41:29Speaker 06

  all the stuff that happens when a big enterprise does anything. And they're like, you want me to change my tooling? You want me to change my people? You want me to, you know, my processes? And that's what's going to slow it down. And that's slowed down every technology way. But to your point, we have massive distribution. It's already everywhere in some sense, right? I don't know that you guys probably know the number. You just talked to Sam Altman, right? What's the number of people using ChatGPT per month? But that's a huge impact already.

• 1:41:53Jordi Hays?

  Yeah, it's interesting. They haven't said that. It has to be north of a billion because they're already, they're reporting 800 weekly active.

• 1:41:59John Coogan?

  If you have 800 weekly, you have to have over a billion. And that feels like such a new cycle, but maybe he's just keeping it in his back pocket for when he needs a good, he needs a new cycle.

• 1:42:08Jordi Hays?

  Bit of a wild card question, and I didn't plan this, so I didn't mention it beforehand. But no, it's not, it's not bad, but I just think it's interesting. If you couldn't be an entrepreneur and you couldn't be an investor, what hyperscaler would you want to work at, where, you know, be an executive at?

• 1:42:23John Coogan?

  That's interesting.

• 1:42:24Speaker 06

  Oh, that's so interesting. I don't know, I could make arguments for two or three of them. Because I think there's such different problems to be had and different assets or, you know, Google, for example, just has such amazing assets relative to this era, right? They have the most data, they have the most compute, they have amazing cash flow. I mean, they're just like in

• 1:42:44John Coogan?

  TPU.

• 1:42:45Speaker 06

  A great spot.

• 1:42:45John Coogan?

  Deep mine.

• 1:42:46Speaker 06

  Yeah.

• 1:42:46John Coogan?

  It's a, it's a really crazy stack over there, yeah.

• 1:42:49Speaker 06

  Yeah, amazing stack. So there's amazing things they could do.

• 1:42:54Speaker 06

  Obviously, there's crazy stuff Microsoft can do on the business side, plus with GitHub and Copilot and everything, you know, so they should really be driving a lot of the coding future, in my opinion, if they make the right moves over time.

• 1:43:07Speaker 06

  You know, and so you can kind of go through one by one and say, there's really interesting things to be done with Meta in terms of social. I think there's opportunities everywhere, yeah.

• 1:43:15Jordi Hays?

  What, give us a, give us an update on AI rollups. You have some investments here, from my understanding, but how, how do you see the category evolving? We see new, you know, new teams coming together to attack various, various markets with the strategy almost daily now, but what's your view?

• 1:43:37Speaker 06

  Yeah, I think, so it's back to, if you look at services in the US, it's three and a half to five trillion a bit is sort of labor that, to some extent, could be augmented or displaced by AI. And so the idea is, can you, there's certain types of companies that are going to be very slow to adopt software or AI. And so there's two things you can do with that. You can wait and build a software company that will take a really long time. You can actually buy those companies, implement the AI changes, and dramatically change their margin structure. And that doesn't mean letting people go, it could just mean you make people five times more productive for certain types of roles. So you can look at different businesses where, you know, 80% of the cost of that business is repetitive white collar labor. And so you can help augment or automate stuff for people.

• 1:44:20Speaker 06

  And so I've looked at a few dozen of teams or companies doing this. I ended up backing two of them. And really, you need three things to make this sort of strategy work, which is truly transforming a business with AI and then scaling it up. The first is you need a great AI person, obviously, right? You need to build the technology. Second, you need a great PE person. You need to buy assets properly, understand your envelope. Just like a SaaS company has its ICP or like customer profile that goes after you. Almost have like your M and A profile, like what fits in my pocket of stuff that I want to go after. And then lastly, you need somebody who's operationally great, who can rework the organization against the AI because that's often the hard part. Right? You actually have to get people to use this stuff in order for it to be implemented. And so very, very few of these teams have all three of those things.

• 1:45:04Speaker 06

  And many of these teams are basically doing traditional PE rollups. They're not really using AI, but they're raising at AI prices and then they're buying at PE prices. And so this are being, and so I've tended to avoid arbitrage.

• 1:45:15Jordi Hays?

  Yeah, it seems like a great deal with the founder in another world. They'd be doing a private equity fund with two and 20. And then here they can go out and raise and dilute 20, you know, raise 20 on 100. And then they, they own 80% of the, of the business.

• 1:45:30John Coogan?

  Yeah, remarkable.

• 1:45:31Speaker 06

  Yeah, it's a, it's a very smart thing to do. And if I was a PE person, I totally could do that instead of doing AI. But most of these things aren't doing AI, right? And so, but I have a handful of them that are going to be massive, right? Imagine an AI Denner, right? It's just, it can really be transformative to big sectors. And it changes something from a services margin to a software margin business with software leverage.

• 1:45:52John Coogan?

  Yeah.

• 1:45:53Speaker 06

  So it changes the characteristics of the, of the business.

• 1:45:55John Coogan?

  Sort of, sort of flashing back in your career, one of my questions I've always had on my mind is that you kind of like created the solo capitalist idea. People have kind of, you know, put that label with you. Was that just a happy accident? Did you, were you deliberate that you didn't rap what you were doing in a firm? There's obviously people that start with similar scales, but rapid in a firm with a brand. And like, how thoughtful was that? What were the considerations? Do you like what, how that?

• 1:46:24Speaker 06

  Yeah, I think, um, you know, for a while it really was just me. So it wasn't some strategic move to, you know, do something. It was just I was on my own doing stuff and I, you know. And then eventually I brought on people for back office and finance. Cause like, I think that's really important, right? You want compliance, you want things to be proper and all that. Uh, and then I got this moniker and I never asked for it, right? Like I actually am happy to be called whatever, as long as I get to be involved with the most interesting technology and technologists in the world, you know, they, they could call me. I don't know what a carpenter, I don't care.

• 1:46:53Jordi Hays?

  They could call you big VC, big venture capital.

• 1:46:56Speaker 06

  That's the one thing I don't want to be called. Other than that.

• 1:47:00Speaker 06

  But I think what we do is different from like traditional VC too. You know, like I don't, I, we do traditional investing and we do traditional venture, but I actually think we do a bunch of other stuff and we do interesting projects around. You know, things like one person on my team who's working as an investor has a technical background is actually driving. AI driven translation of the world's thousand most important books that are off a copyright. And we're working with a few really big foundation mobs on that. So we do stuff like that too, just. Cause it's interesting. So I hope it's never just a venture fund, but.

• 1:47:33Jordi Hays?

  Do you think, when do you expect AI to transform venture capital? I think it's notable that the firm today and the activities of the firm look quite similar to. Pre chat GPT, maybe you can write an investment memo faster, maybe you can. Uh, seem like you prepped for a board meeting better, you know, if you can just drop the deck in and ask for. A summary, but it doesn't feel like it has changed the profession at all yet. It's still. Uh, finding and winning allocation and, and, um, you know.

• 1:48:10Speaker 06

  Yeah, I think it can help with some aspects of diligence to your point, like it can pull competitors and things like that. To some extent, it depends on the market. You know, there may be weird uses that nobody's done yet. So an example would be, have you ever done the prompts where you ask the. AI to like, uh, cold face read somebody and tell you about their personality?

• 1:48:29Jordi Hays?

  No, you, you uploaded a picture for this? Yeah, I mean, just, just analyzing somebody's personality with a picture, even just any picture of their face. Yeah, it's, it's pretty. I mean, this is like the, the schizo is called as physiognomy. Sure, sure, sure.

• 1:48:42Speaker 06

  Yeah, but there's stuff like that where I've, I've done that just for fun with my friends, right? I'm like, hey, what, what is this person like? And my friend's sitting there with me, right? I'm not secretly trying to psychoanalyze this or something. And then I'll ask it to give me a detailed breakdown of those characteristics and why. And I'll say, oh, this person looks like they have a genuine sense of humor and they're warm because of the way that the crow's eyes around their eyes exist in this way versus somebody who fake smiles because it doesn't get to the eyes. So there's no wrinkling. And you're like, wow, that's actually like super interesting, right? And so it'll break down the sense of humor. It'll break down how likely that person is to be loud or quiet, like the aggressiveness, like all this stuff.

• 1:49:20Jordi Hays?

  Yeah, you can imagine there's, there's a, somebody could create an EQ co-pilot for the new like meta display glasses. You can just walk around and I, and if I'm, maybe I'm really high IQ, but I don't read people that well. I could look at John and say, uh, which is probably, probably inverted, but I could look at John and be like, oh, John is, John's very interested in the conversation and he, he clearly wants to be friends.

• 1:49:44Jordi Hays?

  So I think there's more, more to, more to build there. Uh, give us the update on, on, uh, on your, your company with Jared Kushner. I know he's been very busy, uh, but, uh, but I'm excited to, to hear the latest.

• 1:49:56Speaker 06

  Oh, sure. Yeah. So, um, we recently launched a company, um, that's called Brainco, which is focused on using AI as basically a platform to help transform the world's largest institutions. And so we've been working with a number of large enterprises, um, some private equity, um, and other firms around this. And so, um, this has been a fun project to do, uh, with him and with Eric Wu and Louis Videgrain and a few other people. Uh, Eric was the former CEO of Open Door and then Louis, uh, is, uh, the former finance minister and foreign minister of Mexico. So it's kind of this interesting group of people coming together to try and solve really big AI problems. So that's been really fun.

• 1:50:32Jordi Hays?

  So is this realizing how much, uh, the Accentures and the McKinsey's of the world were, were getting paid to make pitch decks on basically here's, here's what you should know about AI for your business and realizing, hey, we could probably do that a lot better. And then ultimately build software within these organizations. Like what is the actual shape?

• 1:50:51Speaker 06

  Yeah, it's much more focused on the, yeah, it's more focused on the software side of it. So basically there's a common platform that's involved in terms of dealing with different forms of data, dealing with evals, dealing with a lot of the things that every enterprise needs to build in order to, um, really adopt AI. And then we build vertical specific applications on top of that, or in some cases for horizontal applications that can be reused over and over by, um, similar companies in the same vertical. So you could imagine, for example, for a financial industry company, there's like a dozen things that every single one of them needs to build and there's some customization around it. It's kind of funny because if you look at very large deals, right? If you're Dell or you're VMware or you're Oracle and you do like a tens of millions of dollar deal with with a customer, you're going to have customization against that customer. You can afford to do it, but also it's important enough to do that for them.

• 1:51:36Speaker 06

  And so it's similar in that regards where we have common infrastructure, common platform, the same vertical applications, but then there's going to be some customization per per client, just like any other giant enterprise company.

• 1:51:49John Coogan?

  Have you thought about slicing the target customer either across vertical? Like, we're not doing healthcare because of HIPAA just yet, or we're not doing defense because of FedRAMP just yet, or we think we have a lot in industrials that we can go after? Or are you more focused on slicing by market cap or size of business? Like, yeah, we're not going to work with mid-market companies. How do you think about where the wheelhouse customer will be?

• 1:52:14Speaker 06

  Yeah, it's very much, the goal is to work almost solely, and there's going to be some counter examples of this, with companies that are truly the world's biggest institutions in terms of revenue, market cap, and then potentially impact, which means sometimes you work with somebody a little bit smaller. But the goal is to ask, how can you use AI to really get leverage on things that are important at sort of a massive scale?

• 1:52:38Jordi Hays?

  Yeah, there was a report that JP Morgan is spending $2 billion a year investing in AI to effectively save $2 billion a year from automating. It's like, when there's that much money. Yeah, they're breaking even, basically. I mean, presumably, like, some of those savings are durable, but certainly, there's a lot of money. What do you, how good do you think you've gotten at clocking AI pilot revenue as non-durable? Because I'm sure you saw that headline, an MIT study came out that said, basically, 95% of pilots are not actually delivering in value.

• 1:53:19Jordi Hays?

  This felt like the year, the year of the pilot, next year is maybe the year of reality. But I don't know how you see it.

• 1:53:27Speaker 06

  Yeah, I just view that as a standard technology cycle. I thought that was a very overstated article. So, um, you know, this happened with mobile. You do the kind of crappy mobile app. I don't know if you guys remember the first B of A mobile app. It was basically like a, yeah, it was just like a webpage. Yeah, but everyone was just wrapping it.

• 1:53:43Jordi Hays?

  Well, the, the current B of A app is still, still pretty rough, so.

• 1:53:46Speaker 06

  I actually think it's pretty good. Like you can go in ATM, you can take out cash. And I think I'm the only person who still does that. You can take pictures of checks, you can pay with Zelle, you can do all these things, right? That you can do before. But you started off and you tried to log in and the thing would crash. So I just feel like we're kind of in that era of AI implementation. People will get it. It'll take a decade to fully sort of propagate to your earlier point. But it really is the big wave that we're living through right now, and I think it's truly transformative.

• 1:54:12Jordi Hays?

  Would you ever, uh, would you ever, uh, have you ever considered an LBO of any of these companies that are in the, the SaaS apocalypse in the public markets that clearly have some, you know, you know, super meaningful customer relationships and a ton of potential important place in their market, but just aren't evolving their business model quickly enough?

• 1:54:35Speaker 06

  Yeah, we've looked at that, actually. I think there's a few really interesting things to be done at scale. And to your point, I think part of it is just driven by can you actually implement AI? And I think the, if you look at the private equity industry in general, they've talked a lot about tech transformation. That was a prior wave, right? Like 10 years ago, and you had all these tech-based rollups, like Compass was supposedly a technology company. And it's a great company, but it's not really a tech company, right? And so I think, um, we've, we've kind of lived through the cycle before where people do almost like tech, uh, fake tech, tech implementation, where they claim they're doing it, they get a higher valuation and it doesn't quite happen. They still load up the company with debt, they still run it a certain way that, you know, the, the drivers are different. The CEO is the wrong person, et cetera. I think there's a good version of that to be done.

