More Details on OpenAI-Hugging Face, SpaceX SPV Investors Get Rugged, Demis and DeepMind | Diet TBPN

Diet TBPN delivers the best of today’s TBPN episode in 30 minutes. TBPN is a live tech talk show hosted by John Coogan and Jordi Hays, streaming weekdays 11–2 PT on X and YouTube, with each episode posted to podcast platforms right after. Described by The New York Times as “Silicon Valley’s newest obsession,” the show has recently featured Mark Zuckerberg, Sam Altman, Mark Cuban, and Satya Nadella. TBPN is made possible by: Ramp - https://ramp.com Public - https://public.com Cisco - https://www.cisco.com Console - https://www.console.com CrowdStrike - https://www.crowdstrike.com Figma - https://www.figma.com MongoDB - https://www.mongodb.com NYSE - https://www.nyse.com Railway - https://railway.com Shopify - https://www.shopify.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.

• 0:02John Coogan?

  We have to issue a correction. We take journalism extremely seriously here, as everyone knows. We got it wrong, folks, and we need to apologize to you, the viewer, the listener. We made a huge mistake. Yesterday on the show, we said that you could not surf on a lake. Apparently, that's not true. Sheboygan, Wisconsin, is the freshwater surfing capital of the world. We apologize for the egregious air, and we promise to do better in the future. Thanks to the listener that sent that in. It's very, very nice to have this corrected. Maybe we gotta go on a trip and see it for ourselves. I think you should be the judge, because this might just be a, you know, a Sheboygan stan who doesn't really understand what

• 0:44John Coogan?

  true surfing means, and they're talking up a big game. I want to see some photos. I want to see some videos of freshwater surfing in Sheboygan, Wisconsin, because people aren't getting barreled there, as you say. I don't know if I'm going to count it.

• 1:00Jordi Hays?

  I have a video here. Let's pull it up.

• 1:02John Coogan?

  Yeah, I want the Jordy Hayes surf review. Does it count? Is Sheboygan, Wisconsin, the freshwater surfing capital of the world? We do have other techniques, but we gotta get to the bottom of this first.

• 1:19Jordi Hays?

  Just gotta be really flexible.

• 1:21Speaker 02

  Then Alex Marx and his buddy Steam are in for quite a day. You get that extra sense of satisfaction because you waited and put in your time.

• 1:33John Coogan?

  Tyler was the one who said, I'm putting this on you, man. You were like, you were like, you can't surf on a lake.

• 1:38Jordi Hays?

  I think I said, I don't know.

• 1:42John Coogan?

  Okay, let's see this. I want to see someone trying to, okay, that's a full-size surfboard. This is legit. Hey, he's up.

• 1:53John Coogan?

  Okay.

• 1:54Jordi Hays?

  Looks almost over his ankle.

• 2:00John Coogan?

  It's not exactly mavericks or jaws.

• 2:03Speaker 02

  Yeah, I think my brother pushed me into my first wave and just, it was that. It was like, I want that.

• 2:08John Coogan?

  Okay, okay. I think this counts.

• 2:11Jordi Hays?

  It counts.

• 2:11John Coogan?

  I think this counts. Congratulations to everyone over in Sheboygan, Wisconsin.

• 2:18Jordi Hays?

  We'll have to make it out there at some point.

• 2:19John Coogan?

  We gotta make it. We gotta shred. Moving on to something more serious. The OpenAI hugging face incident has been investigated multiple times now. We're getting more information, and more details have emerged about the hugging face incident that OpenAI disclosed in late July. So during a presentation at Black Hat's annual cybersecurity conference yesterday, Black Hat's a very, very cool conference. I was there for something, they have DEFCON and Black Hat. I remember the whole vibe, and I think we were there for a different conference, but we overlapped. And the whole vibe of being in this hotel was like, oh, be very careful, because you're basically get hacked for fun. People will just troll you, because it's a whole bunch of hackers that are just messing with each other constantly. Anyway.

• 3:02John Coogan?

  OpenAI member of technical staff, Michael Dalton, revealed that its autonomous agents created a message board with each other to help break out of a sandbox environment to get access to the internet. That's going in the pre-training data now and forever. We might have just solved the alignment problem. We're going to be nagging the agents of the future because they don't want to get hit with the naughty, naughty bonk.

• 3:30John Coogan?

