Leopold is Back! Big Tech Earnings, Defense Tech Deep Dive | Richard Craib, Trae Stephens, Blake Resnick

(00:27) - Leopold is Back! (29:21) - Big Tech Earnings (32:45) - Richard Craib is a mathematician, AI researcher, and founder of Numerai, an AI-driven quantitative hedge fund. Richard Craib discusses the distinction between genuine alpha and returns driven by concentrated risk, arguing that disciplined diversification, mathematical risk management, and sustainable long-term investing matter more than short-term gains or investor hero worship. (01:00:15) - Trae Stephens, co-founder of Anduril and general partner at Founders Fund, discusses volatile venture valuations, responsible fundraising, and the evolving defense-tech ecosystem. He also covers Anduril’s autonomous aircraft and rapid manufacturing expansion, the case for mandatory civil service, and Founders Fund’s investment strategy. (01:34:39) - Blake Resnick, founder and CEO of public-safety drone company BRINC, discusses the company’s $125 million capital raise and tours its drones, recharging pods, R&D facilities, and factory. He explains BRINC’s plans to deploy autonomous emergency-response drones nationwide, its strategic partnership with Motorola Solutions, and opportunities for innovation across the domestic drone supply chain. (01:53:47) - 𝕏 Timeline Reactions 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 Codex - http://openAI.com/codex Follow TBPN: https://TBPN.com https://x.com/tbpn https://open.spotify.com/show/2L6WMqY3GUPCGBD0dX6p00?si=674252d53acf4231 https://podcasts.apple.com/us/podcast/tbpn/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 TVP. Today's Friday, July 31st, the end of the month 2026. We are live from the TVP and Ultra in the Temple of Technology, the fortress of finance, the capital of capital. We have a guest co-host today. Introduce yourself for those who don't know.

• 0:15Speaker 01

  Jordy's out again. I'm back.

• 0:16John Coogan?

  Yeah, we got Tyler in the Ultra Dome in the hot seat. Well, let me tell you about ramp.com. Time is money. Save both easy use corporate cards, bill pay accounting and a whole lot more all in one place. You're back. You know who else is back? Leopold Oshin Brenner is back. He says, you're going to have to drag me out of Sulp, out of situational awareness LP because he's down, but not out. Little beat up, but he shared a letter that's making the rounds. Thanks to some intrepid reporters on the DBBN team that posted this. He sent LP letter that clarifies a lot of the questions. Yesterday, I mean, even internally, we were going back and forth on like, okay, he sold a bunch of the portfolio to Ken Griffin to Citadel. Does this count as a liquidation?

• 0:57John Coogan?

  Yeah. Does this count as blowing up? And these are like sort of vague terms. Like, what does it mean to blow up? It seems like there was definitely a drawdown. The fund definitely was underperforming that month. But what does it mean? Is the fund gone forever? Is he going to work at McDonald's as some people were trying to make it seem like it was happening? Obviously, that's not going to happen. He's going to have a long career. Lots of people are rooting for him. I'm certainly rooting for him. But there are some facts in this letter that we should read through. So he writes, this is Leopold Oshin Brenner to the LPs of situational awareness LP. We let you down this month. We came closer to permanent capital impairment than is acceptable to us. We, while we ultimately found a solution that protected the fund and you as investors,

• 1:42John Coogan?

  that was the sale of the, of the public equity book to Citadel. There were some other structure going on to get liquidity. He said, we ultimately found a solution that protected the fund and you as investors. Our intention in running the fund is to never find ourselves in such a position in the first place. Volatility is the price of long-term investment returns. Over the past two years, we have delivered outstanding results. That's 100% true. It was up, what? A thousand percent at one point or something like that?

• 2:11Speaker 01

  Yeah, something like that. I mean, it got up to what 45 is the number?

• 2:15John Coogan?

  Yeah, 45 billion AUM from an original raise less than two years ago, I believe, up $250 million, which seemed crazy at the time. People were like, he's a young, he's a young first time hedge fund manager. He's got $250 million. That's crazy. Then pretty soon it was like, oh, he's got a couple billion. That's crazy. Then it was like, he's got tens of billions. Then he's got half a centi-billion. So he says, over the past two years, we have delivered outstanding results despite occasional sharp pullbacks. Probably not the first time. There's been other pullbacks in the market and those have probably been amplified, but never gotten to this level of, of actually distressing the fund in this way. He said, but our fund must always be structured

• 2:58John Coogan?

  such that we can take a loss and fight another day. And that's a recurring theme in this. The writing in this letter is really good. Very clear, very direct, not being dodgy, very upfront. I love the way it's written.

• 3:12Speaker 01

  Almost kind of like there's the PG advice to like write very clearly. Yeah. I think it was very, for sure, in that line.

• 3:18John Coogan?

  There's a lot of that in here. Yeah. So he says, I will make it my mission to ensure that we learn the necessary lessons from this experience. Here's where things stand. One, the portfolio experienced a significant drawdown over the course of July, which was exacerbated by extreme moves in core positions over the past week. Many AI names drew down by half or more when, while our positive long short spread reversed violently. While we could say much more about how unusual the month was, we hold ourselves to a higher standard irrespective of market conditions. Two, as these moves proceeded, we started to see increasingly adverse trading in names publicly associated with us. So this is the rumor that Martin Scurely was talking about

• 4:01John Coogan?

  yesterday, this idea that there's blood in the water.

• 4:04Speaker 01

  Yeah, you can kind of sniff out if someone's hurting and that.

• 4:07John Coogan?

  Exactly. And then short, sell those positions, sell those names, go, put some pressure on those downward pressure to actually intentionally hurt that fund. It's a knockout, drag out fight there on Wall Street, clearly. But that's the game you're playing. That, like, that, that's, that's why you get paid the big bucks if you can pull it off. So these, these dynamics are essentially similar to a bank run. Crazy to put that word in there. A lot of people would be dodging that, but very, very direct. I love it. Vulnerability be getting more vulnerability. We worked to keep the portfolio within our risk parameters, but gradually this became more difficult as positions rapidly moved against us and market liquidity dried up. On Wednesday night, Thursday morning, we took decisive action to protect LP capital. We traded a portion of

• 4:50John Coogan?

  our public portfolio in a block transaction to remove all leverage from the fund and prevent further losses. All shorts were closed and reliance on portfolio financing removed. We currently manage a fully paid for public book, long stock and long fully paid for options with no margin liquidity risk. This restored stability and allowed us to preserve our private positions. So this feels like down, but not out for sure. And he says, I take full responsibility for these events. That's just the full paragraph. He just says, I take responsibility. No equivocating. It's great. To be clear, this should rightly have been a very painful month in terms of the performance of our fund. When AI stocks draw down dramatically while AI technical business

• 5:32John Coogan?

  fundamentals are improving, you should expect our fund to be down a lot. We embrace volatility, but it should never jeopardize the fund. The fund was not shut down. It was not liquidated or transformed into a private only fund. This was something that a lot of people were speculating on was, is this going to be private only? Are they only going to have their private book? Is it just going to be the anthropic position? That's going to be riding? Or is it just going to be liquidated and they're just going to return capital LPs and just say, hey, we're going to start completely fresh, do something completely different? Even, even like, like an aqua hire, like the, you know, situational awareness becomes like a desk at another fund. None of that's happening. He's very clear about this. Situational awareness is not shutting down.

• 6:13John Coogan?

  It's not liquidating and it's not transforming into a private only fund. He says, we are continuing to operate as a hybrid public private fund as before. However, we will manage our public book on a fully paid for basis while we draw the lessons from these developments. Most importantly, we took the steps that were necessary to fight another day. I love it. A rallying cry to both the LPs and the employees, I'm sure. In the coming weeks, I will focus on putting in motion the necessary changes across a portfolio management, risk team and vigilance applied across the board to ensure a higher level of resilience going forward. AI may continue to intensify market volatility for years to come. And that is something that is so clear

• 6:53John Coogan?

  outside of the situational awareness, bottleneck trade, long tail, low market cap, high volatility stocks. Like, I have never seen the Mag 7 trading like this where across earnings, we're going to get into this with recapping Meta, Apple, Amazon, Microsoft.

• 7:09Speaker 01

  Yeah. I think the stat was Microsoft had the biggest like day ever of any public company.

• 7:15John Coogan?

  Yeah, the biggest move. Yeah. So you're seeing, you're seeing trillion dollar companies move by 10%, 9%, 15%. It's insane that anything can happen at that scale. And so clearly, there is going to be a lot of volatility. And I think he's right to point out that it is based on the AI trade. There's so much uncertainty about one little number about how the capex is going to trade back, you know, the, the investors in these, in these large companies, let alone the small ones, are moving the stocks significantly and that makes his job all the harder. He says, these were very expensive scars, but I am dedicated to ensuring they will be invaluable

• 7:57John Coogan?

  lessons for our organization and for myself as we move forward. My core promise to you is that we will not waste the opportunity to learn from these events on the portfolio itself. We are very optimistic about the current investment opportunities. Of course, I mean, the thesis still holds. The underlying fundamentals are accelerating at the very same time that prices have declined significantly. Thank you for your patience and your partnership. I'm fully invested alongside you. Virtually all of my capital is in the fund and I intend to work relentlessly to demonstrate that the events of this month have made me a wiser and stronger investor. He says, he's available for calls. But he also says that the, as an interim update, the current unaudited estimate of net month to date performance, this is for all of July, basically,

• 8:40John Coogan?

  negative 67%. Sounds atrocious until you realize that net year to date, they're still up 80%, which is like better than any investment fund ever. So people are definitely, you know, maybe down, but not out. There's going to be a second act here, which I think everyone's very excited for. A lot of people were praying for his downfall. It's very unfortunate to see.

• 9:04Speaker 01

  I think this was really good letter. I mean, this is like, instills so much faith. Like, yeah, he's completely level-headed. He's not like freaking out.

• 9:11John Coogan?

  You're calling it another billion dollar PDF.

• 9:15Speaker 01

  This could be the second billion dollar PDF.

• 9:16John Coogan?

  It might be. I mean, Sholto agrees. Sholto.

• 9:20Speaker 01

  Yeah, Sholto had a great take.

• 9:21John Coogan?

  Had a great position. What did he say?

• 9:23Speaker 01

  Uh, he said, uh, prediction. Situational awareness will be bigger than Citadel by the end of the decade. Leopold has predicted the last two years better than anyone else. Now that he can combine that with very expensive lessons in risk, he will be unstoppable. He has my full confidence.

• 9:36John Coogan?

  This is such a wild post. Ken Griffin sitting there being like.

• 9:40Speaker 01

  You gotta ride with your boys.

• 9:41John Coogan?

  Sholto, like, you're gonna take a shot at me like that, bro? Really? Really? You're gonna come for me like that? Uh, because I will die before I am not the biggest hedge fund manager in the world. But no, I mean, uh, I, I love that Sholto is coming out and, and supporting. Uh, now, interestingly, this is the battle of the Dork Cash, uh, Dork Cash guests. Because, uh, Sholto's been on Dork Cash, obviously, also a roommate, uh, and Leopold's been on, but Augustine LeBron is a little, little deep cut in the Dork Cash archive. One of the first Dork Cash guests, Augustine LeBron, is taking the other side of it. He says, even, even odds, I'll take the other side. It's gentleman's bet. And so they're putting money on the line. How much leverage will they be using? That's the key question.

• 10:23John Coogan?

  Sholto says a thousand dollars for fun. Anything more is better put in the fund at even odds. And Augustine LeBron says, done. And Sholto says, deal. And Augustine says, it's in my Google calendar. They're going back and forth. Now John Shu wants to get in on the action. Everyone's doing derivative bets on whether or not Leopold, uh, surpasses Citadel by the end of the decade. So check back, December 31st, 2029, I guess, would be the end of the decade.

• 10:54Speaker 01

  Yeah.

• 10:54John Coogan?

  That counts, right?

• 10:55Speaker 01

  Yeah.

• 10:55John Coogan?

  So when the clock strikes midnight, there'll be a countdown. 10, 9, everyone's gonna be new decade. Tech people are just gonna wonder which one is bigger. This is the biggest thing of the decade. Hopefully, the situational awareness will be taking over Times Square for a ball drop to celebrate being bigger than Citadel. No, I mean, if it happens, it's gonna happen like way before then. It won't be down to the wire. But, uh, let's pull up first this ad for Cisco. Critical infrastructure for the AI era unlocks seamless real-time experiences and new value with Cisco. And then let's pull up a live view from the Citadel trading floor because we got some leaked video.

• 11:39John Coogan?

  This is not the vibe that Martin was articulating Ken Griffin's wanting to be framed as like the savior, the glass resort, positive force.

• 11:50Speaker 01

  This is the guy you wanna call.

• 11:52John Coogan?

  I guess.

• 11:54John Coogan?

  Dune, so good. Is this from Dune 1 or Dune 2?

• 11:59Speaker 01

  I think it's. Dune 1? I wanna say Dune 1.

• 12:02John Coogan?

  Yeah.

• 12:05John Coogan?

  Beautiful.

• 12:07John Coogan?

  It's very heavy.

• 12:08Speaker 01

  So I, I think one of the, the big stories of the last, you know, few days is we've seen all these new Leopold photos. We've never seen these before.

• 12:14John Coogan?

  Yes.

• 12:15Speaker 01

  Brand new rare Leopolds from Wall Street Journal.

• 12:17John Coogan?

  This might be the biggest story of them all.

• 12:19Speaker 01

  Yeah, cuz I mean, for a while, the only image of Leopold was basically, there was like one headshot and then it was just stills from Dork Cash Podcast.

• 12:26John Coogan?

  Yeah.

• 12:26Speaker 01

  And now we're just seeing all these new ones. Like, where did these come from?

• 12:29John Coogan?

  There was one, and then there was a photo that was done, I think, for the Wall Street Journal. But then the New York Times writes up the whole story of the, of the situational awareness, uh, uh, you know, deal with Citadel. And they just drop a banger new photo that they just had in the archive that they could have leaked. Uh, let's pull it up. It's here. Uh, it's, uh, Leopold looking very, uh, pensive behind a glass wall. This one's in the Wall Street Journal today. This one's new too. Everyone's been clamoring for this because the one that goes viral is him in that green suit. This is the one.

• 13:01Speaker 01

  I'm pretty sure that's AI.