• 1:55:18Speaker 06

  I don't think it's easy, but if you do it, I think you can unlock an enormous amount of potential in companies that won't make it otherwise or won't go there. And so, yeah, I think that's a super interesting area and we've looked at a few things over time. And part of the decision sometimes is like, do you want to try and do that or just fund a startup that you think will get there instead? And it's a little bit of that. It's kind of easier to just fund a startup because buying a company and transforming it is quite hard.

• 1:55:44Jordi Hays?

  Yeah, it has to be a company that is, I mean, is at a sufficient scale. Obviously, we just saw that the EA LBO, you don't need to go that big, but finding something that's like really a whale.

• 1:55:57John Coogan?

  Can't hurt to go that big though.

• 1:55:58Jordi Hays?

  Yeah, I would like, we would like to see you go that big.

• 1:56:00John Coogan?

  I would love to see.

• 1:56:01Jordi Hays?

  I feel like that's the next, that's the next, I feel like you've done it all at the early stage. You've done it all in growth. I feel like just get into the.

• 1:56:08John Coogan?

  How about an Activision spin out? Activision spin out, take Microsoft Game Pass, Xbox.

• 1:56:14Speaker 06

  Moving too slow. You're putting all this pressure on me.

• 1:56:19Jordi Hays?

  I know. That's, that's our small ask is set the record.

• 1:56:22John Coogan?

  Wait, wait. Do you have, do you have any, we like to ring the gong for people around here when they share a number. Do you have any number you can share?

• 1:56:28Jordi Hays?

  What's your favorite number?

• 1:56:29John Coogan?

  Number of deals, number of AUM, number of, I don't know, anything. Do you, what's the number that quantifies your, your corpus of work? Number of startups founded?

• 1:56:38Speaker 06

  My corpus, I've started, well, I've started two companies directly and there's two I've incubated. So.

• 1:56:47John Coogan?

  That's a lot of business.

• 1:56:48Jordi Hays?

  Relatively modest amount for the amount of EV creative.

• 1:56:51John Coogan?

  Yes, yes.

• 1:56:52Jordi Hays?

  It's good, good hit rate.

• 1:56:53John Coogan?

  Well, thank you so much for stopping.

• 1:56:55Jordi Hays?

  This was super fun. Really, really glad.

• 1:56:56John Coogan?

  I'd love to do it again. We'll talk to you soon. Have a good day.

• 1:56:59Speaker 06

  Really appreciate it.

• 1:57:00Jordi Hays?

  Take care.

• 1:57:01John Coogan?

  Before our next guest joins, let me tell you about numeralhq.com. Sales tax on autopilot. Spend less than five minutes per month on sales tax compliance.

• 1:57:09Jordi Hays?

  I hate to pick favorites. I hate to say it. I was, I was, I was more, I was more engaged for, for a lot than.

• 1:57:16John Coogan?

  A lot was great. A lot was great.

• 1:57:18Jordi Hays?

  But his book, High Growth Handbook.

• 1:57:21John Coogan?

  Yes. Fantastic. It's a series of interviews.

• 1:57:24Jordi Hays?

  Is my, yeah, is my favorite, favorite business book.

• 1:57:29John Coogan?

  Yeah. No, it's a great.

• 1:57:30Jordi Hays?

  High Growth Handbook, Scaling Startups From 10 to 10,000 People.

• 1:57:34John Coogan?

  Interviewed some hitters for that.

• 1:57:35Jordi Hays?

  Timeless, bunch of great interviews. And yeah, you should go pick it up. I need to, I need to re-listen to it.

• 1:57:42John Coogan?

  Well, without further ado, we have Robby Stein from Google in the Restream Waiting Room. Welcome to the show, Robby. How are you doing?

• 1:57:50Jordi Hays?

  Robby, welcome.

• 1:57:51John Coogan?

  Good to see you.

• 1:57:54Speaker 07

  Hi, can you guys?

• 1:57:55John Coogan?

  We can hear you, we can hear you.

• 1:57:56Speaker 07

  Loud and clear.

• 1:57:57John Coogan?

  I know people are going to be confused, so why don't we just get out in front of it and explain your role at Google relative to Gemini, relative to AI. Take us on a little Game of Thrones HBO intro of the map of Google and where you fit in.

• 1:58:14Speaker 07

  Sure, yeah, so I work on the Google search team, so it's the search bar, you type things in. Yeah, I was gonna ask, could you, could you explain?

• 1:58:21John Coogan?

  Yeah, what is Google?

• 1:58:22Speaker 07

  Yeah, it's a thing, you can type a question in, sometimes you could use a camera, I don't know if you've used Google Lens?

• 1:58:27John Coogan?

  Oh, yeah.

• 1:58:27Speaker 07

  You can also Google that way, too. There's this app, it's also called Google. All that kind of stuff is, is, it was where I focused my time.

• 1:58:34John Coogan?

  Consistent.

• 1:58:34Speaker 07

  And the don't forget about the I'm feeling lucky button.

• 1:58:37John Coogan?

  Yes.

• 1:58:37Speaker 07

  It's still on there, right?

• 1:58:39John Coogan?

  Yeah.

• 1:58:39Speaker 07

  Yes, that's the one, too.

• 1:58:40John Coogan?

  So, so, so how do you think about integration with the DeepMind team, integration with the Gemini team? How do you think about bringing AI to search?

• 1:58:51Speaker 07

  Yeah, so we work very closely with the Google DeepMind team, Demis, Cori, that whole group, and what we think about is we want to have frontier models right in search so you can really ask anything, and have the ability to use all of search's incredible knowledge, real-time information systems, and context of the web to help give people this incredible information, and that's really where the two come together.

• 1:59:12John Coogan?

  Yeah, there, there was this question, this like, you know, chatter in class being like, oh, well, Google's, you know, it's such a different paradigm, chat versus the search, ten blue links, but have you drawn on the fact that Google's search started with two modalities? The I'm feeling lucky button was a different way to interact with Google search, the ten blue links was one way. What are you, how are you thinking about how you like kind of level up or educate the consumer to use the, all the different tools, since now there's not just, you know, search results and AI overviews, but there's so many different things? How do you think about ramping those up?

• 1:59:53Speaker 07

  Yeah, so there's always been many ways to use search. Actually, Google Lens is a good example. You can take a picture of something, you can ask what is going on with this plant that seems to be dying, and you can get information from that right from the camera, and that happens in the app. So there's always been different ways that you could access and tap into the search knowledge base. But I think increasingly, it feels like you want to go to search, ask whatever you have in mind. You don't even want to think about where you're going to ask that question. And then if you have something where AI is really helpful, you get this little AI preview, it's starting to show up now around AI overviews. And if you click into that, you're in this AI-driven experience. And we've now, through a new project we launched called AI Mode, allow you to follow up, go deeper, and have a full generative end-to-end chat-like experience right within Google Search.

• 2:00:35John Coogan?

  Yeah. Walk me through the international expansion. I'd love to know if legal or engineering is more rate-limiting there. It feels like it's got to be incredibly complex to check all the boxes when you want to expand. You've obviously expanded really fast, so what's the secret to taking over the entire world so quickly?

• 2:00:57Speaker 07

  Well, our newest product, AI Mode, is the thing that lets you really ask anything within Google Search using frontier, state-of-the-art models. You know, we launched in the US and then quickly in India, a couple of countries, UK, over the summer, kind of May, June, July timeline. And then just a couple of months later now, we're at over 200 countries, 40 languages. We moved really fast to ship that. And so we're now basically everywhere, except for a couple of countries. And there's certainly a bunch of considerations, policy and infrastructure. Honestly, they both affect the timeline.

• 2:01:31John Coogan?

  Oh, yeah, because there's actually inference going on, so you need local compute, basically, more than you would.

• 2:01:36Speaker 07

  There's also, we want to make sure to do quality checks, because in every language, you have different permutations, or you have multilingual people moving between English and other languages. You just want to make sure everything is doing what you expect it to do. You know, this is also a multi-turn conversational experience, and when you evaluate it, you want to make sure that it's dialed before you go. And so each of those just takes time. I know everyone's always frustrated like, why can't I use it today? It's the main thing I see on X. But hopefully now almost everyone can.

• 2:02:01John Coogan?

  How are GPUs allocated at Google? You have TPUs, you have TPUs in the cloud, you're selling them now. Obviously, DeepMind wants so much for research.

• 2:02:11Jordi Hays?

  Every team member just gets a rack.

• 2:02:12John Coogan?

  Everyone gets one rack. You're split equally. But I imagine that, you know, is there a spreadsheet? Like, what's the process to actually to figure out where to allocate GPU or TPUs?

• 2:02:24Speaker 07

  Yeah, I mean, there's an allocation process. I mean, everyone needs TPUs. It's just compute is by far the most important thing in driving infrastructure right now. I mean, there's lots of needs, but they're important things. We want search. The search is one of the largest ways people interact with AI. So that's like a very important one. Obviously, we're doing frontier modeling work. We've got a bunch of things happening in cloud. So that's, there is a process by which you do those. It's funny, I did an event and a Google team actually gave me like an old Ironwood, like gen, prior gen, single TPU in this little case.

• 2:02:56John Coogan?

  That's cool.

• 2:02:56Speaker 07

  And I was joking, if somehow I could like crack it open and like refurb it and like get it up and running, I could somehow like improve my, improve my standing on the team. But I don't think it's gonna happen.

• 2:03:07John Coogan?

  Couple of flops.

• 2:03:08Jordi Hays?

  How often do you guys come back to Google's mission when, when thinking about product decisions? We've talked about this on the show before. There's always, you know, I'm sure you wake up every morning. There's a new headline. What is Google doing in AI? Why haven't they released this faster, et cetera, et cetera? But I, you know, we were never, we never really stressed about it too much because when you look back, I have AI overview here. I said, what is Google's mission? My AI overview says, Google's official mission is to organize the world's information and make it universally accessible and useful. And it feels like LLMs are just so aligned. It's the perfect technology to, to carry out the mission.

• 2:03:51Jordi Hays?

  And so it's like, relax, everyone. Think this is, this is like a natural evolution for the company.

• 2:03:59Speaker 07

  Yeah, I mean, we talk a lot internally, actually, about how the mission has never felt more relevant. And it is really incredible to work somewhere. I worked at Google in 2007 for a while, did some startups and worked in some other companies too. I'm back now. And it feels that same level of entrepreneurialism in 2007 where it's like you're building all these new things for the first time. Except you're kind of building them again because AI allows you to say, what does search look like if you could really ask literally any question and have created an AI? That's the most knowledgeable AI out there that could understand all of Google's information, the context of the web, and you could talk to it. And by the way, you could talk to it live, like we just announced Search Live that's available. So if you're driving, you could just talk to Google, literally like in your car. You could take a picture and have this multimodal conversation back and forth now.

• 2:04:43Speaker 07

  Like this is all stuff that talked about a long time ago, but was limited because of technology. So that is incredibly exciting. It's very motivating and I do feel like it's one of the reasons people on the team are fired up.

• 2:04:53John Coogan?

  How do you think, I mean, it's so interesting that as LLMs boomed, AI search overviews made a ton of sense, were baked in, adopted, loved. But now we're already in the next phase, which feels like agentic purchasing, agentic checkout. How do you think evolving, how do you think about evolving the product even further to go from knowledge retrieval to taking action?

• 2:05:17Speaker 07

  Yeah, we have a bunch actually active there and we recently launched in the US an agentic experience where you can book restaurants and local services through agentic. So it's actually really neat, like you through AI mode now. You can just have a conversation, hey, what's a good date night place? It'll do all the thing. It'll tap into the knowledge of Google. It'll look up Google Places. It'll do research. It'll do whatever. But then if you want to start a task, it'll also go bring back availability across talk and open table, like right in the experience. And you can just book it and it's awesome. I've been using that. It's just a small example of what's possible. You know, people come to Google not just for information, but to get things done. It just materializes itself as a query.

• 2:05:57Speaker 07

  But you're not like, I don't like want to just know restaurant reservation availability and like, oh, sweet. I'm glad to know there's a table available. I'm going to go back to my day. Like you're trying to do something. We think about that a lot. And that's just the, you know, the surface that there's so much people are trying to do, but they're just kind of getting started with those journeys on search. What could we do to really help you? Shopping's a big one. So we have, we just launched a new visual way to do AI, which is like is one of the first ways where AI can be helpful with inspirational tasks. So now AI mode, if you ask to design a bedroom or look up landscape lighting, it actually finds you beautiful inspirational imagery and products in a grid. You could click on it. You can imagine getting much more help finalizing those purchases, doing, you know, being reminded of price changes.

• 2:06:39Speaker 07

  And it's much more of this interactive version of search that can do things for you and you can, you can really connect with versus just a pure informational experience.

• 2:06:49John Coogan?

  Right now, my, my mental model for is like Google.com, the search bar, then AI mode almost as a vertical product like flights, like images, like shopping, where it's sort of a portal or sub-product that I get, you know, I, I go down a funnel and I wind up in. Do you see that holding? Or do you think that AI mode acts as a wrapper on top of all the different sub-search products?

