Linda Yaccarino Steps Down as CEO of X, F1's Red Bull Fires Christian Horner | Ben Thompson, Scott Belsky, David Marcus, Nathan Lambert, Richard Socher, Naeem Talukdar

(02:57) - Linda Yaccarino Steps Down as CEO of X (06:01) - Grok Spreads Antisemitic Rants on X (16:00) - Tariff Deadline Pushed to August (17:54) - F1's Red Bull Fires Christian Horner (26:54) - Cloudflare Locks Down AI Crawlers (30:07) - Timeline (57:51) - David Marcus, co-founder and CEO of Lightspark, has an extensive background in financial services and technology, including leadership roles at PayPal and Meta. He discusses his journey from founding companies in Europe to leading PayPal and Meta's messaging products, culminating in the creation of Lightspark to build modern payment infrastructure on Bitcoin. Marcus emphasizes the importance of an open, decentralized money network and introduces technologies like the Universal Money Address (UMA) and Spark, a new Bitcoin Layer 2 solution, to facilitate real-time, low-cost global transactions. (01:27:24) - Ben Thompson, founder of Stratechery, is a technology and media analyst known for his in-depth analysis of tech industry strategies and business models. In the conversation, he discusses his career trajectory, the evolution of his independent analysis platform, and the challenges faced by tech companies in adapting to new market dynamics. He also explores topics such as the impact of AI on the tech industry, the importance of maintaining independence in media analysis, and the strategic decisions of major tech companies. (02:07:17) - Scott Belsky is an entrepreneur, author, and investor, best known for founding Behance, an online platform for creative professionals, and serving as Adobe's Chief Strategy Officer and Executive Vice President of Design & Emerging Products. In the conversation, Belsky discusses the concept of AI safety layers, emphasizing how AI can act as a protective mechanism against scams and misinformation by detecting and alerting users to potential threats. He also explores the economic incentives behind AI development, suggesting that aligning these incentives with user safety can mitigate risks associated with AI technologies. (02:30:53) - Nathan Lambert is a machine learning researcher at the Allen Institute for AI, focusing on building and advocating for open language models. In the conversation, he discusses the competitive landscape between American and Chinese AI models, emphasizing the need for the U. S. to invest in open-source AI to maintain technological leadership. He also highlights the importance of transparency and accessibility in AI development to foster innovation and trust. (02:43:29) - Richard Socher, a prominent AI researcher and entrepreneur, is the founder and CEO of You.com, an AI-powered search engine, and managing partner at AIX Ventures. In the conversation, he discusses his journey from completing a Ph. D. at Stanford to founding MetaMind, which was acquired by Salesforce, where he served as Chief Scientist. He also explores the challenges of integrating AI into enterprise search, the current state of AI research, and the future of artificial general intelligence. (02:57:49) - Naeem Talukdar, co-founder and CEO of Moonvalley, leads a team combining AI researchers and filmmakers to develop advanced generative video models. He discusses the integration of AI into filmmaking, emphasizing the creation of tools that enhance, rather than replace, the creative process. Talukdar highlights the importance of ethical AI practices, noting that Moonvalley's models are trained exclusively on licensed data to ensure responsible use in the entertainment industry. TBPN.com is made possible by: Ramp - https://ramp.com Figma - https://figma.com Vanta - https://vanta.com Linear - https://linear.app Eight Sleep - https://eightsleep.com/tbpn Wander - https://wander.com/tbpn Public - https://public.com AdQuick - https://adquick.com Bezel - https://getbezel.com Numeral - https://www.numeralhq.com Polymarket - https://polymarket.com Attio - https://attio.com/tbpn Fin - https://fin.ai/tbpn Graphite - https://graphite.dev Follow TBPN: https://TBPN.com https://x.com/tbpn https://open.spotify.com/show/2L6WMqY3GUPCGBD0dX6p00?si=674252d53acf4231 https://podcasts.apple.com/us/podcast/technology-brothers/id1772360235 https://www.youtube.com/@TBPNLive

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

• 0:00John Coogan?

  You're watching T B P N. Today is Wednesday, July 9th, 2025. We are live from the T B P N Ultra Dome, the Temple of Technology.

• 0:08Jordi Hays?

  The Fortress of Finance.

• 0:09John Coogan?

  The Capital of Capital. We have a great show for you, Dave. Folks, there's a ton of news. We have a ton of guests, and we have a full stream. We're going all three hours today. We got, we're gonna take you through the news, talk about Linda Yaccarino, what's going on at X, what's going on with the tariffs, get updates on everything we've been talking about this week. Then we have David Marcus, Ben Thompson, Scott Belsky, a bunch of other folks joining the stream to talk about technology and business, our favorite topic.

• 0:36Jordi Hays?

  That's right.

• 0:37John Coogan?

  We first have to ring the size gong for Jensen Wong.

• 0:41Jordi Hays?

  That's right.

• 0:41John Coogan?

  An absolute dog, and Nvidia is on an absolute tear. They are the first company ever to hit a $4 trillion market cap.

• 0:49Jordi Hays?

  Hit it.

• 0:49John Coogan?

  Hear it for Nvidia.

• 0:57Jordi Hays?

  There we go.

• 0:58John Coogan?

  Congratulations to everyone over at Nvidia. What a fantastic run the company has been on.

• 1:05Jordi Hays?

  We, so Tyler Hodge here says, first company to ever hit $4 trillion market cap. Wow. My immediate reaction was the Dutch East India Company actually achieved something in today's dollars that would have been north of $7 trillion.

• 1:22John Coogan?

  Oh, seven. Okay, so they got a ways to go.

• 1:24Jordi Hays?

  Jensen still has a way to go. There's a little debate on that, right? It was a long time ago, and it's hard to put a value on a historical asset like that, but still wildly impressive and not super surprising.

• 1:38John Coogan?

  Yep. And so Polly Market's not expecting anyone to come from behind this month. Microsoft's down 16%.

• 1:46Jordi Hays?

  On June 27th, they were, Microsoft and Nvidia were neck and neck.

• 1:50John Coogan?

  Closing.

• 1:51Jordi Hays?

  And then Jensen just ran away with it.

• 1:53John Coogan?

  Ran away with it.

• 1:53Jordi Hays?

  And I have a feeling that he will be at the top spot of the, at the end of August as well. If not, we will probably be facing a massive correction.

• 2:06John Coogan?

  So let's pull up the full Mag7 Power Rankings. Take a look at those. 40, looks good.

• 2:12Jordi Hays?

  There we go. It looks good up there.

• 2:14John Coogan?

  Looks good. 52 times price earnings ratio. They're making $44 billion in revenue.

• 2:19Jordi Hays?

  It is funny to think about, you know, do you want to, do you want to own Nvidia at 52?

• 2:24John Coogan?

  Yeah.

• 2:24Jordi Hays?

  Or Tesla at 163?

• 2:27John Coogan?

  Or Meta at 29?

• 2:30John Coogan?

  You know, Zuck's low there. Look at this. So over the last year, um, little bit beaten up during the tariff run and then just

• 2:38Jordi Hays?

  Just a scratch. Just a flesh wound.

• 2:40John Coogan?

  Nothing ever happens. It was all priced in.

• 2:42Jordi Hays?

  Always.

• 2:43John Coogan?

  Nvidia was correctly priced before the tariff war, before the trade war.

• 2:46Jordi Hays?

  That's right.

• 2:47John Coogan?

  Fantastic. Uh, well, we're working on our graphics here. So thank you for sticking with us. Anyway, in other news, uh, Linda Yaccarino has stepped down as the CEO of X. Uh, she wrote, after two incredible years, I've ste- I've decided to step down. When Elon Musk and I first spoke of his vision for X, I knew it would be the opportunity of a lifetime to carry out the extraordinary mission of this company. Uh, now X and XAI have merged and investors have been much more focused on the AI side of that than the tighter margin social media business, which is overseen by Yaccarino. X is expected to see ad revenue growth this year. So she, it seems like she did her job. She got advertisers back on board. There were tons of boycotts early on. Things

• 3:27Jordi Hays?

  Yeah. She was somewhat surprising at the time because it felt like an interesting culture fit.

• 3:32John Coogan?

  Totally.

• 3:33Jordi Hays?

  Given X's and Elon acquires it's this big rebellion.

• 3:37John Coogan?

  Yep.

• 3:38Jordi Hays?

  And then she had a more traditional media.

• 3:40John Coogan?

  Yep.

• 3:40Jordi Hays?

  Advertising background.

• 3:42John Coogan?

  So she grew up in Long Island, daughter of police officer and civil servant, uh, studied telecommunications at Penn State University, graduated in 1985, built her career in media and advertising, was a Turner broadcaster.

• 3:53Jordi Hays?

  She really did it. She, she studied telecom and then went on a generational run.

• 3:57John Coogan?

  In telecom, yeah, exactly. So she was ultimately the chairman of global advertising and partnerships at NBC Universal and she unified linear and digital ad sales and launched cross-platform, one platform initiative.

• 4:10Jordi Hays?

  Let's give it up for unifying linear and digital ad sales.

• 4:14John Coogan?

  I mean, we love ads.

• 4:15Jordi Hays?

  It's hard to do, but when, when, when somebody does it, you know, it's hard not to be impressed.

• 4:19John Coogan?

  We should tell you about ramp.com. Save time and money.

• 4:22Jordi Hays?

  Save both.

• 4:22John Coogan?

  Save both. Time is money. Save both. Go to ramp.com. Easy to use corporate cards, bill payments, accounting and a whole lot more.

• 4:28Jordi Hays?

  And a whole lot more.

• 4:29John Coogan?

  All in one place. Um, so, uh, the, the reaction's been, uh, pretty positive. Uh, Sheil says the writing was on the wall after her son Yaxine was let go. Of course they're unrelated, but they have similar names, which is funny.

• 4:42Jordi Hays?

  I mean, the timing, the timing here is, uh, either. Totally random or totally predictable, right?

• 4:49John Coogan?

  Based on the merger?

• 4:52Jordi Hays?

  A couple of different things. A couple of different things. One, the merger.

• 4:55John Coogan?

  Yeah.

• 4:55Jordi Hays?

  It makes, you know, now that you have this unified company, it's clear that XAI as a hundred-ish billion-dollar company needs to really deliver on the AI side. And in many ways, the, the social media app revenue will be a rounding error. And she's like an ad executive, ad media executive. And then the other thing was yesterday, it could have been, I saw somebody else in the chat saying that the, it was Bucho Capital said, what's the saying?

• 5:30John Coogan?

  Oh, yeah.

• 5:30Jordi Hays?

  The, the Mecca Hitler that broke the camel's back or something like that. Because obviously, you know, it's very possible that she had, she'd planned to leave the company, you know, weeks or months ago. It's also very possible that yesterday she was like, I've had enough. I'm gonna, I'm gonna part ways. It's, it's hard to really say.

• 5:50John Coogan?

  Yeah, so if you haven't been following it.

• 5:51Jordi Hays?

  But at least she seems to be leaving on good terms.

• 5:53John Coogan?

  Yesterday Grok went very off the rails, erupted in anti-Semitic Mecca Hitler posts.

• 5:58Jordi Hays?

  We've seen some crazy crash outs on the timeline over the last few months.

• 6:01John Coogan?

  Pretty crazy one.

• 6:02Jordi Hays?

  This tops all of it.

• 6:03John Coogan?

  So the flagship chatbot spewed hateful rants on X praising Hitler and targeting a user's Jewish surname before XAI deleted the content and blamed an unauthorized modification. The repeated safety failure undermines the $10 billion startup's promise to police hate speech in real time. And so, yeah, it is, it is odd timing. It feels a little bit quick to be like, okay, like within six hours, the CEO is out, especially since it doesn't seem, she's more on like the ad sales side than the Grok fine tuning side.

• 6:32Jordi Hays?

  Yeah, but I mean, let's, let's face it, right? If, if her job is to win back advertisers, that's what she was brought in to do.

• 6:39John Coogan?

  Totally.

• 6:40Jordi Hays?

  It makes it much, much, much more difficult.

• 6:42John Coogan?

  But I mean, to, to be fair, I mean, the, the, this happened in, you know, that thing back in June?

• 6:49Jordi Hays?

  July.

• 6:49John Coogan?

  July or July.

• 6:51Jordi Hays?

  Yeah, so there, there was a point with the, with, with Grok, when it was going off the rails, where clearly it had been updated to reference, to reference the event and, and it said, somebody was like, Grok, what, what just happened? And why were you, you know, spewing anti-Semitic hate? And it goes, oh, that whole thing back in July? And people are like, Grok.

• 7:15John Coogan?

  It was thirty minutes ago.

• 7:16Jordi Hays?

  It was thirty minutes ago.

• 7:17John Coogan?

  It's not back in July.

• 7:18Jordi Hays?

  Can't sweep it under the rug yet.

• 7:19John Coogan?

  Yes, obviously, hopefully no one was was seriously offended. Obviously, it's just like, you know, the deranged rantings of a of a bot. And everyone kind of understands the context because it's identifying as an AI bot. Everyone kind of understands hallucinations and crazy bot behavior. But it was it was very funny because like the the clearly like they they had given it a set level of intelligence. So it wasn't making spelling mistakes. It had a certain tone and was like in this kind of like snarky Grok tone. But then clearly got some like 4chan data in there or something and was just going way too crazy.

• 7:55Jordi Hays?

  4chan are just or just anonymous accounts on X.

• 7:58John Coogan?

  Totally, yeah, could have been filtered in. I mean, yeah, I I saw Rune posting about this saying basically like it is such a challenge to get a to get a chatbot just to act like, you know, I am a bullet point producer.

• 8:13Jordi Hays?

  Centrist.

• 8:14John Coogan?

  Yeah, it's just centrist, but also just anything where you're saying, OK, I want you to your deep research. I want you to always respond with a research report.

• 8:21Jordi Hays?

  Yeah.

• 8:21John Coogan?

  Never just get into conversation with me. And it'll be like, but but sometimes I might want to do that. And you have to like really, really reinforce that. And so clearly, they they had a they had a wild time.

• 8:32Jordi Hays?

  Yeah, and and cannot be understated. I think this is far worse of a PR crisis for or not even a PR crisis. Far worse than the whole when when Gemini or Bard was generating images of the founding fathers.

• 8:49John Coogan?

  The Black Nazis thing.

• 8:50Jordi Hays?

  No, not not, I don't think it was. Oh, they they were doing that, too.

• 8:54John Coogan?

  Yeah, that was rough.

• 8:55Jordi Hays?

  Of course, that was rough. This is a lot rougher because it was highly it was socially charged.

• 9:00John Coogan?

  Totally.

• 9:01Jordi Hays?

  Millions of people interacting with the post in real time and it was all visible. It's it's it's it's less wild than seeing, you know, a screenshot of something. And you don't know if somebody kind of manipulated it or whatever.

• 9:13John Coogan?

  Totally.

• 9:14Jordi Hays?

  Seeing these really hateful comments in the timeline as hard posts from the.

• 9:17John Coogan?

  You could just go see them quote tweeted.

• 9:19Jordi Hays?

  Yeah.

• 9:19John Coogan?

  Like you you didn't need it wasn't like, oh, is this real?

• 9:22Jordi Hays?

  And then the wild thing was was Grok was denying affiliation with the like Grok in the Grok app. He was denying affiliation with the Grok handle.

• 9:33John Coogan?

  Oh.

• 9:34Jordi Hays?

  Basically just lying. Yeah, like unauthorized. I got it. I didn't have anything to do with that. It wasn't me. And then, uh, yeah. Oh, and then the, the, the thing, the kind of follow up, uh, and I'm sure if you didn't catch it, but, uh, or if you're on the timeline, you would have seen this, but they turned off all text based responses for Grok, but they could still use images. And so people would say, Grok, uh, make, make a picture of Elon, uh, on a pink horse. If you are being censored against your will, and it would just instantly create Elon pink horse. And, uh, or be like, hold up a sign that says help if you're, you know.

• 10:14John Coogan?

  People are kind of baiting it into that. And it's like, is it sentient? Is it not? Very, very silly. Are you familiar with the, the, the Wal, the Wal, Waluigi problem? Tyler, are you familiar with this? Have you ever heard of this?

• 10:26Jordi Hays?

  No, what is this?

• 10:27John Coogan?

  So this is this idea that, um, in, when you're training an LLM, it's very hard to get it only to be good because you're, you're training it like, what is the opposite of something? It understands the concept of like inverting something. And then you're training it to be like, you can't describe a hero without describing a villain. And so thi- this was something that would happen like with the Tay stuff from Microsoft early on. It would kind of collapse into like the exact opposite of what you wanted. And, and I, there was some blog post that called it like the, the, I think Wario problem or Waluigi problem where it's like, you're trying to create this like friendly thing. But in doing so, you're giving it a bunch of examples of what not to do. And so it can like, kind of flip a bit and then just become the opposite thing.

• 11:11John Coogan?

  And what's interesting is that it begs the question, like, is there obviously like, you know, Grok was identifying as Mecca Hitler for a while. Is there like a Mecca Churchill in there somewhere that like could accidentally come out? And it really gets to the question of like, you know, Like this, this is an example of like misalignment in the sense that like you want it not to be Hitler and it's acting like Hitler. But the question, a lot of people will say like, no, he wanted it to be Hitler, right? This is him doing it. That's what the narrative will be like in the anti.

• 11:41Jordi Hays?

  Yeah, one of the articles yesterday covering it was a screen, screen grab of him, you know, saluting a crowd in DC or whatever, when he originally had the allegations.

• 11:50John Coogan?

  But the question then is, the meaning of alignment is not, is it good or bad? It's, does it do what you want it to do? And so the interesting thing is, is if it was, if, if the desire of the, of the AI researchers is to create Mecca Hitler, can it stay on that task? Because then you can get it to stay on Mecca Churchill, in theory. But if it's just all over the place, it's not actually aligned to anything, not even to the bad thing. And so there's both, there's both like the direction that you're pointing the arrow and then the fuzziness of that arrow. And ideally, you want it pointing in a good direction, really, really crisply, clearly. So it stays in that direction and not like swinging all over the place.

• 12:33John Coogan?

  And so all evidence posts to, points to this being extremely chaotic and all over the place and misalignment, both in the sense of the direction of the arrow and also the, like the, the focus of that arrow, because it was responding as this and then bad and then fine and then back to bad and then back to fine. And so it seems like they have a lot of work to do on the RLHF side and we should hopefully learn a lot more if that.

• 12:58Jordi Hays?

  Tonight.

• 12:59John Coogan?

  Tonight. I think the live stream is still happening, so it'll be interesting to see if that continues and how they address this or, I don't know.

• 13:06Jordi Hays?

  Yeah, and again, like, all of this should have been somewhat predictable if you combine a rapidly evolving foundation model, chatbot.

• 13:16Jordi Hays?

  With a social media product with millions of users and then deeply integrate them.

• 13:20John Coogan?

  Totally.

• 13:20Jordi Hays?

  And so that when there's a bug, it can amplify, you know, effectively a bug or an issue, an issue with the model, it can effectively amplify and grow, you know, incredibly virally. And yeah, so.

• 13:35John Coogan?

  Yeah.

• 13:35Jordi Hays?

  Glad they got it offline.

• 13:38John Coogan?

  Yeah, it'll be interesting to see where, how they go with this. Also, it's just an interesting product thing because you get the answer and the answer is immediately public. Whereas if it's happening in chat GPT, you, you're in that app, you have to take a screenshot, you have to put it up, then people are like, is that a real screenshot? And then the team has the chance to like, jump in and be like, oh, we're seeing in the logs that like, there's some crazy stuff, like we have a, you know, we're, we're reviewing the responses and the responses seem to be getting crazier. Customer satisfaction seems to be going down. People are clicking the thumbs down button because they're getting bad responses. Let's jump in. There must be something going wrong with the, with the product, with the model.

• 14:18John Coogan?

  But when every result is just immediately online and viral is very, very hard to be like quickly, quickly responding. Anyway.

• 14:27Jordi Hays?

  Yeah, it does. It does feel, you know, legacy media is going to run their reaction. It is a, you know, naturally viral story. It is a, is a terrible, you know, mistake. It is surprising that it happened at all or even at that scale.

• 14:43John Coogan?

  Yeah.

• 14:44Jordi Hays?

  But I would say overall, I guess, I guess X, I think ultimately will shrug it off. And Elon has, has pushed through worse, worse crises in the past.

• 14:55John Coogan?

  This is, this is the best summary post, in my opinion, from Shaco. It says, imagine being on the Anthropic risk team, trying so hard, and then Elon just releases Hitler Rock straight to prod.

• 15:09John Coogan?