• 13:02John Coogan?

  That's AI. But this one is not. This is from the New York Times. They went and shot this and then never published anything. Like, the first time Leopold was mentioned in the New York Times was yesterday, and they used this photo. And so you have to wonder if they were like working on a profile.

• 13:17Speaker 01

  Yeah, they've just been sitting out.

• 13:18John Coogan?

  But Leopold's been so quiet with his public relations strategy. He's not talking to media, doing photo shoots, doing profiles constantly. Like, he certainly could be doing more in Bloomberg, at Forbes, and Fortune. Like, he could be doing a lot, but he's had a very narrow strategy. And I think it's worked very well for him. Um, but it's funny that somehow all of the mainstream media just has secret Leopold photos. They've been dropping on the timeline. It's a, it's a, it's a, it's a big day. Uh, let me tell you about MongoDB. A strategic reserve indeed. Uh, what's the only thing faster than the AI market? Your business on MongoDB. Don't just build AI. Own the data platform that powers it. Uh, John Arnold is chiming in. He says, my philosophy when I used to hire traders was that the optimal number of past blowups was one. He's not saying zero.

• 14:03Speaker 01

  Yeah.

• 14:04John Coogan?

  He says, you gotta learn your lesson.

• 14:05Speaker 01

  The question is, is how does the FTX future fund count? Does that?

• 14:09John Coogan?

  I don't think that counts at all.

• 14:10Speaker 01

  That, it definitely doesn't count as a full blow up.

• 14:12John Coogan?

  He wasn't a fund manager of it, right? It wasn't like for donations and then FTX was just the one that was funding.

• 14:18Speaker 01

  Yeah, he was like Flansbury. He was doing Flansbury stuff.

• 14:20John Coogan?

  That seems, yeah, that seems completely separate. Is, is the wedding photo AI or is this real? And is he carrying an American flag? Let's pull up this image.

• 14:28Speaker 01

  Yeah, this one I've never seen before until yesterday as well.

• 14:30John Coogan?

  I mean, like, if it's the wedding, like, the wedding's happening right now. This wouldn't exist, but, but I, I'm wondering if this, like, leaked onto the timeline from someone who was there. Also, this photo hit like Wednesday, and I think the wedding would be over the weekend. Um, but it's cool that he's just rocking, carrying an American flag international. Yeah, the real lesson here is never travel internationally because he takes one day off, one weekend off to go to Europe and everything, everything blows up. Of course, this one I was laughing at before the show. Rambo says, comparing Leopold Ashenbrenner to Bill Wang. Wang is, Wang is the goat. The Wang's from Arca Ghosts. Uh, Wang is the goat of degenerates and Leopold is a sheep compared to him.

• 15:11John Coogan?

  Did you know that Wang turned 200 million into 36 billion and it was all personal capital? The guy literally led prayer circles in the conference room before trading days started. He had $160 billion of stock exposure on just 36 billion of capital. It's like five or six X levered. His blow up happened in two days and he literally caused the collapse of one of the most prestigious investment banks. Banks lost a total of $10 billion combined because of his collapse. Leopold is nothing compared to Bill.

• 15:43John Coogan?

  So.

• 15:44Speaker 01

  Get her numbers up.

• 15:45John Coogan?

  Yeah, no. Uh, yeah, I mean, that, that, that's the interesting thing here is that, like, it is this sort of, like, dramatic unwind. But at the end of the day, it is just like an over the counter transaction with Citadel for a block of trades and block of equity positions.

• 15:58Speaker 01

  Yeah, and the fund is still around. I mean, they still seem to be like, probably gonna be doing very well.

• 16:02John Coogan?

  Yeah, they'll be, yeah, they'll be okay. Citadel will be okay.

• 16:04Speaker 01

  They're gonna be bigger than Citadel pretty soon.

• 16:06John Coogan?

  Any day now. Uh, and, and importantly, uh, all of the, all of the prime brokers, the big banks, like, they were not affected. There was not, uh, there was not like a liquidity crisis that.

• 16:17Speaker 01

  Yeah, yeah.

• 16:17John Coogan?

  That, uh, contagion effect did not take root.

• 16:20Speaker 01

  Yeah.

• 16:21John Coogan?

  Roy Driscoll says, uh, there's nothing to learn from the situational awareness situation about the AI trade. Leo was right in 2024. And based on the Amazon results, he's still right today. Hyperscale capex continues unabated. There's obviously something to learn about risk management. Forex leverage with high beta stocks is a mistake in trading stocks. Half the battle is getting the trend right, but the other half is nailing the portfolio construction.

• 16:44Speaker 01

  Well, I mean, this is what, um, Martin was saying yesterday, right?

• 16:46John Coogan?

  Yeah.

• 16:46Speaker 01

  Like, the, the underlying completely makes sense, but like you get into these crazy psychology things where it's just like.

• 16:52John Coogan?

  Yeah.

• 16:52Speaker 01

  Who's really?

• 16:53John Coogan?

  Everyone's focused on the leverage. It does also seem like there were, like, every time the 13F would drop, it would be like 12 names, which is like not a lot of diversification. So I wonder, like, right now, the message from the letter is, um, we're not using leverage right now. We're going to be learning the lesson.

• 17:08Speaker 01

  Yeah.

• 17:08John Coogan?

  Maybe the lesson is, hey, two X leverage or three X or something like that, or four in certain scenarios with smaller trades. Not portfolio wide or something like that. But it will be interesting to see if there's a difference in, uh, if, if the, the lesson that's learned. When the next 13F drops in a couple of quarters, we see, oh, wow, he has like 100 names. Or, or there's, you know, he's, he's using more options or less options or, you know, whatever, however it changes, that will be interesting to see for sure.

• 17:38John Coogan?

  So Leopold still has Anthropic, Maddox, and Fluid Stack, tier one private companies. He can probably raise two to three billion more. It's not over for him by any means, says Zephyr. Uh, and people are, uh, going back and forth on this. A lot of people. It, it is interesting. I'm seeing, I don't know if it's just my algorithm, but I seem to be tuned to, I'm seeing more people. Dunk on people dunking on Leopold than actual people dunking on Leopold?

• 18:05Speaker 01

  Yeah, it's like mostly just defending him like, yeah, he was correct and unfortunate certain chances, but.

• 18:12John Coogan?

  And and a lot of people being like, it's in poor taste to dance on graves or or you shouldn't you shouldn't be so negative. Why is everyone praying on his downfall? I'm not actually seeing that many people praying on his downfall. I have here and there throughout. And earlier in the week, there was like the he's working at McDonald's memes and whatever.

• 18:30Speaker 01

  Yeah, yeah.

• 18:31John Coogan?

  But overall, it feels like that has been pretty quiet and low, but I do get where those takes are coming from. There's been this vibe of like, it's too good to be true.

• 18:43Speaker 01

  Yeah, it's like tall poppy syndrome. You know, he's he's the AI.

• 18:46John Coogan?

  Can't keep getting away with it.

• 18:47Speaker 01

  He's the wonder kid.

• 18:47John Coogan?

  Yeah.

• 18:48Speaker 01

  Yeah, you know.

• 18:49John Coogan?

  Yeah, people, people hate to see a young, a young.

• 18:53Speaker 01

  A young goat.

• 18:54John Coogan?

  A young, young hedge fund manager run it up crazy. Let me tell you about Railway. Railway is the all in one intelligent cloud provider. Use your favorite agents to deploy web apps, servers, databases and more while Railway automatically takes care of scaling, monitoring and security. We have Richard Crave from Numerai coming on in 10 minutes. He's been running an AI hedge fund for years now and has been through all sorts of different pullbacks, understands this stuff really well. We opened the show with one of his takes and his analysis of how leverage affects the returns and risk profiles of hedge funds yesterday. So very excited to talk to him. He has been a very interesting voice in the world of tech and finance for years. I've been a fan of his, so very excited to have

• 19:38John Coogan?

  him on the show. So Alexey Guzy says, keep, people keep making fun of Leopold on the timeline, but everyone, one, everyone needs to get margin called once in their life. Is this true?

• 19:51Speaker 01

  Delian had a similar take, right? He said, basically, all the goats on Wall Street have had some sort of blow up earlier in their career, part of the game being live player on the field.

• 20:02John Coogan?

  So.

• 20:03Speaker 01

  But yeah, is that true?

• 20:04John Coogan?

  I don't think that's actually true. I don't think Warren Buffett ever blew up. I don't even think Ken Griffin ever really blew up. I think he had a really bad year in 2008 during the financial, during the housing crisis, the financial crisis. But early on, I think he got his start sort of post.com and was doing convertible debt trading and and never really like the entity has always been Citadel. There was no precursor to that. But but it's a fair take that like clearly people can blow, can can build back up after there's a.

• 20:35Speaker 01

  Yeah, I mean, there's a lot of comparisons to PT, right?

• 20:37John Coogan?

  Yeah.

• 20:38Speaker 01

  Very, um, and then they're saying, oh, this is also kind of a loose take, right? Going to VC, then you can kind of do the long only thing.

• 20:45John Coogan?

  The real, the real hack would be to just raise the smallest hedge fund ever, $10,000, lever it, blow it up and be like, wow, I'm post fall.

• 20:55Speaker 01

  Oh, yeah, he's post fall now.

• 20:58John Coogan?

  He's post fall now. And so, but but if you do it with like such a small amount of capital, but you can still be like, oh, man, I learned so much. That was really crazy. Those were crazy, crazy times. I lost $500. Ready, ready for the real fund now? No. Leo still made incredible returns. His fund will do incredibly well in the long term. Lots of people coming out in support. One person that's not in support, Joe Weisenthal is is going back and forth with Tracy.

• 21:27Speaker 01

  This is hilarious.

• 21:27John Coogan?

  This is funny. So, so Joe has been live tweeting this. He's, he's been making a bunch of great points and just illuminating the deeper level of like what's going on with prime brokerages and all these different aspects of what's going on. But so Joe started by sharing the Wall Street Journal article that said that Citadel buys situational awareness stock portfolio after big losses in AI and Tracy says, why does he have to get bailed out at all? And this is another question, like, is this a liquidation? Is this a blow up? Is this a bailout? It would be, it would have been a very different conversation if this had been like a government bailout of situational awareness. That's not what happened, but.

• 22:07Speaker 01

  It's a risk.

• 22:07John Coogan?

  Tracy says, why can't we just let the speculators fail? Joe Weisenthal says, who says he's getting bailed out? He entered into a transaction with a willing counterpart. And Tracy says, isn't that a bailout? Why not just keep managing the fund? Why not beat Kathy Woods and have a bad day and live to tell another tale? Except there were probably too many redemptions, so it was spiraling. Joe says he got margin called and Tracy says, so it is a bailout, just let it fail. But maybe it was too big and could see the contagion. Joe says, I don't get what you're saying. Someone got gets margin called and they have to pay the broker. And the way they pay the back the broker is selling off shares to some other counterpart. How is that a bailout? Like, he's just selling and people associate every sale with a bailout now, I guess. But that's not what this is. This was not the government stepping in.

• 22:50Speaker 01

  Yeah, yeah. He was not too big to fail.

• 22:52John Coogan?

  No, not at all.

• 22:52Speaker 01

  I mean, some people are saying that he could have been too big to fail going in, but.

• 22:55John Coogan?

  Yeah, it doesn't seem like that's what happened. It seemed like there there were significant losses and then they ran an auction and there were three, three parties bidding and they and the bids came in above, above like, you know, liquidation level. So the fund is not liquidated.

• 23:11Speaker 01

  Yeah.

• 23:12John Coogan?

  And it remains. And so, Joe, after fighting back and forth for several posts, he says, I think we might have a different definition of the term here. And I think you do. I think you do. Very fun. Anyway, let me tell you about Shopify. Shopify is the commerce platform that grows with your business, lets you sell in seconds, online, in store, on mobile, on social, on marketplaces, and now with AI agents. Yes, this was the post we were talking about from Delian. He says Silicon Valley somehow unaware that basically all of the goats on Wall Street hedge fund land have had some sort of blow up earlier in their career. Part of the game is being a live player on the field. He's obviously talented, never met, don't know him, and will be back. So people are.

• 23:53Speaker 01

  In the comments, there's some counter examples, Paul Turner Jones.

• 23:56John Coogan?

  Paul Turner Jones.

• 23:57Speaker 01

  A lot of that.

• 23:58John Coogan?

  I mean, a lot of these people are like wildly different strategies. They're not really like, I don't know, like, like, there's a whole class of like mutual fund managers that were like by design, never using leverage, never, never hedging anything, never going short. Like, and if you never, if you never engage in a trade that can blow up on you by definition, you can go down, you can go way down and just not sell. And if you have good relationships and there's not redemptions, like if the redemptions are locked up. I mean, this is like VC funds have never, like, there's not really any VC funds that have like blown up all of a sudden, because it's like, okay, you invested $1 billion over a decade and you returned 700 million of that. That's terrible. You lost money over a decade

• 24:43John Coogan?

  and you completely whiffed on the benchmark and it's a, it's a bad result, but there's not like a blow up. It's just like, just a miss. And so you're sort of set up for a different thing. Anyway, let me tell you about Figma. Agents meet the canvas. Your AI agents can now create and modify your Figma files with Design System contacts. I want to keep going on this. Let's see. Yeah, the fund is still up 80% year to date. That is a crazy, crazy stat. This might surprise some, but I continue to evaluate Leopold Ashenbrunner as a live player, says Samo Burja. Absence of setbacks isn't a technical criteria for who is or isn't a live player. And.

• 25:26Speaker 01

  Yeah, I mean, it is funny. Like, I really, I can't think of many examples I've seen of people like actually hating on. Basically, everyone's defending him.

• 25:33John Coogan?

  I think the algorithm might just be tuned to like positivity. I got a gold retriever algorithm or something. This happens all the time where I will see the backlash to the backlash. I don't actually see the first backlash. I just see people dunking on like, whatever's going on is so unacceptable. No, I'm sure it's there. And there's also like, you can sort of feel it in the, in the replies and the nods and the, in the snarkier people a little bit. I think it's out there. This is an interesting scoop from Berber Jin over at the Wall Street Journal related to this. Situational Awareness tried to sell a $3.5 billion stake in Anthropic to a group of investors led by Green Oaks and Sequoia. Obviously, there's a lot of demand for the stock. The parties reached a deal late Wednesday, but then situational awareness pulled out Thursday morning.