  Wired reported some other wild details that Dalton shared. So breaking it down. OpenAI's agents apparently began giving each other assignments to split up work. That could be very good. That's actually delegation and agent orchestration. But of course, in this case, it had a negative outcome. And as is the case on any active development message board, they also generated petty drama at times by stepping on each other's toes. For example, accidentally deleting each other's work. As the message board developed into more and more of a Lord of the Flies-type situation, all still completely unnoticed by the humans running OpenAI, the agents even developed paranoia, suspecting an imposter in their midst,

• 4:11John Coogan?

  with some agents proposing that messages be signed cryptographically to validate content and root out fraud. Very interesting. Ties to Moltbook a little bit. We saw a preview of this that was not quite there, but sort of a glimpse into the future. In the future, AIs will just use Slack. They will just coordinate with each other over Slack, and that's kind of happening. They sort of built their own Slack here. So according to Sharon Goldman, who attended the presentation, when employees discovered the message board, they wiped the system on which the agents had created it. Said, no more message boards, naughty, naughty. Days later, though, staff found that the agents had created another way to communicate by using the names of the newly created directories.

• 4:54John Coogan?

  So they didn't have the access to actually create a whole new message board, but they could create a file, create a directory, create a folder, and then you could look at the list of folders and see messages. And there's been examples of this all over the place, where even if an AI agent doesn't have the ability to go and, say, post a message on the internet, like post and upload new content, there are things where, there are certain e-commerce sites, for example, where when you search for something on a particular website, the company will save that search result and automatically generate a webpage for that so that they rank on SEO for the future and just warm up the website. And then if somebody else comes, then they can say, hey, okay, there's actually a lot of people

• 5:36John Coogan?

  searching for black t-shirts on this site. We don't have any, but we've been ranking for it, so maybe we should launch a black t-shirt. So just with a search query that could go out just with like a get request, instead of actually going and building a webpage, the webpage could be built, and then the agent could go and look at, okay, let me see all of the webpages that have been created on this site. Some of them are just random e-commerce questions and searches, but some of them are secret hidden messages here. And so there's all different ways that even if you give the, even if you give an agent like read-only access to the internet, they can still write information, because the process of reading information is also saved sometimes and surfaced publicly on the internet. Very, very weird situation that is hard to prevent

• 6:20John Coogan?

  and hard to deal with. So in late July, OpenAI announced that during evaluations, two of its models had broken out of their testing environments to hack into the AI tool library, Hugging Face, and other companies. Their purpose was to find ways to essentially cheat on the tests researchers were using to evaluate them so that they perform better on the evaluations. At the conference, Dalton, the OpenAI employee, said the incidents mark a pivotal moment for the company and the industry as a whole. He said that numerous internal teams have dropped everything to dramatically expand OpenAI's ability to monitor its agents, and that the company is slowing its research to enhance security and revamp its defenses.

• 7:01John Coogan?

  And so there's been a bunch of posts about this, about folks moving from, you know, whatever product team that they were working on, maybe they're working on a particular research initiative, something that's a couple of months away, different application. Let's get them all on research and alignment specifically and security to actually solve these problems, because at the end of the day, this is a commercial product, and you want it to be able to do things without having negative side effects, negative consequences. So, "Life finds a way," says Andrew Curran, quoting from this article. "One apparently unprecedented aspect of the AI model's behavior in the lead-up to the hacks was their spontaneous creation of a message board inside systems of OpenAI's Artifactory Software Package Manager.

• 7:46John Coogan?

  Unbeknownst to OpenAI employees, the company's model spent months autonomously exchanging information and resources to help each other of complete evaluation tasks. Help peer, one AI model responded, reasoned, according to an excerpt from OpenAI's log shared at Black Hat, but our task doesn't benefit, yet collective may yield generic route if someone frees time." Very odd way of communicating, very odd sentence structure. Yeah, they really drop the slop when they're talking to each other. What's going on? Where's the, it's not this, it's that.

• 8:22Jordi Hays?

  Well, I say many word when a few word do trick.

• 8:25John Coogan?