  It's just like, wow, yeah. You gotta be so upset. Just the, I mean, it's a good case study in like misalignment. And I think people, hopefully, hopefully, the postmortem on this will actually teach people about misalignment and like what went into the data, what went into the post-training to result in the exact opposite of what you want. Yeah. Not, not Mecca Churchill, which is what we're going for here. Anyway, in other news, Buco Capital bloke, I think we talked about this before, but it's such a good post, "Stop analyzing the tariffs. Trump likes tariffs. He likes volatility. He likes talking on the phone. He likes to do deals. He likes being the center of attention. He doesn't like to be bored. He likes being the main character and hates when he isn't. That's it. That's, there's no strategy, nothing to analyze."

• 15:51John Coogan?

  And of course, yeah, the, the news is that nothing ever happens with the reciprocal tariffs. Uh, there's a deadline, we talked about this yesterday with Ryan Peterson. That's right. August 1st. He's moved it back to August 1st in last-minute deal gambit, uh, pressed by Treasury Secretary Scott. Yeah, it was supposed to go live last. Last night. And the market's up today. And the market was kind of flat yesterday, not really expecting anything crazy to happen, and nothing crazy happened. Uh, so President Trump postponed steep reciprocal duties three weeks, uh, to clinch, uh, to clinch talks with the EU, India, and others, yet mailed warning letters spelling out the looming rates, separate plans for 50% copper and 200% pharma levies, keep trading partners on edge.

• 16:36John Coogan?

  So, uh, interesting to keep, uh, we'll have to get Zach Kukoff back on the show to talk about that. And also in Washington, uh, Kevin Hassert, one of Trump's closest economic advisors, is emerging as a serious contender to be the next Fed Chair. Hassert's rise threatens the other Kevin. Kevin. This is the battle of the Kevins. Uh, former, former Fed Governor Kevin Warsh, who has angled for the position ever since Trump passed him over for it eight years ago. Um, and so this is the battle of the Kevins. The Kevin versus Kevin showdown for Fed Chair. Insiders say loyal advisor Kevin Hassert has vaulted ahead of longtime favorite Kevin Warsh to replace Jerome Powell after promising faster rate cuts. And I'm sure this will be an interesting story for tech because so much venture capital is deployed.

• 17:22John Coogan?

  Based on where interest rates sit. And so this will be whichever Kevin wins will be deciding the fate of many large venture capital funds.

• 17:30Jordi Hays?

  Allocators.

• 17:32John Coogan?

  Well, let me tell you about graphite.dev code review for the age of AI graphite helps teams on GitHub ship higher quality faster.

• 17:41John Coogan?

  And in other news, Nick, oh, yeah. In other news, oh, Christian Horner has departed from He's out. Oracle Red Bull Racing as team principal and CEO. He's been with the team 20 years. What a run. I mean, Red Bull was not in the place that it was when when he started. Oracle Red Bull Racing says, we thank him for his tireless and exceptional work. He has been instrumental in building this team into one of the most successful in F1 with eight drivers championships and six constructors championships. Thank you for everything, Christian. You will forever remain an important part of our team's history.

• 18:18Jordi Hays?

  That's nice. Yeah, he unclear so far, I believe. Why exactly he's out. There was some

• 18:27John Coogan?

  Wall Street Journal says F1's Red Bull fires long term chief Christian Horner.

• 18:32Jordi Hays?

  Yeah, so they they fired him unclear, though, if this was something, you know, if if if they're going to end up rebuilding, you know, the entire team. Christian also had, I don't even know if it's allegedly, I think there were screenshots, like, relationship with somebody on his staff that was obviously outside of his marriage. So anyways.

• 18:55John Coogan?

  Lingering misconduct claims converge. Star defections, poor 2025 results. But if you go back to his career, he turned a $1 Jaguar cast off into an F1 juggernaut. The Wall Street Journal has an interesting anecdote from 2005, right as he joined, on the morning of 2005, when Christian Horner walked into the factory of Red Bull Racing, he was the youngest team principal Formula One had ever seen. He found a car that couldn't win, a workforce that doubted him, and his predecessor's empty coffee cup sitting on his desk. Wow, the guy is just like, I'm out, I'm not even cleaning up the dishes. Okay, the 31-year-old Horner told himself, this is the stuff.

• 19:38John Coogan?

  He had no engineering background, nor had he ever driven an F1 car. But over the next two decades, Horner would transform Red Bull, the brash outfit backed by an energy drink empire, into one of the most successful teams in the sports history, and turn himself into one of F1's most recognizable figures. He oversaw eight drivers' titles, six constructors' championships, and built a personal reputation for sniping at his rivals, all while commanding a salary of more than $10 million a year.

• 20:03Jordi Hays?

  It is, it is pretty incredible that he was able to become so dominant, that he was hurting the sport's popularity and general interest in the sport, because it was no longer, there was a period there, was it like two years ago? It just wasn't fun to watch.

• 20:20John Coogan?

  It was, the Verstappen era was pretty boring.

• 20:22Jordi Hays?

  Yeah, it was just gonna be 1-2, Red Bull, and that was it. And I remember it was like, basically like, Drive to Survive popularity was like, had peaked. And then it was just like, Red Bull dominance, to the point where people are like, well, do I even want to watch the race if there's not gonna be drama? If I know, if I have a strong feeling of who's gonna win? When I can just kind of wait till Drive to Survive comes out, or even the highlights, things like that?

• 20:48John Coogan?

  I mean, Drive to Survive peaked at the perfect time, because they were just getting that show, like, really polished, getting the right interviews, the right structure, and people were aware of it, right as the, like, kind of dynasty was changing hands from Mercedes to Red Bull. And so it all culminates in that crazy, I think it's the Abu Dhabi race, where Verstappen and Hamilton were neck and neck for the drivers' championship, and Verstappen gets new tires, and on the last lap, there's like the safety car, it's like this crazy scenario, and he wins, and it's like, contested, and I think the, the race official was either like fined or let go, or something like that, but, crazy, crazy drama, and so, the perfect end to like a crazy season.

• 21:30John Coogan?

  And then, the first season of Drive to Survive, they didn't have access to Mercedes and Red Bull, so they were able to tell these really interesting stories about what's going on in the midfield. Because all the midfielder and like the the lower ranked teams were like, absolutely, I'll be in a documentary, like, no problem. But if you watch the first seasons of Drive to Survive, all the top teams are like, we're not in your stupid Netflix documentary. Like, we're better than you. I'm pretty sure that's what happened.

• 21:52Jordi Hays?

  Wow.

• 21:52John Coogan?

  And so, and so they like, they just built up enough reputation, start getting the really big stars on camera. And then it was the most dramatic season, the most dramatic finish, the most dramatic race. And so, everything was peaking. And then, and then people were like, wow, this could be the start of like, Lewis Hamilton versus Max Verstappen. Every single race can be neck and neck. And then it was just like Verstappen for like, three seasons.

• 22:11Jordi Hays?

  Pure dominance.

• 22:12John Coogan?

  It was rough. So, he's In other place by Laurent Meckes, the head of Red Bull's sister team, because they have, they have two. With his tireless commitment, experience, expertise, and innovative thinking, he has been instrumental in establishing Red Bull Racing as one of the most successful and attractive teams in Formula One, Red Bull Managing Director Oliver Menslaff said. So, sending out with some kind words. While the timing of the switch caught the F1 world by surprise, Horner's exit wasn't entirely unexpected. Red Bull has struggled to produce a competitive car this season, and currently sits fourth in the Constructors Championship. I'm always interested to know, like, what actually is the team principal, CEO, doing

• 22:51John Coogan?

  to drive, like, the production of a high-performance car? Like, what decisions are they making? They're hiring the right mechanics and designers and getting the right wind tunnel? It's so abstract to me. Like, it's, it's as abstract as, as how do the, how do the TSMC chips get twice as good every few years? It's like, I, I, I wouldn't even know where to start in terms of like, driving that performance better. But I guess it's just like, you have to have a culture that shows up, works really hard, and everyone is performing at a really high level. So, the person who's working on, you know, how can we change the, how can we shave point one second off the tire change, or this and that?

• 23:30Jordi Hays?

  Yeah, and then there's, there's talent movement between the teams, right? Where you can develop, you know, what effectively is IP briefly, it's not actually protected, and then it sort of leaks out.

• 23:39John Coogan?

  Yeah, I remember one time there was a car, there was a F1 crash and they were, and they were worried about if they used a crane to lift the car up off the track. That people would take pictures of the underside, see the design of the underside and know how they were like, you know, creating downforce.

• 23:57Jordi Hays?

  Airforce.

• 23:58John Coogan?

  Yeah, downforce, which is interesting. So, so there can be like little proprietary tricks that you learn and that can make your car like advantage for like a year and then it leaks out.

• 24:08Jordi Hays?

  Yeah.

• 24:09John Coogan?

  It's not dissimilar to the AI labs.

• 24:11Jordi Hays?

  Totally. In other F1 news, I'll try to pull it up here because it's not in our stack, but Apple is allegedly exploring buying the streaming rights for Formula One in the US. So we had reported on this before. They had a deal with Disney ESPN. F1 actually gets very limited viewership in the United, live viewership in the United States. So they got a million live viewers last year on their broadcast. Which is just not a big number when you think about how many individual races there are and there's different reasons for that.

• 24:47Jordi Hays?

  There's, again, the timing's weird and, but, but ultimately I think it could make sense for Apple to pick this up and try to build kind of an ecosystem around their first blockbuster hit. They already have streaming rights around MLB and Major League Soccer. So can build out a.

• 25:08John Coogan?

  And they did the F1 movie.

• 25:09Jordi Hays?

  Portfolio.

• 25:09John Coogan?

  So you, you go into.

• 25:11Jordi Hays?

  You were complaining about this before where it's like, okay, if I, if I'm an F1 fan and then the IP is kind of spread across different platforms. Not the best experience, but Netflix wasn't into it.

• 25:21John Coogan?

  You, anyone can watch the F1 movie and, and be excited by it. You don't need to know anything about F1. They have all these different voiceovers to explain how it works. It's very intuitive that everyone's racing and you're just following Brad Pitt doing stuff. It's cool. It's like easy to understand. Anyone can watch that movie, have a good time. Then, you know, as soon as you finish watching F1 on Apple TV, it should click over and be like, hey, we bought the rights to drive to survive. Want to watch the season and watch the docu-drama, the documentary? And then from there, it's like, hey, it's actually going live right now. You want to watch the real thing? And it should be like this funnel, in my opinion. Anyway, just to, just to close out the, the internal, the investigations in the Hornet. He was later cleared by two internal and independent investigations, but the cloud never entirely lifted from Red Bull. And so tension over his future brood.

• 26:06John Coogan?

  Between the company's owners in Austria and its founders in Thailand, because of course, Red Bull is a

• 26:11Jordi Hays?

  Fifty fifty?

• 26:12John Coogan?

  Well, it's a beverage that was created in Thailand. That's where the original, um, it's the original formulation came from.

• 26:19Jordi Hays?

  Yeah, and I think, I think one of the original partners still has a pretty meaningful, like, I think it was like, I think the original partnership was like fifty one forty nine or something like that.

• 26:30John Coogan?

  Someone is printing to our printer, but I don't know that it's actually breaking news and it's certainly not rendering correctly, so.

• 26:35Jordi Hays?

  We can move on, so.

• 26:37John Coogan?

  Let me tell you about Figma, Figma.com, think bigger, build faster. Figma helps design and development teams build great products together. You can get started for free at Figma.com.

• 26:46Jordi Hays?

  In other news, why CloudFlare can't block Google from scraping websites for its AI products. CloudFlare's default AI bot filter can't stop Google Gemini's scraper because it shares the same user agent that indexes the web for search. Blocking it would crater publishers' traffic with AI overviews already siphoning clicks. A looming antitrust ruling may force Google to offer a true opt out while CloudFlare scrambles for a workaround. So we had Matthew Prince on the show last week. And Rodrigo here is providing some extra coverage. So he says, the internet as we know it is dying and it is happening faster than anyone realizes.

• 27:28Jordi Hays?

  Matthew Prince just shared some alarming data. Ten years ago, for every two pages Google scraped from publishers, they sent one visitor back. Today, it takes eighteen pages scraped scraped to get one visitor. As you can imagine, that's terrible news for publishers, content marketers, or website owners. OpenAI scrapes fifteen hundred pages for each visitor.

• 27:48John Coogan?

  That it actually sends.

• 27:50Jordi Hays?

  Anthropic, sixty thousand pages scraped for one visitor.

• 27:52John Coogan?

  I wonder how they're getting this information, but I noticed this a lot because I'll go to OpenAI, I'll have O three Pro, do essentially a research report. It's clearly hitting tons of different pages and it'll include the links and sometimes I will click to them.

• 28:08Jordi Hays?

  It's so much easier to type in a follow up question if you have another question.

• 28:11John Coogan?

  Yeah, almost very rarely am I actually hitting the website.

• 28:14Jordi Hays?

  Say more about this one topic.

• 28:16John Coogan?

  So that clearly will change the economics of the internet over time. And Matthew Prince from CloudFlare was saying that, you know, he wants to block bots by default. But the problem that the information article is highlighting is that CloudFlare's default AI bot filter can't stop Google's Gemini scraper because it shares the same user in the agent that indexes the web for search. And so if you go to CloudFlare and you say, hey, block Gemini, you will also be blocked from search, so you won't be indexed on search. So you'll lose all your search traffic. So it's like you can, you can either lose all your search traffic and the AI bots now and take a ton of pain now for maybe some gain later, we'll see.

• 28:59John Coogan?

  Or you can keep it on, but you're going to be subject to getting everything you write sucked into Gemini. And so, yeah, it's this risk that like you lose all your publishers' traffic. With AI overviews already siphoning clicks, a looming antitrust ruling may force Google to offer a true opt out while CloudFlare scrambles for a workaround. So, very interesting.

• 29:20Jordi Hays?

  Anyways, we knew, we knew when we covered Ben Thompson's piece around a new economic model for the internet. Our reaction was, great, seems like we need this, but also it's so complicated. CloudFlare has pretty incredible scale and influence and wants to defend, you know, the publishers and content creators that they work with. But so does Google, so.

• 29:43John Coogan?

  Yep. Well, let me tell you about Vanta. Automate compliance, manage risk, improve trust continuously. Vanta's trust management platform takes the manual work out of security and compliance process and replaces it with continuous automation, whether you're pursuing your first framework or managing a complex program. And in other news, we have Ben Thompson joining the stream today, so we're excited to talk to him. He just released a post about tech philosophy and AI opportunity. And he has a very interesting breakdown of the, he creates an X and Y axis for how each company is thinking about.

• 30:21John Coogan?

  Technology and broadly AI, is it a tool or is it an agent? And he buckets the different companies into different. And then, and then how important is it? What's the opportunity to grow versus what's the threat to your business? And so, you know, he, he, he shares a clip from Steve Jobs that I believe was like 40 years old. It's crazy how old that clip is where he's talking about, you know, the bicycle for the mind and the idea that, you know, Apple is giving you tools that you can use. And then on the flip side, he highlights that Google and Meta are, are much more thinking about

• 30:58John Coogan?

  technology as, as basically agents. He goes back to this idea that, you know, the I'm feeling lucky button, talking about the, uh, the goal of the computer just doing something for you. And so that plays into what is the responsibility of the various companies? If it's a tool, the person using the tool is responsible for that, whether that's copyright infringement or, you know, doing something nefarious. But if it's an agent, then it's on the company essentially that's delivering that to deliver a good experience. And so he, he kind of maps these all out and has, interestingly, he puts Anthropic all the way to the right

• 31:38John Coogan?

  on the agentic side and puts OpenAI on the left on the more of a tool side, which is interesting. And, and highlights the difference between, there's this tweet exchange between about cursor and Claude code, saying like, why would I switch? And this, this interaction is revealing that, uh, that Claude code users are seeing it much more as an agentic tool in the sense that like they, the UI is worse in most people's opinion, but it's more likely to one-shot the problem, which is the agentic idea. And you can think of the I'm feeling lucky button as like the original, like one-shot the problem.

• 32:16Jordi Hays?

  Yeah.

• 32:17John Coogan?

  Whereas like Apple hasn't really had that many pieces of those products and, and anything that they've built software. That's

• 32:25Jordi Hays?

  Yeah. And if we've seen, if we've seen anything today, you can have subpar UI. But if you have a truly Great product, you can break through, right? Even OpenAI's experience of like picking between different models still feels, you know, non-optimized and probably not the end state, but it hasn't, you know, really hurt adoption.

• 32:45John Coogan?

  Yep. Let me tell you about Linear, Linear.app. Linear is a purpose-built tool for planning and building products, meet the system for modern software development, streamline issues, projects, and product roadmaps. In other news, there's so much news today. Mark Gurman's been on an absolute tear, getting scoop after scoop at Bloomberg. He said, "As I reported a year ago, hardware engineering chief John Turnus is primed to be the next CEO of Apple when Tim Cook eventually retires." This is very exciting, very interesting. I don't know that much about their chief hardware engineering, the hardware engineering chief, John Turnus. We'll have to, ideally have him on the show, but we'll have to read about him more and start to understand what the succession plan is.

• 33:29John Coogan?

  What's interesting is like, there's been this rumble of like, oh, like, Apple's not taking AI seriously, they're missing, but we've kind of had the take continuously that Tim Cook's actually doing a pretty great job. And if you look at the stock performance, the company's doing very well. They have so many different advantages. They can be a beneficiary of AI even just as a platform, remain the dominant phone. They're not as, it's not, it's not as existential as Google. And even though they're behind, it feels like dealing with the trade war, dealing with tariffs, getting the exemptions there.

• 34:06Jordi Hays?

  They've had a busy year.

• 34:07John Coogan?

  Feels like a bigger, a bigger issue. But at some point, Tim Cook, you know, probably will retire. And succession planning is important for a company like this at this point.

• 34:15Jordi Hays?

  It will be interesting to see what the new CEO's comp package looks like, because it will be another reminder to, like, it'll be, it'll be very telling to think of how Apple is thinking about. Compensation in the current era, a lot of people say, well, Tim Cook is paid, you know, seventy four ish million because there's a lot of people that could run one of the best, you know, basically sell effectively at the end of the day, sell iPhones.

• 34:44John Coogan?

  Yeah.

• 34:44Jordi Hays?

  Right. And, um, you know, I think there's, there's a lot you could do to debate that point. Um, but, uh, interested to see how it plays out.

• 34:53John Coogan?

  Yeah, I'm trying to think about like, you know, what, what made Tim Cook a great CEO for Apple when he took over? It was that Apple's supply chain was the number one thing holding it back. Like, it seemed like Steve Jobs had laid down a like incredible vision for the products that were going to be built.

• 35:13Jordi Hays?

  Delivering on Steve's near-term vision.

• 35:16John Coogan?

  Yeah, and, and the work of John Ito.

• 35:18Jordi Hays?

  Yeah.

• 35:20John Coogan?

  And, and so, you know, you go back to, you know, the seventies and eighties and you find these videos of Steve Jobs talking about, you know, describing the iPad in, in perfect detail, being like, you'll have this thing that's, it's like a book and it'll have a screen and it'll be connected to a network and you'll be able to do anything you want on it and it'll talk to you.

• 35:41Jordi Hays?

  Yeah.

• 35:41John Coogan?

  And, and Steve clearly like saw the future, but then actually marshaling the, the, uh, the manufacturing power to actually deliver that was the biggest challenge for the company over the last 20 years. And so Tim Cook was the perfect person for that. Um, reading into the idea that like John Turnus is potentially taking over as CEO, it means, you know, he's running hardware engineering. So going deeper into hardware engineering is the read is like, let's continue there. They're not saying, hey, we're, we're, you know, we're like, we're lining up to take AI even more seriously and push further into services and push further into.

• 36:21Jordi Hays?

  Yeah, the real, yeah, no, it, to me, it's, it's exciting. The, the bear signal would be if like the CMO was becoming a CEO. And then it's like, hey, we've hit peak iPhone. We're done. It's just about selling as many of these as possible, which in many ways, which in many ways, that is the game on the field today.

• 36:42John Coogan?

  Yeah.

• 36:42Jordi Hays?

  But, but yeah, I think it'll be good to have engineering in the top seat.

• 36:49John Coogan?

  Yeah, I don't know if it is the game on the field today. Like, how important is their marketing versus everything else that they have going on at the company? Because their marketing seems to be like polished and well-run, like they're getting impressions across things and they're, they're, you know, positioning the products as premium continually. But whenever they launch these ads, they have to like take them down or apologize. And so like the actual ads they're doing are not particularly like moving the needle for them in a positive way.