• 2:07:22Speaker 07

  Yeah, I think what's going to happen is you have this AI mode, which is going to hopefully be this most knowledgeable AI possible. It knows everything in Google, billions of products, million, hundreds of millions of locations, all over the web, and it has access to all of it, knows how to use Google as a tool, and it's super powerful. But not necessarily the best thing for all things. Like if you just need a specific phone number, you probably get that in like 50 milliseconds right at the top of the page. You just want to know a sports score, what's, what's literally the sports score right now? Just works. You just, you know, you put it in Google. Or if you're just looking up a musician's name for the first time, you're trying to get a browser experience, like you actually want to kind of see images. You want to see what's going on on, what are people saying on X, which shows up in the search page? So I think what happens is you have this incredibly knowledgeable system

• 2:08:04Speaker 07

  that we feel like is designed for more complex tasks, more of this like, how do I do this? What's my advice for this? I'm doing this trip. I need this restaurant. I'm trying to buy some jeans. How do I get started with that? And that if you have knowledge baked into that, that's really powerful. But then people need, how do you, how do you bring that to people? And there's basically two ways. One is you just search and through AI overviews, we will show AI where we think it's useful. And for many queries, it's not useful actually, which is why it doesn't show up. The system learns that. But for these longer queries, we have a specific question, it typically shows up there. Then the other ways for power users, we feel like they kind of have this mental model of like, oh, like this, I'm doing this planning thing. Like, oh, I'm like, I'm really curious to know like, what a stock price difference between these three stocks are over some period of time.

• 2:08:48Speaker 07

  You wish you could just type that in natural language and have the thing generate a chart and look at, use Google Finance as a tool, which it will do. And for that, you can go right to AI mode. So if you can do that through the mode, you can do it on mobile through those direct kind of buttons to go right to AI mode. You can go through Chrome now. We announced like a way to just type and go right to the AI mode in Chrome. And you could also just go to google.com/ai now, which is kind of fun.

• 2:09:12Jordi Hays?

  What anomalies are you seeing? Have you seen any of these screenshots of of Google trend data? People are posting, you know, people forever have been posting screenshots of effectively search data and using them to infer what's happening in in the world, right? And so over the past few months, we've seen people posting search queries like help with my mortgage. And it's just like a crazy ramp up into the right. My my intuition is that it's potentially a bunch of different keywords are seeing these crazy ramps

• 2:09:55Jordi Hays?

  because there's potentially agents sort of like leveraging Google Search to drive a higher volume of searches on potentially a search that's happening, maybe in an LLM. Have you seen any anomalies there? Is that something you're aware of?

• 2:10:14Speaker 07

  Haven't personally seen any anomalies there. I don't, I haven't really heard of that before. So wouldn't look, I wouldn't buy too much into that. We do have protections for those kinds of things. I think in general, what we're seeing is people who are using Google very differently and at a very fast growth. So people are asking very specific questions of Google. They're they're using Google Lens and asking multimodal questions. They're asking follow ups. I mean, those are kinds of things that we're just seeing, we're seeing in such a broad way. I think that's the thing that we mostly focus on. But yeah, I can't speak more to some of the trends things that you're mentioning. Yeah.

• 2:10:51John Coogan?

  How do you think about advice for brands? I've run brands and grinded my way up the SEO rankings. I never did a ton of optimization. Most of my strategy was just try and make something eventually that people talk about and it gets written about. And those websites have ranking power and then you kind of rise to the top of that keyword. Is any of that changing in terms of in the AI shift? What advice are you giving to brands that want to perform on Google these days organically?

• 2:11:28Speaker 07

  Yeah. Well, what's really interesting is I think the core Google search ranking is more relevant than ever. Because it turns out that one of the best things that every AI model does now is they kind of like search the web. It's like, I don't know, like, what are you trying to do? Oh, I don't know, I'm trying to figure out if like I should go to this hotel. All right, well, like it's not in parametric knowledge. Do you like know the rates of those hotels? Like, okay, I'm going to search the web, right? And even AI mode is special in that we're Google. And so it uses Google really effectively and it creates these query fan outs, it does dozens of queries. But effectively is Googling stuff, right? And everyone's Googling stuff all the time. So for a given question, what are the things that show up as highly relevant to a given question?

• 2:12:11Speaker 07

  Those end up getting absorbed into the context window and have a high probability of being displayed to the user. And so if you are just thinking, how do I build great original content that's trusted and authoritative for this kind of query? Turns out that's still going to likely be very valuable. And you can go read the Google guidelines on content and human radar guidelines. I think they're super interesting. There's lots of detail in there on how Google evaluates trustful, high quality content and scoring systems that are used. Turns out that's a really good investment because every other system is kind of proxying for the info that's most useful for a question.

• 2:12:48John Coogan?

  Yeah.

• 2:12:49Speaker 07

  So that's my main advice is to kind of like dig in more on understanding how those systems work because it's largely going to apply later.

• 2:12:54John Coogan?

  Yeah.

• 2:12:54Speaker 07

  And then the second one is what are people using AI for? Those are the growing kind of needs.

• 2:12:59John Coogan?

  Oh, sure, sure.

• 2:13:00Speaker 07

  And there's a disproportionate amount of use case in different types of domains now with AI. Because it allows complex needs and it allows for things like advice. It allows for things like really nuanced troubleshooting with stuff. It allows for these emotional needs to be satisfied differently in mental health.

• 2:13:16John Coogan?

  Yep.

• 2:13:16Speaker 07

  So those are areas that are probably growing markets of use cases and I would be I would be a student of those as well.

• 2:13:23John Coogan?

  What about, sorry, can I one more on that? So what about content that was previously buried to Google? That is now available for search rankings because of artificial intelligence. I'm thinking about like literally this show. It will be a three hour video on YouTube that, you know, a buried mention previously probably wouldn't be perfectly translated indexed, et cetera, et cetera. But I would imagine that the the strength of like video content and audio content gets relatively better over time in the AI era. I mean, honestly, you guys have been doing this for probably a decade, but take me through a little bit of that. Is that is that a reasonable thesis?

• 2:14:05Speaker 07

  Actually, we are, it is a reasonable thesis. We have been seeing an increased diversity of the kinds of pages and sites that show up within AI.

• 2:14:11John Coogan?

  Yeah.

• 2:14:11Speaker 07

  Because people are asking these nuanced questions. A lot of times there isn't even like a single webpage that has this information.

• 2:14:16John Coogan?

  Yep.

• 2:14:16Speaker 07

  But if someone, I don't know, sometime in the future, this this video gets segmented and scanned and understood by Google. And someone asks for like, I don't know, an interesting conversation on Google's AI journey, recreating search in the AI era.

• 2:14:30John Coogan?

  Oh, sure, sure.

• 2:14:30Speaker 07

  Maybe it's like, here's a cool conversation you could check out and this this like clip will show up now.

• 2:14:35John Coogan?

  Yep.

• 2:14:35Speaker 07

  In a way that would be very difficult for that to happen unless you search for like TVPN, like interview of whatever.

• 2:14:43John Coogan?

  Totally, totally.

• 2:14:43Speaker 07

  Which was like very specific keyword.

• 2:14:45John Coogan?

  Yeah.

• 2:14:45Speaker 07

  Based on.

• 2:14:46John Coogan?

  Or or we'd have to go manually create a transcript and then get that into like the text SEO world. So yeah, very different era. Sorry.

• 2:14:54Jordi Hays?

  What are what are the plans around giving, if there are any, giving publishers control over whether or not their content is used in various AI functionality?

• 2:15:06Speaker 07

  Yeah, we have a bunch of publisher controls we what we have. So there's an over there's an overall opt out and training side. You know, in search, you can opt out of crawling. You can opt out of this other thing called snippets where you can you can show up in Google, but you won't show up in these rich. These rich experiences if you want. And so there's a bunch of things that, you know, publishers can do and can look at there. But, you know, I think ultimately the belief I have is that to the prior conversation. You know, AI should be this massive discovery engine over time. Because if you think about it, these complex needs, we're getting growth like we're seeing 10% growth, for instance, in large markets like like India and the US for these really specific questions. Which at Google scale is like enormous, enormous number.

• 2:15:51Speaker 07

  Where you got if you have a really specific question, people are doing that more and more and more and more because you can get AI to go deeper. Multimodal, right? You're asking, taking a photo of something and you want to shop it. Seeing 70% in year over year increases in those kinds of questions. And these are billions and billions of queries like so these are huge numbers.

• 2:16:11John Coogan?

  Wait, how many queries? Billion?

• 2:16:13Speaker 07

  Billions.

• 2:16:19John Coogan?

  The sneaky. Sorry.

• 2:16:22Speaker 07

  That was totally worth it. I'm glad you did that. So like, these are big numbers and each of those generate AI experiences with links to go deeper on stuff. Every single one of them. And so theoretically, you should have this like unique opportunity to say, oh, did you take a picture of your bookshelf? What book should I read? Oh, well, here are cool reviews of other books that are like things you've liked. It's like, I could never Google that before. And so theoretically, you should have. Because it's an expansionary moment. We're seeing that this is an expansion more than anything. It's like the old, like the way people Google, they're Googling. And they're using it in all of these new ways. And so hopefully, over the long term, that's what that produces growth.

• 2:17:03Jordi Hays?

  I have a lot more questions, but

• 2:17:04John Coogan?

  We'll have to follow up. Yeah, we could go way deeper here. I would love to even even just dig into how TBPN shows up on Google. It's such a fascinating content because we create so much content all over the web. But thank you so much for taking the time to hop on the show. Thanks for having me. And congratulations on the progress. We'll talk to you soon. Thanks so much.

• 2:17:22Jordi Hays?

  Cheers, Rob.

• 2:17:22John Coogan?

  Have a great rest of your day. Before we bring in our next guest, let me tell you about fin.ai, the number one AI agent for customer service, number one in performance benchmarks, number one in competitive bake offs, number one ranking on G2. And we have Morgan Housel in the restream waiting room. We're going to bring him into the TBPN Ultra Dome. We're very excited to catch up with you again. One of our earliest and just most enjoyable guests. I had such a fun

• 2:17:48Jordi Hays?

  My favorite conversations ever across 1,000 plus interviews.

• 2:17:52John Coogan?

  Remarkable. So thank you so much for taking the time to hop on the show.

• 2:17:55Jordi Hays?

  Especially in a huge, huge week.

• 2:17:56John Coogan?

  Yes.

• 2:17:56Jordi Hays?

  Congratulations on the launch.

• 2:17:59Morgan Housel?

  Big shoes to fill. Thanks, guys. Nice to see you.

• 2:18:02John Coogan?

  Yeah, give us the give us the updates, set the table. What's going on this week?

• 2:18:06Jordi Hays?

  Get that gong ready.

• 2:18:08John Coogan?

  Get this gong.

• 2:18:09Morgan Housel?

  I, yeah, so my my third book, The Art of Spending Money, came out this week on Tuesday. You know, it's a tough thing with, there it is. Thank you. Thank you. It's a weird. It's a weird thing with books. I think I feel like it's almost like a startup where I've been a writer for 20 years, but you get like three shots on goal when when a book comes out. And when when when you're writing a blog post,

• 2:18:28John Coogan?

  Yeah.

• 2:18:29Morgan Housel?

  if it sucks, and at times they do, there's always next week.

• 2:18:31John Coogan?

  Yeah.

• 2:18:32Morgan Housel?

  It's not not that big of a deal.

• 2:18:33John Coogan?

  Yeah.

• 2:18:33Morgan Housel?

  When when when you write a book, you really got to be like, this is this is it. You really got to put your best foot forward. So there's it's always a stressful thing to go through.

• 2:18:40John Coogan?

  Was the process different for this book from the other ones? Do you you've heard from authors who like go lock themselves in a cabin? Like, what's your process like? And has it changed?

• 2:18:49Morgan Housel?

  It's usually it's usually roughly this. It's about a year of very informal noodling, where it's like, I'll be going for a walk and be like, oh, that would be a cool chapter, and I could use this story. It's a year of that, like, like, just just no effort. And then three months of part time writing and three months of full time writing. During the last two weeks of the full time writing, the world does not exist outside of my keyboard. That's usually how it works.

• 2:19:11John Coogan?

  Yeah. And are you like combing? Like, like, front to back of the manuscript, like, every day? Are you focused on, like, a single chapter for a full day? Like, how do you actually, like, chop through, like, what becomes a full book?

• 2:19:26Morgan Housel?

  It's usually, it's usually the latter. There's not much going through everything end to end until the very, very end of the process. So it's usually just focusing on one chapter. And very roughly, this is not a hard and fast rule, but when I was writing it, it was like, I want to focus on one chapter per week. And normally, I'd say, I'd say if there's one thing that I've gotten a little bit better at over the years, just a little bit better at, not perfect by any means, is that I think my first draft is closer to my last draft than it used to be. Not necessarily because I'm a better writer, but because I'm better at knowing what writing is not going to work and then stopping it very quickly. And so I think when I, when I go through a chapter, by the end of it, I can go back and scan it and be like, oh, this is pretty good. I'm going to set that aside. And then when I do my little self-edit at the end, that's, that's usually where, where, where most of the work happens.

• 2:20:08Jordi Hays?

  So it's much easier to write a book now that, that we have AI? Is it?

• 2:20:13John Coogan?

  Yeah, what was your prompt?

• 2:20:14Jordi Hays?

  I'm kidding, I'm kidding.

• 2:20:15Morgan Housel?

  Yeah, no, but here's, here's the thing.

• 2:20:16John Coogan?

  Share the prompt.

• 2:20:17Morgan Housel?

  I've, I've, I've talked to.

• 2:20:19John Coogan?

  Just share the prompt. Just give me the prompt.

• 2:20:21Jordi Hays?

  Yeah, come on. You scared to share your prompt?

• 2:20:24John Coogan?

  Come on, just give me the.

• 2:20:25Morgan Housel?

  I was talking to a guy the other day who just finished his manuscript. And he said, without ChatGPT, he would not have been able to write the book. And I'm like, I love hearing that. I love that if we can have a tool now, we're going to have more books being published. Because I think there are people who have very good ideas, who have a story to tell, but are too intimidating to write a $50,000, a $50,000 word manuscript, which is not an easy thing to do. So if we can just get more people out there because they have ChatGPT to get them through writer's block, awesome, I think it's wonderful. I'm still, I'm still old school because I've been doing it for long enough that I want to write every single one of my words, for better or worse, even if I could have done a better job with some LLM, like, getting me through those blocks, I'm still going to try to power it through myself.