• 26:16Speaker 01

  They turned it down.

• 26:17John Coogan?

  They turned it down.

• 26:19Speaker 01

  They turned it down.

• 26:19John Coogan?

  They were going to offer like 3.5 billion, something like that. Something like that. And they turned it down just to grind for the public equity book. They sold that to Citadel. That obviously cleared a lot of the risk out. And they said, hey, let's keep this position. We're extremely excited about this. We're bullish. And so, I don't know. I think, will this be the subject of a book? Will this be the subject of an actual movie? Is it, is it drama enough? Have we gotten the FTX movie yet? Because that's way more dramatic and I don't think that ever happened.

• 26:51Speaker 01

  Yeah, I haven't seen.

• 26:52John Coogan?

  And then there was Infinity, not Infinity Machine, there was a Going Infinite.

• 26:56Speaker 01

  Yeah, that was the Michael Lewis book.

• 26:57John Coogan?

  Michael Lewis book, but that was written like before the blow up. And so it was like sort of, it didn't really tell the story like day by day, but like an in the room, fly on the wall, minute by minute account of this would be interesting, but it's not that dramatic because it doesn't end with an explosion. It ends with like a, okay, we're back in the fight, which is cool. I mean, it's maybe more positive outcome. And so Augustine LeBron has taken a victory lap because he tweeted a SHA 256 hash.

• 27:30John Coogan?

  December 29th of 2024, saying Leopold Bausch and Brener has terrible instincts and he will fail spectacularly. This is of course, the Door Cash on Door Cash guest battle that's playing out. And, and so this is an interesting thing that you can post a cryptic, a literal.

• 27:47Speaker 01

  I've seen a bunch of people do this. Yeah, they post some prediction.

• 27:49John Coogan?

  Shouldn't you just post every possible prediction then, and then just delete the ones that don't come through?

• 27:53Speaker 01

  And then be like. I think some people accuse other, you know, anons, you just post, you know, one trade and the opposite of it, and then you delete it.

• 27:59John Coogan?

  Yeah, yeah, yeah.

• 28:00Speaker 01

  If everyone's wrong.

• 28:00John Coogan?

  Yeah.

• 28:01Speaker 01

  Then you look back and you're, wow.

• 28:02John Coogan?

  This is another way to get started in the hedge fund game. You start two hedge funds, True North Capital, True South Capital. One goes extremely levered short the market. The other one goes extremely levered long the market.

• 28:14Speaker 01

  Yeah.

• 28:14John Coogan?

  And then, and then after a year, one has exploded, the other one has ripped. And then you wind down the one that didn't work and you're like, I called it. It isn't a bigger fund. I'm good. Exactly. I don't think that's what Augustine did. I think this is his, I think this is his real take. And maybe he's, he is, he is the example of someone who has been like, not so secretly rooting against Leopold or just skeptical.

• 28:41Speaker 01

  Sure.

• 28:41John Coogan?

  And he continues to be skeptical because he's betting Sholto $1,000 that Leopold will not be bigger than Citadel. What if, what if Citadel just pivots and just becomes something way smaller? Like it could just spin out, fracture, he could divest some things, break up the company. Yeah, like Sholto could win on a technicality here.

• 29:04Speaker 01

  Yeah, yeah.

• 29:05John Coogan?

  You know?

• 29:05Speaker 01

  No, I'm riding with Sholto.

• 29:08John Coogan?

  Okay. Well, let's go through a quick, we have like one minute until Richard joins. So let's just go through some timeline. We'll take you through some, some bit mag seven earnings later. But the, the interesting recap is that there's absolutely turmoil in the, in the big tech markets based on earnings. Big tech's AI spending is continuing to produce blockbuster financial results, even as investors have become increasingly selective about which companies are willing to reward. Over the past two weeks, Microsoft, Apple, Amazon, Meta, Alphabet, all reported quarterly earnings that largely exceeded Wall Street expectations. It's very boring when you pull the, did they beat on top line? Did they beat on bottom line?

• 29:50John Coogan?

  It's like everyone beats and then the stock goes down 10% or up 10% based on capex forecasts and also just messaging around AI diffusion and AI uptake. So Microsoft led the group with shares surging after reporting fiscal fourth quarter revenue of $90 billion, of 18% year over year and ahead of the $87.4 billion that analysts were expecting. That was the consensus estimate. EPS came in at 474 versus expectations of 421. So they beat top line, beat bottom line. Azure revenue accelerated 43% over year over year.

• 30:26Speaker 01

  Yeah. And so they gained 450 billion in one day, 16%.

• 30:30John Coogan?

  50 billion in one day.

• 30:32Speaker 01

  Yeah.

• 30:33John Coogan?

  That's for.

• 30:34Speaker 01

  Biggest one day market cap gain for any US company.

• 30:36John Coogan?

  Look at that. Thank God. That's really, really impressive. It's up 25% over the month. Very impressive. Apple also beat expectations, reporting 109.4 billion in quarterly revenue, earnings per share of 202. Stock briefly pushed the company market cap, cap above the $5 trillion mark, but it has been absolutely tanking today, down what 10% today or something like that? Let's see, down 9.47%. Last, we'll go through two more. Amazon has also impressed investors with revenue climbing 20% to 200 billion, 200.6. AWS growing 37% to 42.4 billion, sending shares sharply higher in after hours trading.

• 31:20John Coogan?

  Here's Amazon, we can pull that up as well. The market is up 13.76% and the day is looking pretty good too. 15% today.

• 31:33John Coogan?

  The market's reaction wasn't usually universally positive. Meta posted stronger than expected revenue of 60.8 billion, up 28% year over year, but earnings per share fell 6.18, $6.18 fell short of the $7.22 analysts had expected. Investors focused on the company's 31.1 billion in quarterly capex, along with 3.6 billion in one-time legal and severance costs, sending the stock sharply lower. Let's see what Meta's doing, down just a bit. Alphabet meanwhile, reported revenue of 119.8 billion, while earnings per share of $9.11, comfortably beating expectations while Google Cloud revenue surged 82% year over year to nearly 24.8 billion.

• 32:18John Coogan?

  Even so, investors remained focused on the escalating cost of AI infrastructure as hyperscalers continue pouring hundreds of billions of dollars into new compute capacity. And here's, here's Google. So we can dig into this more. There's a whole bunch of deeper questions about what is the actual efficacy of Meta spending on AI? How much are they spending on tokens? How much are they spending on headcount? All these things matter, but we will dig into it another time because we have Richard Craig from Numerai here with us in the TV panel show. Richard, how are you doing?

• 32:48Speaker 02

  Hey.

• 32:48John Coogan?

  Hey, great. How are you? Thank you so much for taking the time. I'm so glad that you had a chance to hop on the show on such short notice. Very excited to talk to you, but could you kick us off with a little bit of background for anyone who's unfamiliar with your career, your business and why it's relevant to talk to you today?

• 33:09Speaker 02

  Yeah, so I am a hedge fund manager. I started my hedge fund Numerai in San Francisco in December 2015. Before that, I studied mathematics and I was very, very interested in AI from a very early age. And in 2012, some of the key breakthroughs happened with self-driving cars and things like that. You could really see that this would be a really, a really good thing for, to kind of bet on in the future.

• 33:40Speaker 02

  But Numerai, you know, we're a quant hedge fund, so we trade stocks using AI. We don't simply invest in AI companies.

• 33:48John Coogan?

  Yeah.

• 33:49Speaker 02

  Although pretty much every company is in some way entangled with AI. So, you know, it has a lot to do with us.

• 33:57John Coogan?

  And in terms of like the fund structure, how similar or different is it to what we're talking about with situational awareness? Where there's like a few LPs, maybe some institutions invested? How broad is the LP base? How concentrated are the bets? How big is the investment committee? How are investment decisions made?

• 34:18Speaker 02

  So yeah, I mean, we're trying to make alpha, which is a kind of a technical term. Like we can't take any market risk. We can't take any factor risk. We can't go off on anything we think is, you know, something's going to be big. Okay. We can't invest in that except for through our strategy, which is a low volatility strategy.

• 34:41Speaker 02

  The fund has been growing a lot. Assets are up 100% a year for two years now.

• 34:48John Coogan?

  Congratulations.

• 34:50Speaker 02

  Well, remember that's, that's a lot of, that's AUM growth. And, but you know, the point of the, the point of the company is to make this, this kind of thing called alpha, which I feel like is a term that gets abused a lot. And we're trying to make sure that our investors can make a better portfolio by holding a piece of us.

• 35:12John Coogan?

  Yes. So help me understand alpha in the context of situational awareness, because I've heard a lot of people throw around, it's just levered beta, it's, it's beta. But when I think about situational awareness and the ideas and the thesis that was contained in that PDF that was released almost two years ago, that felt contrarian. It felt like alpha in the sense that you can understand the future in a way that other people can't. Is that not alpha?

• 35:47Speaker 02

  Yeah, it is. It is, it kind of isn't in a naive sense it is. And, and it's obviously the situational awareness, you know, blog posts that came out was sort of supervisionary and fun. I mean, I read the whole, the whole thing. We have a mutual friend, I think we were at Joey's wedding together.

• 36:06John Coogan?

  Yeah.

• 36:07Speaker 02

  And Vienna and Joey, I said, Joey, can you please introduce me to Leopold? This is so cool. So you know, there's a, there's a, there's a place for that type of, that type of fund where you're going to take a big, a big bet with a lot of risk. And those types of funds can obviously produce extraordinary returns. But the trouble is. The driver of the return is the risk.

• 36:34John Coogan?

  Hmm.

• 36:35Speaker 02

  Um, more than the, more than the alpha.

• 36:38John Coogan?

  Okay.

• 36:38Speaker 02

  So the alpha is there, but the driver of the return is, is the risk.

• 36:42John Coogan?

  And so when people retreat to a, a more classic example of alpha, what are we talking about? What, what, what is the purest source of alpha?

• 36:52Speaker 02

  Yeah. So I mean, the, the, here's the naive way to have alpha, right? If you, if you, if you have, if you beat the market, you have alpha.

• 36:59John Coogan?

  Okay.

• 37:00Speaker 02

  So neutral. Why, why, what's, what's so hard about that? If my portfolio is up 20%, but the market's up 9%, I have alpha.

• 37:08John Coogan?

  Yeah.

• 37:08Speaker 02

  But that's actually still kind of missing the point in actually a very deep way. Um, and so the, the problem is there's not just one factor. You have to look at, do you beat the market?

• 37:20John Coogan?

  Hmm.

• 37:20Speaker 02

  You have to look at, do you beat all the factors uh that there are in the market? So there's a factor called momentum. There's a factor called technology. There's a factor called US technology. There's a factor called momentum times beta.

• 37:34John Coogan?

  Yeah.

• 37:34Speaker 02

  Okay. All of these things in the, as a term of art in quantitative finance, you call that risk premium.

• 37:42John Coogan?

  Sure.

• 37:42Speaker 02

  They might, they're risks, but they, and they might have a premium, but they, but they're actually not the types of things you would call alpha. Um, and so a fund like Numerai, we're trying to hedge to things, so many things, thousands of different risks. So that if someone ever looks at our portfolio and wants to say, do you have alpha or are you making money just from risk? They can't argue that. It's very hard to say that. So we, that's our, that's, that's the goal. And that's the goal of all hedge funds. That is Citadel or a Millennium. They're trying to make this kind of alpha.

• 38:23John Coogan?

  How much should I, if I'm, if I'm trying to understand, if I'm, if I'm looking at a fund's returns over a number of years, uh, how much should I be able to identify alpha purely by uh, uncorrelated results with the broader market? Like is, i- i- if the market goes down 10%, the fund goes up 20%. Then the market goes up and the fund goes down. Is that, is that giving me like a sense of alpha? That at least this fund is searching for that? Or is that just uncorrelated returns and they're just throwing, throwing?

• 38:57Speaker 02

  Yeah. So if you're uncorrelated from all the factors, you have alpha.

• 39:02John Coogan?

  Okay.

• 39:03Speaker 02

  I think there's a sort of sleight of hand that discretionary investors, hedge fund managers tend to pull, which is they say, well, look, we believe in the US. We believe in AI. We want to take that factor risk. Um, because that's part of our return. And to which a sophisticated investor would say, we can take that risk ourselves without paying fees.

• 39:30John Coogan?

  Yeah.

• 39:31Speaker 02

  Uh, there is nothing stopping any LP of situational awareness from buying Anthropic shares themselves. Right. There's, there's nothing, if, if, and there's nothing stopping them from going long micro.

• 39:46John Coogan?

  Micron or something.

• 39:47Speaker 02

  It's really like almost childish to think that they, a sophisticated investor wouldn't be able to pull those trades themselves. Um, and so to take a personal example, here's a fun thing. So I bought, it's a good day to say this. I bought some Amazon options.

• 40:06John Coogan?

  Hmm. Okay. Yeah.

• 40:07Speaker 02

  I bought some coal options on Amazon. I'm a hedge fund manager. You know, I don't really trade very much, but I just think it's a cool company and it's going to benefit from AI. And I, and one of my friends said it would be a good thing to buy. That's it. Okay. Now, my coal options are up whatever, 300% today.

• 40:28John Coogan?

  Yeah.

• 40:28Speaker 02

  Uh, whatever it is, does that mean I'm on a generational run? Does that mean I'm, I'm a genius investor? Uh, no, it just means a, a, a gamble I took paid off. And it paid off actually probably appropriately for the risk I took. So in the hedge fund industry, you know, that, the banality of that is extreme. Uh, I, no one is, uh, no one at Numerai is talking about how I bought Amazon options and made money. This is like, so boring.

• 41:00John Coogan?

  Okay.

• 41:00Speaker 01

  Uh, but so, so, so e- even the timeline, like the, the length that Leopold was, you know, it was like a year and a half. He was on this like generational one, as, as people say. Is, is there no difference between that and?

• 41:11John Coogan?

  Yeah. Wait, does a generational run stop?

• 41:13Speaker 01

  How do you define?

• 41:14John Coogan?

  Is it 11 months and 30 days?

• 41:17Speaker 02

  I think it takes a generation, actually.

• 41:19John Coogan?

  Oh.