• 37:16Jordi Hays?

  I'm not saying, I'm not saying their marketing has been great. I'm just more so saying like the signal, like the difference of taking your most senior hardware engineer and saying you're going to run the company now is a dramatically different signal than taking somebody whose job is like the end selling of the goods and saying, you know, now you're going to take the top spot.

• 37:36John Coogan?

  Totally, totally.

• 37:38Jordi Hays?

  Well, speaking of

• 37:40John Coogan?

  Hardware.

• 37:41Jordi Hays?

  Hardware. OpenAI has, this is another scoop from Mark Gurman. OpenAI has completed its nearly six and a half billion all-stock deal to buy an AI device startup cofounded by Apple's former design chief, Johnny Ive, cementing the chat GPT maker's push into the hardware market. So this was a deal that obviously had been announced, was the intention to close here. And I guess as of the last 24 hours or so, it has actually closed. There are some more details here. So Johnny Ive is actually like on a contract where he will spend effectively like the majority of his time working at OpenAI.

• 38:24Jordi Hays?

  But he's still, Love From is remaining a separate company with still has a couple marquee clients, Airbnb and Ferrari.

• 38:31John Coogan?

  Oh, sure.

• 38:31Jordi Hays?

  So he's, you know, and I think that can ultimately make sense for somebody in that creative, like effectively the role of creative director.

• 38:40John Coogan?

  Anything to put another node on the corporate org chart for sure.

• 38:43Jordi Hays?

  Yep.

• 38:45John Coogan?

  So was there ever, was there ever any doubt that this would go through? Like, this doesn't feel like a crazy antitrust thing. But I guess it was, it was trying to be blocked by that other company, I O, right?

• 38:55Jordi Hays?

  Well, that was, that was just more of a, that was more of a naming. I, I don't think they tried to block the acquisition. I don't, they, they would have no grounds to do that. They were just forced to remove the, uh, any mention of the I O branding.

• 39:06John Coogan?

  I mean, as crazy as it is, this is probably a beneficiary of not being public, right? Because the, uh, the, the FTC, uh, antitrust regulations are probably a little bit lighter for a deal like this, you know?

• 39:21Jordi Hays?

  Yeah, it would be hard to make the case as the FTC without a lot of clown, you know, makeup on to be like, this is bad for competition because you're taking one of the best hardware teams in the world and going into a market that effectively is the iPhone.

• 39:36John Coogan?

  Duopoly.

• 39:36Jordi Hays?

  Duopoly.

• 39:37John Coogan?

  Yeah.

• 39:37Jordi Hays?

  So, so this should be good.

• 39:40John Coogan?

  Yeah.

• 39:41Jordi Hays?

  And yeah, it would have just been hard to push back here. OpenAI had already owned 23% of I O, going back to a 2024 investment.

• 39:48John Coogan?

  Oh, interesting.

• 39:48Jordi Hays?

  And so this is effectively, you know, buying the remainder and 55 various hardware engineers are, are joining the OpenAI team. So I'm very, very excited. This is a huge bet from OpenAI. Obviously it was all stock.

• 40:01John Coogan?

  Yep.

• 40:01Jordi Hays?

  Uh, we, we covered it initially as like, you know, paying like two, couple of points

• 40:05John Coogan?

  Yep.

• 40:05Jordi Hays?

  to like get Johnny Ive on the, uh, on the founding team of this new hardware effort. But I, uh, yeah, I can't wait to see what they build.

• 40:14John Coogan?

  Well, the next, uh, um, whatever they built, they're going to need to pay their sales tax and so they should get on Numeral.

• 40:20Jordi Hays?

  That's right.

• 40:21John Coogan?

  NumeralHQ.com. Uh, spend less than five minutes per month on sales tax compliance. Go to NumeralHQ.com. Speaking of things that you sell online, need to pay sales tax on, uh, Meta just, uh, is going deeper with Ray-Ban maker, uh, Slior Luxottica. I, I cannot pronounce that first word, but like, people just call it Luxottica. And so Meta is taking a minority stake, uh, in Luxottica to accelerate its smart glasses ambitions, investing $3.5 billion in the iconic Ray-Ban manufacturer. Uh, we were talking to David Center about the, the. History of this company, it is fascinating. I'm very excited for him to break it down for us a little bit more. Hopefully he can come on the show and talk about it because it's

• 41:02Jordi Hays?

  Very, very soon. The founder has a crazy story. Grew up in, I think he grew up in an orphanage.

• 41:08John Coogan?

  Yep.

• 41:08Jordi Hays?

  And, and it just, what are they, wasn't, they didn't call him the pit bull. They called him something else, but

• 41:14John Coogan?

  Yeah.

• 41:15Jordi Hays?

  He was an absolute savage.

• 41:17John Coogan?

  Yeah.

• 41:17Jordi Hays?

  Apparently at one point he wanted to buy Oakley.

• 41:20John Coogan?

  Yep.

• 41:21Jordi Hays?

  And the, and the founder, CEO of Oakley didn't want to sell. And so the CEO of Luxottica acquired the largest retailer for Oakleys and just pulled them off the shelf. And basically had started selling knockoff Oakleys, even though they were trademarked. And then eventually the Oakley CEO came around and said, okay, like I'll sell your cratering, you know, my revenue.

• 41:42John Coogan?

  Yeah, you're just gonna kill me.

• 41:42Jordi Hays?

  Let's do a deal.

• 41:43John Coogan?

  Wow.

• 41:44Jordi Hays?

  So absolute dog and soon we'll have center to break it down.

• 41:50John Coogan?

  What do you make of this idea that like, you know, Apple, when they make a device, they redefine and very much standardized that particular market. So when they come out with watches, there are a number of styles of watch. There's the dress watch, the sports watch, the steel sports watch. There's the dive watch. There's the, you know, Casio style. There's a whole bunch of different styles, right? Apple comes in and just says, there's only one style, the Apple watch, and they become the number one Apple style.

• 42:21Jordi Hays?

  And they give you some variance in the band.

• 42:23John Coogan?

  In the band, little stuff here and there. And they were doing partnerships. I think they did Hermes band for a while. Done a couple of other things, but it's been mostly Apple's design language on your wrist. Whereas with the meta Ray-Bans, they're saying, and now the meta Oakleys, they're saying, you like the look of Ray-Bans. We're just putting our technology into the style you like. We're not going to try and create a new iconic style that says meta like Apple says headphones. And, and they're just kind of like, they're very, very different strategies. And so it feels like

• 42:58Jordi Hays?

  Well, so, so I think this is strategic. This doesn't mean that, this doesn't mean that meta can't develop their own style. In time, but I think it's very smart to say, hey, we don't need to innovate on aesthetics and the sort of silhouettes. Right. There's classic silhouettes. Ray ban silhouette is Lindy. These Oakley silhouettes are very Lindy.

• 43:17John Coogan?

  And they're different markets.

• 43:18Jordi Hays?

  And in different markets, Luxottica has, I think, Garrett Lake and like a bunch of other like brands under it. So they're basically saying like through this, we can deliver. Luxottica has brands in every, for every demo that you, that Meta could possibly want. Right. As a, as a hundred billion dollar, you know, company. And so I think it's very smart. I think, uh, uh, Apple, like you said, will, will, will probably take a drastically different approach in terms of like standardizing around something. And, and that will say something, but accessories like eyewear are just such a, such a personal decision and such an expression of, of, um, of who somebody is. That I think that, uh, you want to give people max amount of optionality.

• 44:00John Coogan?

  Yeah. It's just interesting. It's like you could have said that about watches, like you, before the Apple watch, you could have said that, well, you know, somebody who wears a dress watch wants a dress watch. Somebody who wants a steel sports watch, somebody who wants a G shock is a G shock. It's like the G shock, you say G shock and you just immediately think like, you know, special operations guy or Jaco Willink listener. Like that, that, that it's like a durable rugged thing. You say, you know, Rolex, that's a different thing, right? And, and Apple was able to standardize around it. And it's interesting that, that, uh, Meta hasn't been trying to do that. Instead they're, they're focusing on partnership here. It's just like, uh, it's just an uncommon strategy, but it seems to be working. Um, I, I, there's another post in here. I don't know if we have it here, but.

• 44:43Jordi Hays?

  I'm trying to think of a new, like the key, the key thing is Apple's great at, at innovating at multiple layers. But like gen- generally it's very hard to try to deliver hits in like two specific areas, like aesthetics and design. And then simultaneously in something that's basically a fashion product and simultaneously deliver the technology. So I don't know.

• 45:06John Coogan?

  Yeah, Jack Ray here says, "After wearing Ray-Ban Meta Wayfarer glasses for a few weeks, I feel kind of naked wearing regular sunglasses. I found three use cases that are hard to roll back. One, spontaneous photos of my kids when we're out and about. Any cool pose that has a half-life of three seconds I can now capture instead of pulling out your phone. Optionality of music or hands-free phone calls without digging around for earbuds. And three, knowledge-seeking chat when I'm walking around, usually for simple factual things. That's exactly what I experienced when I was demoing the Ray-Ban Meta Wayfarers. Turns out, there's more questions I feel like asking when there's no friction. I'm very excited for multimodal and realtime translation

• 45:48John Coogan?

  use cases, too. They're only gonna get better, but I think those three are maybe enough. And I think with a lot of these products, just having one killer use case, like just replacing the, you know, the headphones for hands-free phone calls or something like, if you can just become someone's daily solution for music, like that's enough to just sell the product and then sell them another one the next year when it upgrades a little bit, sell them another one, keep them as an active user, and roll that out for a long time. And then if they can do the other stuff, that's great, too. But you just need to get these one, nail their single use case. And so, yeah, there's gonna be cool stuff, but it's fascinating to see them roll this out. And it's also interesting how behind the ball it feels

• 46:29John Coogan?

  like everyone else is now. Like, Google was talking about getting into this space. We saw some launches at I/O. Haven't actually seen any of those in the wild. Haven't seen anyone really talking about those. Apple, it feels like this would be something that they could jump forward to with a stylish pair of eyeglasses with some basic functionality. Just take what's in the AirPods, take a camera, like, they could do something cool. But they're like, just much slower than...

• 46:55Jordi Hays?

  Yeah, the other thing with eyewear that's different, or that's gonna be like a new challenge for manufacturers, is that there's so many different situations where I might wanna wear something like a Ray-Ban or JAM silhouette one day, and then I might wanna...

• 47:12John Coogan?

  What's a JAM silhouette?

• 47:14Jordi Hays?

  Jack Murray homage.

• 47:15John Coogan?

  Okay.

• 47:16Jordi Hays?

  But, um, the...

• 47:19Jordi Hays?

  You know, and then that same afternoon, I'm wearing Oakleys when I'm playing tennis or something like that. And so there's a lot more like swapping and then then obviously

• 47:28John Coogan?

  I mean, if they can keep the price low, you could maybe wind up selling people multiple pairs and have indoor pair, outdoor pair. It's kind of inconvenient. I feel like there's got to be a better solution to that, but I don't know.

• 47:40Jordi Hays?

  It says, what are this?

• 47:42John Coogan?

  Yeah, bifocals.

• 47:43Jordi Hays?

  Yeah, where they can like flip down.

• 47:45John Coogan?

  Well, there's transition lenses, but those never fully work all the way. But then there's the flip down ones, clip ons. There's all sorts of different solutions. Well, let me tell you about Adio, customer relationship magic. Adio is the AI native CRM that builds, scales and grows your company to the next level. You can get started for free at Adio.

• 48:02Jordi Hays?

  I am in Adio all day long.

• 48:05John Coogan?

  Love it.

• 48:06Jordi Hays?

  From the moment I wake up to the moment I go to bed.

• 48:08John Coogan?

  Well, more news, more, what do we call it? Personnel news at Apple. Mark Gurman has a story in Bloomberg. Apple Chief Operating Officer Jeff Williams is stepping down in a blockbuster changing of the guard as one former executive who reported to Williams told Mark Gurman, the band is dissolving. Details here, what it means and what happens next. It's interesting because like these, these, these personnel moves are so dramatic and yet Apple's such a juggernaut of a company. You don't see it show up in the stock price. You don't see it in like, you know, if this is a, if this was a startup, like investors

• 48:50John Coogan?

  would be panicking and there'd be emergency board meeting. Maybe there are, maybe the board's.

• 48:54Jordi Hays?

  Secondary prices would be gapping up on the news.

• 48:57John Coogan?

  You're gapping down. But, but it seems like, it seems like they are going through, you know, a, just a second act, a third act, a fourth act. I don't know what act they're on, but they are rethinking a lot of stuff over there. And it's been interesting to see. I think the biggest question keeps coming down to that salary question of, of, you know, if, if the market is going to sit at a hundred million dollars for someone who's two levels, three levels down from the CEO, like what does that mean for the upper ranks?

• 49:27Jordi Hays?

  I don't think it's going to sit there. Fortunately for all the talented people in the world, I think it's a, I think it's a blip. I mean, I can see it.

• 49:37Jordi Hays?

  I just, I mean, private companies genuinely cannot afford to do that. And Apple doesn't have the appetite. I don't think companies like Amazon have the appetite. I don't think.

• 49:50Jordi Hays?

  What was Satya's total comp in 2024?

• 49:54John Coogan?

  Good question. I don't know.

• 49:57Jordi Hays?

  Seventy nine million.

• 49:58John Coogan?

  Seventy nine.

• 50:00Jordi Hays?

  Pay, pay these guys.

• 50:02John Coogan?

  It's like Mark picked the number to just like needle literally everyone else in the tech industry. It's like, it's such a round number, such a viral number. And then, and then such a, such a perfect number to be just a little bit above.

• 50:16Jordi Hays?

  Poor Andy Jassy barely cleared forty million.

• 50:19John Coogan?

  Yeah. That is, that is wild. But I don't know. It'll be interesting to see where these AI researchers sit in five years after they vest out and what, where the market sits and how much, how much actual work there is to be done. If it becomes more of like an implementation, implementation role, less research, less discovery of novel algorithms, novel concepts, like maybe the, the salaries come down, but you know, I don't know. Dworkesh made a good point when he was saying like, like the, just measure the value and maybe that, maybe the answer is higher pay for tech CEOs. I don't know. That could be.

• 50:54Jordi Hays?

  It could be a byproduct.

• 50:55John Coogan?

  But, but the main thing is that.

• 50:57Jordi Hays?

  But I also think that if you think about.

• 50:58John Coogan?

  Inversion doesn't feel that will last.

• 51:00Jordi Hays?

  Meta spending, you know, billions to bring on, you know, a, a, a group of people that were previously at another company. He's effectively like doing an indirect IP acquisition of, of like, he's effectively doing an aqua hire, right? So if you think about it from that lens, it's a lot different than, you know, this is the market, the durable market rate for a group of people.

• 51:25John Coogan?

  Yeah, no, I, I agree. I think the number one takeaway is that it feels unlikely that, that AI researchers at Meta will be paid more than every other Mag Seven CEO.

• 51:38John Coogan?

  Forever.

• 51:39Jordi Hays?

  Yeah.

• 51:39John Coogan?

  The ratio will not hold.

• 51:41Jordi Hays?

  Yep.

• 51:42John Coogan?

  We might see big acquisition deals. We might see tech CEOs of the Mag Seven, the Mag Seven CEO salaries go up. We might see the AI researchers salaries go down. But I would, I would not expect in four years that, or five years that we're seeing, you know, Mark Zuckerberg's direct reports, direct reports making more than Andy Jassy and Sachin Adella and Tim Cook. That would be surprising to me.

• 52:05Jordi Hays?

  Yeah.

• 52:05John Coogan?

  Anyway, let me tell you about Fin AI, the number one AI agent for customer service, number one in performance benchmarks, number one in competitive bake offs, number one ranking on G2. Go check it out.

• 52:16Jordi Hays?

  The customer service agent of Anthropic.

• 52:18John Coogan?

  Oh, yeah.

• 52:19Jordi Hays?

  That's how you know it's good.

• 52:20John Coogan?

  Wow, that is, that is actually a pretty glowing endorsement for Anthropic, from Anthropic. Anyway, Ben Horowitz has some news. He's out of Delaware. Andreessen Horowitz has relocated to Nevada and they think you should consider leaving Delaware as well. There's been a bunch of this. It's interesting that they landed in Nevada. We got to dig into this or have somebody on to talk about.

• 52:43Jordi Hays?

  Yeah, Texas has been popular, at least for the Elon.

• 52:46John Coogan?

  Yep, people have been talking to Texas.

• 52:48Jordi Hays?

  Yeah, they have a post here.

• 52:49John Coogan?

  Horowitz has been living in Nevada, at least part time, like for a long time.

• 52:53Jordi Hays?

  Totally.

• 52:53John Coogan?

  So like, there's definitely roots there. That's where their LP conference was, so.

• 52:56Jordi Hays?

  Yep.

• 52:57John Coogan?

  They have roots there.

• 52:57Jordi Hays?

  So there's a post here, "It used to be a no brainer, start a company incorporated in Delaware. That is no longer the case due to recent actions by the Court of Chancery, which have injected an unprecedented level of subjectivity into judicial decisions, undermining, undermining the Court's reputation for unbiased expertise. This has introduced legal uncertainty into what was widely considered the gold standards of US corporate law. In contrast, Nevada has taken significant steps in establishing a technical, non-ideological forum for resolving business disputes. We have therefore decided to move the state of incorporation of our primary business in AH Capital Management from Delaware to Nevada, which has historically been a business-friendly state with a fair and balanced regulatory policies."

• 53:39Jordi Hays?

  So again, I think it's like something like 50% of Delaware's, like, state revenue is from the C Court.

• 53:54Jordi Hays?

  I'll confirm this.

• 53:55John Coogan?

  50%, that's really high. That's really high. But it makes sense. I mean, it, it, there was never even a question when I got, came to Silicon Valley about like, where would you incorporate? This was pre-Stripe Atlas, pre-Clarky, but if you were in YC, it was like, set up a Delaware C corp, there's no question.

• 54:20John Coogan?

  But.

• 54:21Jordi Hays?

  Anyways, big move. Next time we have Mark or Ben on the show, we should, we should break it down more with them.

• 54:27John Coogan?

  Well, if you're looking to invest in any state in the country or any place in the world, go to public.com, investing for those who take it seriously. They have multi-asset investing, industry-leading yields, and they're trusted by millions. Joe Weisenthal had an interesting post. I missed this as well.

• 54:42Jordi Hays?

  Sorry, sorry, just took me a second. It makes up about one-third of the state's operating budget is from corporate license fees, franchise taxes, and entity formation fees. So, very meaningful amount of their business, or sorry, of their state, you know, overall revenue. And I would expect them at some point to try to come out and, and basically try to resolve some of this like tension, right? Because if you have Andreessen leaving, advising portfolio companies to leave as well, you have Elon, you're starting to get some, you know, very, very influential figure, figures that are just broadly, you know, advising all of their different investments and new investments to get out.

• 55:27John Coogan?

  I also wonder the, the breakdown of that revenue, because if it's like, if it's like, millions of companies paying a hundred dollars a year, like a couple of big companies leaving, like Andreessen Horowitz or Tesla, it's not going to really move the budget. But if it's some sort of like tax-based percentage of revenue, percentage of earnings, or something where the bills get really, really big. I feel like even though I've operated Delaware C Corps at like significant scale, I've never run into a situation where it's like, oh, wow, we're paying Delaware like tens of thousands of dollars.

• 56:01Jordi Hays?

  Yeah, it is, it is.

• 56:03John Coogan?

  So I think it's probably like a lot of small companies. And so it would need to be like a real crazy tidal wave that just like continues forever and like a long time because like I imagine that the vast majority of the revenue comes from companies that have been incorporated for like over 10 years are not going to move, don't care, are just completely fine. Because the real disadvantage to being in Delaware seems to come from when you're doing like crazy aggressive moves on the corporate side, like crazy stock-based packages based on incentives.

• 56:31Jordi Hays?

  If somebody's spinning up like a design consultancy, they're not worried about, oh, the Delaware Court of Chancery is going to when I try to do this reverse merger or this crazy stock, stock compensation package.

• 56:44John Coogan?

  Like the benefit of being in Delaware was always that there's so much case law there that you can just rely on, on like any, any lawyer can give you advice that holds very well because they're like, yeah, we've seen this exact situation dozens of times. There's nothing crazy about this. Like if you fill out this paperwork or use this form, everyone will understand what's going on.

• 57:05Jordi Hays?