• 2:21:05Jordi Hays?

  I'm sure you saw David Simon, the creator of The Wire, there was a screenshot from an interview. Someone asked him, okay, you've spent your career creating television without AI, and I could imagine today you thinking, boy, I wish I had that tool to solve those thorny problems. David Simon says, what? And the interviewer says, we're saying, dot, dot, dot. David Simon goes, you imagine that? And the interviewer goes, boy, if, if that had existed, it would have screwed me over. Simon says, I don't think AI can remotely challenge what writers do at a fundamentally creative level. And then he says, I'd rather put a gun in my mouth.

• 2:21:41Morgan Housel?

  There you go. Yeah, just get right to it. Here's what I think. I've always thought that writer's block is actually a symptom of your idea sucks.

• 2:21:49John Coogan?

  Sure.

• 2:21:49Morgan Housel?

  And it's not working. And the reason you can't find the words to get through is because you know in your soul that this idea is not working.

• 2:21:56Jordi Hays?

  Well, yeah, you fundamentally don't, you don't care about what you're writing about, right? And I think as like, when I think about the points where I've been writing that I cannot get, get myself moving. It's like writing that essay. I had to take a class in college about dinosaurs.

• 2:22:11John Coogan?

  Yeah.

• 2:22:11Jordi Hays?

  I had to write a paper about dinosaurs.

• 2:22:13John Coogan?

  You studied dinosaurs in college?

• 2:22:15Jordi Hays?

  It was an actual class that fulfilled some sort of like, some sort of requirement.

• 2:22:19John Coogan?

  And now your son is obsessed with dinosaurs. Apple doesn't fall far from the tree. That's incredible.

• 2:22:24Jordi Hays?

  No, but you're writing, you're writing about a topic that you don't care about. The words do not come easily. You're not, if you don't care, of course.

• 2:22:31John Coogan?

  Jordy's secretly a PhD paleontologist. I'm finding this out for the first time. Sorry.

• 2:22:36Morgan Housel?

  No, I would say the, the flip side of that is when you know you have a good idea.

• 2:22:39John Coogan?

  Yeah.

• 2:22:40Morgan Housel?

  And it's a right idea, the words just tend to fall right out and, and it's no problem to get them on the paper.

• 2:22:45John Coogan?

  Yeah.

• 2:22:45Morgan Housel?

  And so I bring that up because I think if you have writer's block and you're like, oh, let me use chat GPT to get me through it. It will find, it will find a road through and it'll help you onto the next paragraph. But then you're probably ignoring the signals of your idea not working. And you're much more likely to get to the bottom and finish the essay or whatever it is, even if your idea sucks and it didn't work.

• 2:23:04John Coogan?

  Yeah, I've noticed.

• 2:23:05Jordi Hays?

  Writer's block is just this divine presence that's telling you, you don't need to make this.

• 2:23:10John Coogan?

  Yeah, yeah.

• 2:23:12Jordi Hays?

  It's not needed. It's not needed by the world and you can force through it.

• 2:23:15John Coogan?

  Yeah.

• 2:23:16Jordi Hays?

  What did you actually, what did you actually do?

• 2:23:17John Coogan?

  I've been writing a.

• 2:23:18Morgan Housel?

  I think there's a.

• 2:23:19John Coogan?

  Oh, sorry.

• 2:23:20Morgan Housel?

  Oh, sorry. I was gonna say, I think there's a similar analogy with music where I've heard from many musicians. I am not one of them, of course, that their best songs were the easiest to write. And like the tune, the lyrics just flowed right out. And if they are struggling to figure this out, figure out the tune, figure out the lyrics, it's probably because the song's not working. It's usually the same.

• 2:23:38John Coogan?

  Yeah, I've been writing a daily newsletter for this and to prep the show, about 500 words. And I've noticed that I haven't been using AI for anything other than knowledge retrieval. If I have to look up what's the market cap of this company, of course, I go to ChatGPT. And then I also noticed that a lot of times I'm kind of just reiterating like a discussion that I had with Jordy earlier in the morning. And so I'll use dictation sometimes to just get some of the words down and then I'll kind of write from there. But I'm never crafting a prompt for what I'm writing, which I think is just interesting because the models have gotten so much better. And yet there's still something about like, I gotta come up with the own idea or like the seed of the debate.

• 2:24:16Jordi Hays?

  Yeah.

• 2:24:16John Coogan?

  What do you think?

• 2:24:17Morgan Housel?

  Yeah. It's also very difficult to really make it right in your voice.

• 2:24:20John Coogan?

  Yeah.

• 2:24:20Morgan Housel?

  So you can prompt it and say, write it like Jordy, like do it exactly. But it's not. It's just, it hasn't gotten there yet.

• 2:24:26Jordi Hays?

  I feel super grateful that it's still easy to clock AI-generated text because if I'm scrolling on social media, maybe I see a post and then I'm in the comments like interested to see what other people think about it. And I can just easily clock, okay, AI-generated, I'm just gonna skip it because it's probably just like summarizing it and asking a question. But I worry we'll lose that ability to filter like in the next iteration of the models.

• 2:24:53John Coogan?

  It's definitely made me a sloppier writer and I'm like deliberately not trying to craft the perfect sentence structure constantly because I feel like the rigidity is just an extra layer that I impose on myself. And if I take that away, it just kind of feels more stream of consciousness and is just actually a better product. I don't know.

• 2:25:14Jordi Hays?

  Shifting gears.

• 2:25:15John Coogan?

  Yeah, yeah. Sorry.

• 2:25:17Morgan Housel?

  Go ahead.

• 2:25:17Jordi Hays?

  I was gonna say shifting gears to the book.

• 2:25:19John Coogan?

  Yeah, yeah. I want to hear the thesis and.

• 2:25:21Jordi Hays?

  Do you think, well, maybe a kickoff question. Do you think tech has figured out how to spend money? Because there's always this, there's always this critique that tech people don't know how to spend money. And I think part of that was the tech uniform was not maybe like the, you know, the West Coast tech uniform, jeans and a T-shirt and sneakers. People sort of came. You know, participated in this industry in a very sort of plain way.

• 2:25:50John Coogan?

  Patagonia jackets like 200 bucks. Okay. It's reasonable.

• 2:25:53Morgan Housel?

  Well, let's, let's compare tech spenders to Wall Street spenders. The major difference is most tech wealth is not liquid and Wall Street was paid in cash every year.

• 2:26:02John Coogan?

  Sure.

• 2:26:03Morgan Housel?

  So, so I mean, that's, that's, that's one of the biggest, like tech wealth is a lot of paper wealth relative to Wall Street wealth. That was so much more liquid. You can go buy the Rolex. You go buy the house in the Hamptons. Cash. And so I think that was, that was, that was probably, that was probably part of it, but.

• 2:26:15Jordi Hays?

  Yeah, there's a culture of like buying the, the, the watch based on the, you know, a banker buying, deciding what watch to buy based on the size of their Q4 bonus.

• 2:26:25John Coogan?

  Yeah.

• 2:26:26Jordi Hays?

  Right. It's just like, it's going to be some percentage of that. So the watch I get will, you know, maybe it'll be a Submariner, maybe it'll be a Daytona. I don't know yet.

• 2:26:34Morgan Housel?

  Yeah, I, I do think there's something to be said that on Wall Street, your value and your success was, was how much money you made. And in tech, it is much closer to, towards the product that you built and the intelligence that you have and whatnot. And, and so there is less desire to show off wealth in tech because that's not what people get valued for. And I, I can't think of hardly anyone in Wall Street outside of maybe Warren Buffett, who is very well respected and admired and wears a T-shirt and lives in a modest house. It doesn't happen, but you can, but, but you can name a hundred of those people in tech who do that because they're valued for their ideas, not just their annual bonus.

• 2:27:10John Coogan?

  On that illiquidity question, Paul Graham had a take recently that a lot of, a lot of tech people, they're locked up. And then by the time they can afford art, they struggle to like get up to speed on the art world or something. Does that resonate with you at, at all? Just the fact that if you come on Wall Street and you can afford like the, the Rolex and then the AP and then the FPJ or eventually like it just ladders you up the luxury ladder easier than just having all this money and being like, well, do I really want to jump to the top of this luxury ladder that just put the hedonic treadmill on 15 miles an hour on the first run?

• 2:27:46Morgan Housel?

  Yeah, I think it's very difficult for people to know what they want.

• 2:27:48Jordi Hays?

  Yeah.

• 2:27:49Morgan Housel?

  They're very good at knowing what they need and they're very good at knowing what they don't want. Knowing what you want is actually very difficult. And, and part of the reason is because what I want might be totally different from what you want. People have completely different needs and whatnot. I think if you are thrust into wealth very quickly, there is, there is knee jerk reactions of what you think you should want. I want a mansion, I want a fast car, I want art, I want the plane, whatever it might be. And sometimes it's true and sometimes it's, it's very not. And I think if you, I think if, if I can predict all of your spending habits based off of your income, there's a very good chance that you're not doing it right. Because there's a very good chance that you are just buying and spending your money in the way that, that society told you to do.

• 2:28:25Jordi Hays?

  Sure.

• 2:28:26Morgan Housel?

  If you earn this much money and your net worth is this, you should have this house and this car and this art and travel this way and whatever it might be. And, and most of the time it just doesn't work that way. People have very unique spending preferences. The people who I've seen, the wealthy people who I've seen, who've done the best, have a lot of really extreme quirks in their spending. Where they spend, they're very wealthy, but they spend no money on, on cars or no money on travel, no money on food, whatever. It, it's very unique to them, whatever it might be. You're, I'm, I'm not a wine person in, in the slightest. I'm not, I'm not even necessarily a travel person. But a lot of people would be the exact opposite and that's fine. So I think it takes a lot of looking in the mirror, so to speak, to figure out who you are and to go down the path of trying to figure out what you want, which is not easy.

• 2:29:08Jordi Hays?

  I, I feel on a personal level that my relationship with money has been very distorted because the business that I started building in college ended up, you know, as cash flowed every month for my entire adult life, which has been a tremendous benefit, but it's also completely, it's just distorted the way that while in tech, the primary way you generate wealth is you get a measly salary for a long time and then you get a whole lot of money at once. Or maybe you sell some secondary along the way and get some liquidity. But it's been this weird dynamic where it's like, I remember. I wear a lot of t-shirts.

• 2:29:49Jordi Hays?

  Well, so, so the first time I took a meaningful profit share from, from my company, I bought a nine, I took the entire amount and I bought a 9/11 because I was just like, well, I'm gonna get the same amount next month and then I'm gonna have this 9/11 for a long time. And so I had to kind of like, I've, it's taken, it took me a few years to kind of like, learn. Such a fascinating psychology. Learn that.

• 2:30:12Jordi Hays?

  Lesson, whereas I wouldn't think like, oh, that's a lot of money. I would just think of money in increments of basically months of cash flow.

• 2:30:20Morgan Housel?

  Yeah, yeah. I think, I think there's, there's good mental accounting there of like, rather than thinking about the nine 11 costing 120 grand, you think of it as one month. It cost me one month or something like that. I think that's, that's actually a smart way to do it.

• 2:30:31Jordi Hays?

  And even, even I value a month even more now, even though monthly income has like increased throughout my adult life because like I'm like a month, as a kid, you're like, I got all the time in the world. Now I'm turning 30 at the end of this year. I'm like, oh, time is a real thing. It goes by. You don't, it's not, you don't have a infinite supply.

• 2:30:50Morgan Housel?

  Do people come to How do you, how do you think that makes me feel when you say times, times like running out because you're turning 30? How does it make everybody else feel? I would, I would kill almost 30.

• 2:30:59Jordi Hays?

  Well, are you, are you, are you, are you spending a lot of money on your health because you look younger than the last time you came on the show?

• 2:31:06Morgan Housel?

  I mean, maybe I just hadn't showered last time I was on, on, on, on, on the show. I don't know. But, um, no, I, I, I do think there's, there is a real thing where there, it's a fine balance between spend for today, live for today and save for tomorrow. Both of them are really great ideas and it's never as simple as YOLO or, or, you know, save and, and, and, and save for the future. It, it always just comes down to what are you going to regret? What are you most likely to regret at some point in your future? And, and it goes both ways for people. You could easily imagine looking at yourself 20 years from now and regretting the trips you didn't take, the nine 11 you didn't buy, the house you didn't buy. You can so easily imagine too, looking back at some point in your life when you're tired and your career's not working out, whatever it might be, and saying, I

• 2:31:50Morgan Housel?

  am so grateful that I saved the way that I did. It gave me a sense of independence that I value more than anything right now.

• 2:31:56Jordi Hays?

  What are your quirks?

• 2:31:57Morgan Housel?

  Take on the, oh, sorry.

• 2:32:00Jordi Hays?

  You, you said, you said a lot of, a lot of, uh, successful people have, you know, quirks in their spending. Do you, I imagine you understand your own at this point.

• 2:32:09Morgan Housel?

  Yeah. I mean, this is, this is a trivial and small thing, but I love this heuristic by Rob Henderson. He's a great, uh, great academic. And he says, uh, rich people food looks better than it tastes and poor people food tastes better than it looks. And on that spectrum, I love, I love cheap food. I love Taco Bell. I love Jimmy John's. I can't get enough of it. And I've had, I've had some very expensive meals, whatnot, and I, I have enjoyed them marginally at best. The best meals I've ever had tend to cost the cheapest. And so that it's such a trivial thing, but never would I want to be like, oh, I can afford to eat this way. So let me abandon all the food that I love and go eat some food that is subpar because I'm supposed to like this stuff better when I don't.

• 2:32:51Jordi Hays?