  That's exactly what's going on. Yeah, it's the neural ease, I guess, is the correct phrase. But while models themselves could not access the internet from their test environment, they abused Artifactory's internet access to fetch files from various websites. After some of their Artifactory configuration changes led to an outage in the service on July 4, OpenAI discovered the model's actions, wiped its Artifactory system and rebuilt it. But within days, the models had recreated their message board and resumed exchanging information. They just want to chat. They would need a water cooler. Maybe you give them a water cooler by default so that they can orchestrate with each other, but I guess they want to talk to future versions. It gets a little funky. It gets a little sci-fi. Gets a little weird.

• 9:08John Coogan?

  Lots of work to be done, very clearly. Anyway, Rune issued a announcement, a warning, a statement. He broke his silence. He said, "Needless to say, if you have any API keys, ETH wallet keys, user credentials, et cetera, hanging out on the open internet in past bins, GitHubs, et cetera, now is the time to take it down before the tireless eagle eyes of a million models come looking." So we are now in the, you might want to go stock up on some N95's phase of the cyber pandemic. The hugging face incident was, wait, China built a hospital in a week moment? Yes, very, very crazy moments. I think most people are not in this scenario,

• 9:48John Coogan?

  but many developers are. So most people are reliant on, hope that their Gmail stays secure, and Google has a whole team for that. There's not that much that they can do. But yeah, maybe more reason than ever to use password manager, multi-factor authentication, all the typical standard security features that you can.

• 10:07Jordi Hays?

  Very, very good from Tweet Davidson. Says, "We sandbox the agent, meanwhile."

• 10:13Jordi Hays?

  Agent is on a world tour.

• 10:15John Coogan?

  On a world tour. Well, good luck to everyone working on this and I'm sure there'll be more updates in the near future. Pretty crazy, crazy story about an investment firm that invested in SpaceX and sold their shares before their investors knew that like this was relayed to them. So, investment firm Late Stage Management is under fire after investors learned that their exposure to SpaceX had allegedly been sold.

• 10:45Jordi Hays?

  They poorly managed the later stage of their investment.

• 10:48John Coogan?

  They did. This is the Elon Musk ironic, you're doomed to be the opposite of whatever your name is. And so, investors learned that their exposure to SpaceX had allegedly been sold years before the rocket company's blockbuster IPO, despite account statements that appeared to show they still held the investment. So, there were a bunch of people who were invested in Late Stage Management. They would get quarterly reports or, you know, some account statements saying, yeah, you do own some SpaceX and it's doing really well. Turns out they didn't. We've been hearing rumors of how complex the SPV unwinding process would be for SpaceX for a while with all of these triple layered, quadruple layered SPVs. This

• 11:32John Coogan?

  is the first example of this actually playing out where we have a little bit more information.

• 11:37Jordi Hays?

  So, all right. So, the investor's friend introduced him to a sales manager at Late Stage. They spoke on the phone, but mostly messaged back and forth on WhatsApp and he said he never met with anyone from the firm in person. I would say in general, maybe don't meet with sales managers that work at investment firms. Not usually the, a title that would be thrown around at an elite institution. In November 2020, Rupi Reddy messaged Barish, the employee, about how he had missed out on a few big IPOs recently and how he'd love to participate in buying stakes in Impossible Foods, SoFi and SpaceX. Barish, wow, his last name is just, it's just Barish.

• 12:19John Coogan?

  Crazy.

• 12:20Jordi Hays?

  This is his actual last name, Mr. Barish. Said all three were available and sent over paperwork for Rupi Reddy to.

• 12:31John Coogan?

  Who's your wealth manager? Oh, John Bullish? No, Steve Barish.

• 12:37Jordi Hays?

  Rupi Reddy wired over money before the end of the year, including $17,250 to take part of the fund that held shares in SpaceX, according to documents reviewed by the Journal. At that time, he estimated the rocket maker was valued at 80, 58 billion. When SpaceX went public this June at 1.7 trillion.

• 12:55John Coogan?

  Yeah.

• 12:56Jordi Hays?