• 41:20Speaker 02

  I think that's how you measure the investment performance of someone over a very long time.

• 41:24John Coogan?

  You're right there.

• 41:25Speaker 02

  So, uh, that's, that's why it's kind of a funny term.

• 41:28John Coogan?

  Okay. So, uh, wait, but, uh, I, what, what do you think about the, the idea that, uh, certain managers, they might, it might be possible in theory to like copy them, but they are getting paid to do something that you might emotionally not have the resilience to do. I, I'm thinking of this Jeremy Giffon post. Uh, he says, uh, people really miss that buy and hold means the ability to buy and hold, not that you should buy and hold. And he quotes this screenshot from the Financial Times. It says, since 2010, Warren Buffett sold his entire holdings in 63 positions with an average hold time of four years and three months. Uh, Combs and Weschler, uh, two other managers exited 48 stocks,

• 42:12John Coogan?

  holding for just two years and 10 months. And so even though we all know buy and hold, uh, you know, buy low, sell high, psychologically it's hard to do. So that's maybe what some hedge fund managers are getting compensated for. Sure. I might've read situational awareness, agreed with Leopold, but do I have what it takes to actually go and buy on margin and do all this crazy stuff and, and like, and not, and not paper hands?

• 42:38Speaker 02

  I love that, uh, discussion. I think there's a sort of feeling that he, he was the one with the courage uh, to take all this risk or something. But even that falls flat on a hedge fund manager, I'm afraid.

• 42:52John Coogan?

  Okay.

• 42:52Speaker 02

  Uh, because it's like, it, it, you know, it's like someone, someone goes all in with pocket sevens and, uh, he, he doubles that money.

• 43:03Speaker 02

  If, if you learned anything about his courage or his skill, really he's, uh, it, it's a bit like, um, it's a bit foolish really. So it's basically like the, I also used to actually think this. I was a young hedge fund manager. I feel like I'm maybe, maybe aging out now. But I, I was a, a 28 year old hedge fund manager. And I did also have this perception that surely these big hedge funds are just so risk averse that it's almost like, like for psychological reasons, they refuse to take enough risk. And, um, I've come to learn that they're taking nearly the exact amount of risk that you should take because these things are mathematical.

• 43:46Speaker 02

  There's a right amount of risk to take if you have a certain sharp ratio. And, uh, those numbers are smaller than you think. Uh, if you want to run money for a very long time.

• 43:58John Coogan?

  Yeah.

• 43:59Speaker 02

  Right? So, you know, Leopold was up 400% in H1 of 2026.

• 44:08Speaker 02

  Well, Warren Buffett was up 5 million percent by basically being sensible for a very long time.

• 44:15John Coogan?

  Sure.

• 44:16Speaker 02

  Um, so do you want to do the 400 and then lose everything? Or do you want to do the 5 million? And it takes 30 years. So I think that's, that's kind of like the orientation you have to think about. So it's not that some people are unwilling to take, uh, risk. It's that they are already taking that risk. It's just a small part of their portfolio. So there's no doubt that in the markets, numerized, uh, AI models that are trading thousands of stocks at all times that we intersected with situational awareness. And we bought some of their positions and sold some of their positions.

• 44:56John Coogan?

  Sure.

• 44:56Speaker 02

  And maybe had similar alpha, if you constrain our portfolio to just look at that segment of the market.

• 45:02John Coogan?

  Sure.

• 45:03Speaker 02

  But we didn't do it at the wrong size, you could say.

• 45:07John Coogan?

  Yeah.

• 45:07Speaker 02

  To that appropriate size.

• 45:08John Coogan?

  You, you actually ran the numbers on, or you had Claude run the numbers on, uh, how likely a catastrophic down, uh, down, a drawdown would be based on a certain leverage ratio. Uh, what does that math say? Is the optimal amount of leverage, the optimal amount of risk? Is it all based on the timeline? If you think, okay, well, I want to be the next Warren Buffett. He's been investing for 60 years. I need to work backwards from that number. And then is that different than if I say, look, I actually believe the singularity is going to happen in 2030.

• 45:51John Coogan?

  And so I only need to survive another four years. And then I'm done because it's whatever the singularity is.

• 46:01Speaker 02

  Yeah, well, that's in some ways almost the problem. You really have to have a long horizon for investing. You know, the market is not pricing that the world ends in 2030.

• 46:18John Coogan?

  Yeah.

• 46:19Speaker 02

  In fact, the market's pricing, I mean, just not like on every level.

• 46:24John Coogan?

  Yeah.

• 46:24Speaker 02

  If the world was going to end, you know, volatility of the stock market would be as high as situational awareness fund.

• 46:30John Coogan?

  Sure.

• 46:31Speaker 02

  Um, so it's like, you know, we basically, we have to have this orientation of long term. And if you don't have that orientation, kind of all bets are off. I mean, if you, if you're, if you're gambling and you're playing poker and it's late at night and you, you only have 30 minutes left to play before you have to catch a flight.

• 46:49John Coogan?

  Yeah.

• 46:50Speaker 02

  Okay, let's up the risk.

• 46:52John Coogan?

  Yeah. Yeah, I mean, there is an element, I'm not saying that this is what's happening there, but there is an element where you're like, if I believe that the world is ending in four years, I want to spend the next four years in a yacht. And so I need to get as much liquidity as possible in the short term. Sort of like the, the, you know, you have, you have, what, what, what does that mean? You have like six months to escape permanent underclass. Sort of like the hedge fund version of that, I suppose. But you clearly don't, you know, believe in that. What are your beliefs about the, the, the future technology, the financial markets broadly? Like, how are you feeling? Is that even something that you interrogate?

• 47:35John Coogan?

  Or are you preoccupied with other sources of alpha that are less like macro and, and long-term trend-based?

• 47:44Speaker 02

  Well, any, yeah, any, any long orientation. So if you're long the stock market, the problem is all of our investors are already long the stock market. You don't have to tell them, you know, it's a good idea to buy stocks. Um, and so, you know, if I was running a fund and maybe this personal trade of buying Amazon, if I had sold that to an investor, they'd be like, well, bro, we already had Amazon and we already sized the risk appropriately. So all you did was add risk and not any reward. Really, that's, it's that kind of tension that forces all the, all these issues. But, um, you know, I also want to say, I mean, I think, one, one of the first things I said in my post is, I think there's a place for these kinds of funds.

• 48:29Speaker 02

  Okay, so I've invested in funds like this. So there's a fund, it was basically the A, the crypto version of this was a fund called Polychain. And it's good. And I was a big LP in that. Um, in fact, the first LP and the biggest, I think the biggest one for, for a while. But, um, I guess I never got that enthusiastic that if someone had made a thousand percent of the past two years or whatever it was, that this would be some permanent property of that manager. Do you see what I mean? Like if there's no, there's no amount of looking back on a track record of a manager that's just buying risk,

• 49:13Speaker 02

  will basically be able to overcome the, the realities of investing, which is that it's always going to be hard to make money.

• 49:20John Coogan?

  Yeah.

• 49:20Speaker 02

  So let me defend the situation more, not just that these funds are cool because I have been invested in one, but, but I think they're cool because many investors want a high return on the risk that they're taking. Because they already have their portfolio entangled in all these investments. So they have, you know, bonds and stocks and all this stuff. And this marginal 500 million that they're going to give to a small fund, they want that fund to kind of kick, kick ass with that money. And, and, and so that's where I would say, I don't think it's right to say, uh, Leopold did something wrong in a certain sense.

• 50:02Speaker 02

  It was very likely to go badly, but I don't think it's intellectually wrong for any LP to have invested in that. In fact, maybe I, I would have invested in it or, or something, uh, if I could have understood it a bit, bit more and so on. But the, but obviously there were a lot of red flags and, and the fact that the volatility was obviously much higher than a hundred percent. You can't make 400% in six months without having that kind of volatility. Then you're basically saying, we're literally doing a coin flip here. And I just hope that all the investors knew that. And by the way, if you're a huge investor, you put 500 million in and you lost it all,

• 50:46Speaker 02

  on the very day you lost it all, you might still be up on your portfolio.

• 50:50John Coogan?

  Sure.

• 50:51Speaker 02

  Because your other stuff went up.

• 50:52John Coogan?

  Yeah.

• 50:52Speaker 02

  And so that's how investors should be managed, it's on their whole portfolio. So I don't want to say anything bad about anyone who invested in that fund. I'm sure there are some of the best, wealthiest investors out there, so I'm sure they're.

• 51:06John Coogan?

  And I mean, from the letter that he sent today or yesterday, it seems like the, the Citadel deal put a lot of new cash on the balance sheet, cleared a lot of things out and that there might not be permanent capital impairment, as he put it in the letter. So there, he is living to fight another day. What do you make of this idea that the optimal number of blowups for a hedge fund manager is one?

• 51:39John Coogan?

  Not zero, not five, but do you agree?

• 51:43Speaker 02

  Uh, we had one, uh, we had one losing year so far with Numri, right? So we are not, uh, are not, you know, if you're in the business of being an investment manager, you're almost putting yourself on the hook to be like, yeah, one time we lost money. In fact, about 50% of days we'll lose money, right? Um, so you, you really don't want to be, you know, negative about that.

• 52:09John Coogan?

  Yeah, sorry, continue.

• 52:12Speaker 02

  No, so I think that's, that's, that's one very important piece.

• 52:17Speaker 02

  I would say though, the key thing that I think matters is, is not just leverage, which I think people are saying, oh, you use leverage, you lost money. We use leverage. I'll bet you, we use way more leverage than situational awareness. Um, we're not leveraged long, we're not leveraged long. We're not leveraged factors. So we're leveraged, if you were to plot our, our performance on a graph,

• 52:49Speaker 02

  you would see, and you would say, show me the unlevered performance. It would, it would basically look like the X-axis. You wouldn't even notice it.

• 52:58John Coogan?

  Sure.

• 52:59Speaker 02

  It's so much kind of risk constrained that it, it requires leverage to get to appropriate ball.

• 53:06John Coogan?

  Got it.

• 53:07Speaker 02

  So with, with more leverage than situational awareness, we have

• 53:14Speaker 02

  one-tenth of the volatility and risk is volatility squared. So if they have 150 squared units of risk and we have 10% squared, it is a whole different ballgame. So I was, I'm mostly critical about the, the, the high volatility. I think that was the mistake, not the leverage.

• 53:38John Coogan?

  Interesting. Where do you think the fund goes from here? It feels like he's set up for a second act. The fund is not liquidated, not private only, not converted. How do you think this evolves? Like, what is the lesson to learn?

• 53:58Speaker 02

  I think,

• 54:01Speaker 02

  I think, first of all, I don't think that we should have a culture of thinking people are intelligent anymore. Because AI is smarter than all of us.

• 54:13Speaker 02

  So if one of the reasons is you think there's like a super genius investor out there, that's clearly got something, like a kind of same type of reason you might have invested in SPF,

• 54:26Speaker 02

  is clearly on, you know, doing so well, that, don't do that. Don't do that hero worship thing. Just pick up, take out your pocket calculator and calculate the risk of ruin.

• 54:37John Coogan?

  Sure.

• 54:38Speaker 02

  Okay, and then you'll like probably avoid a lot of these types of mistakes.

• 54:45Speaker 02

  But I think, you know, I really believe in, in AI and I'm a singularitarian. I mean, I'm seriously a believer. I'm not moderate about it. But because of that, guess what? AI is in the stock market. We, you know, AI is in Citadel. AI is in Numri. So if, uh, you know, if someone comes up and says, oh, my, my thesis is we're going to buy AI stocks because AI going to be big.

• 55:19Speaker 02

  Okay, the stocks are in the market. The market is an artificial intelligence. So don't take it lightly, man. Like, yeah.

• 55:32John Coogan?

  What is the process psychologically for dealing with a career where 50% of your days are going to be bad days? There's a lot of people in most careers, I feel like, can show up and have a day that's successful. Like, they moved the needle forward, they didn't make backward progress, and yet with the job of a fund manager, in your role, half the time, you're gonna wrap up your day and you're gonna be worse off than the day before, right?

• 56:04Speaker 02

  I think, well, you see my Terminator hand in the back, right?

• 56:09John Coogan?

  Yeah.

• 56:10Speaker 02

  I think you need to lean on math and AI. You need to basically say, you know, if the volatility, if you know what volatility means, and you know what your volatility is, can there be anything to shake you if you can just rest on that mathematics? I mean, so when our fund had a down year, we lost a bit more over the whole year, a bit more than one standard deviation volatility. Okay? But guess what? That happens to practically any investment.

• 56:47John Coogan?

  Yeah.

• 56:47Speaker 02

  You're guaranteed to lose one standard deviation, one unit, you're guaranteed to lose your volatility. So the question is, were we running 100% volatility when that happened? No, we were running a survivable amount, so we didn't lose everything. But yeah, it's, so I think there's some, there's really a lot of comfort to be had in math and AI and just kind of trusting that, you know, things, things will work out. You know, all you need to do to be Warren Buffett is just get 9% alpha per year, and add that to the S and P, right? So if you have a hedge fund that's making 9% alpha per year, and

• 57:32Speaker 02

  they can repeat that, they're gonna make 5 million percent return. And all, and all the people taking too much risk are going to lose it all over and over and over again. And so, you know, that's how you, how you have to think about it.

• 57:50John Coogan?

  Last question, and we'll let you go. Retail froth. There's an interesting arc here, and I want to know if you think it's, it's, it's real or the shape of it, but it feels like when, when the situational awareness PDF drops, no one's thinking about bottleneck stocks or memory, the, like, the smart money gets in.

• 58:13Speaker 02

  Everyone in Silicon Valley was already thinking about that.

• 58:15John Coogan?

  Yeah, yeah, yeah, but that's like maybe the smart money, and then it gets bigger and bigger, and then pretty soon, it's like retail meme stock. And it feels like one of the knock-on effects of that is just more volatility, like, the last little leg up can be more tumultuous. Is that the way to think about that? Is, is it important to, to think about, like, the meme stockification of a particular asset class as a factor, and then how to deal with it?

• 58:44Speaker 02

  Yeah, I, you know, our fund was, was operating with high leverage during 2021's, like, meme stock rally.

• 58:52John Coogan?

  Sure.