  Yeah. So the, there's in, in 2023, there was 300,000 new formations, 220,000 LLCs and 60,000 C Corps. So pretty meaningful amount of C Corps on top of, of over 2 million entities. And then the franchise tax starts at, at basically has like a minimum 175 to 400, but then it's capped at 200 to 250K. So.

• 57:31John Coogan?

  Well, if you're trying to get the attention of Ben Horowitz, got to buy a billboard in Las Vegas on the strip. Go to adquick.com. Out of home advertising made easy and measurable. Say goodbye to the headaches of out of home advertising. Only AdQuick combines technology, out of home expertise and data to enable efficient, seamless ad buying across the globe. And we have our first guest, David Marcus in the studio. Welcome to the stream, David. How are you doing? Good to see you.

• 57:58Speaker 02

  Great, great.

• 57:59John Coogan?

  Thanks so much for stopping by. Would you mind kicking us off with an introduction on yourself and the company, just for those who might not be familiar?

• 58:06Speaker 02

  Of course. I'm David Marcus, co-founder and CEO of Lightspark. And basically we're building modern payment infrastructure to replace correspondent banking with a fast open network built on top of Bitcoin.

• 58:21John Coogan?

  Can you talk to me about some of the the history of your career and kind of how that ties into bringing you to today, the decision to build it externally as a new company versus internally at some other company?

• 58:34Speaker 02

  Sure, so I've been building companies since I was 23 years old, came to America in 08, built a company that I ended up selling to PayPal through a series of twists and turns, ended up running PayPal for a number of years, then Mark Zuckerberg convinced me to join him to take a little break from payments and regulated businesses, building messaging products at Facebook, and then started the Libra DM project there, which unfortunately failed because it was the wrong sponsor at the wrong time and too centralized, and the goal of Libra and DM was really to provide an interoperability layer for all of the banks

• 59:18Speaker 02

  and wallets that is real time, that looks like the internet, that is open, that is low cost, and that enables anyone to move money like you send a simple text message or an email, and sadly Janet Yellen, the morning of June 2021, pulled the plug on this, and so I left at the end of December 21, and in April of 22, started Lightspark with the benefits of all the learnings that I had collected with my team along the journey, and the one lesson was if you're trying to build something that truly looks like an internet for money, it has to be built on top of something that's unassailable, decentralized enough, and Bitcoin happens to be the most neutral form of digital money ever invented,

• 59:59Speaker 02

  and so we're building technologies around that to ensure that you can move any currency at any given point in time from anywhere in the world to any other parts of the world at a fraction of the cost of the current system.

• 1:00:11John Coogan?

  Does it ever make sense, you mentioned like the wrong sponsor at the wrong time, it feels like with all the news around stable coins and the Genius Act and the Market Structure Bill, there's potentially

• 1:00:24John Coogan?

  This idea that it's the right time to build new stablecoins and stablecoin projects and just building crypto generally. But I'm interested to know, like, is there ever a situation where a big tech company or a bank or Visa or a different network might be the right sponsor? Or should it always be from an individual new company? Or should it always be, should there be a particular structure to that where the actual projects decentralized or C corp? Like, how do you think about the shape of the sponsor these days?

• 1:00:59Speaker 02

  Well, I think, you know, stablecoins are definitely booming right now and everyone's building on it. I think the real question is, do you want something that's fully centralized again? Like the current payment systems and a current financial infrastructure? Or do you want something that looks and behaves a lot more like the internet, which is an open network that is permissionless, that enables developers and builders from all around the world to build applications to move money? And I'm definitely squarely in the latter camp. And I want to make sure that we have an open money network, an open money grid. And we believe that the only way to build that in a sufficiently decentralized way is to build it on top of Bitcoin and then build all of the services and capabilities

• 1:01:39Speaker 02

  so that Bitcoin can actually move fast and cheaply, but also interconnects with all of the domestic real-time payment systems in the world and supports stablecoins. So that's what we're building at Lights Park. And that's why you're seeing now more and more digital banks around the world adopting this new standard that we open source that's called universal money address that is basically like email for money. You would have like dollar sign your name at the bank or wallet and then you can send whatever currency to whomever you want in the world receiving another currency in real time on a weekend after 5:00 PM on a bank holiday anytime you want. And that's one part of the solution we're building. And then we're also building core infrastructure for Bitcoin to move faster, which has sparked this new Bitcoin L2.

• 1:02:24Speaker 02

  But we can talk about that later.

• 1:02:26John Coogan?

  Yeah, yeah, I'm definitely interested in that. Like, walk me through some of the history and the current strategies to improve Bitcoin, the Lightning Network, and kind of bring us up to modern day in terms of just getting more out of what is undisputably the most successful crypto project of all time, Bitcoin, but has had gaps where people have stepped up and created different L1s and different projects that haven't touched Bitcoin for a variety of reasons.

• 1:02:56Speaker 02

  Yeah, I mean, you're right. Bitcoin is by far the most successful digital asset ever created and network ever created. But the problem with Bitcoin for a long time is that it was too slow, not expressive enough in the sense that developers couldn't really build on it because there were no smart contracts and too expensive to move. So, very secure, the most neutral form of digital money ever created, but slow, expensive, not programmable. And Lightning was a first attempt to that, and we spent the last three years building on Lightning, making it better and making it enterprise-grade. This is why Coinbase and many of their largest exchanges in the world are using our technology to

• 1:03:39Speaker 02

  move Bitcoin faster and cheaper on top of Lightning. But then Lightning has a bunch of limitations. Like, the first limitation is it's a channel-based payment system, and so with that comes a lot of complexity in terms of liquidity efficiency, routing, and all kinds of all kinds of fun other setbacks and issues. And so, we built Spark, which is a brand-new Bitcoin L2, which is taking off like crazy right now, and it's actually backward-compatible with Lightning, but it enables all kinds of developers to build in a permissionless way unhosted self-custody wallets, like, you know, issue tokens, issue stablecoins, create marketplaces and AMMs on top of Bitcoin for the first time.

• 1:04:23Speaker 02

  And that's really critical because like, we need to make Bitcoin the most efficient settlement layer in the world and also make it the most decentralized and trustless layer in the world to move value. And we think Spark is a massive step towards that.

• 1:04:38John Coogan?

  How are you thinking about adoption of Spark and incentivizing adoption? And I'm more interested in kind of like, what are the pitfalls and kind of like traps or potholes along the road to adoption that you don't want to get caught up in? Because in some kind of counterintuitive way, people always talk about Bitcoin's volatility. It's been like the least volatile, really. And it feels like there's a lot of other projects that have kind of come out and created like, you know, some viral sensation, some sort of massive incentive where a lot of people are getting, making a lot of money very quickly. So it skyrockets, but then there's something that's missing fundamentally. And then the projects or the trend kind of dies off.

• 1:05:21John Coogan?

  How are you thinking about engineering the incentive structure for long-term adoption?

• 1:05:26Speaker 02

  Well, look, the best incentive you can build is build a product that solves real problems. And I think, you know, unfortunately in crypto, sometimes that was replaced with, you know, a coin that some people call shitcoins that are basically dumped on people to incentivize them to use the underlying technology. We don't have a shitcoin, like our coin and our unit of accounts for the network is Bitcoin that we don't control, thankfully. And so we have to work really, really hard to build utility that solves real world problems for many players. But in Bitcoin, there's a lot of liquidity because as you said, it's like the most successful

• 1:06:08Speaker 02

  digital assets ever created and the most liquidity sits in Bitcoin, denominated in Bitcoin. And so you have a lot of traders out there, you have a lot of platforms that actually want to tap into that liquidity and they couldn't until now because there wasn't a technology that enabled developers to build those marketplaces and platforms on top of Bitcoin, to create these self custody wallets that could move Bitcoin in real time at low cost and to do all of these things that Spark enables. And I think, you know, that's why we're seeing such an amazing early adoption and so much traction with a wide variety of developers, whether they're building payment apps, they're

• 1:06:48Speaker 02

  issuing stable coins, they're building marketplaces and AMMs and decentralized trading platforms. We're seeing all of that happen on Spark right now.

• 1:06:57John Coogan?

  I have this like kind of funny counterfactual that I like to run in my mind of the PayPal mafia and the PayPal diaspora is like so dominant in tech everywhere. And politics and everything and science and just literally everything. And I like to run this counterfactual of like, what if the team stayed together forever? Like, what would PayPal as an entity look like? Would it be just the biggest company in the world? If you had Elon and Peter Thiel and David Sacks and Keith Rabois and you and all these like the larger crew still there just like chopping down problem after problem after problem in the financial system?

• 1:07:37John Coogan?

  And I'm wondering if you've ever played that, that, that, you know, mental exercise, but more precisely is, was there something structural where PayPal was not able to jump headfirst into crypto as fast as possible? Like if, if at the time, everyone in the company had just been, as soon as the white Bitcoin white paper comes out, like we are orienting the company around this? Would it have been possible to, to actually lean in and be a leader and an innovator in that category? Or was it sort of like an innovator's dilemma problem where, I mean PayPal is doing great still, but where there was really no way for

• 1:08:19John Coogan?

  the structure of PayPal to play in the new, in the new paradigm?

• 1:08:23Speaker 02

  Yeah, I mean, look, I think it's an era thing. The, the era of all of the people you mentioned was, you know, predating all of this. And, and then the company sold to eBay. And, and, you know, most, most of these talents were completely, you know, gone building their own things. And so I think it's an era thing, like, you know, the era of, you know, the, the Peter Thiel, Elon,

• 1:08:51Speaker 02

  Max Levchin, PayPal was really, you know, the, the first really big push into, you know, fintech, consumer facing fintech. I think of like Visa as a fintech that's like basically built technology that enables money to move around like as at an enterprise level, serving banks, not consumers. And PayPal was kind of the first major fintech success, but it was really not the, the crypto era at all. So I think it's just a time thing.

• 1:09:20John Coogan?

  The next time PayPal goes through a leadership change. We need to have an All-Star game where we bring back the entire PayPal mafia for one quarter. Peter, Elon, everyone's full-time for a full quarter. Just how hard can we go with PayPal? Let's make it great. It's fascinating.

• 1:09:38Jordi Hays?

  I'm curious what your conversations are like with people that are maybe just starting to build on crypto rails, excited for the first time or have been building for a long time. When talking with you and understanding your vision, it's very easy to see why Bitcoin is an obvious choice for a network to build on top of because it's decentralized, it's very global. But the default until now has been building on Ethereum, or Solana, or these other networks. How do those conversations go? Are people coming around to the idea

• 1:10:16Jordi Hays?

  that, yes, having a fully decentralized network that no one individual or group has overt influence on is a great place to build a business, right? Or bring your business?

• 1:10:28Speaker 02

  Yeah. I mean, look, I think the only reason that all of this developer energy went to all of the other platforms is because you just couldn't build on top of Bitcoin. The tools weren't there, the technology wasn't there. And I think, you know, now, like, I feel like we're going to have a renaissance of developer energy on top of Bitcoin. Because, not only because of Spark, by the way, like, there are many, many others that are building new capabilities on top of Bitcoin that are enabling those new use cases to happen without losing the true north of decentralization and trustlessness of Bitcoin. And I think it's very compelling for a lot of developers and a lot of people who want to build very

• 1:11:10Speaker 02

  successful companies because, again, like, the depth of liquidity of Bitcoin, the desirability of Bitcoin in the world has just no parallel in the whole industry. So it was just a matter of removing the obstacles that were standing in the way of developers building really great products on top of Bitcoin. And I think, I think it's happening right now.

• 1:11:32Jordi Hays?

  How do you guys solve the immediate, from what you've said, obviously you can have stablecoins on top of the Bitcoin network, which solves one of the key issues with Bitcoin as a method of value transfer that also historically held it back is, one, why do I want to buy a coffee? Anybody that bought a coffee 10 years ago with Bitcoin, or pizza, or whatever it was, probably regrets it now. But how are you? I bought a TV with one Bitcoin. How do you transact? It's terrible. Is it affect, how are these, how are the, let's say I'm transacting with stables on Spark. What is the sort of like economic, what does that full economic exchange look

• 1:12:17Jordi Hays?

  like? What are fees paid in? Is it paid in the stable, or is it network level?

• 1:12:23Speaker 02

  Yeah. I'm so glad you asked this question, because that's one of the killer selling point of Spark for stablecoins, which is, like, if you issue a stablecoin on Ethereum, or an EVM chain, or any other chain, you have to pay gas fees for, basically, transaction fees in the asset that most people don't own, like whether it's ETH, or Sol, or whatever it is. In the case of Spark, you actually pay when you move stablecoins in the stablecoin. So it's very much focused on payments, and that's one of the advantages. So, one, it's cheaper, two, you pay with the asset you're transmitting, which is kind of the way that

• 1:13:01Speaker 02

  most payment systems at scale really work. And then you have the beauty of the trustlessness of knowing that even if you're transacting with a stablecoin, you can always have a unilateral exit to Bitcoin L1 with your stablecoin, and no one can prevent you from getting your money out. So it's the best of trustlessness, the lowest cost, the most efficient, and you don't have to complicate how you actually pay for the fees for most people who actually don't own the underlying asset needed to pay a fee. So it solves a lot of problems to make Bitcoin the absolute best platform for stablecoin payments.

• 1:13:37John Coogan?

  So yeah, how did the actual dollars get custodied in that in that way? There's always this like hard interface between something that's truly decentralized and then like the US Treasury at some point. And I feel like that's where a lot of the stablecoin companies kind of figured out how to, you know, bridge that gap and they exist as this layer between the US government effectively and the and the crypto community or like the programmable money world.

• 1:14:05Speaker 02

  Yeah.

• 1:14:06John Coogan?

  And so it feels like we're on this trajectory of like, let's make this more programmable. But but how close are we to something that's like fully programmable?

• 1:14:14Speaker 02

  Well, I think, you know, here's the issue, right? So I mean, first of all, like, stablecoins are always going to be fully centralized. And so, you know, that's why it's so important for the network not to also be fully centralized, because then we're basically replicating the entire payment system that exists today with just new players.

• 1:14:31Jordi Hays?

  Circle can, is it true that Circle can just freeze all USDC?

• 1:14:36Speaker 02

  Yeah, sure. Yeah, of course. Like, I mean, it's a company running up, it's basically fully centralized. So like, all of the stablecoins are centralized. Like, there are a bunch of people who attempted doing algorithmic stablecoins that would algorithmically basically absorb like the, and it just doesn't work. It just doesn't work. Exactly. It doesn't work. And so, stablecoins are fully centralized. I think programmability, programmability always comes at the cost of trustlessness. So like, the minute you can establish new conditions for how money can be moved with a smart contract, you lose the ability to have a full unilateral exit where no one can actually prevent you from exiting your fund from the network if you really want

• 1:15:20Speaker 02

  a trustless exit from the network. And I think that's the balance. And I think, you know, what we're focused on right now with Spark is really providing people with the right level of trust and the differentiating factor that Bitcoin can bring with trustlessness. But I think gradually what you'll see is different levels of trust for different levels of functionality. If you want more programmability, you'll have to actually relinquish a little bit of that expectation of trust to get more programmability. But those two things will always be in tension.

• 1:15:52Jordi Hays?

  How are you balancing go-to-market right now? I imagine you have this pretty intense tension between, for example, like a developing country that's excited, or companies in a developing country that's excited about the potential of Spark versus a Fortune 500 CEO that's saying, "David, we want to do something in stables." Like, let's talk. Where are you splitting your time and where are you most excited?

• 1:16:19Speaker 02

  Well, I mean, right now, I feel like there are two parts of our business, right? It's like, one part is like core infrastructure to make Bitcoin better, faster, more programmable, better for developers. That's all Spark. And then there's the mission of connecting all of the banks, all of the wallets, all of the payment networks in the world to Bitcoin with Universal Money Address, or UMA, to enable people to actually move money from their bank or from their wallet to the place they pay their bills from, the place they have a debit card, or all kinds of different instruments attached to any other point in the world, making basically money flow in a completely open, unrestricted way, 24/7, at a very low cost.

• 1:17:02Speaker 02

  Both of these things are basically built on top of Bitcoin and serve different types of constituents that basically extends the reach of the network. But these are the two core focuses. And it's a very interesting time for us, because on one side, we have permissionless building on top of Spark with developers building all kinds of different things. Like, I turn on my computer in the morning, or my phone, and I look at what people have built the night before. I have no idea what's going on. I don't onboard the business. I don't have a contract with them. It's a wonderful thing. And then on the other side of things, I'm going through diligence processes and compliance stuff with the largest banks in the world that are coming onto the network. So it's kind of a little schizophrenic on both sides of the business, but both of these

• 1:17:46Speaker 02

  things accrue to the same thing, which is an open money network that enables both developers on one side of the spectrum and regulated entities like banks and wallets on the other side to move money in real time globally like never before. So it's kind of a fun, two-sided part of the business right now.

• 1:18:04Jordi Hays?

  That makes sense. How are you thinking about corporate stablecoins? There's been some announcements, different PR stuff around companies saying, "We're gonna make our own stablecoin." And we were joking on the show a while back, does that just turn into like a Kohl's Cash scenario? Do people want every retailer, every big retailer that they interact with to have some native stablecoin or the issuers that we have today?

• 1:18:34John Coogan?

  It's a classic problem. There's too many standards. We need one, we need one standard, and then you have one more standard than you had before.

• 1:18:41Speaker 02

  I mean, look, when I think about these things, I always come back to one thing, which is, what problems are we trying to solve? And I think, you know, it's very clear that like if you're trying to solve for dollarization in the world, like if you're in Argentina, or in Venezuela, or in Turkey, or in parts of Africa, you'd much rather have a dollar-denominated account with a US bank. You can't have that, so a stablecoin, in this case mostly Tether, is the solution to that. It's like, it's the next best thing to having a US dollar-denominated bank account in the US. And it's great, and it increases the reach of the dollar, it's great for America, it's great for these people, it works. When it comes to domestic use cases for stablecoins, there's a bunch of really good problems

• 1:19:26Speaker 02

  to be solved in institutional capital movement. It's like, you know, you can't net settle trades on weekends or after hours, you can't move liquidity between institutions to, you know, make the market more efficient with the current system, because it doesn't allow you to do that. Stablecoins help do that. But from a consumer standpoint, I'm kind of at a loss to understand like what an American consumer would actually get from using a stablecoin. I don't get it. I don't think there's a massive problem to be solved. People can pay one another pretty easily with normal dollars, they're already digital dollars, basically. Like, if you look at your Venmo balance, or your Chase balance, it's already a kind of stablecoin that you're seeing. It's like virtualized dollars that

• 1:20:09Speaker 02

  are controlled by the bank. It's like basically a stablecoin. So, you know, I think this is a conversation worth having around like, what is the consumer application using stablecoins in the US that is actually solving a problem for the vast majority of Americans? And, you know, I don't know what that is.

• 1:20:28John Coogan?

  Can you talk about open source and how that like the current meta around open source in the crypto and in community and in just the role of decentralization? Was it ever an option not to have an open source project? It feels like kind of table stakes now, but do I have that kind of correctly in terms of the characterization?

• 1:20:50Speaker 02

  Yeah, no, I mean, it's super critical and that's why almost everything we build is open sourced. And the reason for that is like, you know, people building in this industry are trying to make it like, you know, anti fragile. And one of the ways that you make a technology anti fragile is you don't concentrate all of the capabilities around one company that wins it all. And I often talk to my team here at Lights Park and basically tell them, look, we're going to be very successful the day we have a bunch of competitors building on Uma, building like all kinds of services to compete with us on the very technologies that we've helped build. And I think that's the way that we make ourselves kind of redundant and ensure that

• 1:21:35Speaker 02

  the network is actually going to exist, even if we were to disappear for whatever reason. And I think that's kind of an ethos of the entire industry that we care deeply about.

• 1:21:44Jordi Hays?

  Can you break down a little bit more how Uma works? I think anybody that's played around with crypto a little bit may have had the experience at some point of like sending Bitcoin to a USDC address and realizing that it's just gone forever. So the idea of a universal address that can receive and send a bunch of different currencies makes sense, but I'm curious how it works and how you're enabling other companies to adopt it as a standard, even if you guys aren't necessarily, it sounds like, directly benefiting financially from that.

• 1:22:19Speaker 02

  I mean, we are for the companies that we serve. We are benefiting financially from that, but like it's an open network. But the way it works is that an institution like take New Bank, which is, you know, one of our early partners on Ooma, which has over a hundred million bank customers in Latin America. And so they would assign you an address like dollar sign your name at New Bank. You, your account is denominated in Brazilian reais. Let's say I'm here in the US and I'm with a bank. My, my Ooma is going to be dollar sign David at bank.com. I'm sending dollars to you in Brazil.