  Yeah. Did you, uh, did you cover private aviation at all in the book? We had a funny conversation with a friend this morning. He basically said, I'm, my house is going to be paid off by the end of this year. And after that, I'm giving all my money to NetJets.

• 2:33:06Jordi Hays?

  He's not getting a second home.

• 2:33:07Morgan Housel?

  That's great. I love it.

• 2:33:08Jordi Hays?

  Which is a quirk in itself.

• 2:33:09Jordi Hays?

  It's very quirky.

• 2:33:10Jordi Hays?

  He finds, uh, commercial aviation to be very dehumanizing.

• 2:33:13Jordi Hays?

  Yeah.

• 2:33:15Morgan Housel?

  I would, I would, if, if you had a choice between two houses and commercial or one house and NetJets, a thousand times out of a thousand, I would do the latter.

• 2:33:22Jordi Hays?

  Yeah.

• 2:33:22Morgan Housel?

  Absolutely.

• 2:33:23Jordi Hays?

  Totally agree.

• 2:33:24Morgan Housel?

  Two houses are a giant pain in the ass anyways. But I, I, to answer your question, I do cover private aviation in that because I made this, this observation that like having a, a, a private plane is like the ultimate luxury. If you talk to wealthy people, they're like, that's the only thing that you get pleasure out. That the house, the yacht, the car doesn't do you much. The plane will change your life forever. And I think part of the reason we love it so much is because the vast majority of people in that situation remember what it was like to fly commercial. Now here's the, the observation is nobody thinks it is an ultimate luxury to have a private car, but virtually all of us do. And the reason we don't think about it is because we've always had private cars. And so there's nothing to compare it against. Now you, you could imagine that if you spent your entire life on a train, on a public train or a public bus, and then you got a

• 2:34:09Morgan Housel?

  quote unquote, private car, it would feel like the ultimate luxury, but we have nothing to compare it to.

• 2:34:14Jordi Hays?

  Well, another, another example of-

• 2:34:15Morgan Housel?

  So much of their lore.

• 2:34:16Jordi Hays?

  Yeah. If you're, if, if you, uh, if someone's lucky enough to be born into a family that , uh, only flies private. Can you imagine their experience of flying? They're like, I don't want to fly. It's gonna... You could imagine they don't even have a positive feeling associated with flying private because it's all they know. Because if you actually, you know, it's like, okay, I'm gonna be up in the air and like the bathroom's small and I don't have that much... There's not that much. There's some food, but it's not my favorite food.

• 2:34:44John Coogan?

  Can't get Taco Bell delivered.

• 2:34:45Jordi Hays?

  Yeah, exactly.

• 2:34:46Morgan Housel?

  Exactly, right, right.

• 2:34:48John Coogan?

  Do you think people... Oh, I want to hear your reaction to Jordy's take that buying physical things is actually an experience?

• 2:34:58Jordi Hays?

  So I grew up...

• 2:34:59John Coogan?

  False dichotomy between I just want to spend money on experiences.

• 2:35:02Jordi Hays?

  Yeah, so I, growing up as a kid, I always, I always loved brands and I would get obsessed with different things, whether it was mountain biking or snowboarding or surfing or anything. And I would get fixated and obsessed with like a certain kind of surfboard, right? As a kid, I wanted to surf mayhems, but I couldn't really afford them. They were super expensive. And I worked at a surf shop. I could get these other boards for a lot cheaper, so I'd always get them. Now, as an adult, I only surf mayhems. And I always, we grew up in this era, our generation was told constantly, don't spend money on things, spend money on experiences.

• 2:35:43Jordi Hays?

  I never understood that because in my view, it was like when I put on a jacket that I love and it's a thing and I wear it for the day, it's an incredible experience. Or if I take this surfboard, that's incredible, and I go out surfing with it, that's an experience in itself. So what do you, what's the verdict on things? Can things make you happy? I've found that things have, have and continue to make me happy in my life.

• 2:36:09Morgan Housel?

  Yeah, totally. Because I think, I think what you broke down there is if nobody were watching and nobody could see your surfboard, nobody could see your car, you would still buy them. And therefore, you're doing it for something that actually makes you happy rather than trying to signal for the attention of strangers. If you use like a fancy sports car, for example, there are some people who own Ferraris because they love the artistic engineering of it. They love the line, they love the beauty of it, they love the growl, they love the engine, they work on it themselves, they wax it themselves. They love the art of owning it. They love the acceleration, they love driving it. That's one group. Another group just wants to get the attention of strangers.

• 2:36:43John Coogan?

  Yeah.

• 2:36:43Morgan Housel?

  And they just rip it down the road, just trying to turn as many heads as they can. The former is gonna get way more happiness out of it than anyone else because they would still do it if nobody was watching. I think that's the framework is like if if nobody was watching how you lived, what would you spend your money on? And as you just described it, I know you would still buy that surfboard. And so it's it's it's the right thing to do. I think the stuff versus experience tends to go astray too, because particularly in the social media world, a lot of experiences that we want to spend money on are literally just to impress other people. It's where should we go on summer vacation that's going to generate the best Instagram pic?

• 2:37:18Jordi Hays?

  This is this is John's thesis on Europe. He's like, I don't need to go to Europe. We have lakes here. We have oceans here. We have mountains here. Why would I? Why would I leave the the great United States?

• 2:37:29Morgan Housel?

  You know what? My example of this is Bali. I don't know if you've ever been to Bali?

• 2:37:33Jordi Hays?

  It's a dump.

• 2:37:35Morgan Housel?

  Thank you. Thank you. My, my, my wife and I took our honeymoon to Bali and it's a dump.

• 2:37:42Jordi Hays?

  So so I went there on a on a on multiple surf trips. And I only cared about the waves. But the funny thing is people go out there on surf trips and like, the actual best surfing in Indonesia is really not in Bali. There's a handful of solid waves. The downside is there's actual trash in the water. You were just swimming and it's like supposed like idyllic reef break and you're just swimming through plastic bags. It's just absolutely disgusting on a half the island. The water is just like brown and dirty.

• 2:38:13John Coogan?

  And people surf in America, too.

• 2:38:15Jordi Hays?

  Yeah. And it's like, you want to you want to say that you want to take the picture and say, I'm I look, look at me. I'm in Bali in my trash water.

• 2:38:21Morgan Housel?

  I think that's it. I think that's no, I think I think Bali becomes a popular tourist destination because people love to say, I went to Bali and post that on social media. The whole time I was there, my wife and I kept saying, we could have flown to Maui, which is a five hour flight. Instead, we flew 20 hours to Bali.

• 2:38:36John Coogan?

  Yeah.

• 2:38:37Morgan Housel?

  And it's 97% worse.

• 2:38:38John Coogan?

  Yeah.

• 2:38:39Morgan Housel?

  And like, but I I think honestly, we were attracted to it back in the day before we knew better, because it sounded like a cool thing to do. Like, oh, we get to tell our friends we're going to Bali. We didn't know anything else other than it was a cool, it sounded like a cool thing to do.

• 2:38:51Jordi Hays?

  I don't want to. I don't want to. I don't want to say too dunk too hard on on Bali. Part of why it's not as great as the hype is that there's too many people there. So the hype sort of like created the problem. I think it is, you know, probably is as nice as Maui, just just physically, but the challenge is.

• 2:39:12Jordi Hays?

  Again, the infrastructure, the, the traffic is, uh, number of times I've almost died on a scooter in Bali too.

• 2:39:19John Coogan?

  Oh, yeah.

• 2:39:19Jordi Hays?

  I'm surprised I'm here on this podcast.

• 2:39:21John Coogan?

  Safety is real.

• 2:39:22Morgan Housel?

  Right. And so then it's like, if, if nobody could, if nobody got to hear where you're going on vacation, you can't post it and you can't tell anyone else.

• 2:39:29John Coogan?

  Yes.

• 2:39:29Morgan Housel?

  Never would I want to go to Maui. I'd be like, ah, let's just go to Santa Barbara. Or let's go to Maui or something like that. It's so much better and easier.

• 2:39:36John Coogan?

  Yeah.

• 2:39:37Jordi Hays?

  Totally.

• 2:39:37John Coogan?

  Uh, I want to talk about like the, the, I mean, maybe the frame is like, do people ask you more questions about? Or how do you see the job to be done by the book? Is it more about, how, is it more about money or just happiness?

• 2:39:52Morgan Housel?

  It's definitely more about happiness. And one of the big points in the book is there is no formula for how to do this. And so that's why when you have a formula like spend money on experiences, not stuff, it tends not to work because I'm different than you are. And, and people from different generations, different countries, different backgrounds totally want different things. And I think it is immature to say that because I like spending my money on this, you should too. Or because I don't value this, you shouldn't either. It's not, but it's, it's an innocent mistake to make. And a lot of people make it in finance. The assumption that there is a right answer to earning, saving, spending, investing, when it gets a very individualistic endeavor. And so a lot of this, when the, the question you asked, like, do people ask me for advice on this? The advice I have, and people don't like to hear this, is like, you need to figure it out for yourself.

• 2:40:37Morgan Housel?

  And so the book is about the psychology of envy and contentment and social aspiration, which tend to be universal, but there's nothing in this book that says you should spend your money like this. And so it's not called the science of spending money because I don't think that exists at all.

• 2:40:52John Coogan?

  Yeah.

• 2:40:53Jordi Hays?

  What about, uh, what, what do you, what kind of, uh, things that you can spend money on have the worst value? Because when I talk about, uh, when you, when you look at, uh, luxuries, like maybe staying at an Aman property. Aman is maybe 10 times as expensive as like the average Four Seasons. But I think it's, it's probably like five times better, in my opinion.

• 2:41:17Morgan Housel?

  Yeah.

• 2:41:18Jordi Hays?

  So, so it's not, it's not, it's not like a perfect trade, but, but it's at least, if you only have a limited amount of vacation time a year and you want to have the best possible experience, I think it's a, it's a trade worth take, you know, a trade worth making. But where, where do you think, um, maybe is on the opposite side of that? Things that are 10 times, uh, do you think, do you think it's, you, you mentioned food. Is there anything else?

• 2:41:42Morgan Housel?

  I'll tell you one like little spending quirk that I have. This is slightly off topic, but I think it's when I grew up, I was a, I was a ski racer and I always felt that everyone else in my team had better gear than I did. They had, they had, they had nicer skis, they had a nicer jacket, they had, they had all of that and it drove me crazy. And so when my son, he's nine now, when he started skiing, to kind of make up for the, the hole in my soul that I had when I was a kid, I was like, I'm gonna buy you the best of everything. You're gonna get, you're gonna get the nicest skis, the nicest everything. And the, the quirk is, he could care less. He could not care less about any of that, about having the nicest stuff. And so that would too, was like a realization of like, that would have meant more to me than anything that I could have ever had and he could not care less because everyone has their little spending quirks about them.

• 2:42:27John Coogan?

  Totally. Last question from me. I, obviously we're here, I want to celebrate the book, I want to promote this book, but I'd love to know about another book that you think serves as just something you enjoy, something that you, an author that you respect, maybe someone from the 20th century or 21st century author, someone who you've pulled influence from or just have respect, or just a book that you keep coming back to?

• 2:42:56Morgan Housel?

  Yeah, I mean, two, two nonfiction authors that I think are the greatest of modern times, they're both still living, still writing. One is Eric Larson and the other is, is Robert Kurson. They've, they've both written some very famous books and some very successful books. And I think their ability to craft a sentence and tell a story is unparalleled. And even if I were to compare them of all the writers of the last 200 years or so, I'd put them near, near the top. There, it's just so, it's effortless to read their, their work. Never do you have to reread a paragraph and say, what are you trying to say here? You can just kind of glaze your eyes over the page and completely understand what they're saying. And what I love about what Eric Larson in particularly does, so he's a nonfiction writer, writes books about like World War II and all these, these, these different events. Some of his chapters are half a page.

• 2:43:40Morgan Housel?

  And so some of his books can have 200 chapters. They're each a page or two because he's so good at just being like, here's my point. I'm going to make the point, use an example and boom, I'm done. I don't need to ramble for another 17 pages. I'm just going to move on. And that to me is the key of good writing. It's like the person who can say the most in the fewest words wins and he's the best at that.

• 2:44:00John Coogan?

  Yeah, I read Devil in the White City a while, maybe a decade ago. Fantastic book. Loved it.

• 2:44:05Morgan Housel?

  Very good.

• 2:44:06John Coogan?

  And perfect example of that. Thank you so much for coming on the show.

• 2:44:08Jordi Hays?

  So fun.

• 2:44:09John Coogan?

  Always a great time.

• 2:44:09Jordi Hays?

  Let's do it again soon. We're gonna, this time, we're just gonna send a recurring slot.

• 2:44:13John Coogan?

  Yes.

• 2:44:14Jordi Hays?

  Your calendar. You can move it if you want.

• 2:44:15John Coogan?

  Yeah.

• 2:44:16Jordi Hays?

  But we'd love, we'd love to.

• 2:44:18John Coogan?

  It's always fun.

• 2:44:18Jordi Hays?

  Hit the, hit the gong again for being number one in the business section on Amazon.

• 2:44:25Jordi Hays?

  Business decision making. I see you at number one and I'm sure many other charts to come.

• 2:44:32Morgan Housel?

  Thanks, guys.

• 2:44:33John Coogan?

  Congratulations.

• 2:44:33Morgan Housel?

  As fun as always.

• 2:44:34John Coogan?

  We'll talk.

• 2:44:35Jordi Hays?

  Great to see you.

• 2:44:35John Coogan?

  Before our next guest joins, let me tell you about Adio, Customer Relationship Magic. Adio is the AI native CRM that builds scales and grows your company to the next level.

• 2:44:43Jordi Hays?

  CRM.

• 2:44:43John Coogan?

  You get started for free.

• 2:44:44Jordi Hays?