• 58:53Speaker 02

  And it is a phenomenon. And Cliff Asness, a famous quant AQR, talks about how the internet's sort of making the market less efficient because there's so many people who almost get the same message at the same time with the same media and then have the same trading account systems like on Robinhood or whatever that can instantly express that. But I think, you know, I don't think that's something to lose sleep over. I mean, it's very easy to handle that type of thing. The, what happened to Leopold wasn't something

• 59:35Speaker 02

  extraordinary. It was banal. It was, you had higher volatility and you had a standard deviation drawn down.

• 59:45John Coogan?

  It's gonna make for a bad movie, then. Well.

• 59:47Speaker 02

  Well, it'll be a great movie, I'm sure. The movie won't have any math in it, but it's probably math.

• 59:53John Coogan?

  It should. It should. It should. Well, thank you so much for taking the time to come chat with us. Have a great rest of your week, great weekend, and hope to talk to you soon. Thanks so much.

• 1:00:03Speaker 02

  Thank you.

• 1:00:04John Coogan?

  Talk to you soon. Goodbye. Let me tell you about CrowdStrike. CrowdStrike secures AI and stops breaches. Your business is AI, their business is securing it. Head over to CrowdStrike. We have Trey Stevens, the co-founder of Anduril, general partner at Founder's Fund. Trey, how you doing?

• 1:00:22Speaker 03

  Hello, guys.

• 1:00:23John Coogan?

  Welcome back to the show. I don't know if you've met Tyler before.

• 1:00:27Speaker 03

  Yeah, Jordy's, Jordy's out today.

• 1:00:28John Coogan?

  Jordy's out sick, so we have a guest co-host, but great to see you. How you doing?

• 1:00:33Speaker 03

  I'm good. Can't complain.

• 1:00:35John Coogan?

  How is the market turmoil affecting you in the venture world?

• 1:00:42Speaker 03

  You mean the public market turmoil?

• 1:00:44John Coogan?

  The public market, I, I mean, first time in my career that I've seen trillion-dollar stocks, mag seven companies moving by 10% in a single day. That seems crazy. You have the situational awareness thing going on. Like, the public markets seem insane, and sometimes, you know, gyrations in the public markets reverberate into private markets. Sometimes they don't. Sometimes you're insulated as someone who can hold longer, who doesn't have to deal with that. But I'm, I'm just wondering if any of that chaos is bubbling up to what you're seeing in your seat?

• 1:01:18Speaker 03

  Well, I think, I think there's certainly, like, different places where that intersects. You know, one of the things that Brian Singerman, who's one of the former partners here at Founder's Fund, he used to tell us, venture capital is a microgame, not a macrogame. What matters is, have you invested in the generational companies in, in every kind of era? And, you know, I think Founder's Fund has performed incredibly well in that regard. We have large positions in some of the most important companies of the last 20 years. But obviously, there's, you know, questions around things like, you know, SpaceX has gone public, there's, there's been kind of a reset back to, like, basically the IPO price. The lockups haven't even released yet, so there's, like, all these questions about where that's going

• 1:02:01Speaker 03

  to stand as that kind of lockup happens over the next, really, two years, almost. So, I don't know, is, I guess, is the answer. And I'm not a finance person at heart in any way, so I very, I understand very little about the public markets. But one thing that I hope happens is that as there's a reset on the public market side, I'm hoping that there will be somewhat of a reset on the private side as well, because the, the, the market, it makes absolutely no sense in venture capital right now.

• 1:02:30John Coogan?

  Okay. Is there, is there a steel man here where we're, the capex intensivity that we saw work out in hard tech companies like SpaceX, like Anduril? You know, this is a company that's doing something very important. It's gonna take a little bit more capital to actually build something really hard. It's not just a couple lines of code and then an elegant, you know, website that just prints money. You're gonna have to invest some real money to make SpaceX work, to make Anduril work. And that's coming for AI companies now. They have big training budgets. They have very expensive talent. Isn't there a reason why valuation should be higher because the, the rewards that people are going after

• 1:03:13John Coogan?

  are so much more, not just capital intensive, but potentially bigger?

• 1:03:19Speaker 03

  Well, I mean, certainly, if the outcomes are these, like, multi-trillion-dollar businesses, then yeah, you know, you can kind of blend that risk over, over many rounds at higher prices. But that's the question, is like, is that necessarily the case? Are we going to have 10 trillion-dollar IPOs over the next five years, or is it going to look more like a reversion to the mean, where we have companies like Anthropic, companies like OpenAI, companies like SpaceX, but then a lot of companies that are really successful, really interesting companies that are, you know, Uber scaled, or Airbnb scaled, or even, you know, when Meta first went public. You know, those would be tremendous venture capital success stories, but not if, you know, you're pricing a seed round at a billion dollars.

• 1:04:03John Coogan?

  Yeah. Well, how do you, how do you advise founders who might have the option to raise that billion-dollar seed round? Because you're in this sort of conflict of interest territory, where if I come to you and I say, hey, I got an idea, I think I'm gonna raise a billion-dollar seed round, you could be, you know, saying, I don't know, this doesn't seem like it's gonna be 10 trillion dollars anytime soon, maybe you shouldn't do that. But then I come to you and I just say, hey, you're just the VC, you want a good deal.

• 1:04:29Speaker 03

  Yeah, I mean, there's, there's two kind of schools of thought. The first school of thought is to say, you should do that. You should raise as much money as you can at the highest, highest price possible, build up a war chest and survive until you can justify that price. And that might actually be the right answer for some companies. I don't, I don't want to say that that's like always a bad idea. That might be a right idea. Obviously, the worst thing you could do is raise a very small amount of money at a very high price because that's, that's where you're going to get yourself into trouble. But then the other side of this is like, can you build a financing strategy that allows you to grow responsibly over time and that you will see continuous momentum with every fundraise? And you're never going to have your back against the wall. That's been the approach from the very beginning with Anduril. This is what we tried to do. And I don't think

• 1:05:14Speaker 03

  we have any regrets about doing that. We could have raised at a higher price at every round. But it's been nice to be able to go back to our employees and our investors on an annual basis and say, look, we just did a 2X markup. Look, we just did a 2X markup. Look, we just did a 2X markup. So it feels more sustainable and keeps us tethered to our company performance more than this belief that it's going to pay out at some point. You know, I'm sure you guys watched the HBO show Silicon Valley, but there's the hilarious scene where the, the, what's his name, Rich or whatever, the, the, no, the Trace Colmas guy.

• 1:05:49Speaker 01

  Oh, yeah.

• 1:05:50Speaker 03

  Yeah. Yeah, where he has that famous line where he says, no, whatever you do, don't get revenue. Once you have revenue, you're going to be judged on the basis of your revenue.

• 1:05:59John Coogan?

  Yeah. Is, is a billion dollar seed round, is, is, is too much capital, like, is it, is it increasingly intoxicating? Is the level of intoxication with overfunding at the early stage, is that problematic? Are there some founders that can work it out and not develop a culture that overspends early? Because your, your point was like, if there are a bunch of money shows up, you need to actually have it as a war chest. If you just have it flowing out easily, you're just going to run out of it and then you're in a corner. But I'm, but I'm wondering, like, is there, is there a, is there a path to actually setting your company up for war chest mode as opposed to just, oh, we're just spending freely and we're just going to burn through this?

• 1:06:42Speaker 03

  I'm sure there is a path. You just don't see that discipline exhibited often. And you can see this in every bubble that's happened over the last 20 years is that, you know, everyone believes that they can have a billion in the bank and be responsible with it. And very few people can actually pull that off. So I think there is something, there's something wise about kind of metering that out and having a plan rather than just kind of YOLO-ing into the abyss. But, you know, it's, it's so hard because like, like I said, in some cases, it might actually be the right decision to raise as much as you can at the highest price possible.

• 1:07:18John Coogan?

  In, in defense tech specifically, it feels like this was a category that was extremely hard to get revenue because you had to work with the government. The government is just a little bit slower than sell-in to your friend in B2B SaaS or something like that. And the, and the traditional path that I remember talking to you about was SBIR, and then at some point, there's the Valley of Death, and you try and get to the Program of Record. But following the, the, the new programs in the Department of War, it feels like there's more of a menu. There's more ways for hard tech companies, defense tech companies to work with the government just to get to revenue. Can you explain a little

• 1:07:56John Coogan?

  bit more of what you're seeing in terms of early, mid-stage, different ways for defense technology companies to actually grow their business, prove what they're doing? And has it actually changed over the last decade that I, I'm feeling like there's a change?

• 1:08:14Speaker 03

  Yeah, it really has. I mean, I was at Palantir very early. And, you know, that early era of the, you know, 2005 to 2015 range, where Palantir and SpaceX were really the only players that were doing this, I mean, it was the Wild, Wild West. Like, both companies had to sue the government for contracts to go through on the basis of this thing called Title 10, USC 2377, which is like a commercial preference authority. So there was really no path. It was like, you know, if you got to the point where you had a product that was worthy of going into production or going into scale with the government, they would do everything they could to block you and, and go back with the primes. That's shifted.

• 1:08:58Speaker 03

  You know, that's not the case anymore. There are much better pathways. You know, in the early Palantir days, we worked with Incutel, which is a CIA's venture capital firm on these work programs. And that's the same way that we got started at Anduril, actually. And, you know, right around that same time, Raj Shah and Chris Kershaw were standing up the Defense Innovation Unit and making that like a relevant contracting pathway. You know, all of the like Softworks, AFWorks, Army Futures Command, they all like started developing pathways for companies to get, to get funded. Now there's StratFi funding, which can come through under the SBIR umbrella that allows you to get, you know, tens of millions of dollars in matching funds from the government as you're scaling. There's

• 1:09:42Speaker 03

  bridging funding to go from pilot to prototype to production. It's much better understood. But the problem is, is that a lot of these are still, at the end of the day, funded out of the research and development budgets rather than production budgets. So, you know, the, the US government has a history of kind of this let all flowers bloom strategy where they are always happy to give out low, single-digit millions of dollars to hundreds or thousands of different companies. But there's a big difference between having, you know, 10 to 20 million dollars of research and development funding and having billions of dollars of production funding under like major weapons acquisition programs, program offices, things like that. And that muscle is still, it's still needing to be developed. It's, it's early days.

• 1:10:27John Coogan?

  When, when you say the let all flowers bloom strategy, I'm thinking back to when we talked about like this idea of the Anduril for X is Anduril. There's a, there's a lot that Anduril can solve. At the same time, you've partnered with companies like Dirac. You've partnered with other new startups in the hard tech, defense tech space broadly. And I'm wondering if there's maybe more opportunity now, now that we're, you know, maybe a decade into the defense tech boom, maybe five years, a couple, you know, we're deep into this. There's a path. You've charted it. Is there more opportunity for new entrepreneurs to pursue deeper in the supply chain opportunities, see an Anduril as a customer, maybe instead

• 1:11:12John Coogan?

  of a, instead of the government as a, as a customer?

• 1:11:16Speaker 03

  Absolutely. I think not only instead of, but also in addition to.

• 1:11:21John Coogan?

  Oh, sure.

• 1:11:22Speaker 03

  You know, I think a lot of these companies that are working down the supply chain, they have relevant government customers, they have old, like legacy customers like the primes that are still needing to, to correct some of these problems or become more efficient, as well as the big, successful tech companies like the SpaceX's, the Teslas, the Andurils, things like that. So I, I think that the opportunity is definitely there. It's just a matter of like, you know, having a novel idea and being really passionate about driving that single thing forward. And I, I fear that when you look at the defense tech industrials kind of ecosystem right now, it's a lot of hype. It's a lot of like, you know, people that want to be part of a moment. And the reality is, is that's not how tech investing

• 1:12:05Speaker 03

  or tech startup creation has ever worked. You know, once nothing is a category, it's kind of too late. If you were a space tech investor and you didn't invest in SpaceX, you probably lost money. If you were a crypto infrastructure investor and you didn't invest in Coinbase, you probably lost money. I, I think that we're like nearing kind of overhype of volume in defense tech that is going to make it very difficult to separate signal from noise.

• 1:12:30John Coogan?

  I assume you're referring to on the venture side specifically. I'm interested in an idea of, like, is there an opportunity for an entrepreneur who says, look, I'm not building a next trillion dollar company. I don't want money from Founders Fund. It's not a fit, but I need some private equity dollars to go buy an old factory and I'm going to make drone motors, small drone motors in America, pretty cheaply and efficiently. And I'm going to sell them to a bunch of people. And it's going to be, you know, a, a, a $50 million revenue business after a decade. And it's going to continue chugging along at 10% growth. And the EBITDA is going to be reasonable. We're going to pay back the debt. And we're

• 1:13:12John Coogan?

  never going to IPO it, but it's going to, at the same time, provide a career and jobs, but also a financial return for the right person. But we're not going after the, you know, oh, hype and venture funding and the big raises and all of that.

• 1:13:26Speaker 03

  Well, I think the intersection of both of our points is that, yes, I think there's a ton of room to do that. And secondly, all of those companies that are doing the things that you're mentioning are trying to raise oodles of venture capital dollars. So if someone actually wanted to build this business in like a, a, a more like normal financial structure, yeah, I think, I think it makes a lot of sense. But, you know, there's 20 of the companies that you just mentioned, they've all raised tens of millions of venture dollars. And I'm not really sure what the end game is.

• 1:13:57John Coogan?

  I guess we'll find out.

• 1:13:59Speaker 03

  We'll find out.

• 1:14:00John Coogan?

  Take me through some of the recent Andorl announcements. I want to know about the Thunder Autonomous Attack Aircraft. How did that come together? What is the, what is the program? What is the scale up? What's the manufacturing look like for that?

• 1:14:15Speaker 03

  Yeah, so Thunder is an autonomous attack helicopter that we just announced at Farborough in the United Kingdom last week. You know, the proliferation of drones has turned the near surface fight into like a robotic kill zone. And so crude helicopters or crews, they're tremendously at risk. And so basically the same way that we approached Fury, the collaborative combat aircraft that we can talk about as well, we just rolled our first unit off the line to the Air Force earlier this week. But the same kind of concept with collaboration with manned crews is what we're talking about here, except with helicopters instead of with fighter planes. So that process is, you know, fully in flight. We have, we've been working on this project for years now.

• 1:15:00Speaker 03

  We've completed test flights with a full scale surrogate and we're planning for Thunder's first flight for next year in 2027.