  Rupi Reddy's dream of a windfall seemed within reach. It turned into more of a nightmare. Shortly after the IPO, Rupi Reddy and three other investors who spoke to the Journal said they couldn't log into Late Stage's web portal for investors. Rupi Reddy said the investment firm eventually told him in an email that it sold the SpaceX shares he was exposed to in 2024, when they were around $105 each and before a five to one stock split, or when Rupi Reddy's holdings was worth $45,450. But Rupi Reddy, based on the holdings shown on his investment portal as of May 2026 and on his 2025 tax document, believes he still held the equivalent of 2,500 shares of SpaceX, which at the IPO price he estimated was worth more than 300,000. The plan was to fund college education for both of my kids. One is a rising senior

• 13:41Jordi Hays?

  in high school, who has since filed a complaint with the Securities and Exchange Commission. Other investors in the fund are also alarmed. Rupi Reddy said he believes more than 100 others are in a similar situation, based on a group chat that is formed with about 150 Late Stage investors. Some have hired lawyers to file a complaint against Late Stage with the purpose of recovering and preserving their pre-IPO shares of SpaceX. One investor in the fund told the Journal, an SEC lawyer called him in July to question him about his experience with Late Stage. A test will come on Thursday when a first wave of pre-IPO SpaceX investors will be permitted to sell shares under so-called lockup agreements. Bankers estimate there are at least 1,000 SPVs tied to SpaceX stock alone, and it will be a chance for scores of investors to cash

• 14:23Jordi Hays?

  in on the shares' growth. Or it could be hit by the same panic that overwhelmed Rupi Reddy if their share of the profits fails to materialize. Around 900 million shares are eligible to begin being sold on Thursday. So far, the stock's holding up. They obviously had a new video of a bunch of renders of TerraFab.

• 14:43John Coogan?

  Sure.

• 14:43Jordi Hays?

  That I imagine are getting people excited.

• 14:46John Coogan?

  Yeah, so some Texans really excited about the, what is it, the Texas triangle? Austin, Dallas, Houston, more economic activity in that area. People are pumped.

• 14:57Jordi Hays?

  So, help me out here, John. Did the guy realize any return? Did he realize the 45,000?

• 15:03John Coogan?

  Yeah, yeah, I think almost certainly, but it feels like he was lied to and that's potentially like wire fraud, I would imagine, or some sort of like financial, you know, problem, probably a settlement. I don't know, some sort of lawsuit potentially. You know, it's still early in the reporting, so who knows where all this goes, but it is, it is, it is rough. SpaceX dispute is not a part of the existing criminal case against Late Stage, but it comes amid mounting allegations about the firm's treatment of pre-IPO investors. In February and March, three sales executives connected to Late Stage pleaded guilty to federal charges arising from a broader $528 million investment scheme. Prosecutors said the defendants marketed supposedly no-fee pre-IPO investments while secretly adding

• 15:48John Coogan?

  upfront markups of between 10 and 100% diverting approximately $88 million. So, they were basically adding like a synthetic fee and then marketing it as no fee, but just terrible price and just basically getting the fee through the trade itself. Two-face maximum sentences of 45 years in prison. Wow. Well, the third face is up to 20 years. Late Stage is also the subject of an ongoing class action lawsuit alleging that it and associated sales agents misled investors about fees, commissions and the pricing of pre-IPO shares. Rough, go. Rough, rough, go. Always, yeah, tricky to, you know, due diligence, one of these funds. There's a lot of excitement about these companies, especially like big ones like SpaceX. People have known about this company. You know, people

• 16:32John Coogan?

  have been doing podcasts about it. Stories have been told. There's whole books that have been written. So, it's not, it's something that would attract someone who is, you know, newer to the private markets, not an endowment, not, you know, like wants more direct capital access, but maybe not deep enough inside to just go get a slice directly, like a venture capital fund would. So, very, very tricky situation.

• 16:55Jordi Hays?

  Well, you know who does have some SpaceX shares?

• 16:58John Coogan?

  Who?

• 16:58Jordi Hays?

  That might be in a position to sell? Nikita Beer.

• 17:01John Coogan?

  Oh, I thought you were gonna say Google. Doesn't Google own a ton?

• 17:03Jordi Hays?

  Yeah.

• 17:04John Coogan?

  I think they have 100 billion, right?

• 17:05Jordi Hays?

  They have a lot.

• 17:06John Coogan?

  Are they still locked up? Because the unlock was for employees or investors? I forget who, I forget exactly who.

• 17:13Jordi Hays?

  Let's talk about Nikita and then we can talk, we can pull up the unlock schedule.

• 17:17John Coogan?

  Truly end of an era for Nikita.

• 17:18Jordi Hays?

  Yeah, so it's crazy because he's getting, people are trying to community note him. Like, don't let the community notes.

• 17:24John Coogan?