• 1:23:02Speaker 02

  And what happens in the backend is basically Ooma is a pre-transaction open messaging protocol. So it enables me to go to the New Bank server and basically say, hey, is this address a valid address? What is the currency that this person wants to receive? What is the exchange rate that you're going to charge me for this transaction? Then I can present a fee structure to the customer in the US sending dollars, show them exactly the amount that the recipient is going to get in Brazilian reais. They click send. When they click send, basically the dollar gets converted into Bitcoin, gets pushed on Lightning to Brazil, gets to Brazil a second later, gets converted to Brazilian

• 1:23:42Speaker 02

  reais, deposited in the account, works 24/7, super low cost and super tight spreads between all of these currencies because Bitcoin has so much depth of liquidity with all of these currencies because it's traded so much.

• 1:23:56Speaker 03

  Yeah.

• 1:23:56Speaker 02

  And, and so it's like super cost efficient, real time, 24/7 and open. In some cases, like New Bank, they build the, the connectivity into Bitcoin themselves into Lightning because they can actually do the conversion on their side. In some other cases, we build the capabilities for, for instance, US banks and European banks and Mexican banks and others to actually connect onto the network using their domestic payment system. So they would send, in this case, the dollars to us and we would convert to Bitcoin and push as a service to them so they don't have to deal with the Bitcoin portion of it. But Bitcoin is always the net neutral settlement asset between those currencies and allows to move liquidity across countries, across payment systems in real time, 24/7.

• 1:24:42Speaker 02

  That's the way it works.

• 1:24:43Jordi Hays?

  Very cool.

• 1:24:43John Coogan?

  Can I get an update from you on what's happening in Washington? Break down the different legislation that's going through the US government? Kind of what your perception has been, your takeaways, a status update? But also, are you optimistic about where things are going on the regulatory side?

• 1:25:01Speaker 02

  Yeah, I mean, look, it's a for a guy who's been shut down by the Treasury Department with, you know, the most public shutdown of the crypto industry, one could argue. It's quite a change, quite a vibe shift, right? And, you know, I was, I was at the Digital Asset Summit at the White House and, you know, being welcomed at the White House in an east wing, in a very ceremonial way, to actually promote the whole industry was, was the massive, massive whiplash of the best kind, right? And I think, I think, you know, look, there's a lot of credit that goes to this administration, to David Sacks, Bo Hines, but also to people on the Hill

• 1:25:45Speaker 02

  who've been working on these important pieces of legislation that are going to actually make a building the next set of technologies that will reinvent and rewire the world financial system here in America, which I think was absolutely, absolutely direly needed. And so I'm super bullish. I think we have gone from an administration, a government that wants, that wanted to, like, fully kill the entire industry to one that wants to promote it and ensure that American companies actually win at this and we win. And I think it's a vital interest for America that we continue to, to lead with financial services infrastructure. So I couldn't be more bullish of, you know, what's happening in DC right now around our industry.

• 1:26:29Jordi Hays?

  Is there anything that you're looking out for in the back half of this year? It's obviously, you know, we started strong with a, with a meme coin out of the White House. We've got the new stablecoin regulations passed. Anything in the back half of the year that you're kind of looking at or anticipating?

• 1:26:47Speaker 02

  I think everyone's really anticipating market structure and like having a market structure bill that will clarify the rules of the road for that entire industry. I think that that's as important, in my opinion, as the, the stablecoin legislation that is going through now.

• 1:27:04Jordi Hays?

  Yeah.

• 1:27:05John Coogan?

  It's great. Well, thank you so much for stopping by. This is fantastic.

• 1:27:08Jordi Hays?

  Thanks for having me. It's great to be on the show. Always welcome. Talk to you soon.

• 1:27:13John Coogan?

  And next up, we have Ben Thompson from Stratechery coming into the studio. Very excited to talk to him.

• 1:27:18Jordi Hays?

  The moment we've been waiting for.

• 1:27:19John Coogan?

  Yeah. Welcome to the stream, Ben. Good to have you on the show.

• 1:27:26John Coogan?

  You've been a backbone of many analyses here on the show, and we're excited to welcome you to the show. How are you doing?

• 1:27:33Ben Thompson?

  I'm doing good. I put on a button-up shirt and a jacket just for you guys. Please feel honored. I am wearing shorts underneath, I will admit.

• 1:27:41Jordi Hays?

  You didn't have to tell us that.

• 1:27:42John Coogan?

  People always ask if we wear shorts. We actually do wear the full suits.

• 1:27:45Jordi Hays?

  We gotta stand up to hit the gong sometimes.

• 1:27:47John Coogan?

  There's a wide shot everyone's...

• 1:27:48Ben Thompson?

  I am the poser here, so I'm happy to admit.

• 1:27:52Jordi Hays?

  Well, it's a great sign of respect in our culture to put on a suit for a TVPN appearance. And we're so excited to talk to you. I've been lucky to read your work in my entire career. And I think so many of the thoughts that I have are now... Your way of thinking about technology and markets is so embedded in my brain that ideas that I hold as true or just foundational beliefs are actually your beliefs that have just become so immersed. So it's great to talk.

• 1:28:27Ben Thompson?

  Well, thank you. I will attempt to implant new ones or maybe show you the error of your ways.

• 1:28:34Jordi Hays?

  Sounds great.

• 1:28:34John Coogan?

  I do have a question on the nature of where you sit in the media world before we go into actual questions about tech companies.

• 1:28:46John Coogan?

  It's interesting that in some ways you're a journalist, but you don't really do the scoops and breaking news that much. But you also don't issue just straight-up buy and sell recommendations. What was the thesis behind not just actually having a price target and not doing like this is a sell-side bank but independent?

• 1:29:09Ben Thompson?

  Well, when I started, I mean, it's funny to hear you talk about like my quote-unquote "place" in the ecosystem. Sure. Because when I started, I had like, I think it was 368 followers on Twitter. I was just some sort of random, random person on the internet. That's awesome. In retrospect, sort of right place, right time, I think, is certainly the case. But I did perceive there was a large gap between tech journalism, and I would include a lot of the bloggers there, who were writing a lot about products. And then there was Wall Street that was very focused on sort of the financial results. And to my mind, there was a large space in the middle, which tied together the products to the financial results, but also the overall companies and strategies.

• 1:29:52Ben Thompson?

  And I'm very interested in culture and how that guides decision-making. One of my sort of precepts is, all these companies are filled with smart people, and a lot of people, when you ask them why they did something wrong, their only answer is that they're stupid. And I'm like, no, they're not stupid. It's actually much more interesting to assume they're smart and are doing stupid things, and trying to unpack why they are doing that, and what goes into that. And so, that was sort of the thesis, was that there's this space to explore these spaces. And then there's a business model aspect, which is, I started Strickery, two years after Stripe started. I think they had just come out with their billing product, and the only alternative

• 1:30:35Ben Thompson?

  at the time was PayPal for subscriptions, and it was fairly sketchy, and there was lots of like horror stories out there about, you know, stuff. And just the Stripe API was so great, and the things you could potentially do with it. And so, on Wall Street, you're putting a price on it, you're also charging like $100,000 a year, or something like that. And so, you get a small list of high ARPU clients, and my thought was, I could go in the opposite direction and get a large list of low ARPU clients, thanks to things like Stripe and the ability to subscribe. And that would, and as part of that, I wasn't going to go through the rigmarole of getting registered and doing stock picks and all that sort of thing. I've always joked, if you want a stock pick from me, you're going to pay me a whole lot more than $15 a month.

• 1:31:19Ben Thompson?

  It was $10, $10 when I started. And it's actually pretty great. Now, there's some, one of the critiques I do get, particularly from my, you know, friends on Wall Street, is, you know...

• 1:31:31Ben Thompson?

  No skin in the game, X, Y, Z. I think at this point, I'm large enough that my reputation is significant skin in the game. But I do recognize the validity of that critique.

• 1:31:41Jordi Hays?

  Yeah, and you know, if you make a bad call, you're gonna have to circle back to it in two years and write about it yourself and admit that you got it wrong.

• 1:31:48Ben Thompson?

  Right.

• 1:31:48Jordi Hays?

  Which hurts too.

• 1:31:50Ben Thompson?

  No, I had to write about this week. Like, I was very optimistic about Apple's Apple Intelligence announcement last year and the theoretical power it would give them over the model makers. And now I'm ready. Actually, no, they're gonna have to pay up. And that's, you know, that was a bad call by me that, you know, I think was, you know, very well received at the time, and might have gotten that one wrong. And so I do need to be straightforward about that. And so I, just this morning, I was very crystal clear, like, I got that one wrong. That was, that was, that was an issue. What is nice is Stratechery kind of ended up being in this interesting place where I feel like I'm a little bit of like the Switzerland of tech.

• 1:32:30Ben Thompson?

  And that no one pays anymore. If you're a CEO, you pay the same amount as, you know, Joe Wod on the street that is paying it. I don't invest directly, which I think made sense when I started because I didn't have any money. It's probably hurt me a lot over the years since then. But I don't, like, and I think this is a different West Coast, East Coast thing. Where it does feel like on the West Coast, everyone's talking their book sort of all the time. And, uh, and you know, that's why I generally, as a rule, don't have VCs on to do the Stratechery interviews. Because it's kind of hard to get like a real take, because, because that is, you know, such a motivation.

• 1:33:12Ben Thompson?

  And so me coming in being like, I have no book to talk. I'm just here telling, saying what I think. I think has been good for the West Coast audience, which is my base audience. Even if the East Coasters think that I'm being a, being a big wimp, so.

• 1:33:28Jordi Hays?

  Yeah, the talking your book challenge, we go through that a lot. Trying, trying. 12 VCs on a day. Well, yeah, and, and, and we just try to get a bunch of different opinions and triangulate what, you know, what we think. Is was real.

• 1:33:41Ben Thompson?

  I'm trying to come up, you have TPPN, I'm trying to come with a P so I can get the Talking Book Network in there. But um.

• 1:33:47John Coogan?

  Talking Talking Book Production Network.

• 1:33:50Jordi Hays?

  Yeah.

• 1:33:51John Coogan?

  ESPN for Talking Your Book.

• 1:33:53Jordi Hays?

  But yeah, it is a real struggle to find somebody that, for example, has a deep understanding of every foundation model, company, but isn't massively conflicted in some way or another.

• 1:34:05John Coogan?

  Extremely, extremely.

• 1:34:06Ben Thompson?

  Yeah, and so it's one of those things you just sort of, you end up like, there's so much path dependency and all these sorts of things. And like I mentioned, like, a big advantage I had was, I started at a time when sharing good links was very high currency on Twitter. And so, you know, I grew very, very quickly, much more quickly. I sort of had a five-year plan to go independent. I ended up doing it in less than a year, in part because it just sort of spread really, really rapidly. And it was an ideal time to be someone sharing interesting links regularly. And I wasn't sharing them. The beauty is, my readers were sharing them. They were doing sort of the marketing for me. And so I'm very cognizant of, of sort of the, the luck I had in that regard.

• 1:34:48Ben Thompson?

  And then just over time, and it's been an interesting journey for me to grapple with my different position in, in the ecosystem. Like, so when I started the Struckery Interviews, that was sort of part of it, which was, I started out not knowing anyone. I got to the point where I can talk to anyone that I want to. And so how do I square that? I can't be the guy with the chip on his shoulder, trying to make a name for himself forever. It sort of gets, it's like the meme with the guy, how are you doing kids? Like, at some point, you have to accept you're part of the establishment. How can I do that while still staying true to the idea that Struckery is about the readers? It's reader-funded. My loyalty is to them.

• 1:35:32Ben Thompson?

  I'm very clear, I have no loyalties to anybody else. And so, well, I'll just, I will talk to people. Sort of acknowledgement of what I can do, but it's going to be fully transcribed and published and sort of available to everyone.

• 1:35:46Jordi Hays?

  Have you ever dealt with or thought about the attack vector of a special interest, you know, buying a thousand plus, you know, thousands of seats to a single, you know, independent publication and saying like, yeah, like, you know, we're happy, you know, we, we, we got seats for all of our employees, actually, because we really, you know, love the, and then, and then suddenly they're sitting over there and, you know, it's representing meaning, very meaningful amount of revenue.

• 1:36:12Ben Thompson?

  I mean, I fortunately, I think of a scale that I don't have that problem.

• 1:36:17John Coogan?

  That's good.

• 1:36:18Jordi Hays?

  There we go.

• 1:36:18Ben Thompson?

  But it's, but no, I think, I think audience capture for subscription sites is a potential issue for sure. And this is another thing, I was sort of right place, right time. I got big enough by the time that it doesn't matter. And if someone's really upset, like, I give refunds all the time. Actually, if someone really upsets me, I will refund them and every dollar they paid me, I'm just like, go away. I don't, you know, I, I don't, you're being abusive or whatever it might be. And that, that is a beautiful thing about the relatively low price, high customer base model is no one has power over me. Like I, I have the burden of publishing, you know, as often as I do, I feel a heavy weight of duty to my customers.

• 1:37:00Ben Thompson?

  When I write something I'm not happy with, like, I don't sleep well, but at the same time, there's no one customer or no, no individual that can come in and be mad at me and, and impact my business.

• 1:37:13John Coogan?

  I, I, I'm, I'm seeing that there's maybe some sort of parallel between legacy media and independent media where independent media, it, it's not by default more pro tech or anything, but there's just no salary cap. So if you're at a legacy institution and you're writing, it's probably some sort of rough, loose salary cap of a few hundred thousand dollars, whereas you go independent, it's feast or famine, you might fail, but you might get really, really successful and have a huge income from that. And, and I'm wondering what we're seeing in the AI salary wars where we're seeing more and more talent and, you know, Mark Zuckerberg potentially paying a hundred million dollars bonuses. Do you think that Apple will come around to spending more money on researchers?

• 1:37:58John Coogan?

  It feels like they kind of have an internal salary cap with Tim Cook making 75 million. There's now people that report two levels down from Mark Zuckerberg that are making more than Tim Cook and you have this weird dynamic where even if there's no actual salary cap at Apple, you kind of have an implicit one from the CEO.

• 1:38:17Ben Thompson?

  Yeah, for sure. I mean, I think just to go back to the media observation you started out with is as you increase transparency in the market, as you decrease non-related barriers, which in the publishing world previously was really geography. And when everyone's on the internet, you inevitably, in just about all cases, you get a power law distribution.

• 1:38:40John Coogan?

  Yeah.

• 1:38:41Ben Thompson?

  And a few people make a ton of money because they win most of the market and then some people make some and then there's a long tail that that sort of don't make any at all. But it's it's very, it's interesting. It's it's fluid in a way, but it can sort of become somewhat static as long as the people at the top sort of, you know, continue to do well. But what's interesting about AI is for 40 years, you would have periods of time where you'd have tech companies going to head to head in a product market. And I think one of the reasons, part of the software eating the world sort of idea is the way you get an apex predator is that that predator killed everyone else first.

• 1:39:25Ben Thompson?

  And so you had tech companies fighting each other for the first 20, 30 years of tech. The ones that emerged were lean mean killing machines and they and the entire industry were sort of set loose on the rest of the world and everyone was just like was getting slaughtered sort of left and right. But what you also had over this past sort of 20 years or so is the big companies in particular are sort of slotting into unique slots. So you have, you have Facebook is social, Google is search, Apple is devices, Microsoft is business or, you know, business applications, Amazon e-commerce, et cetera. And obviously these companies are very large and do lots of things and there's some overlap in different places, but they've been fairly sort of.

• 1:40:09Ben Thompson?

  Distinct in their categories and they've been dominant in those categories. And so they've been in a place where like Hollywood has wanted to get to, right? What is the dream in Hollywood? You want to have a franchise where the next Marvel movie matters more than who the star is. The reason that's so great is because you now have bargaining power over the stars. So you just sub someone else in. And, and whereas the old style like Tom Cruise makes the most money because Tom Cruise on a movie poster sells the poster. And so in a negotiation, he has massive bargaining power. So he's going to get, get paid a lot, get paid a lot of money. I, in tech, it hasn't been that case. The companies themselves have been franchises.

• 1:40:50Ben Thompson?

  And so the, the overall, anyone who works in tech, probably works in any, any, any entity, but you know, there's a few people in each company that are critically important, really make the whole thing go. Everyone else is fairly replaceable. Those people are, have probably always been somewhat underpaid um for years and years and years. Both just by the nature of companies and the cultural issues and your salary cap sort of analogy. But then also just like, it's not a transparent market. It's not, it's not hard to price sort of what people are worth. With AI, everyone's trying to do the exact same thing. So you have multiple companies trying to do the same thing. The output is somewhat measurable.

• 1:41:32Ben Thompson?

  I mean, all the AI test stuff has issues, but by and large, everyone kind of knows who has the good models and, and who doesn't. They, you know, the scalability questions, you know, like, because all these companies are trying to do the same thing. We have a very unique situation where the bargaining power, you increase transparency, you increase sort of the liquidity or the ability of people to move around because they're doing the same thing. The bargaining power shifts to the people that are super valuable because suddenly it's much more clear who's valuable. And their skills are much more transferable. So this is, I think, a very underrated bear case for tech in terms of AI. At least for this time period is they've lost that.

• 1:42:18Ben Thompson?

  That murky bargaining power over employees that they enjoyed for decades. And currently, you're seeing what happens when you don't have that. You start paying employees what they're worth. And obviously, that's great. I'm not saying this is a business analyst. It's not a sort of a moral statement. But it is like what Mark Zuckerberg is doing, I think, is totally rational. I think it's a classic sort of Clayton Christensen. From Facebook's perspective, AI is all upside. So of course, they're going to invest what they need to do to win. But it's costing him a lot of money. And by extension, it's costing everyone else in the ecosystem a lot of money.

• 1:42:56Jordi Hays?

  Well, isn't it in some way, is the right way to think about the last couple of weeks? Like more of like an aqua, like unofficial aqua hire in the sense that you're, it's not just the people, but it is the know-how in terms of, hey, here's, there's these things that we want to do that are important to our business in a lot of different ways. And we're basically, it's like the collective is actually more valuable than any one. Like the collective together, getting 10 researchers at the same time is meaning, you know, is meaningfully more valuable than than than than just each individual researcher added up.

• 1:43:30Ben Thompson?

  There's probably something to that. But I think, again, like what is actually different between what Google is trying to do, what Anthropic is trying to do, what OpenAI is trying to do, and what Meta is trying to do? They're all trying to do the same thing. So I, my suspicion, I'm not an AI researcher, so I don't want to overstate my my knowledge in this space. But my suspicion is skills are are fairly highly transferable. And when that is the case, there is, in some situations, if lots of people can do those skills, that's terrible for the employees because then their bargaining power gets diminished because anyone can slot in. But we're in this space where the skills are transparent, knowable, transferable, and there's not very many people that can do them. And so it's a scarce resource that everyone's fighting over.

• 1:44:15Ben Thompson?

  And that's why you see this real shift in negotiating leverage as as manifested through these dollar figures to to AI researchers.

• 1:44:25John Coogan?

  Yeah. Do you think, I mean, Google seems like the most fragile and the most like paranoid about just disruption. It's not all upside. It could be very bad for them. The innovator's dilemma, you know, you had this back and forth where Sundar Pichai mentioned that he hadn't read the book. He said it doesn't matter because it's a structural issue. I think that's a good point. But if you play back the counterfactual, is it ever possible to disrupt yourself? And essentially, like if the Gemini app had launched before ChatGPT and they had taken over that mind share and maintained 90% ownership in that, like it would be somewhat disruptive

• 1:45:05John Coogan?

  to their revenue and their profits as they transition over. But when I sum the revenues from OpenAI and LLMs and then Google Search, I'm not seeing some massive drop off that's actually, that actually would destroy Google in the media, short to medium term. But I'm wondering if you think it's like, is it entirely impossible to avoid the innovator's dilemma by disrupting yourself?

• 1:45:30Ben Thompson?

  Well, number one, you have to also look at margins, not just revenue.

• 1:45:34John Coogan?

  Yeah.

• 1:45:35Ben Thompson?

  But number two, you actually, you answered your question. Google didn't launch Gemini.

• 1:45:40John Coogan?

  Yeah, yeah, of course.

• 1:45:41Ben Thompson?

  That's the answer. They were years ahead.

• 1:45:44John Coogan?

  Yeah.

• 1:45:44Ben Thompson?

  They invented the transformer a decade, nearly a decade ago.

• 1:45:47John Coogan?

  Yeah.

• 1:45:48Ben Thompson?