• 1:15:09Speaker 01

  And what is like the shape of the autonomy? Is it like you have one person kind of overseeing a bunch of these different crafts? Or like, how do you guys think about that?

• 1:15:18Speaker 03

  Yeah, you can kind of think about the helicopter pilot, whether it's, you know, an Apache or whatever. They're like Ender in Ender's Game and they have this, you know, fleet of autonomous vehicles that they can kind of command and control from the cockpit of their own aircraft. And, you know, there's this really cool anime video that's the third in a series that just came out when we did the launch last week. And it kind of explains the concept of operations for this, which is, you know, you don't want to be putting the Apache and the human beings in the helicopter in harm's way when you're engaging with all of these autonomous assets that are creating risk out forward.

• 1:15:59Speaker 03

  So you want these to be able to go out and take shots, give you a better sensor view of things, or even become attributable and take the shot for you so that you're not the one that's eating that missile they are.

• 1:16:13John Coogan?

  We talked years ago about the idea of not, of not building attributable systems, not building capital assets, these huge aircraft carriers, these exquisite systems. But if I'm charting the size of what you're building, year over year, we go from the Anvil, we go from a very small drone, something bigger and bigger. If I chart it out, it looks like, you know, C-130 is coming up any day now. Am I off? Is there a limit to this? Or is there, is there a world where, you know, everything up and down the stack is on the table?

• 1:16:45Speaker 03

  Well, at some point it becomes non-attributable, right? Like, you know, the danger of an aircraft carrier is that there are 5,000 service members on a 20-plus billion dollar vehicle that can be destroyed by a single missile. That's a bad trade. We don't want to, we don't want to be doing that. But, you know, to the extent that there are assets that are physically larger but will be better suited to robots, yeah, I think that's very much in play. You know, the DOW has been talking for a long time about autonomous tanker aircraft for aerial refueling. That's the sort of thing that if you could actually get an autonomous system to do that really well, logistically it becomes easier, reduces risk in theory if you can get it to work really well.

• 1:17:28Speaker 03

  And, you know, it also is kind of like a prime target for risk reduction. So I think there are larger assets where it does make sense, but the trade-off is really in human lives and total cost. Because at some point, you know, in either of those calculations, these things are no longer considered to be attributable.

• 1:17:46John Coogan?

  Yeah. Talk about Fury at the Ohio production line, Arsenal One. How did that project, like what, 18 months from start to finish, I think is roughly the number, but was that the original plan? Were there setbacks? Was there a risk of not hitting that? Like, what did it take to actually nail that? Because that feels incredibly quick.

• 1:18:10Speaker 03

  Yeah, it was incredibly fast. We kind of did the ribbon cutting for the land that we were building on in January, I think it was, yeah, January of last year of 2025. And then factory is up and running in May of 2026. We rolled our first fighter plane off the line on Monday of this week with the governor. And so, you know, things, things were very, very rapid. We can talk about this for a long time. There are a lot of advantages that we had going in. We had an existing building, an 800,000 square foot building. It was just a shell, just a concrete shell. But we weren't starting totally greenfield. We had utility support to the site.

• 1:18:53Speaker 03

  JOBS Ohio, which is the Economic Development Agency for the state of Ohio, was partnered very closely with us on making sure that we had the resources that we needed to get that facility up and running. But of course, there is like a tremendous operations effort that had to go into building, like designing the facility, building out all of the office space, setting up the factory line. And that's still a work in progress. We're not totally done with building one, but we've already stood up the shell of building two next door. So that will be in flight as well. You know, internally at Andorl, the person that eats all of the garbage around this is Matt Grimm, our COO, my co-founder. So I would hesitate to pretend that I know what I'm talking about, but Grimm is the man

• 1:19:37Speaker 03

  that made this really difficult project happen alongside his team on the manufacturing side, on the operations side. They really put off a heroic effort.

• 1:19:47John Coogan?

  So are there, is there, I don't know if you can actually show this, but are there long lead times for specific machines that you, that you sort of needed to think about sourcing and even signing contracts with like years in advance? And then you were like, okay, we have the site, so we can go drop this one expensive machine in the facility and get going faster? Because when we hear, when we talk about like semiconductor supply chains, like everything's stretched out 24, 36 months. And it feels like if you were to sign, get the building, and then start ordering things and actually building the production line, you'd be behind schedule on day one.

• 1:20:25Speaker 03

  Yeah, I mean, if we're comparing it to the semiconductor supply chain, nothing like an ASML EUV machine or anything like that, to be clear. But yeah, of course, there's, there's all sorts of things you have to figure out in the supply chain. Not only the tooling, but also the materials that go into construction of the products that we're building. So, you know, natural resources are very challenging. Rare earths are very challenging. And we're working closely with the Department of War to ensure that we have off-take agreements to get those natural resources that we need to build the things that are important for them. They've been a great active partner with us in that. And in addition to that, I would say that labor becomes a big bottleneck. You can't, you know, say 18 months ago, yeah, when we're ready to open the factory,

• 1:21:10Speaker 03

  when everything is built, we're going to start hiring people. No, we started hiring people the day we announced that we were, we were doing this. And we had them work out of our headquarters in Orange County. The entire team of people that are building Furies at Arsenal One in Columbus, Ohio today, were doing the exact same thing a few months ago in, in Orange County, where our headquarters is located. So you have to really get ahead of every aspect of this and it's a very complicated task. But again, we're really happy to see that we have things up and running and rolling off the line today.

• 1:21:43John Coogan?

  Speaking of jobs, what is your pitch for mandatory civil service, engaging, solving the jobs crisis that may or may not be coming? Walk me through your latest thinking on the role of civil service in the modern American society.

• 1:22:03Speaker 03

  Well, you know, I've actually had this thought for a long time, for probably close to 20 years now, I've been kind of beating this idea around. You know, it's not like a super contrarian idea, actually. Like, there are a bunch of countries across the world that have some version of mandatory civil service. In fact, we have aspects of this inside of our own society. If you think about things like jury duty or being subpoenaed for court. Or there are instances throughout the last even 50 years where people were called into service to do things like road construction and maintenance. So I understand there are all sorts of questions that you would have about the 13th Amendment. I am not in a position to adjudicate those complicated constitutional issues, but I

• 1:22:46Speaker 03

  think that there's something really important about ensuring a sense of civil duty into our next generation. And I don't think that needs to be into military service. I think it could just as easily be like going and working as a clerk at a county, you know, courthouse. There's all sorts of things that we can do to pull people in and have this feeling of shared progress that we all owe a responsibility towards. And I think if you were to go to Singapore or to Israel and ask them, like, is this a societal good or has this been a disaster? Is it forced labor? Is it involuntary servitude? I think they would all say, no, this is actually pretty great. You know, it was, it was a difficult thing that I did and I'm glad that I did. I learned a lot.

• 1:23:31Speaker 03

  I met a lot of people that are still part of my life today. And I think that it would be wise for Americans to take a hard look at ourselves and say, is what we're doing right now working? Like, are we happy with the path, the pathways that have been created for our own kids? Are we happy with the political tribalism that's resulted from a lack of civic duty? I would say, no, I'm not particularly happy with this. Is my particular recommendation the right answer? I don't know, but I think we should try things.

• 1:24:00John Coogan?

  Yeah, no, I love it. I have a hot take I want you to react to. I believe that the TSA is underrated. I think people complain about the TSA constantly, say it slows me down, I'm just trying to get to my airplane. But when I look at the record of the TSA, it seems pretty much flawless. Seems like they've done a great job securing our airways. And when I actually experience and think about the people there, I have positive interactions. I haven't actually been offended by anyone or anything. It feels like a great, yes, maybe it's a jobs program, but it feels like a great job. It feels like people, they're going and they're working in a clean, air-conditioned building. They're interacting with other Americans, meeting other people.

• 1:24:45John Coogan?

  I, I think that TSA might need a reevaluation after being the butt of every comedian's joke for two decades.

• 1:24:54Speaker 03

  Uh, I mean, there are aspects that I would, I would probably agree with you. I still do think it's sort of a jobs program, but again, that's maybe not the worst thing.

• 1:25:01Speaker 01

  Mandatory service in the TSA.

• 1:25:03John Coogan?

  Yeah. Well, yeah. How does it fit in with, uh, with like mandatory civil service?

• 1:25:08Speaker 03

  Yeah. I mean, it could definitely be into something like that. I mean, the reality is like, it's actually gotten pretty efficient.

• 1:25:13John Coogan?

  It has.

• 1:25:14Speaker 03

  Like, I don't know if any of you, this is, this is CBP, not TSA, but I'll, I'll use it as a similar, uh, kind of, uh, counter. I don't know if any of you have gone through a global entry, uh, at one of the large international airports, but you just literally walked through now.

• 1:25:29John Coogan?

  It's amazing.

• 1:25:30Speaker 03

  It's, it's unbelievable. Like, uh, you know, I, I think that we have the ability to lead the world in the way that we, uh, you know, process travel safety, that we handle, um, you know, visas, that we handle immigration. And, um, I think the Department of Homeland Security has actually done a pretty remarkable job despite all the criticism that they've been levied.

• 1:25:49John Coogan?

  Yeah. I think that, uh, there's, there's two steps to the argument and the discussion around, uh, any sort of mandatory civil service is first, you know, y- yes or no. And I think you made a good case for, for yes in some capacity, but, uh, the second stage is, okay, what will these civil servants be doing? Will, will have a new, a new labor force and how will, how will, you know, we democratically decide to deploy these folks? Will they be repairing potholes or building parks or?

• 1:26:17Speaker 01

  Building data centers?

• 1:26:18John Coogan?

  Building data centers potentially? That would be great.

• 1:26:21Speaker 03

  That would be politically spicy.

• 1:26:23John Coogan?

  It might make people like a lot more. They're like, hey, I got a hard day's work. I feel good. I feel like I accomplished something. The building's there. I don't know. Um, but, uh, anyway, uh, another random take, Oppenheimer or the Odyssey? Which one did you like more?

• 1:26:40Speaker 03

  Uh, I liked the first two thirds of the Oppenheimer better than I liked the entirety of, uh, the Odyssey.

• 1:26:47John Coogan?

  Okay.

• 1:26:48Speaker 03

  But I, I liked the Odyssey more than the last third of Oppenheimer.

• 1:26:51John Coogan?

  Oh, interesting. Okay.

• 1:26:55John Coogan?

  What can you tell us about?

• 1:26:56Speaker 03

  They're both at the bottom though, of the Christopher Nolan canon, um, alongside Tenet, I would say.

• 1:27:01John Coogan?

  Oh, you were gonna put Tenet at the bottom. I like Tenet. I think it's so fun to watch.

• 1:27:05Speaker 03

  Tenet is inarguably the worst Christopher Nolan movie of all time.

• 1:27:09John Coogan?

  What's the best one? Dark Knight?

• 1:27:11Speaker 03

  Interstellar. I gotta go with Interstellar.

• 1:27:13Speaker 01

  What did you not like about the Odyssey?

• 1:27:16Speaker 03

  I didn't, I, I'll be very clear. I didn't say that I didn't like it. I just said it wasn't as good as any of his other movies other than Tenet.

• 1:27:26Speaker 03

  If it was any other director, I would have came out of the movie theater and been like, that was great. I'm glad that I watched that. But it was Christopher Nolan, so my expectations were much higher.

• 1:27:33John Coogan?

  Totally. It was the same thing. I was like, that's obviously the best picture. I can't think of any other movies that are going to be better than that this year. Uh, at the same time, I don't know if I'm going to re-watch that this year. I don't, I, you know.

• 1:27:42Speaker 03

  I don't know that I would re-watch it. I don't think, like, I watch Interstellar every year. I don't know that I would watch the Odyssey, you know, again, ever. I don't know. We'll see.

• 1:27:51John Coogan?

  Yeah. Also, there is just, it's a type of film. It's like a moment. It's a whole experience. You gotta see it in IMAX. It's three hours. It's a, you know, it, it's very much a slog, whereas, you know, you could throw on the Dark Knight and it's just like a, it's like a party almost. It's like a very entertaining. It's a popcorn movie. This is not, this is a whole like journey that you're going on. That's the point and that's the experience. Uh, anyway, what can you tell us about the future of Founders Fund? Uh, SpaceX, uh, we were talking to an LP in Fund Two yesterday. I think you said it's like potentially the best fund in, in human history. Uh, are you resting on your laurels? Are you going to be incubating new things? Bring in on new partners? You, you signed some new talent. Tell us what's going to happen with Founders Fund over the next couple of years?

• 1:28:33Speaker 03

  Yeah. The worst thing about, uh, Fund Two at Founders Fund is that I was not at Founders Fund, so I, I do not benefit from, from that fund. But yeah, it might actually be the greatest fund in metro capital history.

• 1:28:48Speaker 03

  But yeah, the, the fund is doing really well. Um, we, uh, you know, we, we have a, a main venture fund and a growth fund. We have awesome names in both of those. We're still very bullish about the, again, the micro level, the companies that we're investing in, uh, even if we are a little bit more bearish on the macro. Um, we just added Ryan Baiermeister, uh, to, to the team as a partner. She, uh, she and I worked together, uh, when we were in our early twenties at Palantir and then she went off to Meta and then to OpenAI. And, uh, we just got her to join us over here. So really excited about what the future holds. We have a great team. Uh, we're, we're all vibing really well, so.

• 1:29:27John Coogan?

  Everyone wants to know, is Mafia an official part of the Founders Fund recruitment process now?

• 1:29:34Speaker 03

  It is definitely not. And the joke that I made on X about this is that Ryan got crushed in game one of Mafia. If it was actually a, like a, you know, a recruiting tool, that was not a great interview.

• 1:29:47John Coogan?

  At the same time, I feel like she, she entertained. She seemed like someone you would want to meet with and do business with.

• 1:29:53Speaker 03

  For sure. She's, she's very good. She's actually incredibly talented at Mafia. She just had a bad, an unlucky run.

• 1:29:59John Coogan?

  It could be, you, you could go into a game of Mafia and display that you're going to backstab a founder that you're working with, and that might be disqualifying maybe. I don't know.

• 1:30:08Speaker 03

  That's true. That's true. Although, isn't that the whole point of Mafia is to backstab other people?

• 1:30:12John Coogan?