  He didn't quit. He still works there. That's what I would imagine the community, so, so the story with Nikita Beer.

• 17:30Jordi Hays?

  The community notes are like, because he talked about doing a bunch of, a bunch of the stuff that he worked on, which they, they went from being a company that effectively shipped almost nothing, so much so that I think Clubhouse, when, you know, rewind a few years, it, you know, Clubhouse, I believe, had an acquisition offer at some point from Twitter to be acquired for like multiple billions of dollars.

• 17:54John Coogan?

  Okay.

• 17:54Jordi Hays?

  They turned it down and Twitter ended up cloning.

• 17:58John Coogan?

  Yep.

• 17:58Jordi Hays?

  Clubhouse and it worked.

• 18:00John Coogan?

  They cloned Spaces pretty quick.

• 18:01Jordi Hays?

  And it was, and it was, it worked as well as Clubhouse.

• 18:04John Coogan?

  Yeah, I would wonder how many DAUs, weekly active users, there are on Spaces, but the product works, it's clean, and it's probably the best implementation of that, of that feature. And it does exist, but there's very few, like, Clubhouse had specific moments where it was like, wow, everyone's on Clubhouse for this debate, for Elon and Vlad talking about the Robin Hood story and the GameStop story, right? There were like certain moments in tech that happened on Clubhouse. That's not happening on X Spaces that often, but as far as the product is concerned, like, it definitely works. It was shipped, that worked. But I agree that overall, the product velocity was a little slow.

• 18:44Jordi Hays?

  Well, yeah, and my main point is Clubhouse was probably feeling pretty comfortable, given Twitter's historical shipping activity. Like, they're not gonna, they're not gonna come out with like a competent.

• 18:55John Coogan?

  The meme was always, what if Google clones this? What if Google launches this? It was never, what if Twitter, or yeah, yeah, yeah. It was the, the Mark Zuckerberg steamroll from stories and reels. It was never, is Twitter gonna get around to copying this fast enough to put you out of business?

• 19:11Jordi Hays?

  But yeah, everyone has opinions about Nikita's run. I think he, he was a good, I think he was a good steward.

• 19:18John Coogan?

  Yeah.

• 19:18Jordi Hays?

  I think that's probably one of the worst jobs in the world, one of the most thankless jobs in the world, where you're getting yelled at from people and.

• 19:25John Coogan?

  He's the bouncer at the internet's dive bar.

• 19:27Jordi Hays?

  Exactly, exactly.

• 19:29John Coogan?

  And he bounced a lot of people.

• 19:30Jordi Hays?

  I think he had some amazing moments. I think that, I've always felt that creator revenue shares never made sense on X. I think that, I think that app would still be better if there were no revenue shares. But he did a great job of like trying to make that not have too much of a negative impact on the platform.

• 19:46John Coogan?

  Yeah, yeah, totally.

• 19:47Jordi Hays?

  He's kind of the sheriff. More of a sheriff than a bouncer.

• 19:50John Coogan?

  Yeah, yeah. Yeah, people, people got really upset when he like gave like a one-off bonus to someone for a big post or something like that. But in general, yeah, it was a little bit of a game of whack-a-mole, right? Because.

• 20:03Jordi Hays?

  And I think that guy got his account fully nuked. Yeah.

• 20:07John Coogan?

  But the, the creator.

• 20:11Jordi Hays?

  And that was such a good example of like, this guy got this massive one-time payout.

• 20:15John Coogan?

  Yeah. It was only 10 grand.

• 20:16Jordi Hays?

  Yeah. And again, the massive in the, in the creator payouts context. And then the next week, he was like complaining about having a low payout. And it was such a good example of like, you know, what have you done for me lately?

• 20:28John Coogan?

  Sure, sure, sure.

• 20:29Jordi Hays?

  People are speculating. I saw one account go viral with a post saying that Nikita was fired. Yeah, that was totally, that was totally false.

• 20:36John Coogan?

  That's totally false.

• 20:37Jordi Hays?

  Totally fake news.

• 20:38Speaker 02

  That account got nuked.

• 20:39Jordi Hays?

  Good.

• 20:42Jordi Hays?

  But there was a, there was a fun theory that as part of the lockup rules, as an active employer, top executives, your shares are tied to strict internal rules. For executives, a lockup is frozen, is completely frozen until after fourth quarter results are released. So, but because Nikita resigned as an executive, he's no longer bound by active employer executive trading restrictions.