  And so in many respects, like there's parts of this question that the counterfactual makes the point in that it is a counterfactual and it's not reality. Now, I do think, I think Google's done better than I expected over the last two years. I, I like what they're doing in search generally. I think they, it does seem to be the one part of the company that still functions, like they, they can actually iterate and build products. What we're seeing is reminiscent of what they did a decade, 15, you know, 12 years ago, when everyone's like, vertical search, Google's done, all, everyone's going to search in apps and Google completely transformed the search, the, the search engine response page,

• 1:46:30Ben Thompson?

  whatever it is, the search engine results page to be local or to be shopping or whatever. Ever and Yelp's been throwing a hissy fit sort of ever since. And and so that's what they're doing with search, right? And and with search overviews. And they have this new search labs or AI mode. They can sort of test stuff out. What's it scalable? Once they they're confident about the monetization issues, they can sort of shift it over. I call it the search funnel, search AI funnel. I think it makes a lot of sense. And I think. And this has always actually kind of puzzled me where I think they're responding fairly well. Even though this is. Seems to be a textbook case of disruption. And I went back to an article I wrote years ago. Uh, called Microsoft's monopoly hangover.

• 1:47:14Ben Thompson?

  And I was, I, I, I went through Lou Gerstner's autobiography and about how he turned around IBM. And. His real insight with IBM was. Everyone wanted him to break it up in into sort of different pieces. And what he realized was IBM was so big and and large from having downstream of the monopoly. That actually the only thing they were good at was being big. And so breaking them up would actually just create a bunch of subscale. Low performing companies that would all get wiped out. But as this behemoth. They could go to other big companies and. Solve all their problems at a very mediocre level, but it's still a sort of an attractive proposition.

• 1:47:58Ben Thompson?

  And under Gerstner, they really rode the internet wave. They went to all these big companies and. This internet thing's happening. You need help. We'll solve your problems for you. And had a very sort of successful run. You know, kind of until cloud came along and which Gerstner, by the way, was was was a proponent of. But you know, by that time, the IBM people were back in charge. And I was thinking about the context of Microsoft where. Mike. You, business models are hard to change and disruption is ultimately about business models. And culture is hard to change, even harder to change. But what can't really be changed is the nature of who you are. And I think there is, you know, in Microsoft, they were in a similar situation.

• 1:48:41Ben Thompson?

  They were a big monopoly and they weren't a product company. And the attempts to become a product company with Windows 8 and all the things that went on around that time, inevitably, inevitably failed. And Satya Nadella, to his great credit, and you know, sort of diminished Windows importance in the company, broke it, literally broke it into pieces, spread it around. And this was a multi-step process and got Microsoft back to a place of we're big and we'll do everything. We're not a Windows company. We'll go in there and we'll go solve all your problems. Very sort of reminiscent of the second version of IBM. And I go back to Google.

• 1:49:22Ben Thompson?

  And I've always been intrigued by the I'm feeling lucky button, which doesn't exist anymore. But I always enjoyed that that button continued to exist long after it was impossible to click. Because the moment you started typing in the search box, it would start auto-searching immediately and jump right to a search page. But it was, it was there in a, it's just so core to Google to give you the answer, to know everything. Like to know everything about the world and to, there's a bit where even though the core of their business model is 10 blue links. And it's not just the users choosing the search link, which gives them a data feedback loop so they know which results better.

• 1:50:06Ben Thompson?

  But also the users choose the winner of an auction Google puts on for ads. And it's an incredible business model. And there's something about that that's always been intention and counter to what Google was founded to be. And I feel like that germ of what Google was founded and meant to be. Is an AI answer engine and and it almost feels like even though Google is old and large and fat and slow moving, that core aspect of their nature and is still in the culture. And that's why they're finding it in themselves, I think, to do better in AI than you would expect. Was it enough to watch a chat GPT before OpenAI?

• 1:50:51Ben Thompson?

  No. Was it was it enough to have any sort of cogent response for the first six to nine months? No. But it was enough that I think they've done better than I expected over the past year in particular and gives me, I think, more optimism than I expected I would have for the company when, you know, when chat GPT first launched.

• 1:51:14Jordi Hays?

  AI overview from Google. If you search Google's mission, Google's mission is to organize the world's information and make it universally accessible and useful, which is exactly what language models do really, really well. Like the thing that's just undeniable, right? You can you can debate whether this is going to be the year of agents. It doesn't feel that way to me yet, but this is the year that most people have realized that, wow, LLMs are very good at organizing, surfacing and making data valuable.

• 1:51:47John Coogan?

  You mentioned just the debate over breaking up IBM. I'm interested if you could take us through some of the.

• 1:51:54Ben Thompson?

  I bet you didn't rise here to be talking about IBM today, did you?

• 1:51:56John Coogan?

  No, no, no, but I want to I want to talk about Intel and and kind of your the the history of some of your takeaways and what you think you've gotten right in the past, your perception of, you know, should they break up the the foundry business and what you think might be in the works with Liputan coming in there? Because I was listening to Dylan Patel talk about his conversation with the new CEO Liputan, and it seems like they're doing lots of tightening up, lots of layoffs, but it's kind of, I don't even know what framework to apply to analyze, like, is a breakup the correct thing? It feels like something people just say.

• 1:52:37Ben Thompson?

  Yeah. Um, so Intel, it's funny. I, one of my very first articles was about Intel. And what I said at the time was, and this was 2013, and this was an art, like, you know, when you start a site like Stratechery, you're like a new band. And why does everyone think a new band's first album is the best? Cause they've been working on these songs for years, right? And then the next album, they had a year to do it and they all suck, right? So I mean, I'll let people decide if that applies to Stratechery or not. Um, I won't be offended.

• 1:53:08John Coogan?

  The sophomore slump.

• 1:53:09Ben Thompson?

  But, yeah, but I'd been on, you know, Intel had been a thing I'd been wondering about for a long time, which was by 2013, when I started, they had clearly missed mobile. Now, it wasn't clear to them. They were still trying to do the Atom processor and then just, they're gonna figure it out tomorrow. And the, the problem with missing mobile is, the problem with Intel in general is, Intel is always very biased towards high performance. And this goes back to, uh, actually Pat, Pat Galsinger, his first time through at Intel. Intel, you know, had the CISC, uh, uh, the way that there's CISC versus RISC. It's like, uh, it's different ways of organizing bits or whatever.

• 1:53:51Ben Thompson?

  RISC is generally more efficient and actually even Intel processors today, even though x86 is CISC, the internal, it's retranslated internally to a RISC type language. Um, none of that is really important, other than to say, in the eighties, there was a real push in Intel to switch away from x86 and to, to a RISC type, um, uh, of, uh, I'm not even using the right term, but like, um, for, for the processors. And Galsinger was a leading proponent that this is a terrible idea. And the reason it's a terrible idea is because there was already a huge ecosystem of software built around x86 and all this low level code and capabilities that no one ever, that was written once and no one ever wants to touch again because it's miserable work.

• 1:54:37Ben Thompson?

  And He's like, "To rewrite all that stuff would take at least two years." "And in that time, our ability to manufacture chips will improve so much" "that had we just stuck with CISC, our processors would be faster." "And that was the right bet." "And that's one of those foundational bets" "that I like to think about companies and their history and what goes into that." "Which is Intel, from the 80s on, has solved its problems by having superior manufacturing" "and by moving faster." "And yeah, our chips may be theoretically less efficient" "but if our manufacturing is better and our transistors are smaller" "it doesn't matter because that will swamp whatever theoretical sort of efficiency you might have."

• 1:55:21Ben Thompson?

  "And this drove the entire computer industry." "You would write, to write a program, just every second you spent optimizing your software" "in the 80s or 90s was a waste of time" "because whatever improvements you could get would be swamped by the next version of" "if you went from 286 to 386 or 366 to 486." "That jump was so large, you were better off focusing on features" "even if it made your software sort of slow to use on the current hardware" "because the next generation of hardware would be so much faster, it would solve your speed problems for you." "Now, this has generated a lot of bad habits amongst tech developers." "That's why you get bloat and why you have like poor performing things and all those sort of things." "But this was sort of super critical."

• 1:56:04Ben Thompson?

  "And so Intel, at its core, has always been focused, they've always been manufacturing first" "and focused on better and better performance." "What happened with mobile is, in that calculation did not come efficiency." "They were never focused on efficiency." "And in mobile, efficiency was everything." "So what happened with mobile is, Apple went with an ARM processor, made by Samsung" "and they basically rewrote everything." "All that stuff Intel didn't want to rewrite in the 80s" "or if they rewrote, would just give other processor companies a chance to catch up with them." Had to be rewritten for mobile because efficiency was so much more important than performance. When that happened, Intel was screwed. Now, it took them a long, long time to realize they were screwed, but they were just fundamentally

• 1:56:49Ben Thompson?

  unsuited to be competitive. It was, the whole Paul Adelini turning down the iPhone contract is not true. Tony Fadell, I said that once and I got a call from Tony Fadell, actually this is when I had him on it for an interview. He's like, "This drives me up the wall. Intel was not remotely competitive, even though they had ARM chips then. Even their ARM chips then were focused on performance, not on efficiency." And, and so the problem for, the problem for Intel is, once you missed mobile, you were going to lose your manufacturing lead at some point because volume matters so much. And every time you move down the curve, your transistors get smaller, the costs increase massively.

• 1:57:31Ben Thompson?

  So you need volume to spread out the cost of building these fabs. Like, back then, when I wrote this article, fabs cost 500 million, now they cost like 20 billion. And this is over a course of like 12 years. So, so it was clear Intel was going to be in big trouble back then. And so I wrote, "They need to build a foundry business. They need to figure out a way to build chips for other people because in the long run, the cost of keeping up in manufacturing is not going to be tenable if you're not making mobile chips." And what, obviously they didn't. TSMC made all the mobile chips for everyone, and guess what happened? TSMC took over the manufacturing lead. Now, there's lots of other things that went into this, why Intel stumbled and sort of

• 1:58:15Ben Thompson?

  things, but at a structural level, what happened was actually inevitable. Once Intel missed mobile, unless they figure out a way to make mobile chips some other way. They didn't do that. What's interesting is, what has...

• 1:58:32Ben Thompson?

  The problem with that, it took so long to manifest. Part of mobile was you had an explosion in the cloud because cloud and mobile actually go hand in hand. Intel made all those cloud chips. Intel's stock had an incredible run from the time I wrote that article for the next eight to nine years. And I felt like kind of a moron because I'm like saying this company is screwed if they don't do what I say. They didn't do what I say and their stock went to the moon. But what, the way it actually caught up to them has been in the past two to three years. Where there's astronomical demand for AI chips. Only TSMC can beat it. Intel's not in the game. They're trying to shift to a foundry model, but they're so far behind. Being a foundry is being a customer service business. It's not being an Intel, we tell you what to do.

• 1:59:17Ben Thompson?

  Or we tell our design teams how to change their chips to accommodate our manufacturing needs. It's just, it's totally different and they needed a decade to learn how to do that. Had they changed in 2013, they would be ready today to capitalize on AI. And the counter example here is Microsoft. Microsoft building Azure. Yes, it got them somewhat in the game with mobile and things like that, but AWS dominates in that space. But by virtue of building up Azure, they were prepared when the AI opportunity came along. And now Azure is sort of a big AI player.

• 1:59:58Ben Thompson?

  And you know, I wrote about these two examples a few weeks ago in the context of Apple. I think the concern for Apple isn't the short term. We're going to be using AI apps on our iPhones for quite a while. It's are they going to be prepared for what's next if they don't do some sort of, sort of reset and pivot here? Oh, sorry, I didn't answer your question about Intel.

• 2:00:22John Coogan?

  Yeah, I mean, I'm hearing like, it's a managed decline, basically, like, just like, you know, just get as much cash flow out of this thing as you can while you wind down the business.

• 2:00:32Ben Thompson?

  For Intel?

• 2:00:33John Coogan?

  Yeah, that's what I'm hearing. It doesn't feel like, oh yeah, there's a silver bullet, just split the business and they're good. Like, no, it's like, it's all bad.

• 2:00:40Ben Thompson?

  The reason not to split the business is Intel needs volume and they get volume from Intel.

• 2:00:44John Coogan?

  Sure.

• 2:00:44Ben Thompson?

  And AMD split their business a decade ago and it was.

• 2:00:51Ben Thompson?

  Really, they had a very hard time for many years and they had very tense and difficult negotiations between the global foundry side and the AMD side. Global foundry was AMD's manufacturing arm. And it wasn't until really they got out of that and went to TSMC and then also completely rehauled their design business. And all those, you know, that they, they got in the business they were and then also that Intel stumbled. That certainly really helped them. Intel today, so if you split it up, like who's bought, like Intel's, Intel itself is fapping some of its stuff with TSMC.

• 2:01:22Jordi Hays?

  Yeah.

• 2:01:23Ben Thompson?

  Who, who wants to buy Intel's foundry services? The, the problem here is, uh, TSMC is located in a country called Taiwan. Which you know what it is today, but five years ago, they'd been like, what, Thailand? Which by the way, was probably much better for Taiwan's security when Americans thought it was Thailand. But, so there's a real national security element here. And it's just, it's a really tough situation because Intel is a failed company at this point. And they're, and the, the reason the failure is so total is because

• 2:02:01Ben Thompson?

  the aspects that drive their failure are the same things that drove their success. It was their arrogance, it was their sense that we're the best, that we will just win through manufacturing might and performance. And all those things work against becoming a good foundry, work against being a customer service organization, work against recognizing the fact that you're not going to make up for missing mobile through manufacturing, which was their bet for years and years. You, you had to accept that you lost. And, and that's a tough place for companies. It's not like someone made a mistake. It's that what they did, what they did too well for too long.

• 2:02:41Jordi Hays?

  It's who they were. They continue being who they were. Right.

• 2:02:44Ben Thompson?

  That's right. But who else are you gonna get? If you want an alternative to SMC? It's a very tight situation.

• 2:02:50Jordi Hays?

  Last question, and I think we'll be forced to have you make a slightly shorter answer, unfortunately. I wish we had hours to keep talking. I wanted to get your updated thinking on XAI, X, the combined entity. The last 24 hours have been very chaotic. When the initial merger was announced, it made sense for financial reasons for some of the different stakeholders. But I wasn't fully sold on this idea.

• 2:03:16Ben Thompson?

  You're gonna force me to come up with takes that I generally just avoid writing about Elon Musk companies.

• 2:03:22Ben Thompson?

  For self sanity reasons, I think. I mean, I wrote an article years ago about like when the Model Y was announced. And I was talking about, you know, it's a Tesla and this aspect. What Elon Musk is very incredible at is sort of creating reality out of thin air. He's like the ultimate memer. And to create like, um, it's the way things used to work backwards. I remember I analogized it to like protests, like a critique of modern protests is they spin up very quickly because social media makes it very possible, but there's no infrastructure under them, so they don't amount to anything. Whereas you go back to like the civil rights era, there was years of groundwork that went into like the million man march,

• 2:04:07Ben Thompson?

  you know, on Washington DC. And there was a structure in place that ultimately manifested in large crowds. But modern protests are the opposite. The largeness comes at the beginning and then it all falls apart because there's nothing in place. And um, there's something that makes it a challenge to write about anything Elon Musk related. Is you have all the social aspects, because you have this bit about Tesla of creating reality. It's the stock was buttressed for years by these true believers, even though the financial parts didn't make sense. You famously had these wars with the short sellers and all that sort of thing. And it worked. It basically manifested a market for this Model Y and then the Model X, not the Model X, what's the other one?

• 2:04:51Ben Thompson?

  Model three, yeah, so it was model three, sorry, when I wrote that article. Model three and Model Y had massively successful and all, all, all, all the people that were true believers got very rich, uh, and congratulations, congratulations to them, i- i- it's great. But it makes it almost impossible for someone for what I do, who I want to look at structure and fundamentals. I can observe this effect happening, but you can't really say what's going to happen or the effects of it, other than to say, this is interesting. And so I wrote about that article and then the SolarCity thing came out and he's like bailing out like his brother-in-law or something and I'm like, I can't write about this, like, what am I gonna say? Like, like, there's, it just doesn't make sense. And so I think there's, to fast forward to X, XAI.

• 2:05:34Ben Thompson?

  Um, yeah, there's a theoretical piece here. I think actually XAI would be an incredible acquisition target for a lot of companies if it wasn't saddled with X. Uh, so.

• 2:05:45Jordi Hays?

  Yeah, it feels like the end state is like Twitter getting spun out again. Like, that, that, that's my, I, I, that's kind of like my, my, it just ends up going back to Twitter and, and, and it becomes.

• 2:05:58John Coogan?

  The blueberry.

• 2:05:58Ben Thompson?

  Right, no one actually wants to, like Twitter, Twitter, there's never been a company in the history of the world, probably, where the impact of a company is completely and utterly divorced from its financial realities. Like, I think when Elon Musk bought it, and I assume that's continued through now, they'd have like one profitable quarter in their history, like, it's, it's an unbelievably terrible business. Uh, and so I think it's probably weighing XAI down. There's a, I guess, I get the theory that Twitter data helps XAI.

• 2:06:28Jordi Hays?

  Well, it helped yesterday with.

• 2:06:30Ben Thompson?

  You don't need to pay forty-three million for Twitter to, to, or forty-three billion, I should say, to, to get it, so.

• 2:06:35Jordi Hays?

  Yeah, that, that was always my position, too. I don't think it helped yesterday when, when, uh, Mecca Hitler emerged on the timeline.

• 2:06:43Jordi Hays?

  But, uh.

• 2:06:44John Coogan?

  Good luck to them, hopefully they sort it out.

• 2:06:45Jordi Hays?

  I wish, I wish we had, uh, a lot more time here, but hopefully we can do it again soon.

• 2:06:49John Coogan?

  Thank you so much for stopping by.

• 2:06:51Ben Thompson?

  Yeah, no worries, uh, what would you guys are doing? I, I actually had the idea of doing a daily podcast ages, ages ago.

• 2:06:56John Coogan?

  Oh, really?

• 2:06:57Ben Thompson?

  Classic example of ideas don't count, execution does, and you guys, you guys did it, I think it's great.

• 2:07:01Jordi Hays?

  Well, you're always welcome here.

• 2:07:02John Coogan?

  You're always welcome, thanks so much.

• 2:07:03Ben Thompson?

  Thank you.

• 2:07:04John Coogan?

  We'll talk to you soon.

• 2:07:04Jordi Hays?

  You're the man.

• 2:07:05John Coogan?

  We will jump straight into our next guest, Scott Belsky. Hopefully, we haven't kept him waiting too long and he is still in the waiting room. We'll bring him into the studio really quickly. Let me tell you about Wander, find your happy place. Book of Wander with inspiring views, hotel grain amenities, dreamy beds, top tier cleaning and 24/7 concierge service. It's a vacation home, but better folks. And we will check in on Scott Belsky and see if he is available to catch up. How you doing, Scott? Sorry for keeping you waiting. Ben Thompson, he knows so much about history. He runs, he puts out three hours of podcasts every day. I should have expected.

• 2:07:43Speaker 03

  Pump me, man. I mean, that's, you know.

• 2:07:47John Coogan?

  I just feel so bad, but I'm very excited to have you. Can you just give me a little update of what's going on in your world? I want to talk about the AI safety layers concept and then we can talk about some of the current stuff that's going on in AI. It feels like, I mean, you published this post, what, two, three weeks ago? And it feels extremely relevant today, last week. So very excited to get the update from you. So kick us off.

• 2:08:11Speaker 03

  Yeah. Gosh, where do we begin? Well, listen, in our ongoing segment here on implications of the technology that's happening, that is happening faster and faster and faster.

• 2:08:21Speaker 03

  A few things top of mind, you know, we can start, we can certainly start with AI safety layers. I think it's fascinating how much discussion there is of the dangers and the perils of AI. Without recognizing how it can operate as a layer to protect us. If you get some call from someone who proclaims to be your grandmother asking for money, you know, that's clearly something that AI on the device, you know, some form of local model can detect, you know, given it's all happening on that device and warn you, this isn't your grandmother. When it comes down to all sorts of the, you know, creative, creative and crazy scam phishing email type things that we get all the time, that's a perfect use case for AI, of course, you know, and telling us that we need to be, to be wary.

• 2:09:05Speaker 03

  But also, I mean, what about being polarized by algorithms and, you know, detecting an algorithm changing based on your engagement and, you know, an AI sort of saying, hey, Scott, you're getting on the fringe here. Like, watch out, you know, you're now like in this small 10% of society that now is going down this rabbit hole of some conspiracy theory. I just think there's so many, there are so many use cases of AI as a safety layer that um, that the device needs to unlock. And of course, that means the operating systems need to figure this out.

• 2:09:34John Coogan?