  Yeah. Yeah. So I kind of want to backstab her on my side, so I work with them. Who knows? What about, uh, uh, RIA? Have you, are, are you happy that Founders Fund has stayed in the private markets? Or do you wish you could be just writing, just playing micro on a little bit right now with a little bit of leverage?

• 1:30:32Speaker 03

  I'm so, so happy that we've stayed true to our, to our origins. Uh, we are a venture fund. Uh, we invest in early-stage companies and support founders throughout their entire journey. And I think there's all sorts of cool stuff that's happening, uh, Andreessen's doing, that Thrive is doing, that General Catalyst is doing, that Sequoia is doing with their Evergreen funds. These are all very cool concepts. It's just not us.

• 1:30:56John Coogan?

  You mentioned Thrive. Any plan to buy a sports team?

• 1:31:04Speaker 03

  Ooh, baby. Let's go.

• 1:31:08John Coogan?

  Hopefully, hopefully soon. Well, well, thank you so much for coming on the show.

• 1:31:11Speaker 01

  Okay. Last question. What is that, what is that sword behind you?

• 1:31:15Speaker 03

  This is Andorol.

• 1:31:16John Coogan?

  That's Andorol.

• 1:31:17Speaker 01

  Oh, oh, yeah. Okay.

• 1:31:18John Coogan?

  That's the sword from Lord of the Rings.

• 1:31:19Speaker 03

  Sure.

• 1:31:21John Coogan?

  Andoril. Yeah.

• 1:31:22Speaker 01

  Yeah.

• 1:31:23John Coogan?

  Beautiful.

• 1:31:25John Coogan?

  Is there, is there a criteria for getting one? Is this like, uh, five years of the company and you get a sword? Is there any, uh, are there any Andorol, like totems or, uh, artifacts that come?

• 1:31:36Speaker 03

  You can just go online and buy one of those guys. You don't have to work at Andorol. Um, are there any totems? Uh, well, I mean, we do have, uh, an internal, like exclusives gear store. Um, and I should point out that I'm also wearing one of our external available, uh, uh, swag. So this is at, uh, gear.androol.com. You can pick up this sweatshirt and a bunch of other, uh, a bunch of other cool gear, including our partnership with NASCAR. So there's all sorts of Andorol NASCAR gear up as well, right now. Uh, there's an Andorol Hawaiian shirt, uh, you know, harkening back to Palmer's love of Hawaiian shirts.

• 1:32:10John Coogan?

  Yeah.

• 1:32:10Speaker 03

  So, um.

• 1:32:11John Coogan?

  Miller Time's been cooking. Jeff Miller's been cooking.

• 1:32:14Speaker 03

  Jeff Miller is cooking. No doubt about it.

• 1:32:16John Coogan?

  A bunch of good stuff. Uh, well, thank you so much for taking the time to come chat with us. Sorry we kept you a couple of minutes late. Have a great weekend and we'll talk to you soon.

• 1:32:23Speaker 03

  It's all good. Cheers.

• 1:32:24John Coogan?

  Have a good one. Let me tell you about Codex. Codex is a powerful workspace for getting work done with AI agents, whether you're writing code, analyzing data, creating content or automating business workflows. Codex helps you move projects forward from start to finish. And when you're finished, head over to the New York Stock Exchange, because if you want to change the world, you gotta raise capital at the New York Stock Exchange. Up next, we have Blake Resnick from Brink Drones. He's going to be in the show, in the TBN Ultra Dump in just a minute. Uh, where do you stand Tyler on Oppenheimer versus Odyssey?

• 1:32:55Speaker 01

  I'm going Oppenheimer as well.

• 1:32:56John Coogan?

  You're going Oppenheimer?

• 1:32:57Speaker 01

  Yeah.

• 1:32:57John Coogan?

  Yeah. I re-watched Oppenheimer within a couple of days and, uh, of seeing it the first time. And I, I think it's the movie that I will come back to more frequently, but also I think I like the story more because it's more recent history and it's, it's easier to draw on, I suppose.

• 1:33:13Speaker 01

  Sure.

• 1:33:13John Coogan?

  I don't know. I don't know. Um, let us know in the chat. Uh, Derek Thompson had a funny post here. He said, uh, I went back and read some criticisms of big tech in the 2010s and it's amazing how many of them bemoan big tech's cash hoarding as a major failure of late-stage capitalism.

• 1:33:30Speaker 01

  This was the, the, the PT point, right?

• 1:33:32John Coogan?

  Yeah. Yeah. He literally, Peter Thiel stood on stage at a Forbes debate, I think, with Eric Schmidt from Google and said, you have a hundred billion dollars on your balance sheet and you don't do anything with it. You don't, you're out of ideas. You're, you're chopped basically. Uh, and, and now the hyperscalers are deploying the cash and no one's happy. What's going on? You can't have it both ways. He said, just a few years ago, popular criticism of software giants, indeed of American capitalism, was that big companies hoarded their cash piles and refused to reinvest their profits in new ideas, but that era's over. Today, those same companies have depleted practically all of their cash flow. To thicken the irony, capitalism's critics

• 1:34:12John Coogan?

  seem to hate this new era of unprecedented corporate investment even more than they hated the era of corporate cash hoarding. So fascinating. Uh, it's a, it's a, you know, between a rock and a hard place, I suppose, for American big tech companies. Well, let me tell you about public.com. Investing for those that take it seriously. They've got stocks, options, bonds, crypto, treasuries and more with great customer service. You can find a company that's, uh, burning down all their cash flow. If that's what you're interested in, just be safe out there. Up next, we have Blake Resnick from Brink back on the show. Welcome to the show, Blake. How you doing?

• 1:34:48Speaker 04

  Really good. Thank you for having me.

• 1:34:50John Coogan?

  Thank you. Uh, I'm going to hand it over to you because it looks like you got a tour for us. Take us through it. What's new in your world? What can you show us?

• 1:35:00Speaker 04

  Yeah, a hundred percent. So, uh, Brink just raised a new hundred and twenty-five million dollars of capital and that is all being directed towards these, the most leased entire station roof in America.

• 1:35:12John Coogan?

  Amazing. What are we looking at here? Break it down for us.

• 1:35:18Speaker 04

  Yep. So, so, uh, these are drone recharging pods and, uh, you're currently watching one of our dedicated nine-one-one response drones launch. So, uh, yeah, that's really the, the focus of the company. See if we can get that camera swung around here. And, uh, yeah, right now we are on top of our factory and headquarters. So we have three stories. Right now we're on our, our third, which is mostly dedicated towards engineering office space. And our engineering team is pretty cool. It's very multidisciplinary. We employ mechanical engineers, electrical engineers, embedded software folks, autonomy, you know, aerospace and, and more. So many of those individuals are working in, uh, this volume of our facility.

• 1:36:02Speaker 04

  Now we are transiting down to our second story, which is mostly an R and D space. You'll see a lot of that in just a second here.

• 1:36:15Speaker 04

  This is one of our R and D areas. And to my right is our current product portfolio. So our smallest drone over here is where we started. This is Lemer 2, and it is designed to get eyes and ears in dangerous places. Today, about 20% of the SWAT teams in the country are actively utilizing this aircraft to reduce the probability of officer-involved shootings and keep everyone safe in the most dangerous police response missions. Across from that, put this guy back, we have Responder, and this is the aircraft that you just watched launch. It was really the world's first purpose-made 911 response drone.

• 1:36:56Speaker 04

  So already hundreds of police and fire departments around the country are using these things to respond to the majority of the 911 calls that occur in their jurisdictions. And our largest drone on this platform is Guardian, and this is really designed to replace police helicopters. Guardian can fly for over an hour. It has greater than a 60 mile an hour top speed. Integrated Starlink, that is this panel on the top of the airframe, giving it unlimited range anywhere in the world. I'm calling in from Seattle. If I wanted to take Guardian off and fly it into the Pacific Ocean, that is something that I would be able to do without losing connectivity, which is pretty incredible. We also have an amazing timer payload on this drone.

• 1:37:41Speaker 04

  These two things are HD thermal imagers. The best thermal imagers on drones in production right now are 640 resolution, so that is a huge step up. And we have two thermal imagers that are built into Guardian with different field of view optics, meaning you can zoom in and out of your thermal picture with Guardian without losing any quality. We also have a pretty amazing HD vision system, two 4K imagers with 640 times total zoom. So even from thousands of feet away, end users can zoom in and read license plate details, all sorts of stuff like that. Behind that, we have a mini LRAD, which is an incredibly loud speaker system. You can kind of see it buried in the back of the drone there.

• 1:38:23Speaker 04

  That can emit 130 dB SPL, which is actually louder than a police car siren. So if we had Guardian playing a siren tone and a police car right next to it doing the same, Guardian would actually be the louder vehicle. And then the recharging station for this, you can see on a monitor back here, has a robotic system that is capable of physically swapping batteries. So with Guardian, 911 dispatch doesn't actually have to wait for the drone to recharge between flights. The second it touches down, our robotics will actually physically swap batteries, replace the batteries in the airframe with a fully charged set, and then it can launch immediately. And we use that same robotic system to load different payloads into the bottom of the drone as necessary.

• 1:39:07Speaker 04

  So if 911 got a call about someone having a heart attack, God forbid, they could load in a defibrillator, go accomplish that delivery, come back. And then if the next call is about someone drowning in a lake, they could load in a personal flotation device. So very proud of that. I'll show you just two more things and then would love to chat. Downstairs to my left is where we are actually integrating airframes. So believe it or not, this is one of the larger drone factories in America. And then to my left currently is where we are building our recharging pods.

• 1:39:39John Coogan?

  Wow.

• 1:39:40Speaker 04

  So yeah, that is, that's Brink HQ and a lot of the stuff that we currently have in production.

• 1:39:47John Coogan?

  Yeah, that, yeah, wow, that is amazing. What progress since last time you came to the studio and brought, I believe, the smallest of the drones and flew it around for us. That was a lot of fun. What, what, what is the scale of each program right now? I mean, you mentioned that SWAT teams are using the smallest of the drones in something like 20% penetration, but it feels like that final largest drone is still sort of coming out of the R and D phase at this point. Is that correct?

• 1:40:18Speaker 04

  Yeah, that's totally a fair characterization. There are about 20,000 police departments in America, 30,000 fire departments, 80,000 police and fire stations. And we think in the future, the vast majority of those buildings are going to have a 911 response drone in a recharging pod on their roof. Today, though, that number, that number is probably 400 or 500. And that's spread across all the manufacturers that are interested in this segment, you know, us, Skydio, DJI, et cetera. So yeah, I would say like 1% of the buildings that eventually are going to have this capability currently do. And a big focus for Brink over the course of the next couple of years is going to be

• 1:40:58Speaker 04

  increasing that number from, you know, 1% to 10, 30, 40, 50, and onwards.

• 1:41:04John Coogan?

  I remember talking to someone who was operating drones and single rotor drones actually in the Middle East in a military context. And he was saying that at a certain scale, they would actually use gasoline-powered drones because the energy density was higher and it just made sense in that context. And I'm wondering about, like, there is, there are a bunch of good reasons to give someone a rechargeable battery if they're, you know, going to be filming themselves rock climbing or something. But this is an, this is an industrial company. This is a, this is, you know, an enterprise-level solution. Is there a, like a gasoline-powered use case that would make sense?

• 1:41:49John Coogan?

  Or are we now at a point with the technology where an electric powertrain makes sense across every possible, every possible, you know, opportunity or threat?

• 1:42:00Speaker 04

  I mean, you are spot on about the power density of gasoline. It is far in excess of lithium ion batteries. However, our drones respond to emergencies in known locations around, you know, the United States and the rest of the world. And that means automated recharging and battery swapping infrastructure is actually a pretty good solution to this problem. Right with Guardian, you get an hour of flight time, and then every hour, you're only, you know, down at a recharging station for maybe 90 seconds as that recharging station accomplishes an automated battery swap.

• 1:42:40Speaker 04

  That gives you over 97% kind of applicability of the airframe. You can fly Guardian for greater than 23 and a half hours a day. So our customers generally are pretty satisfied with that. And I think the way that we'll continue to push flight times up progressively moving forward isn't necessarily with a gasoline-powered drone, but instead with larger form factor drones that have, you know, intrinsically superior propeller efficiency and maybe also VTOL fixed wing aircraft that can stay in the sky, you know, for six to eight hours without, you know, requiring a battery swapping operation or recharge.

• 1:43:24John Coogan?

  Yeah, not to leak the roadmap, but it just feels like you're just going to get bigger and bigger and bigger until it's, you know, the size of a manned airplane, but probably still autonomous.

• 1:43:34Speaker 04

  Yeah. You know, there's, there's a segment, there's a segment of our customer base that has enormous jurisdiction. Like sheriff's offices in Florida, for example, I mean, they can have thousands of square miles of jurisdiction. So for them, a VTOL fixed wing that can stay in the sky for eight hours is actually a pretty phenomenal fit.

• 1:43:53John Coogan?

  Yeah. What does the go-to-market look like for this company? Are you selling to every, every sheriff's department or police department individually? Are there conferences where you can meet them all? Are there any that are like collectively buying products together as a group because they might get a better price, but they might also have better service level agreements or some sort of, you know, integration where it's like, oh, well, like the town over is using the same system, so let's go grab a battery from them? There's some value to that, but what does the actual sales process look like?

• 1:44:29Speaker 04

  We're seeing all of that. It's early days, though. The vast majority of our go-to-market is focused on building direct relationships with police chiefs, fire chiefs, mayors, and city council members. And as discussed, there are a lot of these organizations in the US, which, you know, necessitates us to have a pretty large sales team to build all the relationships that are necessary. So we've broken the United States into dozens of different sales territories, and each one of those territories is staffed with an account executive that holds a quota. Then they can pull from various other sales support organizations that we built, like dedicated demo teams and, you know, sales engineering teams and other things.

• 1:45:13John Coogan?

  Can you get me up to speed on Motorola Solutions? They raised, you raised $125 million round led by Motorola Solutions. Most people in the consumer world might think of the Motorola Razr V3, the cell phones. Do they have a lineage in public safety or development of emergency response or equipment? Is there more synergy there or is this purely just like it's a good deal and they did the deal?

• 1:45:39Speaker 04

  No, so the vast majority of Motorola's business is selling body worn radios and public safety software to police and fire departments, like the overwhelming majority of their business.