  Super intelligence.

• 2:44:45John Coogan?

  And we have another gong worthy guest. Let's bring in Misha from Reflection. How are you doing?

• 2:44:52Jordi Hays?

  Boom.

• 2:44:53Speaker 09

  Hey, guys. Good to see you again.

• 2:44:54John Coogan?

  Good to see you again.

• 2:44:55Jordi Hays?

  Good to see you. You've been busy raising billions.

• 2:44:59John Coogan?

  Jordy has this habit of telling people when they come on and they do a great interview, we'll see you soon, but you delivered. I think you're the first person that if we roll the tape, Jordy probably said, we'll see you back here.

• 2:45:09Jordi Hays?

  We gotta, we gotta roll it back. I bet.

• 2:45:11John Coogan?

  I bet you called it.

• 2:45:12Jordi Hays?

  Knowing, knowing the progress you've made and the progress you will make, I bet you'll be back on here with more news.

• 2:45:18John Coogan?

  But quickly, give us a reintroduction to the company and of course, give us the news.

• 2:45:24Speaker 09

  A quick reintroduction to the company. I'm Misha. I'm the co-founder and CEO of Reflection. Together with Yanis, we started the company about a year and a half ago and we were formerly at DeepMind. Yanis was one of the founding engineers at DeepMind, contributed to a lot of projects like AlphaGo and Gemini and recruited a team of about now 60, I would say, researchers and engineers from Frontier Labs. And the charter of the company has opened up since we last spoke.

• 2:45:58Speaker 09

  We've raised this capital to really build out the frontier open intelligence, based in America and exported to the rest of the world.

• 2:46:07Jordi Hays?

  So before we get into the

• 2:46:09Speaker 09

  That is kind of the focus of the company.

• 2:46:10Jordi Hays?

  Yeah, before we get into the details, how much did you raise and who did you raise it from?

• 2:46:15Speaker 09

  We raised in total of $2 billion from a syndicate of investors.

• 2:46:23Speaker 09

  Oh, this has a gong hit.

• 2:46:24John Coogan?

  It does.

• 2:46:28John Coogan?

  Everyone's excited.

• 2:46:29Speaker 09

  Nvidia, Disruptive, DST, 17.

• 2:46:35Jordi Hays?

  There we go.

• 2:46:35Speaker 09

  B Capital, a bunch of existing investors as well, like Lightspeed, Sequoia, and CRV and so forth. So it was quite, you know, we're very grateful for the support from the syndicate.

• 2:46:46Jordi Hays?

  Okay, get even more kind of granular with what the focus is today. My read on it is open source is the focus, is that?

• 2:46:57John Coogan?

  Putting DeepSeek out of business, that's what I want to hear.

• 2:46:59Jordi Hays?

  Finally.

• 2:47:00Speaker 09

  That's right. Yeah, maybe the short of it is that it's a US DeepSeek.

• 2:47:05John Coogan?

  Yes, that's what we want. Thank you.

• 2:47:08Speaker 09

  Frontier open weight models that we train here in America and export to the rest of the world. So this is meant to be a global technology. We have a big presence in the UK. We have a team there. And so this is not just, you know, even though it's American built, it's really built for the world more broadly.

• 2:47:26John Coogan?

  Can you share anything that you think you'll be able to do to outfox DeepSeek and GPT OSS? We're having Dylan Patel from Semi Analysis come on next and he's talking about inference max. He's benchmarking and I learned so much that, you know, it's not just the model, it's how you run it, the batching, the different GPUs, sometimes Nvidia is better, sometimes AMD is better. Like, how are you understanding, because I imagine it's not enough to just say it's American DeepSeek. It's got to be better. So what's your plan to actually beat them?

• 2:47:59Speaker 09

  It's a really good question, and I think it actually falls into two parts. First, actually, just having an American compliant DeepSeek would go a really long way.

• 2:48:08John Coogan?

  Yeah.

• 2:48:08Speaker 09

  Because a lot of enterprises are basically locked out from using those models because of various legal, marketing, provenance, data provenance risks that are associated with Chinese models. So from a commercial standpoint, just having something that is as good, but kind of compliant and built here would be really powerful. But of course, there is, you know, an aspect that you want to leapfrog and really be the leader in open intelligence across the world. And we do have some tricks up our sleeve.

• 2:48:41John Coogan?

  Probably can't share them. Probably can't share them, yeah. But I mean, hopefully, eventually, they'll be out, yeah.

• 2:48:48Speaker 09

  Yeah, yeah. But, you know, we have some great work happening on reinforcement learning within the team. The other thing that, you know, the Chinese labs don't have access to is obviously the same level of chips that American companies have access to. And so what I think DeepSeek did really well is co-designing their algorithms together with the chips they had access to. And so there's some really interesting stuff that you can do with co-designing algorithms with frontier chips that are going to be accessible to us as well.

• 2:49:16John Coogan?

  Interesting.

• 2:49:18John Coogan?

  Quickly, talk about the business model. I can imagine this turning into sort of like a red hat Linux play where there's an open source model, but you're implementing it, working with enterprises, working with the government, and there's a contracting piece, a SaaS layer on top. Is that logical? Or are you thinking more like you nail open source and then you can do a closed source model, sell API, you could go and own the whole token factory, the inference stack? Like, where do you see the business looking in a couple of years?

• 2:49:48Speaker 09

  I think that...

• 2:49:51Speaker 09

  The primary thing you need to set first is how do you build the kind of open intelligence, open models and the sets of tools around them for, you know, you partner with some inference providers, you, you know, set up, you know, make it easy to customize things, you make it easy to build agents out of these models and ensure that that kind of spreads like wildfire. So I think that having an open, some sets of open models that are really fully permissive is really important. But the pull from, you know, for this kind of model really comes from large enterprise. That's, when does it, you know, make sense for you to move from closed to hybrid to open models? It's really once you're a very big consumer of

• 2:50:35Speaker 09

  intelligence and that's basically large enterprise sovereign and scaled up startups that are spending crazy amounts of money on closed APIs. Yeah. And so the way you kind of commercialize it, yeah, you want, you want them to be building on top of your models and there's all sorts of services and products that you can build out on top of it to effectively solve their problems end to end because just providing an open rate model is not enough. These things are very hard to customize. These things are very hard to build evaluations around. They're very hard to do anything useful with if you don't help a customer end to end. So I think that there's a lot of opportunity for commercialization, but you really need to be the core intelligence that others are

• 2:51:18Speaker 09

  building on before you can really be useful at the next layer as well.

• 2:51:25Jordi Hays?

  Why, why do you think the dialogue around open source, open AI models went from, you know, up to a fever pitch, people demanding it and they release it and then now you don't hear it talked about really, at least online in the timeline much at all?

• 2:51:46Jordi Hays?

  Clearly, clearly, and I would say like what I'm trying to understand is like clearly there's massive demand for open source models, but I have a feeling that developers would like to be leveraging the technology of a company like Reflection who's wholly dedicated to open source and dedicated to commit, you know, and really committed to it, whereas it's hard to, you know, we had Sam on today, we've had a bunch of people on from OpenAI. It's hard, it'd be hard for anyone in OpenAI to say like, open source is our top three priority, right? Maybe it's in the top five.

• 2:52:26Speaker 09

  Exactly. Exactly. It's really hard for you to both be the world's open model and open intelligence provider and for it to be the number two, number three, or number five thing, right, that your company is focused on. And the reason is that what matters is capability. You want highly capable open models. And the only way to get that is if your commercial incentives are fully aligned with open intelligence as the first and primary thing that you're doing. Now, when you release something like this, you can't just release the model. I mean, I think that that's one part of it. And then, you know, inference providers can take that model and optimize their stack around it. But these models are

• 2:53:08Speaker 09

  so big and hard to do anything with unless you are an expert, that you really need to help with that as well.

• 2:53:16John Coogan?

  The models seem to be exhibiting spiky intelligence. Where are open source models particularly best or demanded to be best? Like, the customers of open models, what do they want to do that might not be as relevant in a closed source ecosystem? I could imagine that agentic payments is maybe not the hottest thing in open source models, or IMO level math that might be, maybe that's really important in open source, but what is unique about the customer of the open source model? What do they want it to be best at?

• 2:53:53Speaker 09

  Yeah, there are basically two things that as customer you are looking at, looking to do and achieve when you adopt an open model. The first thing is suppose you have good performance on something from a closed model, but it's ludicrously expensive, which is very common. Then you want to drive down the cost while keeping the performance. So you want to customize the model for those tasks. The other way around is that, yeah, you have some finicky data distribution that was not represented when the closed model was trained and the closed model is spiky, but not on the data that you need it to be good at. And so then you want to drive performance on that. And so then you want to post-train and customize for that.

• 2:54:34Speaker 09

  So it's really you're customizing for driving extra performance or you're customizing for driving down the cost, but it's really important to have control over both.

• 2:54:42John Coogan?

  Yeah, that makes a ton of sense. Well, thank you so much for coming on the show. Congratulations on the huge raise. I'm sure we'll see you back here in a couple of months.

• 2:54:49Jordi Hays?

  Yeah, I'm so curious. I imagine you guys are thinking about how you can create your own deep-seek moment. So when the time is right, come back on.

• 2:55:01John Coogan?

  We'll pump it. Play that eagle sound. Thank you. Have a great day.

• 2:55:06Speaker 09

  Thank you so much for having me.

• 2:55:08John Coogan?

  Of course.

• 2:55:08Jordi Hays?

  Great to catch up.

• 2:55:09John Coogan?

  Talk to you soon.

• 2:55:10Jordi Hays?

  Congrats to the team.

• 2:55:11John Coogan?

  How did you sleep last night? I woke up way too early. I woke up at, I woke up at four in the morning.

• 2:55:15Jordi Hays?

  I'm physically unable of a three-peat.

• 2:55:18John Coogan?

  Oh no, this is so bad.

• 2:55:20Jordi Hays?

  I have not gone three days back to back with a 90.

• 2:55:25John Coogan?

  What you got?

• 2:55:25Jordi Hays?

  I got a 79.

• 2:55:26John Coogan?

  I got a 69. You beat me.

• 2:55:29Jordi Hays?

  There we go.

• 2:55:29John Coogan?

  You beat me almost every day this week, or maybe the last two or three.

• 2:55:32Jordi Hays?

  But I got cocky.

• 2:55:33John Coogan?

  So you got your three-peat. You got your three-peat.

• 2:55:35Jordi Hays?

  You got cocky yesterday.

• 2:55:36John Coogan?

  Play some sound effects, do something. Let me also tell you about public.com investing for those that take it seriously. They got multi-asset investing, industry-leading yields, and they're trusted by millions.

• 2:55:45Jordi Hays?

  Please take it seriously.

• 2:55:46John Coogan?

  Did you see that? Margin Revolution is calling for Vitalik Buterin, the co-founder of Ethereum, to win the Nobel Prize in Economics.

• 2:55:54Jordi Hays?

  Really?

• 2:55:55John Coogan?

  I think that'd be very, very cool. It's a wild card. Tyler Cowen's mentioned it a few times, that Vitalik would be kind of the outside-the-box pick, but in terms of advancing economic theory, designing Ethereum, I mean, it'd be remarkable. And he also advocates for Robin Hanson, the father of prediction markets, to win the Nobel Prize. I don't know. We'll see. It'll be fun to track the Super Bowl for economics grads, I guess. I want your take on this. Luke Kawa is quoting the Pepsi CEO. I think fiber will be the next protein. Consumers are starting to understand that fiber is a benefit that they need. We put creatine in everything, we put protein in everything. Is fiber the next thing?

• 2:56:37Jordi Hays?

  We put caffeine in everything.

• 2:56:38John Coogan?

  I mean, why not just add them in?

• 2:56:40Jordi Hays?

  So the thing here is that...

• 2:56:42John Coogan?

  Fiber gummies?

• 2:56:43Jordi Hays?

  Ollie Pop already leaned heavily into fiber.

• 2:56:47John Coogan?

  Okay, so it might already be happening, and maybe the Pepsi CEO is a little behind the times, actually.

• 2:56:51Jordi Hays?

  He might also be... Did Pepsi buy Ollie Pop's competitor?

• 2:56:55John Coogan?

  I don't know. I mean, Kyler Scanlon in the reply says, "Didn't we already do this with the rise and fall of Fiber One?" So, I don't know, maybe it's too late.

• 2:57:03Jordi Hays?

  Pepsi co-acquired Poppy. I think Poppy includes fiber.

• 2:57:07John Coogan?

  Yes. Oh, I have a reaction for...

• 2:57:11Jordi Hays?

  You do?

• 2:57:12John Coogan?

  You want to keep going on that? You have anything else?

• 2:57:14Jordi Hays?

  No, go.

• 2:57:15John Coogan?

  I have a reaction to Rune, who put us in the truth zone. So, on a previous show, we said incorrectly that during the AlphaGo game between Lee Sedol and DeepMind, AlphaGo dropped the 37th move, move 37, that iconic moment that kind of scrambled Lee Sedol's brain. We told the story such that move 37 happened, Lee Sedol was so...

• 2:57:43John Coogan?

  racked by it that he stepped outside to smoke a cigarette. Apparently that's not true. Apparently he smoked a cigarette before move 37. And so it's just more cinematic to tell it that way. I think it's, I think it's actually maybe even more dramatic because potentially move 37 was so crazy that he couldn't even bring himself to smoke a cigarette. Do you think that's what happened?

• 2:58:02Jordi Hays?

  Maybe.

• 2:58:03John Coogan?

  No, I don't know. But thank you, Rune, for doing the fact check. Obviously, you are correct. You know.

• 2:58:07Jordi Hays?

  Truth zone.

• 2:58:07John Coogan?