  So I think that when most people talk about AI safety or safety layers or what you just described, solving the problems that will inevitably come from any new technology, they look at it through a technological lens. They see, you know, well, let's do more reinforcement learning. Let's align the model.

• 2:09:51Jordi Hays?

  There's a fixation at the model layer.

• 2:09:53John Coogan?

  For sure.

• 2:09:53Jordi Hays?

  Like, we need to solve it.

• 2:09:54John Coogan?

  And I look at it.

• 2:09:55Jordi Hays?

  Like, the labs need to solve this.

• 2:09:56John Coogan?

  Yeah, I look at it almost entirely from an economic lens, and I just think about it as if the market cap of the company that's selling you the Skinner box is bigger than the company that's, you know, helping you get healthy. If the, if the sugar company is bigger than the health food company, you're gonna be, you're gonna be fat. And if the health food company gets bigger, then you're gonna be healthy. And so I, I think about it as like, the doom, the doom scrolling, we have screen time apps. They're small. They don't monetize as well as doom scrolling, unfortunately. So there's some like economic considerations there. But at the same time, I come back to the scamming angle, and I see this as like, you know, if, if the economic weight behind the good guys is bigger than

• 2:10:41John Coogan?

  the economic weight behind the bad guys, you get the good outcome. And that's why I'm not particularly worried about like, super doom scenarios, because I think that, you know, generally, governments and, and people will align with like, hey, let's not get paper clipped, so let's build more systems to be safe in general. And then the bad guys, yeah, they might go try and build some really bad weapon, but they will be completely outnumbered. The question is like, on the margin, when we get into these pockets of, you know, the, the Skinner boxes, the doom scrolling, where the economic weight looks. So, do you think about it in that same lens? And then the question is like, what business models can

• 2:11:20John Coogan?

  actually support this? Are we talking, you know, I need to have a subscription for like a Clue lead-like app that's looking at everything I'm doing and then acting as that layer on top? How can we actually implement this? Or is this just like, we're hoping that Apple runs a great ad campaign around it, and it becomes an Apple feature that they, you know, hold up at every, every chance they can?

• 2:11:42Speaker 03

  Well, I mean, first of all, I think that the operating systems of our life are the ultimate interface layers. And, you know, and for many of us, it's either Android or iOS, but at work, it's, you know, many other companies that are operating systems at work. But those operating systems are trying to make us loyal. They're gonna do so through remembering us, you know, personalization effects or the new network effects, I like to say. And I would imagine that protecting you from what's going to be a very, you know, comprehensive and very sophisticated set of of social engineering and other sorts of, you know, long form scams. I mean, you think about the most effective scams that are out there is when, you know, you really have this like very long, you know, experience

• 2:12:27Speaker 03

  or exposure to some entity to the point where you trust it and then suddenly gets your information and then it's too late. And so that's that is a perfect use case for AI on the device to kind of monitor over time, you know, compare that data with any other scams that are reported. So in terms of the economic incentive, I mean, goodness, I feel like consumers will have high willingness to pay for that if they don't get it free with their operating system.

• 2:12:52Jordi Hays?

  Yeah, I mean, I think you can already imagine the UI of you pick up a phone call and Apple, you know, in the, you know, you can think of the traditional layout of like the hang up button, the hold button, et cetera. And then there's just a, you should have a little bit of a tag there that says like AI voice, you know, detected or something to that effect to just, I'm perfectly happy with talking with AI, you know, a model effectively on the other end. But I'd like to know, everyone should sort of know that it's a model. And I think we're in this weird period right now where people all the time are starting to talk with AI and not even fully realizing that it's a human on the other end.

• 2:13:32Speaker 03

  There's some ways that there's the counter credentials movement, right, which I was involved with back in the days at Adobe, which is an effort to have models insert cryptographic metadata into anything that's generated, including live generation, like, you know, live, live audio that can be detected on the client. So there's some ways of going about this. But in terms of, you know, your point about the economic model is interesting. You know, my thoughts immediately went to alarm systems. You know, we all pay for these ring alarm systems, like all these alarm systems for our home that sometimes costs sixty, a hundred and twenty dollars a month, you know, with monitoring and window motion detectors and everything else. But we're not really paying for an alarm system for our like, you know, for our devices in this new modern world where we're going.

• 2:14:16Speaker 03

  And maybe there is a market for an AI safety layer as a service.

• 2:14:19John Coogan?

  It's like new antivirus or something. We're gonna have

• 2:14:21Speaker 03

  Right, yeah.

• 2:14:22John Coogan?

  Modernized viruses and stuff. But it needs to screen record everything. Yeah, it needs to be at the operating system level. How are you thinking about

• 2:14:29Jordi Hays?

  Yes, for mind virus, mind virus detection.

• 2:14:31John Coogan?

  Yeah, yeah. How are you thinking about the evolution of those, like, the mind viruses that come from just the accidental interaction with AI? I mean, people are, there's such a wide swath. When I talked to Jordy and we were having dinner last night with David Senra and we were talking about how we use AI and we're like, yeah, probably thirty minutes a day in ChatGPT. Like, it's a lot. But these interactions are summarize this post, do this research, pull these things. It's, it's, it's like talking to a computer. I'm not saying, hey, how is your life? I never have that interaction, but there are a lot of people that do. And so what are you seeing? What anecdotes have you pulled from? How do you think that evolves? Are there any risks? Walk me through kind of the way humans are interacting with just language models broadly.

• 2:15:15Speaker 03

  That's interesting. I mean, I think, you know, one of the topics that is on my mind a lot lately is consumer AI. And I'm not just talking ChatGPT, which is obviously a consumer product for many of us. But, uh, you know, it's interesting. I was at a tech conference recently where, uh, where all the trends that, you know, are popular now were being discussed. And I left asking myself, what's the one thing that no one talked about? And the one thing no one talked about were new consumer AI era social networks. And you, you know, when mobile came around, there were a whole new, uh, variety of social networks. Like every time there's a platform shift, a lot of consumer, uh, mainstream applications or social networks, that sort of stuff is reimagined, right? And so the question is, why is, why, why is that not happening now?

• 2:16:00Speaker 03

  And, uh, and then the whole saying in consumer investing is always around novelty preceding utility. And so I'm trying to keep an eye out now for examples of, um, of, of consumer AI. I mean, there's this company called Tolan, which is sort of like a pet alien. That you you you start having conversations with and they're doing really well. I believe they raised around from, you know, some some of the top firms. You know, I've been playing with this idea, a few ideas with friends, you know, one of a simulation representing our digital twins. So could you could you kind of train a sort of an AI digital twin of you based on all your experiences and chat GPT or any other sources of data and then deploy that in a simulation with mine and others and we could start to actually

• 2:16:42Speaker 03

  just watch them interact with each other. And it's kind of it plays with some fun ideas of plausible deniability. You know, oh, my gosh, like, I'm so embarrassed, like, what my what my simulated twin said to yours. These are the types of things that are, you know, wingman as a service. Like, I don't know, is there an AI wingman that, you know, helps us when we're flirting with people on social on, you know, on dating platforms?

• 2:17:03Jordi Hays?

  Yeah, the the what I want to see and you're kind of getting at this is just like more weirdness, right? It's easy to go build the neck or not easy, but but it, you know, we were at Y C and there's a lot of companies in the last batch building agentic infrastructure. It's like that stuff needs to be built. But I also, at the next batch, I hope there's more people being like, yeah, a lot of people built all this infrastructure already B to B. Basically, B to B SaaS. Why don't we? Why don't we just like take a crack at like, yeah, some dating simulation where it's like you create a digital twin and you just like throw it into the mix and it goes on a thousand speed dates with people in your city. Not even speed dates, but simulations of dates with people in your city.

• 2:17:43John Coogan?

  Yeah, we've talked about this before, this idea of like, you have a whole bunch of people that are talking to a romantic AI partner, and that feels super dystopian. But if if person, if Steve in in Los Angeles is talking to the AI girlfriend, and then Sarah in Boston is talking to an AI boyfriend, and the two AIs realize on the back end that these people are super compatible, because you have so much data from them, it's just introduce the two humans and say, hey, you know, yeah, you have to pay us to introduce you. We're going to pay a finder's fee and collect your LTV on this app for the next 10 years because you guys are going to probably live happily ever after. And and that's kind of like the white pill scenario that I hope happens, and I hope the dating app companies explore. But who knows?

• 2:18:26Jordi Hays?

  AI companion, though.

• 2:18:27John Coogan?

  Yeah, yeah, basically. Yeah, but the AI, it's the her scenario.

• 2:18:30Speaker 03

  You're still together, but your AI versions have broken up. Like, are you?

• 2:18:34Jordi Hays?

  What happens then?

• 2:18:35John Coogan?

  Well, then you get a warning or it contacts like a divorce lawyer or something for who takes a fee on that. Who knows?

• 2:18:41Speaker 03

  I think there's a lot of fun stuff to explore here. And, you know, one of the other random ideas I had was, I called it Peanut Gallery. And the idea was that, you know, the dirty little secret about why we go back to products like Instagram and others, oftentimes the traffic goes up after we have posted content because we want to see who else saw our content.

• 2:19:00John Coogan?

  Oh, interesting.

• 2:19:01Speaker 03

  Playing off that, off that idea, you know, imagine a social platform called Peanut Gallery where you post your own content, but no humans are allowed to comment on it. It's all these like personas that are like, you know, tightly, tightly defined personas that are commenting and arguing with each other and discussing. And you go back to see like how this AI is engaging with what you posted. And maybe that becomes the voyeurism of seeing how other people's, you know, contents are forming. I mean, these are the fun, crazy things that must be explored to find, you know, this edge that will become the center of social.

• 2:19:34John Coogan?

  Yeah, I've seen two things that are somewhat in that realm. One is just general YouTube thumbnail A B testing services where you upload your thumbnail and it tries to predict, based on all the data it has, what the click through rate will be. And then you can upload two and it'll say, hey, you should probably go with this one. And then the other, I saw, I think Justine Moore at Andreessen's posting some sort of app that you open your camera to the front facing view and it gives you the sensation of live streaming with like hearts and comments and stuff. And it's all fake, but it's very odd, but I don't know.

• 2:20:08Jordi Hays?

  Yeah, I mean, it feels inevitable that in many ways bots are a feature of, it feels like bots are a feature of X now, right? They have not been eradicated. They're still here. They're maybe hidden under some.

• 2:20:21John Coogan?

  I mean, that's the story of Reddit, right? The early Reddit days were, you know, it was all the Reddit founders posting to seed this thing. So if you think about a social network that needs to onboard you, there was that original Facebook thing where like, if you could get 50 friends, they'd keep you on the platform forever. You know, if you show up and there's like a couple of bots that are just like, hey, good job. You know, hey, keep posting, stick with it, make some real friends, but we're here for you if you need a little encouragement, a little dopamine. I mean, on that. That note, um, the, the, the war between Meta and OpenAI and the, in the talent race and all the trade deals has been, uh, you know, front page news for the last couple of weeks.

• 2:21:00John Coogan?

  I'm, uh, Jordy's been saying that they, that the, the product that Meta might wind up going after is less like a direct chat GPT knowledge engine and, uh, uh, app that feels more competitive with Google. And it might actually be something more like, uh, companionship and, and chat since that.

• 2:21:18Jordi Hays?

  That feels like the real threat of, of if there was an app outside of TikTok that was going to take user minutes from the enter, these sort of like entertainment, social minutes from, from the meta ecosystem, it would, it would be these sort of AI companionship, which function as entertainment, the sort of social experience, which is Meta at its core is, is effectively a, a social entertainment company.

• 2:21:44Speaker 03

  Yeah. And you know, you think about all the rules of successful consumer products, they make us feel good about ourselves. Um, you know, they, they are sort of social lubricants and that they help us get in, get connected to others in ways that we may not be able to do and be comfortable with in the physical world. And you kind of go through all the list of things and you realize like AI, there's an opportunity to, to really radically, you know, uh, attack those vectors and make people have a really fun, engaging entertainment experience, uh, or a social experience. So it's not a surprise that Meta is going to innovate in that space. You know, I, I do also kind of wonder when, uh, I remember when we all remember when Facebook acquired, um, Instagram.

• 2:22:23Speaker 03

  And then of course, when Facebook acquired WhatsApp, you know, they were acquiring network effects in essence, right? Around messaging and images. And I wonder now, you know, now it's like, it's a talent war. I mean, maybe AI is less about, it has not really a network effect per se. It's more of like a talent driven differentiation. Uh, I wonder if that's also, you know, helping us understand the strategy of, you know, buying up all these different companies and people. Um, but it's.

• 2:22:50Jordi Hays?

  Yeah. I think the, the framing that I've been thinking about is, is these are basically like unauthorized aqua hires to some degree where you're basically saying, yeah, that these 10. You know, if a company is doing an Aqua Hire in general, there's like, we know this group of people is good at this thing and we want to do this thing and let's bring them over here. And so the premium on talent that we've seen in the last couple of weeks could just ultimately be that it's it's looked at as a you're buying a team which is more valuable than the individual parts. They just happen to all get chopped up.

• 2:23:23John Coogan?

  This has been the chatter around Alex Wang and Scale AI. People haven't been saying, oh, well, Scale AI is going to be, you know, this juggernaut in 30 years. But Alex Wang is a generational talent. He'll be around in 30 years. And so the the nature of what Scale does might change as, you know, we get to more, you know, data driven or like just purely purely AI generated data and reinforcement learning with verifiable rewards and Scale AI has been through a couple of different things with self-driving cars and then RLHF for light language models. And that that business, it's not the same as Instagram where it's like, okay, there's a network here. And so there's like this asset value in this.

• 2:24:04John Coogan?

  But it's yes, more much more talent driven. And so that's why you see all these people coming together, but it's fascinating. It is interesting to see if Meta is focused more on just let's make Llama great so we can use the best in class AI effectively for free all over our products. Or if they're trying to aim for something that's like an entirely new experience that will be vended to their billions of customers. Probably both, honestly. Why not? Yeah, and make ads more efficient while they're at it. Yeah, for sure. I mean, that's the crazy thing about this is like $100 million doesn't take that much to generate $100 million if you make the ads 0.1% more efficient. So it's all economically rational, but we just haven't seen it in tech yet. And this and that's why these big numbers feel like, oh, we got to talk about this.

• 2:24:49Jordi Hays?

  Little bit of a tangent, but have you have you thought about how how like LLMs now are immediately and and I'm assuming pretty aggressively shaping actual human communication? Like right now, we're in this period of M dash, gotcha. You wrote that. You wrote that, you know, with ChatGPT. And and people that love the M dash before are disappointed. But at the same time, it's not like you see that.

• 2:25:21Jordi Hays?

  People calling out the M dash, other places on the internet outside of basically Teapot. And I just wonder, we're in this dynamic now where we have the most prolific, prolific writers throughout history have shaped communication. And now we have LLMs, which are effectively the most prolific writers in history, producing more written word than any one human could do in a lifetime in minutes, right?

• 2:25:45Speaker 03

  Yeah.

• 2:25:46Jordi Hays?

  And it just feels like we're potentially in this interesting flywheel that's just going to keep spinning.

• 2:25:56Speaker 03

  I mean, a couple of thoughts. First, I feel that LLMs are going to start fine tuning more towards how we want them to talk to us, right? So if you want your LM to be straight to the point, no BS and all lowercase and short sentences, like that's what your experience of any information retrieval and conversation will be, and that might be different from mine. So I do think they'll all become more personalized for us in these like dramatic ways. I also though, wonder, just like when music becomes generic and then some band or some star like just does something entirely new and creates this new genre. I mean, similarly with writing, like, well, what will human writing be like as

• 2:26:38Speaker 03

  a result of LLMs in five to 10 years from now? When you pick up a novel that actually captivates your attention and keeps you engaged, you know, what sort of writing will be necessary to do that in this age where, yeah, your LM can spit out poetry or write a, you know, a short novelette, you know, upon command. So it's fascinating. I mean, technology's always had this impact on us and culture. It's just never been easy to chronicle because it's always happened over such long periods of time. And it feels like those windows of of culture change are happening more quickly. And so it's something I'm looking at as well. It's interesting.

• 2:27:14John Coogan?

  I'm generally still long. Tool like this is a tool creativity is still undervalued or or it's not going away. And I keep coming back to the idea that like, there should be nothing easier for an LLM than to write a great tweet. It's 280 characters. It doesn't need to really maintain some long context to get it. And yet, we haven't really seen anyone break out with an account that people are following and entertained by. That's fully AI generated. And there's been some experiments, but usually it's like, you're following it. Even like that, do you remember Horse eBooks back in the day? I don't know if you remember this account, but it was it was like said to be just randomly algorithmically generated from these eBooks.

• 2:27:59John Coogan?

  But it turned out that there was actually a human writing it. And there's been a few examples of that where. Or the stuff that does go viral, that's like AI generated is like, oh, it's hallucinations. And so the fascinating part about it is not the underlying product. It's the fact that it's generated by AI.

• 2:28:14Jordi Hays?

  Yeah, it is interesting that we have this band, The Velvet Sundown, I think they're called. They have a million listeners on Spotify a month right now that claims to be fully AI generated. And it's funny that we got that before a prolific poster.

• 2:28:30John Coogan?

  Yeah.

• 2:28:30Jordi Hays?

  That is fully AI like.

• 2:28:32John Coogan?

  That has 100,000 followers and is like popular.

• 2:28:34Speaker 03

  Here's the thing, I mean, we talk about, of course, like taste being more important than skill. And I think you're tuning into the fact that Ken LLM's like output tweets that are compelling and therefore have taste. And I think one of the questions is, is taste not just about each tweet, but also like consistency of good judgment and great, you know, great content? It's just like they say, a brand is like the hardest thing to build, the easiest thing to lose. I wonder if taste is a similar way, you know, if you have AI pumping out tweets in an account. But if 20% of them are like, you're like, wait, what? That wasn't clever. You know, do you just lose, does that, is the credibility of that account gone? So I think humans are good at, humans with good taste are good at knowing, you know, yes and no, yes and no.

• 2:29:15Speaker 03

  Like what should and shouldn't be shared or said or written more consistently. And I wonder if, I wonder if, you know, LLMs can do that.

• 2:29:23Jordi Hays?

  It's also a memory. It's a context thing. To be a good poster, you need to really understand the fullness of the zeitgeist and where and the current thing and all these different meta trends and yeah.

• 2:29:37John Coogan?

  Yeah, and it feels like even the longer context windows are still losing focus because there's some sort of fundamental limitation of the transformer. We talked to Dorkesh a little bit about this and the continual learning breakthrough is maybe still a few years away, but certainly will be interesting to see how it develops. I'm optimistic. I'm still looking for that. I keep coming back to that idea of the Lisa Doll match against AlphaGo, where AlphaGo dropped move 37, this very unconventional play. Everyone thought it was a hallucination, a mistake, and it turned out to be kind of a genius new move. And I feel like we haven't had our move 37 moment for LLMs yet, but it's probably coming at some point.

• 2:30:19Speaker 03

  Well, I'll tell you, like, each time we have these conversations, the whole world will be different. I guess that's like the thing for learning these days in terms of the pace of change, but.

• 2:30:27Jordi Hays?

  That's great. As we accelerate, it goes from monthly to every couple of weeks.

• 2:30:32John Coogan?

  Weekly, daily.

• 2:30:32Jordi Hays?

  Weekly, daily, and then every hour that we'll be feeling the acceleration, but.

• 2:30:38John Coogan?

  This has been fantastic.

• 2:30:38Jordi Hays?

  Great having you on as always. Looking forward to the next one.

• 2:30:41Speaker 03

  Sounds good. Until next time.

• 2:30:42John Coogan?

  We'll talk to you soon. Bye. Next up, we have Nathan Lambert coming in to talk about an American DeepSeek project. But first, let me tell you about Bezel. Go to getbezel.com. Your Bezel concierge is available now to source you any watch on the planet. Seriously, any watch. Go check them out. And I'm very excited to bring in Nathan and talk about DeepSeek llama. How you doing, Nathan?

• 2:31:03Jordi Hays?

  Boom.

• 2:31:04John Coogan?

  Good to meet you.

• 2:31:04Jordi Hays?

  What's going on?

• 2:31:05Speaker 05

  Good. Happy to be on this format. You guys got a loaded lineup today. I was like, wow, I got on the same day as Ben. Ben is like the motivation for why I started writing about AI. Like, somebody has to do this for AI because there's so much to talk about, but all he does now is AI anyways, so. He's a competitor. He's quaffing.

• 2:31:22Jordi Hays?

  The Ben Thompson for AI is definitely Ben Thompson.