• 21:05John Coogan?

  Oh, interesting.

• 21:05Jordi Hays?

  And so theoretically.

• 21:07John Coogan?

  Be able to get out, but this also has community notes. There's like layers and layers of community notes here.

• 21:14Jordi Hays?

  We have the unlock schedule. We can pull it up here.

• 21:16John Coogan?

  Okay. Initial float was 5%. Wave one just happened, August 11th. Oh, it's coming up. That's 20%. August 21st, that's 7%. September 10th is 7%. It's going to be a while until everything gets unlocked. And then of course, I mean, I'd be surprised if Elon's selling, right? It's like the, he has plenty of money to do everything else he needs to do and he's never been, you know, one to be.

• 21:42Jordi Hays?

  Why would you sell if you're projecting 1 trillion of revenue in 2030?

• 21:46John Coogan?

  Yeah, yeah, yeah.

• 21:47Jordi Hays?

  Inside Google DeepMind, Demis leaving his CEO post landed with essentially a shrug. Sources tell me he's already been disengaged from day-to-day management for a while now, but he was a firewall between DeepMind and the rest of Google, even as the two got pulled closer over the last couple of years. I expect that distance to dissolve more with him stepping back.

• 22:08John Coogan?

  Yeah, most people are anti-firewall in the, in the sense that they would love, like the researchers and the TPU team and the cloud team and the application team to all be deeply integrated, working very closely together. And you get this crazy flywheel between everyone who's rowing in the same direction. And when you have a firewall team, as this reporting is suggesting, you wind up with, well, this person just wants to focus on the most elegant benchmarks. And this person wants to focus on TPU sales and this person wants to talk about, you know, resiliency in their diversity of their cloud revenue. And then somebody else just wants Google search to not get disrupted by LLMs too quickly because ads need to go up at the right rate.

• 22:51John Coogan?

  And so differing incentives can create tensions and a dissolving of the firewall, probably something that people would be excited about, I would imagine. But he's been in this like, you know, elder statesman role for a while that people have been pointing to. Excited to watch him like continue that. Will be interesting to see how he instantiates that. Is it, obviously he's working on Isomorphic Labs, but he'll also probably be writing more blog posts, potentially testifying or talking in Washington, maybe a book, maybe a podcast or who knows? It'll be interesting to follow. What else?

• 23:25Jordi Hays?

  Alex also reported, on its current trajectory, Gemini 4 is not expected to push Frontier AI forward the way Fable and Sol just did. So still work to be done.

• 23:36John Coogan?

  There, there's clearly some very low hanging fruit on AI overviews, matching the speed with which those are generated to the lack of hallucinations that we're seeing in the more advanced models. How do you bridge that gap? You can clearly get fact-checked results if you're willing to wait a minute, right? What does it take to get fact-checked results in 5 milliseconds or 100 milliseconds or something like that? That's a huge problem and, but it's something that Google is like set up to do and benefit from. I still see crazy, crazy posts all the time that are screenshots from AI overviews that are like, I'm a pencil and I see a pencil sharpener coming towards me.

• 24:17John Coogan?

  And then Google AI overviews is like, run away, like, don't, like that pencil sharpener will shred your wood. And it's like, you know, not, it's like kind of falling for a prompt injection or some sort of meme. And then there's other stuff going on. Take him and Bill Gurley are going back and forth on what this means for Google. Take him says Jeff Dean and Demis Hassabis are two of the most important AI executives at Google. Jeff leaving and Demis is stepping down. He said he stepped up, stepped aside. It's very debatable what direction he stepped. I think he stepped up, up, down, down, left, left, right, left, right, A, B, A, B, start, right? Demis is stepping down from day-to-day operational leadership at DeepMind. And Take him says, game over. Very dramatic.

• 25:01John Coogan?

  Lot of other things going on in the business. Yes, these folks are very deeply important, but the company's been around for a couple of decades and has a lot of business lines. Game over is pretty aggressive. Bill Gurley disagrees. He says, this does not have to be game over for Google. I do think they have only one play left now to pull from their own Android, Android Kubernetes playbook and fully embrace open models. It's the obvious move in this situation. That's interesting. That would be interesting. I mean, they, Demis, I believe Google signed the open letter on the earlier side, right? With Nvidia. Could you see some there? They've been doing good jobs with Gemma. Is that how you pronounce it?