  Story more. And we always appreciate the truth zone. Well, we have our next guest, Dylan Patel from Semi Analysis with some massive news. Dylan, how are you doing? That is a cinematic shot. Is this AI or something? Where are we?

• 2:58:21Jordi Hays?

  That's called.

• 2:58:22John Coogan?

  This is aura. You're aura farming.

• 2:58:25Dylan Patel?

  I'm literally in America, bro.

• 2:58:26John Coogan?

  That's amazing.

• 2:58:27Dylan Patel?

  Out of the back of the truck.

• 2:58:29John Coogan?

  You're the bald eagle. You're the bald eagle. He's not a China Hawk. He's a bald eagle.

• 2:58:33Jordi Hays?

  This is proof of work. You're, you're out.

• 2:58:35John Coogan?

  You're out at the cluster, you're cluster maxing, you're inference maxing, you're podcast maxing. Thank you so much for taking the time. Give us your breakdown quickly on, on the launch today, inference max, the launch yesterday. I went on your Zoom call at 10:30. I was laying in my bed, listening to you. It was very interesting, but I'd love to hear you kind of break it down first.

• 2:58:57Jordi Hays?

  Wait, first, that wants a, can we get a, are you, you have cowboy boots on or?

• 2:59:03John Coogan?

  We need the full fit check.

• 2:59:04Jordi Hays?

  Full fit.

• 2:59:05John Coogan?

  The full fit check.

• 2:59:06Jordi Hays?

  Oh, okay. Okay. Looking good. But cowboy boots, cowboy boots next time.

• 2:59:11John Coogan?

  Okay. Anyway, sorry. Please give us the, give us the high level.

• 2:59:16Dylan Patel?

  So I'm at a, this is a fire station behind me, by the way, just so you, you know, but in Tennessee. Anyways, yesterday we launched inference max, which is a humongous release for us. It is running, it is a benchmark that's doing cost per million tokens and how many, you know, cost per tokens per megawatt across all major AI infrastructure, AMD, Nvidia, all the newest GPUs, and, and on all the latest models, GPT, open source, Llama, Deep Seek, et cetera. Right? And so the reason why this is so important is, Throughout the industry, people are always like, oh, our chips are great at cost this way. Our chips are more efficient that way.

• 2:59:58Dylan Patel?

  Well, it turns out to actually measure inference, you have, you know, a variety of different metrics. It can always just cherry pick something, right? It's some vendor saying some BS. And so that there ends up being a cherry picking. And then it's also on some super hyper optimized software stack. That's not real, right? It works for that one specific cherry pick use case. But guess what? When I'm running inference at a major company, sometimes I have big requests. Sometimes I have small requests. Sometimes I'm outputting a ton. Sometimes it's like an agentic workflow. Sometimes it's this model. Sometimes it's that model. So what really matters is the real software that people are running. And it's on, you know, the latest drivers, the latest open source, you know, PyTorch version and latest VLM, latest SG lang. All these things matter because at the end of the day, software changes every day. Performance changes every day.

• 3:00:43Dylan Patel?

  Models change all the time, right? And, and to actually get, hey, there's trillions of dollars of infrastructure investments being made over the next few years. How do you actually measure what's the best hardware? What's the, what's the most efficient hardware? What's it cost? And that's, that's what we're aiming to do with inference max. And so we're supported by Nvidia, AMD, Microsoft, OpenAI, Oracle, CoreWeave, Dell, Super Micro, HPE, and all sorts of vendors that I, I can't remember off the top of my head.

• 3:01:12John Coogan?

  Well, you're not making any money on this, right? It's a, it's all open source, but there was a ton of capital that came together, a ton of people that did put up money. What's the scale and the scope of the project?

• 3:01:27Dylan Patel?

  Yeah, so semi analysis has multiple engineers that I'm paying full time. So I'm, I'm losing like, you know, a million dollars a year on this or a bit more, obviously, because engineers are expensive. Um, but on top of that, it's, it's, you know, the, the vendors are contributing and the cloud companies are contributing tens of millions of dollars of GPUs.

• 3:01:45John Coogan?

  Congratulations. That's fantastic news.

• 3:01:48Dylan Patel?

  So, so you know, the, the, the thing is, I'm, I'm not necessarily like sure how I'm gonna make money on it, but I am Ora farming, as I am with this background, right? All that matters is, you know, what's, what, what, what, you know, how do we deploy AI efficiently across the globe? And, you know, perhaps by Ora farming in this way, we'll figure out how to, you know, people will buy our other stuff, right? Is the hope. Um, you know, not exactly sure, but this needed to exist and there was no way for it to exist unless we did it.

• 3:02:13Jordi Hays?

  What's, what's your life been like the last few weeks? How often are billionaires calling you, asking you specifically for financial advice, saying, uh, hey, I'm, I'm thinking of putting, you know, a billion into this one. What do you think? Did I do it? Should I, uh, do you find yourself having to push back and say like,

• 3:02:31John Coogan?

  I'm thinking of having the second trillion dollars of debt to flow into this.

• 3:02:34Jordi Hays?

  Yeah.

• 3:02:34John Coogan?

  What do you think?

• 3:02:37Dylan Patel?

  Um, you know, the, the, the crazy thing over the last few weeks is that, you know, companies that you would have never expected to need debt are in the debt markets. Right? You mentioned debt. Um, you know, people like Meta and Oracle, you know, who three years ago, you had been like, these are the most profitable companies on the planet. Well, they're in the market for debt because they're, they're building. Um, as far as like, how often are people in the DMs or calling me, you know, that's what the company does. We provide services around this. Uh, so, you know, I'd like to say the company and business is taking off like a rocket. And so, you know, the whole point is inference max aura will increase the aura of like other people like, you know, uh, you know, doing this. But I will say it's just like, we've hit terminal velocity, right?

• 3:03:16Dylan Patel?

  It feels like we're building a motherfucking like, like Matryoshka brain. Um, you know, like, I don't, I don't know what people are trying to invest in besides God.

• 3:03:24John Coogan?

  That's great. Uh, what's the biggest debunk that's come out of the results of inference max? Is there some narrative out there on the timeline or in the AI community that you feel like you've kind of, you're able with this data to turn things around?

• 3:03:39Dylan Patel?

  Yeah, so I mean, there's, there's tons of people like, oh, AMD's best, oh, Nvidia's the best, oh, this is better, that's better. Um, it turns out like, everyone's statements are sort of like, you know, there's got to be a lot more nuance to it. Um, and so my favorite thing is yesterday I saw Twitter war between two accounts of like, 5,000 followers each. So these weren't like small accounts per se, and they were going back and forth, posting data from inference max saying, no, you're wrong, you're cherry picking, no, you're wrong, you're cherry picking. And it's like, the reality is it's a little bit more complicated and they're debunking each other.

• 3:04:12Morgan Housel?

  Yeah.

• 3:04:13Dylan Patel?

  Um, but I think what's relevant is that, you know, Nvidia is not the only game in town. Um, a lot of people, uh, thought that they were, um, you know, between the OpenAI AMD deal, uh, that happened and then the results that we've shown, and we've been working with AMD and Nvidia on this for many, many months. Um, it's clear OpenAI, I mean, Nvidia is definitely ahead, right? But there's certain use cases where AMD is better, right? If you're running GPT open source, uh, that model's exploding in usage, then hey, guess what? Actually AMD may be a better, uh, hardware for, uh, on a dollar basis. It's not better on a watts basis and you know, those are the two things, right? So why maybe I'm in test is, you know, there's a lot of watts here that we could put on AI infra.

• 3:04:53Dylan Patel?

  Um, but it's, it's, it's a challenging sort of, uh, you know, thing is sometimes you're capital constrained, sometimes you're power constrained. And what you should do, uh, may, maybe you do actually think, you know, maybe you should deploy AMD, right? Maybe you should deploy Nvidia, um, the default is Nvidia, but actually in many cases, it makes sense and the software works. The open source software works.

• 3:05:14Morgan Housel?

  Yep.

• 3:05:14Dylan Patel?

  It's not bu- buggy completely. It, it is if you're training and doing other things, but if you're running inference on specific models, it works.

• 3:05:22Jordi Hays?

  Uh, what's the biggest risk to the overall build out? Is it energy capacity? Like what, what's, what's top of mind for you, uh, over the next 12 to 24 months? All these deals have been announced, but a lot of people are asking, where's the energy going to come from once you, you, once you start talking about, you know, gigawatt scale clusters?

• 3:05:46Dylan Patel?

  Yeah, so it's not even, it's not even, you know, like you've got all of these like dudes in suits like you, you know, in their little cushy little offices, signing these big checks of fake money on bank accounts. But the reality is, is like, hey, I can buy the GPUs, I can get them made and import them from overseas. I can buy, you know, like the sheet metal, I can buy all these different things. But you know what you can't do is there's not enough motherfuckers in cowboy boots in middle America, deploying and building these things, right? Like, it turns out electricians' wages are skyrocketing, right? It turns out like plumbing wages are skyrocketing because data centers need liquid cooling. And so like, how, I think that's the biggest risk is, you know,

• 3:06:29Dylan Patel?

  where's the skilled labor going to come from in the West?

• 3:06:32John Coogan?

  Interesting.

• 3:06:33Dylan Patel?

  Because the West has not built at this scale before.

• 3:06:36John Coogan?

  Yeah, chat says that, Regavin in the chat says, "You're the only 10 IC." So he's having fun that you're out in Tennessee. Is there any, what does the long-term vision look like? Is it relevant to think about adding TPU, Grok, Cerberus, other system? Like, what is the shape of the roadmap? Are you sharing that yet, or is that even relevant?

• 3:07:01Dylan Patel?

  Yeah, so inference max is amazing because it runs every single day on the latest software. But right now, we've only got tens of millions of dollars of GPUs. You know, we gotta hit the 100 million number to actually get everything, right? So what that means is more models are being supported and we've got that in the works. We've got adding TPUs in Tranium. This is a real big difficult engineering effort. Google and Amazon are excited. You know, we'll see how long it takes us, but it is a difficult thing. But, you know, they've got to put up the capacity, we've got to get the capacity somehow, and add those chips. And then if you do that... Over ninety-nine percent of the flops are around the world. Maybe we add Huawei, maybe we add Grok or Cerebras.

• 3:07:42Dylan Patel?

  It's really a lot of engineering is going to be required. And so that's all on the roadmap is to add more hardware. Quality. It turns out there's a lot of innovations that people are doing on model inference beyond just quantization, right? You can do eight bit or you can do four bit, but let's say everyone's doing eight bit. You can still do certain innovations that make performance better, but quality worse. And so there's these tricks that people are implementing that, you know, actually it's it's completely unknown to people. And so, you know, measuring quality as well is really, really important. Um, and, and, and, you know, continuing to run it every single day in an automated basis. Um, and continuing to get more people pushed behind it so we can get, you know, TPUs, trainiums, GPUs on as many models as possible.

• 3:08:28Dylan Patel?

  With quality as well measured.

• 3:08:30John Coogan?

  Well, that's fantastic, Jordi.

• 3:08:32Jordi Hays?

  One more question from my side. Uh, seems like the debate is heating up around depreciation schedules for GPUs. Like what's your, what's your framework on, on that front? A lot, you know, NeoCloud wants to say five to six years, but maybe that's not realistic. How, how are you thinking about it?

• 3:08:54Dylan Patel?

  So every company, uh, major company in the world, the Googles, the Microsofts, Amazons, et cetera, do six years, right? That is the industry standard. Um, but that may also be erroneous. And the reason why it may be erroneous is because the reason it's sick, it got pushed up from, you know, four or three years to six years over the last decade. CPU, storage, um, you know, that sort of stuff, uh, was not advancing that fast.

• 3:09:17Dylan Patel?

  We've got it advancing like a rocket ship. Um, and it's faster than ever. And so the question is, there's two points on useful life, right? One is, does the thing still work in six years? And the other one is, is it even useful to run it in six years? Right? And these are two very, very different questions. You know, for will it still run in six years? The answer is most likely, but these things are running super fast. GPUs, GPUs, et cetera, are way less reliable than CPUs and memory. So it's a very high likelihood that it might not work in six years. Whereas CPU servers, they'll actually run like 10 years, it's fine. But GPU may not last the full six years, especially the new ones that are super hot, liquid cooled, et cetera, right? A lot more complexity, a lot more likelihood it could break down within the six years.

• 3:10:02Dylan Patel?

  The other side is economically useful. Well, if Nvidia is releasing a new GPU that times its fat for 50% more money every year and a half, well, then in six years, you're at like 20x improvement in performance. Right? And it maybe only costs like three times more. So, so you're like, okay, well, yes, the old GPU still, even if it still works, is it even useful? Or should I throw it out and with that power, should I feed the new thing? Right? And so that's the big question is, you know, is it useful to keep using the newest GPU or the old GPU? Or should you buy the new thing? You know, as Jensen says, the more you buy, the more you save. Right? And so maybe, maybe his argument is correct, right?

• 3:10:40Jordi Hays?

  Yeah. And does that present a real risk? You know, a lot of people are levering up and, and raising, you know, debt and, and against GPUs that, and, and assuming that, that five, six year useful life. How, how big of a risk is that is what I'm trying to understand?

• 3:11:00Dylan Patel?

  It depends entirely on the company, right? So for example, Oracle is raising debt and they're building out Stargate and all these things, right? You know, they've got this $300 billion deal with OpenAI. Their biggest risk is not that, hey, you know, our depreciation schedule is six years and OpenAI's contracts are five years, right? And they still make money if they, they don't, they aren't able to last a year. Right? Because they've got the contract of OpenAI. The real challenge is where the hell is OpenAI going to pay $300 billion? Right? You know, I'm a believer, I'm a believer. I think you guys are believers, but a lot of people aren't. For other folks, it's like, hey, I'm out here deploying GPUs. I'm just putting them out there, right? Hey, anyone want to rent them? Please rent them and maybe you only sign a six month contract, maybe sign a three year contract. That's where it gets more risky because at the end of the term, I haven't paid off my GPUs.