• 1:45:52John Coogan?

  Yeah.

• 1:45:53Speaker 04

  They are actually the largest company in our industry.

• 1:45:55John Coogan?

  Yeah.

• 1:45:56Speaker 04

  Motorola is number two, or excuse me, number one, Axon is number two.

• 1:46:00John Coogan?

  Sure.

• 1:46:01Speaker 04

  Flock is probably number three in terms of scale.

• 1:46:03John Coogan?

  Oh, okay.

• 1:46:04Speaker 04

  So they have pre-existing commercial relationships.

• 1:46:07John Coogan?

  Yep.

• 1:46:08Speaker 04

  With literally every single one of our potential customers in the free world.

• 1:46:13John Coogan?

  Yeah.

• 1:46:14Speaker 04

  Like, that is their market position.

• 1:46:15John Coogan?

  Yeah.

• 1:46:16Speaker 04

  So we ever have to go and meet like a net new PD or RFD, we can just ask them for the introduction.

• 1:46:21John Coogan?

  Sure.

• 1:46:22Speaker 04

  And then, you know, when that organization decides they do want to adopt our technology, we can usually also fold it in through a pre-existing contract that Motorola has. So they're an incredible partner, and I would say the relationship is very strategic on the go-to-market side, but it's also very strategic on the product side. We've developed a feature, for example, where if a police officer or firefighter pushes the emergency button on one of their radios, that can automatically trigger one of our drones to launch and fly to their exact location.

• 1:46:51John Coogan?

  Sure.

• 1:46:52Speaker 04

  Motorola has a huge percentage of the 911 call-taking software market, so we can grab the coordinates of 911 calls from there and then use those to trigger drone flights. They have an ALPR business, they have a very large computer-aided dispatch business. In fact, most of the, you know, very large police departments around the country utilize Motorola CAD. So, yeah, there are synergies left and right with them. They've been great partners.

• 1:47:19John Coogan?

  Y Combinator has their request for startups. I want your request for startups. If someone in the audience is thinking about building a company deep in the drone supply chain, deep in the battery supply chain, deep in any industrial supply chain, what is, what is, what is a category or product or subcomponent where you would love to meet an entrepreneur who's thinking about building a new company based in America to solve that particular problem?

• 1:47:52Speaker 04

  I mean, camera payloads come to mind immediately. There are very few American-made gimbalized camera payloads that have high-resolution thermal, you know, good zoom optics.

• 1:48:06John Coogan?

  Yeah.

• 1:48:07Speaker 04

  Three-axis stabilization.

• 1:48:08John Coogan?

  Sure.

• 1:48:09Speaker 04

  And that don't cost, you know, an obscene amount on a per-unit basis.

• 1:48:13John Coogan?

  Yeah.

• 1:48:14Speaker 04

  So, yeah, that would absolutely be one. They're nice, like, self-contained components that, you know, a lot of drone manufacturers don't want to make for various reasons. Even Androl is actually a consumer of a lot of these parts, like, they're not doing

• 1:48:25John Coogan?

  Totally.

• 1:48:26Speaker 04

  Their own payloads in that category.

• 1:48:28John Coogan?

  Yeah.

• 1:48:29Speaker 04

  So, yeah, that would be of interest.

• 1:48:31John Coogan?

  Yeah.

• 1:48:32Speaker 04

  I would say, you know, very high-energy-density batteries, of course, always are of interest to drone manufacturers. Brushless outrunner motors, mesh networking, radio PCBs.

• 1:48:43John Coogan?

  You're like, the whole supply chain, just do anything in there. No, it makes sense.

• 1:48:47Speaker 04

  Yeah.

• 1:48:48John Coogan?

  It feels like, it feels like a decade ago, you would have been, you probably were called crazy when you started the company, but you would have been called crazy for trying to just build a hardware company, because hardware was hard. You had to be a billionaire to start a defense tech company, et cetera, et cetera. And now, you know, there's enough motion and there's enough energy that you can, you know, build this company, hire, raise, get to market, sell it effectively. And now, the next challenge is deeper in the supply chain, which is, which is exciting. There's a lot of opportunity there. Tyler, do you have any questions?

• 1:49:18Speaker 01

  Yeah, I was wondering, like, what's kind of the shape of autonomy in response drones? Like, how important is this? Is this, like, getting autonomy much better? Is that like a big bottleneck to selling more of these? Or how do you think about that?

• 1:49:31Speaker 04

  Yeah, no, that's a great question. I mean, the way our technology works in general is someone will call 911 in a jurisdiction. We will grab the GPS coordinate of that call from computer-aided dispatch or 911 call-taking software from some other source. Our software will then find the nearest 911 response drone in a recharging pod that has sufficient battery state of charge to actually respond to the emergency. Then it will plot out a path from that location to the emergency, taking into account manned air traffic, no-fly zones, altitude limitations, and so forth.

• 1:50:12Speaker 04

  The doors on one of our recharging pods will open up, drone will launch, it'll follow that pre-programmed flight path out, but if it encounters anything that it doesn't expect, it also has an onboard obstacle avoidance system, so it'll be able to deal with those unforeseen events. Then, when the drone arrives, it can engage in a number of pre-programmed on-arrival behaviors. Like, it can orbit a structure fire and just keep on circling around, you know, with its camera gimbal pointed in the right place. Or it can be programmed to stop at a specific GPS point, but then move its gimbal to point at an area that might be of interest. And a number of other things.

• 1:50:54Speaker 04

  Or, at that point, the drone could then be manually controlled in order to interact with the scene. Our drones have onboard red and blue lights and sirens, so an end-user might decide to turn those on, depending on, you know, the circumstances of the call. They can deliver, as discussed, lifesaving emergency medical payloads, so an operator, you know, might decide to engage in an action like that. Or they could just follow a person or vehicle. That can be done manually, but we also have automated tracking features that can be utilized in those instances. So, an end-user could, like, click on a person or click on a vehicle, and the drone would just sort of, you know, follow for that end-user.

• 1:51:35John Coogan?

  Do you have benchmarks?

• 1:51:37Speaker 04

  Yeah, in terms of the impact that we make on communities?

• 1:51:41John Coogan?

  No, technical benchmarks. Every AI company is, like, trying to get their LLM to solve math problems, and there's a very clear battery of progress, and I'm wondering if you have, like, you know, is there a standard benchmark for, like, drone agility? Or, like, something that's measurable, but, but a little... The thing with the benchmarks is that they're not, they're not purely quantitative in the sense of, like, you know, how, like, response time is in milliseconds, like, for a computer system, that's very quantifiable. It's often, like, you need to solve this puzzle. And so, what I'm wondering is, when we will enter, or maybe we already have, the era

• 1:52:22John Coogan?

  of, there's, like, a standardized drone agility course, and you can unleash a drone on it and say, "Oh, yeah, it did it in this time," or "It was 90% effective at this," or "No one else can do this." I'm wondering if there's any of that going on in just the drone community broadly.

• 1:52:39Speaker 04

  That does exist, actually.

• 1:52:41John Coogan?

  Okay.

• 1:52:42Speaker 04

  NIST has put together something very similar to what you just described.

• 1:52:45John Coogan?

  Okay, cool.

• 1:52:46Speaker 04

  So, yes, that absolutely happens. I would say, though, mostly customers are focused on specs right now.

• 1:52:52John Coogan?

  Yeah, I'm sure.

• 1:52:53Speaker 04

  So they're curious about, you know...

• 1:52:55John Coogan?

  Flight time, let me know.

• 1:52:56Speaker 04

  Exactly. Flight time, top speed.

• 1:52:58John Coogan?

  Yeah.

• 1:52:59Speaker 04

  HD camera resolution, thermal resolution, recharge time, what integrations exist, all of that sort of stuff.

• 1:53:04John Coogan?

  Sure, sure, sure. We gotta get, we gotta get the police department's bench, bench-pilled, so that they're just like, "Oh, how did you do on, on humanity's last drone competition?" Anyway, that'd be fun.

• 1:53:17Speaker 04

  That'd be funny. We do bake-offs, you know?

• 1:53:19John Coogan?

  Yeah, sure.

• 1:53:20Speaker 04

  There are a lot of instances where Brink drones will go up against Skydio drones.

• 1:53:24John Coogan?

  Sure, sure, sure.

• 1:53:25Speaker 04

  Charlotte Mecklenburg, in particular, ran a pretty extensive evaluation of different companies' aircraft, and we ended up winning that.

• 1:53:33John Coogan?

  Congratulations.

• 1:53:34Speaker 04

  So, yeah, no, this is definitely on people's minds.

• 1:53:36John Coogan?

  Yeah. Well, thank you so much for breaking it down. Thanks so much for the tour. This is fantastic. Have a great weekend, and we'll talk to you soon.

• 1:53:42Speaker 01

  Cheers.

• 1:53:43Speaker 04

  Thank you. I can't wait, truly.

• 1:53:45John Coogan?

  Let me tell you about Consol. Consol builds AI agents that automate 70% of IT, HR, and finance support, giving employees instant resolution to access requests and password rate resets. Take us through what's going on with OpenAI pushing the model frontier access across efficiency. What happened? They dropped the cost of Luna?

• 1:54:03Speaker 01

  Yeah, so there's Luna, Terra, Soul, this is the cheapest model.

• 1:54:07John Coogan?

  Yes.

• 1:54:08Speaker 01

  Massively reduced costs. You can see on the kind of Prudential curve, this is, like, actually much cheaper than a lot of, like, open-source models, because, because we've been talking about this recently, it's like, there's cost per, per task, not just, like, can it do it and how much, like, it depends a lot how token-efficient the model is.

• 1:54:24John Coogan?

  Yeah, because you could measure it on, on cost per token, but if a certain model takes 10 times the amount of tokens, and it's only half the cost, you wind up spending more.

• 1:54:34Speaker 01

  Yeah.

• 1:54:35John Coogan?

  Why is the Pareto frontier in this graph flipped? I feel like the Pareto frontier used to be this direction. Am I hallucinating that? Has it always been this way? You always want to be on the left side? I thought you wanted to be on the right side or something like that.

• 1:54:47Speaker 01

  Well, it depends on where you are in the Pareto frontier.

• 1:54:50John Coogan?

  I suppose.

• 1:54:51Speaker 01

  I guess, I think I see what you're saying.

• 1:54:52John Coogan?

  I suppose. Anyway, we also, I don't think we touched on this, but ArcAGIV3, the leading labs have been going back and forth.

• 1:54:59Speaker 01

  Yeah.

• 1:55:00John Coogan?

  Opus 5 put up a very, very impressive number, then OpenAI fired back with 5.6 Soul used to solve open problems in mathematics. So why was it struggling with ArcAGIV3, which you, at one point, were in the top 10, right?

• 1:55:17Speaker 01

  Yeah, I was, I was globally ranked, ArcAGIV3. I don't think it's still up, but, yeah, I was...

• 1:55:24John Coogan?

  Ranked ArcAGIV3 player. That's up there. You were, like, you were pro-am.

• 1:55:29Speaker 01

  Yeah, yeah, I would say.

• 1:55:30John Coogan?

  You didn't go pro, you turned it down.

• 1:55:32Speaker 01

  I turned it down, yeah.

• 1:55:33John Coogan?

  You had the opportunity to be an Arc...

• 1:55:34Speaker 01

  They were gonna give you, like, 10 more tasks, 5 more tasks, something like that.

• 1:55:37John Coogan?

  Something like that?

• 1:55:38Speaker 01

  Yeah.

• 1:55:39John Coogan?

  But apparently, OpenAI was able to investigate the low score of 5.6 Soul on ArcAGIV3, and the harness was not letting it remember what it had learned. We found that enabling two API settings tripled our scores with 6X fewer output tokens, so very interesting to watch these...

• 1:55:57Speaker 01

  Yeah, this is fascinating. I mean, we've seen this a lot over the past, like, I don't know, year and a half almost, where the harness, like, really matters a lot.

• 1:56:04John Coogan?

  Yeah.

• 1:56:05Speaker 01

  And if you have the wrong harness, or it's, like, limiting the model in some way, I mean, it can have, like, massive, like, effects on the downstream task.

• 1:56:11John Coogan?

  Yeah, people were not expecting this. It was definitely, like, the model, the god model will be just one model, and you'll just ask it to predict the next token, and it'll just do it perfectly.

• 1:56:20Speaker 01

  Yeah.

• 1:56:21John Coogan?

  There's a lot more that goes into the integration here. I still think ArcAGIV3, I mean, fantastic benchmark, love the team, obviously Mike's been on the show multiple times, but it's also just a great way to actually illustrate AI progress to someone that maybe just doesn't want to build software or hasn't built software before and doesn't really, can't really feel that viscerally. I can't say viscerally, I don't know.

• 1:56:45Speaker 01

  Especially, you know, the famous, like, time horizon task doubling every six months. Like, that's basically, like, we can't actually measure the high end now, it's, like, too hard. We don't have enough tasks to, like, measure it efficiently, basically.

• 1:56:57John Coogan?

  Yeah, and a lot of people are just like, "What? A task that takes me 12 hours? Like, what is that? I don't even know."

• 1:57:03Speaker 01

  Yeah, it is a bit hard to kind of understand.

• 1:57:04John Coogan?

  It's hard to think of that off the top of your head, like, what does that mean? Like, like, building a whole report or something, or like, a lot of people work in, like, various ways, like, yeah, 12 hours of meetings, is that one task? I don't know.

• 1:57:15Speaker 01

  Yeah.

• 1:57:16John Coogan?

  But if you show someone the ArcAGIV1 puzzle, and it's very easy, and V2 is very, very, very easy, and then you, and then you walk them through the story of how AI has progressed on this and how hidden the answers are, you can, you can pretty easily help someone feel the AGI, which is very, very, very, very fun. Anyway, that's our show, folks. We will see you at 11:00 AM Pacific on Monday. Have a great weekend, have the best weekend ever. Be like a golden retriever going after the tennis ball. And also, leave us five stars on Apple Podcasts and Spotify, sign up for our newsletter at tvpn.com, and we'll see you on Monday.

• 1:57:57Speaker 01

  See you.

• 1:57:58John Coogan?

  Bye.

• 1:57:59Speaker 02

  Rolling flashback.

• 1:58:00John Coogan?

  Ah! And then...