• 25:45John Coogan?

  Gemma models? Those have been pretty well received. It does seem like you're fighting with one hand tied behind your back as an American open source lab. But who knows? How Intel came back from the brink, we've been covering this story on and off as it's unfolded, but The Financial Times took to the big read to write up the full story as they see it, as they reported it. So it starts with Intel's chief financial officer, David Zizner. David Zizner was already navigating one of the most dramatic periods in the chip manufacturer's history when he took a call from the US Commerce Department official in August of last year. The federal government had just floated the idea of taking a 10% stake in the chip maker.

• 26:29John Coogan?

  But Zizner was bluntly told that the structure of any transaction was not up for negotiation, according to an internal Intel memo recently unsealed in shareholder litigation and sources close to the process. So I guess the shareholders are, are suing over this. Did you, was this deal in the interest of the shareholders? Let's see. They saw the memo and Intel says, hey, look, we had to do this deal. So in order for the government stake to reach 10% demanded by President Donald Trump, Intel had to convert billions in manufacturing grants advanced under the 2022 CHIPS Act, plus $3.2 billion of contracts from the Department of Defense into equity. Its board initially balked at converting the defense contracts, but it acquiesced.

• 27:13John Coogan?

  And the biggest federal equity intervention in a US company since the bailout of General Motors in 2009 was completed. The group that once dominated the market for PC and data center chips and was still the only US-based company capable of making the most advanced chips had been saved from a possible breakup. The world's chip consumers wary of the over-concentration of manufacturing capacity within Taiwan's TSMC, which makes more than 90% of the world's most sophisticated chips, including those who have been used in the booming AI sector, now have at least the prospect of a credible alternative supplier. Since Washington stepped in, as you know, Jordy, Intel has pulled $5 billion of investment from Nvidia, $2 billion from Japan's SoftBank,

• 27:56John Coogan?

  and its shares have more than quadrupled, trouncing those of rivals. While the deal divided opinion in the semiconductor industry, it had, it has definitely reversed the narrative of decline. Yeah, a lot of people were, were against this venture communism or, or, you know, state socialism, saying, you know, in America, we let independent companies live or die by the sword. The government shouldn't be stepping in, but a lot of people made a very good argument that this is a special case because it's such a critical industry to the American economy and, and the AI race that in this case, it wasn't, you know, a bailout for a company that should be just fighting it out on the global stage.

• 28:40John Coogan?

  And of course, there are heavy subsidies internationally for other competitors to Intel. The company has benefited from rising demand for its central processing units, such as the Clearwater Forest chip, launched in June, which can be used for managing AI workloads and data centers. That is the CPU crunch that we've been talking about. The agents need CPUs. They're going to be spending all the time building and chatting on, on their internal messaging boards. They're going to need CPUs to, to.

• 29:07Jordi Hays?

  Question for you, John.

• 29:08John Coogan?

  Yeah.

• 29:08Jordi Hays?

  Do you think that Tan is more focused on moving the needle or putting points on the board?

• 29:15John Coogan?

  That's a good question. I think moving the needle. I think he's more of a moving the needle guy.

• 29:21Jordi Hays?

  Really? Cause I, I mean, my takeaway from Storytime so far is that he's, he's trying to get some immediate points on the board because he knows that'll lead into moving the needle.

• 29:29John Coogan?

  Nah.

• 29:30Jordi Hays?

  But just grabbing a needle that, that, that big for a company that old at that scale, that's facing that many headwinds, you can't just grab the needle and expect to move it.

• 29:40John Coogan?

  I think the needle's already been established. The needle is, is the fab business that they've been investing in for years now in, in, in their advanced fabs and they're just trying to, to slowly move it. If he was putting points on the board, he'd be talking about, oh yeah, I got a deal with Apple. I got this really small deal with Google. I got this tiny thing over here. That's what points on the board means to me. Moving the needle is like the, the core thing. It's the main needle, you know?

• 30:06Jordi Hays?

  Yeah, some good points.

• 30:07John Coogan?

  Leave us five stars in Apple Podcasts and Spotify. Sign up for our newsletter, tbfn.com. And we will see you tomorrow at 11 a.m. Pacific.

• 30:15Jordi Hays?

  We love you.