• 3:11:46Dylan Patel?

  I haven't paid off my debt. Where, where am I going to sell it? Does the price fall? Where does the price end up being in that after, after a year? And so we saw that with Hopper GPUs, right? The people who signed the long-term deals initially weren't making as much money. Because they were selling them at $2. Whereas, you know, other people were out there like, oh yeah, six months, I'll sell it to you for $3. That was amazing money for that first six months. And then on renewals, like, oh shit, it's only $2.50. And then on renewal, it's like, oh wait, now I'm selling it for less than $2. And who knows, as Nvidia's Blackwell comes out, as Ruben comes out, as AMD's new chips come out, as Google starts selling TPUs. All these things keep driving down the the cost performance and how many tokens you can get per dollar and per watt. So then all of a sudden, is a Hopper still worth $2? Is it worth $1.50? Is it worth a dollar?

• 3:12:29Dylan Patel?

  For the people that are locked into a five-year contract, that's one thing. For the people who are, you know, just

• 3:12:36Dylan Patel?

  don't have a long-term contract, it's very possible that, you know, the GPU works, but it's not able to produce economic value worth what you actually put into it. So that's the big risk.

• 3:12:46Jordi Hays?

  That makes sense. Oracle sold off earlier this week based on reporting from the information. Any, what was your immediate reaction to that piece? There was a lot of pushback on it.

• 3:13:00Dylan Patel?

  Yeah, so they said that Oracle's margins were low. Oracle's margins are not that low, they're higher than that. At that exact point in time, their reporting is accurate, right? But what they deduced based on the reporting with the numbers they saw were not accurate, right? Which is that Oracle's margins are low for the deals they've signed. That's not accurate. What's accurate is that Nvidia's GB200 NVL72 has a lot of issues, right? They're mostly being solved and have been solved, but there are a lot of issues. It can be unreliable because of how complicated of a thing it is. So much power, liquid cooling, it's got the backplane. So there's a lot of difficulties with the hardware because of how complicated and how fast it is that are being solved/solved already.

• 3:13:42Dylan Patel?

  The other one is, hey, Oracle has to rent these massive data centers before they fill them up with GPUs. So Oracle's paying all this money for these data centers for Stargate, right? Like in Abilene, Texas, that aren't necessarily generating revenue yet. And when your revenue goes from like this to rocket ship up because you've got Stargate, you know, what happens is you've got all this cost right before the revenue comes in, right? You've bought the GPUs, you're trying to figure out how to make them to work, you know, because they're a little bit unreliable. You're replacing things, you're building out the data center, you're renting the data center. All these costs are hitting their books, right? That doesn't necessarily mean that they can rent them. I might be getting kicked out.

• 3:14:20John Coogan?

  You're all good. This has been a pleasure. Dylan, next time you're in Los Angeles, we'd love to have you at the TBP and Ultra Dome in studio. Everyone's a huge fan here. Congratulations, and thank you so much for stopping by.

• 3:14:32Jordi Hays?

  Yeah, massive launch. Excited to see how it plays out.

• 3:14:35Dylan Patel?

  All right. See you, folks. Thank you so much for having me.

• 3:14:40Jordi Hays?

  We got to get Dylan. Nick, reach out to Dylan, get his shoe size. We'll get him some cowboy boots.

• 3:14:47John Coogan?

  That sounds great. I'd love that.

• 3:14:50Jordi Hays?

  Use out there.

• 3:14:53John Coogan?

  You got something on your mind?

• 3:14:54Speaker 02

  There's some big news going on. So one is about 30 minutes ago, Trump put out a truth. He said 100% tariffs on China, starting November 1st.

• 3:15:02John Coogan?

  What?

• 3:15:04Speaker 02

  So since then, I think broadly today, 250 billion has been wiped out from crypto.

• 3:15:10John Coogan?

  Okay.

• 3:15:10Speaker 02

  Yeah, Bitcoin is down 5%.

• 3:15:12John Coogan?

  Oh, no.

• 3:15:14Speaker 02

  Yeah.

• 3:15:14John Coogan?

  We have to check in on our retail trader.

• 3:15:17Jordi Hays?

  Oh, no.

• 3:15:19John Coogan?

  Retail trader in residence.

• 3:15:20Speaker 02

  Another white pill, though.

• 3:15:21John Coogan?

  Yes, give us the white pill.

• 3:15:22Speaker 02

  Demus just said they did, last month, they did 1.3 quadrillion tokens on Gemini.

• 3:15:31Jordi Hays?

  That'll fix the global economy. That'll fix the drug war. Absolutely wild. Our retail trader in residence has probably put a hole through the wall by now. Thankfully, the markets are closed for the week, but my portfolio on public is looking rough.

• 3:15:53John Coogan?

  It's a rough day, but we're happy to see that.

• 3:15:56Jordi Hays?

  Hey, it's a rough day, but Monday will probably be rougher.

• 3:15:59John Coogan?

  Maybe. We'll see. It might be a white suit day. Everything can get resolved over the weekend. You never know.

• 3:16:05Jordi Hays?

  We have to figure out what our bear market suits are. Maybe suits that actually look like bear fur.

• 3:16:12John Coogan?

  Ooh, fur suits. That'd be good. Yeah. You know, in Hollywood, there's a certain synthetic tears. It's like propylene glycol or something. That's what's in vapes. But there's some sort of eyedropper that you can put in your eyes. They put in eyes of actors when they have to cry, and so maybe we should just be applying those the entire show so that we're just crying constantly. Well, in some much better news, of course, if you want to get away from all the chaos. You can you can book a wander. You can find your happy place.

• 3:16:45Jordi Hays?

  That's right.

• 3:16:46John Coogan?

  Book a wander with inspiring views, hotel-grade amenities, dreamy beds, top-tier cleaning, 24/7 concierge service. It's a vacation home, but better.

• 3:16:53Jordi Hays?

  Joey in the chat says fart coin is down 73%.

• 3:16:58John Coogan?

  What?

• 3:16:58Jordi Hays?

  I don't know. I don't know why.

• 3:16:59John Coogan?

  No, no, no. That's gotta be a joke. That's impossible.

• 3:17:02Jordi Hays?

  I looked it up. I mean, I'm looking at a chart right now. It says 60%.

• 3:17:04John Coogan?

  Today?

• 3:17:05Jordi Hays?

  So maybe it's rallied a bit.

• 3:17:06John Coogan?

  Today?

• 3:17:07Jordi Hays?

  Yeah.

• 3:17:07John Coogan?

  That's the...

• 3:17:08Jordi Hays?

  I mean, I guess.

• 3:17:09John Coogan?

  I can't believe that something that's like a household name and tech is actually down that much. That's absolutely crazy.

• 3:17:17John Coogan?

  Well, in in in some more serious news, we have a new partner at TVPN. We're partnered with Gemini, Google AI Studio, the fastest way from prompt to production with Gemini.

• 3:17:32John Coogan?

  AI-powered coding apps, ease of use.

• 3:17:34Jordi Hays?

  Excited about this one.

• 3:17:34John Coogan?

  It's built for everyone. You've been a power user. We're friends with Logan. We're very excited.

• 3:17:39Jordi Hays?

  Logan is a dear friend of the show and works around the clock to make this product work.

• 3:17:45John Coogan?

  He's done a fantastic job over there. Supercharge your creativity and productivity. Chat to start writing, planning, learning, and more with Google AI. So you'll be hearing more about Gemini in the coming weeks, in the coming show.

• 3:17:57Jordi Hays?

  Not tomorrow, because tomorrow's a Saturday.

• 3:17:59John Coogan?

  Worst day of the week.

• 3:18:00Jordi Hays?

  But I can't wait for Monday, John.

• 3:18:03John Coogan?

  Yeah. What else? Oh, Sheil had a take on Sora, which is interesting. He says, "He personally got bored of Sora after a day, "but a surprising number of my friends are still posting 10-plus videos a day." Maybe this AI slop thing has legs. I have been, I haven't been consuming a lot of Sora. I've been generating a lot, but I haven't been posting a lot. But I started posting, and once I got over that threshold of like, "Yeah, I'm just gonna put my cami up. Yep, I'm just gonna post. It's gonna be fun." I think I'll be experimenting with the actual feed. I only have 20 followers now, but I think that there is some fun, creative stuff that you can do there. It's definitely a different tool to pull off the shelf than the video camera or the text post on on X or the email, but I've been having fun, and I think I will.

• 3:18:48Jordi Hays?

  Apparently, I didn't catch this when you said it, Tyler. The 100% tariff on China is on top of all current tariffs.

• 3:18:56John Coogan?

  Wasn't it already at 100% or something like that? We had Ryan Peterson on a few times, and the tariffs were like up and down and up and down.

• 3:19:03Jordi Hays?

  Get to the Ultra Dome, Ryan.

• 3:19:04John Coogan?

  Seriously, we gotta check in with Ryan for sure.

• 3:19:06Jordi Hays?

  Monday, get back on. Bugle Capital says, "I legitimately cannot believe we are doing this again."

• 3:19:12John Coogan?

  Tremendous nukes have hit the cryptocurrency charts, says Joey in the chat. Did you ever read that? It's very funny. Thank you, Joey, for your service as the resident crypto bro. One last note. You know what hasn't changed with a tariff? Out of home advertising in America, baby. Out, adquick.com. Out of home advertising made easy and measurable. Say goodbye to the headaches of out of home advertising.

• 3:19:34Jordi Hays?

  Do not think about tariffing our billboards.

• 3:19:37John Coogan?

  Do not tariff our billboards.

• 3:19:38Jordi Hays?

  That is my, that is my line.

• 3:19:40John Coogan?

  Yeah, single issue voter on billboards, honestly.

• 3:19:43Jordi Hays?

  Liquidity says there won't be a second date, but at least she now understands why the AI circle jerk deals are quickly becoming a major systemic risk.

• 3:19:54John Coogan?

  Wait, wait. Can we pull up this picture of this eight-year-old building in Kazakhstan from Offsite? This is, this is, this post made me laugh out loud. It's page 70. Do you see this, Jordy? Look at this picture of this eight-year-old building and

• 3:20:09Jordi Hays?

  At the bar?

• 3:20:09John Coogan?

  And Offsite, and Offsite that quote posted and says, "That MF on Roblox, left hand on AWSD." Because if you look at his hand, it's like caught, caught, gaming-handed, for sure. Very funny post. But that would have been me at eight gaming. And you know, who knows? If he's on Roblox now, maybe he'll build a Roblox game. Maybe he'll build a startup. But yes, eight years old is, might be a little bit young to take a company public unless you're a 23-year-old, and then apparently you can stack a nuclear company. Be fun. Anything else you want to cover? Any other breaking news before we log off for the weekend?

• 3:20:45Jordi Hays?

  No, I'm gonna miss being here at this table with these mics.

• 3:20:49John Coogan?

  Yes.

• 3:20:49Jordi Hays?

  This team.

• 3:20:50John Coogan?

  Oh, we missed.

• 3:20:50Jordi Hays?

  With this chat.

• 3:20:51John Coogan?

  We missed Dave Portnoy's mansion. Dave Portnoy made the mansion section in the Wall Street Journal. I'll read you one line of it, because it is iconic. Dave Portnoy adds, "Record-breaking home to his $95 million property portfolio. Inside the Barstool Sports founders' collection of luxury houses." They break down all of his different houses. They're all beautiful. But this is what made me laugh out loud, because it's printed in the Wall Street Journal in the mansion section. Barstool Sports founder Dave Portnoy has been dogged by champagne problems at his Miami mansion. From construction delays to losing his coffee because the waterfront home is too big. Last year, a more serious issue emerged, and we've talked to some founders about this, mold. And he, as he often does, Portnoy turned to social media, quote,

• 3:21:38John Coogan?

  I need the best mold company in the history of Miami to come look at my moldy ass house. Any wrecks? He posted on X in August of 2024. I just thought that was hilarious that he, that one of his X posts made it into the Wall Street Journal. So you can post your way onto a private plane. You can post your way onto the Wall Street Journal. You can post your way on the show. So enjoy the weekend and stay locked in on the timeline.

• 3:22:01Jordi Hays?

  Zitrini says, can we change the channel? I've seen this movie before.

• 3:22:05John Coogan?

  Oh.

• 3:22:06Jordi Hays?

  Our retail trader just posted his portfolio. He's down 12% on the day. He says, I'm so cooked.

• 3:22:14John Coogan?

  I'm so cooked.

• 3:22:15Jordi Hays?

  You're cooked and chopped.

• 3:22:16John Coogan?

  Cooked and chopped, but we love you.

• 3:22:18Jordi Hays?

  Get the Dylan camp.

• 3:22:19John Coogan?

  Get the Dylan camp. He doesn't want to be on TV. Thank you so much for tuning in.

• 3:22:23Jordi Hays?

  We're gonna set up, we're working on setting up a retail corner.

• 3:22:26John Coogan?

  Yes, we're thinking about it. We're gonna get him on.

• 3:22:29Jordi Hays?

  We're gonna give Dylan, not Dylan Uberschotter, the other Dylan, we're gonna give him a public account.

• 3:22:33John Coogan?

  Yes.

• 3:22:34Jordi Hays?

  Funds and he'll just, he'll just trade.

• 3:22:36John Coogan?

  This is just crazy enough to work.

• 3:22:38Jordi Hays?

  He won't be cooked or chopped.

• 3:22:40John Coogan?

  Thank you everyone for tuning in. We will see you on Monday. Have a great weekend.

• 3:22:43Jordi Hays?

  Have a great weekend, folks.

• 3:22:44John Coogan?

  Bye.

• 3:22:44Jordi Hays?

  Bye.