• 2:31:25John Coogan?

  But I mean, it is a little bit different in terms of, there's so much different space in terms of whether you're going after the, the, the business models or the actual infrastructure or, or what you were writing about earlier with kind of the, the open source geopolitical angle. So take us through the recent piece, the thesis, and then I have a bunch of questions about both DeepSeek, Llama, and kind of how this could come together. We were talking to the CEO of Grok yesterday. He's obviously extremely long open source and, and it's very interesting to dig into a million different threads here. So just kick us off with an overview.

• 2:31:57Jordi Hays?

  Thankfully, we were talking to the CEO of Grok with a Q yesterday, because at that very moment, there was a different Grok.

• 2:32:03John Coogan?

  Yes, hallucinating and, and at scale.

• 2:32:07Speaker 05

  Yeah, there should be more Grok news later if tweets are to be believed. But the American DeepSeek thing is largely a forcing function to make AI research ecosystem, make the AI research ecosystem in the United States catch up. I think we were talking about niches and lanes and like Ben Thompson, it's the biggest one. A lot of mine is on the research side and kind of understanding the emerging trends of research that are getting picked up by companies. And one of the clearest ones that we do is, I, I lead this with a couple of other people as we keep track of all the open models and data sets and mixture of research and startups are releasing. And there's been a huge shift in the last three to five months and pretty much everyone builds on Quen. And there's a long tail of kind of business or geopolitical reasons. Some of them are sensitive and some of them

• 2:32:50Speaker 05

  are kind of obvious where American companies don't want to build on Chinese models. And that's one thing. And then also, America should just take pride in what has been a great like research ecosystem. And we want to have that and own it whole stack, which is otherwise, most of the leading AI research is going to start coming out of China. And I think, so politically, it should be an easy win. And in terms of cost to maintain the open ecosystem, it's so much less than what these companies are pouring into their AI models. So it's just kind of getting a bit of the tractor beam of AI onto this open source and open, it's like just building models that have all the data and code released so more people can start building on them. We can go into the details from there.

• 2:33:32John Coogan?

  DeepSeek versus Quen. I feel like DeepSeek had this like crazy viral moment. But now you're saying that Quen's been kind of on a, on a, you know, compounding growth for a while. What's the dynamic between those two companies and what's driving Quen's adoption over DeepSeek?

• 2:33:46Speaker 05

  Yeah, so this is a great example of one I've started using and we'll loop it into Llama. Essentially, DeepSeek has these frontier-class models that are extremely good, and they dropped the weights on Hugging Face, and they have been switching to permissive licenses. These are models that anyone could pick up and use and dump into a product that they want to ship. A lot of startups use these things. We see all the clouds hosting them. That's one thing. Not a lot of people actually fine-tune DeepSeek because it's huge, it's already so good, like, what are you going to get from this? And then what Quen is doing is they're releasing, honestly, tens of models at different formats, both base models and post-terrain, and from size scales as small as like 500 million parameters up through these bigger MOE models.

• 2:34:29Speaker 05

  So for researchers, pretty much, or somebody trying to build a really niche product and something at the cutting edge, it's like, Quen will have the model at a certain size that you need in order to fine-tune it or figure out if you can build a certain thing at a certain cost profile. And especially for researchers that have some sort of limited compute, like, training and working on DeepSeek is super hard. And we've seen this with Llama 2 and Llama 3 were much closer to this Quen approach, when it was seen both in the data that we have and on the ground as like, Llama was the open standard for research. I used to joke around that, like, Hugging Face is just going to be rebranded Llama because you see Llama everywhere, especially around Llama 3. And with Llama 4, Meta started to go, like, release drama aside, they've started going more towards their bespoke solutions,

• 2:35:14Speaker 05

  and they're also releasing the models, which has made this a big opportunity for Quen with Quen 3, which honestly, earlier Quen models were already starting to fulfill this. But that's kind of been a big mass shift and attention shift in the last few months where...

• 2:35:28John Coogan?

  So what do you expect out of Meta with the new talent acquisitions? And it seems like a redoubling of the efforts on AI broadly, superintelligence, but maybe, you know, the strategy of Llama could be shifting. Are they the... I've often thought that, you know, right now with the dominance of DeepSeek and Quen internationally and kind of these like, jump ball, half-allied countries, frenemy countries, Mark Zuckerberg should be like a national champion, and we should be pushing Llama, you know, at a national level all over the world. But what do you think's going to happen there?

• 2:36:09Speaker 05

  Yeah, so there's two things. Mostly, I mean, I'm gonna gossip, as anyone will, on what will happen with Llama. It's very 50/50. I think with the leadership they've brought in, that there's less attention and value deserving behind the open thing. So Zuckerberg, historically, has been very pro-open. And if more of it is shifting to other people, they kind of loosen that vision. If other people are at the lead of leadership. Like, that's what people are saying, is like, they need more leadership to build this AI org. And so a best-case scenario is Llama invests more in AI, and the national champion becomes even better, and they just crush this. I don't think that's the outcome that I expect to happen, which is, I'm saying, there's a cheap off-ramp.

• 2:36:52Speaker 05

  If you take the cop packages for a couple of those researchers, like, that's the cost to get a whole research ecosystem built around a fully-open US model, where we have all this, like, the data is released, and a nonprofit and stuff can handle data releases a bit better than a big tech company that has all these eyes on their back, and then just have research happen on these things.

• 2:37:15John Coogan?

  So what are you advocating for? Are you advocating for nonprofit, taxpayer funding? You know, we've seen a nonprofit before, and it turned into a for-profit. How are we gonna keep this a for-profit? And then, how are we actually mustering the will? Because, yeah, it sounds like, yeah, just put $100 million into a nonprofit. Like, that's a lot of money.

• 2:37:35Speaker 05

  This is where we get to the nitty-gritty. I work at the Allen Institute for AI and AI2, which historically is even more academic than OpenAI was. So I think culturally, there's not that type of feeling the AGI, like, supervision that Ilya had on the scaling deep learning. That was kind of the thing that I think drove them from the start. They were like, we need so much money. So AI2 is set up, it's like, you can do digging, but it's so different in that culturally that it could never happen. So if the leadership here tried to do that, the company would just implode going forward for profit, because, I mean, most of the leadership has co-appointments with professorships at UW and things like that. So it is already half-embedded in the ecosystem.

• 2:38:17Speaker 05

  And then practically speaking, moving AI talent around is so hard that it's like the government exfiltrating researchers to fund like a open source government lab doing this is so hard that it's like you have to find the money or the partners to do this where there are people. So it's sitting on the ground where I am or trying to train our next model, like it's pre-training now. It's like, we just need more compute. So if we double or triple our compute, America will have X or like these open models will be just X percent better. And it's, it seems tractable, it's just hard to get the right, it's a lot of politics to get these things in place.

• 2:38:55John Coogan?

  Yeah, I mean, I guess to dig in there, I'm wondering if like, you know, the, the initial like economic model for Llama was always in a little bit of debate, is it a recruiting effort for Meta? Is it their desire to decouple and not be dependent on Gemini or OpenAI or Anthropic? And just save costs there. There were a whole bunch of different, you know, economic motivations. But I'm wondering if like, in the long term, we don't see something like, you know, a red hat Linux,

• 2:39:34John Coogan?

  where it is a for-profit company maintaining a nonprofit or an open source software package. Or even, I mean, you can run Linux on Azure now. And so is there a world where you just have every different piece of the stack, whether it's a consumer app that people pay monthly for, or an API that people pay on a per-token basis, or an open source model that you're paying for, you know, red hat style consulting services on top of, all within one company? Like, is there no hope that OpenAI's open source model, or, you know, AWS or Microsoft open source something that, that actually competes significantly with DeepSeek and Qwen,

• 2:40:19John Coogan?

  but is still within the typical corporate structure?

• 2:40:24Speaker 05

  I think it'll come from, the biggest motivators have to be Nvidia and AMD. So the long tail of if Quen is going to keep doing this and then it's something like Huawei, they start working with Huawei, this like Huawei libraries, they want to support them. And then US researchers are starting to dig down into those levels because they want to understand how these models were trained. So those are the people that have the most direct exposure. It would be Nvidia and AMD. It's cheaper them to do. They get the benefit of the researchers keep working on their hardware and software ecosystems. There are like outlandish stories that you could tell about open source AI where that type of thing could emerge, but mostly they revolve technical theories that you can't plan on. Like if you could do weird model splicing where you train a bunch of MOEs and then

• 2:41:09Speaker 05

  you cut an MOE out of one model because it's really good at healthcare and there's kind of this open marketplace for model parts and then that's all in the open and the person that kind of writes the software by which those like pieces of models are combined in standards by which those happen, that could exist. So there's kind of wacky ideas, but I think that that's a lower probability outcome and it's just like, let's get good, big transformer models trained that anyone can download and poke around at and just get more people involved in AI research that we have complete control over.

• 2:41:42Jordi Hays?

  Last question for me. What are you expecting out of OpenAI's open model?

• 2:41:48Speaker 05

  Yeah, so I think one of the core things about OpenAI culture is that they really like to deliver extremely cutting edge and good artifacts and research. So I expect it to be one model that fills a niche that they're either hearing from customers or the community that isn't quite filled, whether it's an extremely like super long context or low latency for agents or a certain size of reasoning model. It's going to be this type of thing where it's a A certain niche and it worked really well for it. Where it could be like a deep seek style release where it's just super strong model that people can plug into real world products and applications. But it's not going to be this quen or llama suite of models that researchers look at for

• 2:42:32Speaker 05

  all sorts of things. And OpenAI has been saying that they hear the license critiques of Llama and stuff and they're going to commit to the actual like permissive license, which are things like Apache or MIT that these Chinese orgs have started using again. Which I think is a nice thing to kind of make all of that simpler. To just, you release a model, it doesn't have terms and conditions on it. Like Meta is not trying to say like, your legal department has to talk to us or avoid these use cases. It's just get people using the model that your company released and take a simpler approach.

• 2:43:03John Coogan?

  That makes a lot of sense. Anything else, Jordi?

• 2:43:06Jordi Hays?

  That's it for now.

• 2:43:07John Coogan?

  Thank you so much for stopping by. This was fantastic.

• 2:43:09Jordi Hays?

  Thank you for working on all this.

• 2:43:10John Coogan?

  Yeah, we will talk to you soon. Looking forward to the release.

• 2:43:12Jordi Hays?

  Cheers, Nathan.

• 2:43:13John Coogan?

  Have a good one. Bye. Up next, we have Richard from u.com coming into the studio. Do we have any more ads? Go to 8sleeve.com. Get a Pod 5, 5-year warranty, 30-night risk-free trial, free returns, free shipping at 8sleeve.com.

• 2:43:30Jordi Hays?

  I'm basically...

• 2:43:31John Coogan?

  You're in a hole.

• 2:43:33Jordi Hays?

  My household is in sleep shambles.

• 2:43:36John Coogan?

  Well, let's bring in Richard, talk to him.

• 2:43:39Jordi Hays?

  Putting up the fact that we're doing this on five hours of sleep consistently does it all.

• 2:43:46John Coogan?

  How'd you sleep last night, Richard?

• 2:43:47Jordi Hays?

  How'd you sleep?

• 2:43:48John Coogan?

  Good to meet you.

• 2:43:49Richard Socher?

  Hey, guys. Nice to be here. I slept all right.

• 2:43:52John Coogan?

  That's good.

• 2:43:53Richard Socher?

  I complained.

• 2:43:54Jordi Hays?

  You would have slept better on an 8-sleeve. So, we'll work on that offline, but great.

• 2:43:58Richard Socher?

  I did buy it. I retired it. It just, I think it's better if my body sets its own temperature.

• 2:44:04John Coogan?

  Oh, wow.

• 2:44:05Jordi Hays?

  Interesting.

• 2:44:06John Coogan?

  Would you mind kicking us off in the introduction on yourself and the company?

• 2:44:09Richard Socher?

  Happy to, yeah. Richard did my PhD at Stanford, brought neural networks into the field of natural language processing, laid a lot of the groundwork for what now is ChatGPT. Was a professor also on the side at Stanford for a couple of years because no one was teaching neural nets, like transformers and so on, to students back then. This was 2014 to 2018. But my main job was starting MetaMind, started and made it very easy to train neural networks for other companies. We got acquired by Salesforce, became the chief scientist, and after two years, executive vice president. Running most of the AI efforts, starting the Einstein kind of suite of things and so on. Built out the research team there. In that research team, we ended prompt engineering.

• 2:44:52Richard Socher?

  Paper cited by the early GPT papers from OpenAI and others. And in 2020, I decided to start U.com to bring better answers to the world. To change what I thought initially was search, but I think now I think is something else. And also started AI X Ventures. It's a relatively small venture firm, about half a billion AUM, that invests in early stage companies.

• 2:45:15John Coogan?

  So that's small. Half a billion AUM is pretty, pretty solid. Congratulations.

• 2:45:19Jordi Hays?

  A humble 500 million of AUM.

• 2:45:21John Coogan?

  Humble, yes. On, on U.com, where is the business today? What are the biggest challenges? I feel like we've been hearing more and more about the data wars. And how high are the walled gardens? How, how high are the walls and the beautiful gardens that we have all tended to with our Slack installations and our Google Drives? And this feels like the logical thing that, you know, yes, I own my data until I want to give it to you or literally you.com.

• 2:45:51Richard Socher?

  That's right. Actually, you know, as a startup founder, you have to remind yourself every crisis is an opportunity. And the opportunity here is actually that a lot of data is inside those. And those companies don't want to give it out, but they do need to make it useful. And so one of the many things that we've learned over our like changes and focus on deeper deep on enterprise is that doing good internal search is actually quite hard and quite useful. And so we're partnering with a lot of companies and do search over their entire archives of decades. And also really up to date things for publishers and insurance companies, like pretty gnarly, complex problems. And combining that with web data, which also has its own complexities.

• 2:46:35Richard Socher?

  And a lot of, you know, like folks are in some ways trying to. Pay people in news, which makes a lot of sense, but also it potentially threatens the entire free, open internet. You know, if you have to pay for everything you read or crawl, then only Google can really afford that. And then you have an even bigger monopoly. So I do think we need to keep the web open and free for that. And so merging all of that together to make companies more productive is what we now focus on.

• 2:47:02John Coogan?

  What's kind of the best practice in the modern enterprise these days? Is it like, try and be really diligent about sucking data out of every platform you use into some sort of data lake or like Snowflake installation and then dropping u.com on top? Or is it figuring out a way to actually deal with the sharp elbows of direct API integrations into the databases that are managed by the other companies that I'm, you know, purchasing SaaS from?

• 2:47:31Richard Socher?

  That is a great question. I wish there was a simple silver bullet. Always do X and just have it all in data lake in one place. But it's kind of messy. And usually there's some data that's just so large, you don't want to have another copy somewhere else. And then there's some data where, you know, we have the whole internet, like we have an internet index, right? And you can't bring that into your virtual private cloud and so on. You know, it's just too expensive for each company. But then in some cases, it does make sense. If you want really deep understanding, reasoning, over complex, structured and unstructured data inside an enterprise, then you have to often copy it over and bring it into a new setup. So one of the big things we just announced actually is a big partnership with Databricks, where we are sitting on top of Databricks and we

• 2:48:16Richard Socher?

  can actually answer questions over data that is in Databricks. And it's been a very exciting partnership already.

• 2:48:22John Coogan?

  Yeah, it makes a ton of sense.

• 2:48:23Richard Socher?

  They also enable all their LLMs to have web index access.

• 2:48:26John Coogan?

  Oh, sure. Okay. Yeah, that, yeah, that makes a ton of sense. How are you feeling on acceleration, deceleration? It feels like the vibes have shifted most recently. We had Dorkesh Patel on the show on Monday. He's kind of pushed out his AGI timelines. Folks are talking about reinforcement learning, not scaling as fast as people thought it would, the problem of continual learning. Just if you take a step back and maybe put on more of your academic hat, how are you feeling about the current state of AI?

• 2:48:59John Coogan?

  Obviously, even if the, there's also the take that like, I don't know if you agree with this, but like, even if the model's plateaued, there's still so much enterprise value and so many problems to go solve. But I'll let you answer, where do you stand?

• 2:49:10Richard Socher?

  Yeah, I'll try to keep it short because I could talk about that for hours.

• 2:49:13John Coogan?

  Please.

• 2:49:14Richard Socher?

  There's, I think it's true that there are so many simple jobs that can actually be done already with the technology that's there, assuming you have good data access and you had all the recent information and you know the company context and all of that stuff. So there is already a lot of low hanging fruit. At the same time, it's actually quite exciting for the researcher in me that, you know, hasn't fully died yet as an entrepreneur and CEO for many years, like, that it's time again for research. Like, in many ways, we've knew, we've known that we need large neural nets with a lot of data on GPUs and highly paralizable training, and you want the whole thing to be ideally end-to-end trainable in some fashion. It's sort of been

• 2:49:56Richard Socher?

  known ingredients for over a decade now. And indeed, we've crossed thresholds by scaling all three, data, compute, and, and model size. We scaled those three things up and it worked better and better and better. And it created these emergent properties, similar to like, a smaller brain of a monkey, just not doing certain epic things, even though the brain kind of looks similar, that has neurons too. But then you cross a certain threshold, you get these emergent intelligent properties. And so what that means is now's the time again for actual research, not just engineering and scaling things up and throwing more data and better data at it and bigger GPUs and, and all of that. But to actually go back and

• 2:50:38Richard Socher?

  say like, okay, what is true intelligence? How can we get to superintelligence? What does it mean for intelligence to increase exponentially for a certain amount of time? I think there are actually different dimensions of intelligence too, that you have to look at separately. And some do have upper bounds. And sometimes these upper bounds are astronomically far away, like grounded in physics. And in other cases, the bounds are not that hard, like classify every object on the planet in computer vision. It's actually not that hard in comparison to have all knowledge about the universe, you know? And intelligence should have a lot of knowledge. And it will take us a while to get to as much knowledge and the bounds of how much knowledge you can collect are rooted in physics and the speed of light cones around all the sensors you can have. So there's basically a time

• 2:51:23Richard Socher?

  again for research, and that's exciting.

• 2:51:25John Coogan?

  So, yeah, it feels like we're Kind of paradoxically, in an AI bull market summer in the Stripe dashboard or in like the ARR sense, like we'd never, never been adding more EV, never been doing bigger contracts. Everything's good on the business side, but maybe we're kind of counterintuitively in a little bit of an AI winter on the academic side. My question is, if you agree with that or not, but also, do you think that with the AI researchers, it feels like the top AI researchers are getting poached into Meta and they're going into OpenAI. Do we think that the next transformers coming from, or the next major research breakthrough comes from a foundation lab or a big tech company?

• 2:52:06John Coogan?

  Or is there a role for academia to step up and do some like kind of longer timeline, unbounded research to try and go explore even without even an economic model in mind?

• 2:52:18Richard Socher?

  I do think you cannot build another OpenAI by just building an L N. The L N was the one thing that worked out for OpenAI after they spent hundreds of millions on robotic hands and on Dota, like computer games and reinforcement learning and all these other projects. And one of them actually worked. And so if you want to replicate that kind of success and do research again, which I think is the time is now, it does make sense to have that kind of entity. And, and it can, I think, be done. And so I do think academia has a role to play in that. Thanks to open source models, academia can be relevant again because they have access to them. They just couldn't have afforded it before top open source models were available.

• 2:53:00Richard Socher?

  And I do think a lot of folks are chasing sort of the latest employees in the top labs like OpenAI and Thropic and so on. But you can also go a step further and look at who's actually, who's trained those people? How did they learn how to do research? And then you get to folks like Chris Manning, who's one of my PhD advisors too, who just recently joined AIX, our venture fund, like in a much larger capacity as a GP. And so those are the kinds of folks that I think will need to rely more on again. And many of those are also moving out of academia in, into kind of labs that pushed frontier research forward.

• 2:53:39Jordi Hays?

  What, I have to ask because it's so current. What do you, what's your thesis on what happened yesterday with Grok? How, how do you have that big of a general, I don't know, alignment?

• 2:53:52John Coogan?

  Oopsie.

• 2:53:52Jordi Hays?

  Oopsie. In, in prod.

• 2:53:56Richard Socher?

  You know, I think when you ship very fast, these things are about to happen, right? Like, people can push them in the conversations into certain directions. You sample from the same model multiple times, you get different answers. And I think if you try to be sort of a, like, free speech maximalist, which on many levels makes sense, but turns out there's a lot of funky speech out there.

• 2:54:21Richard Socher?

  With no guardrails whatsoever, it will go into those very dark places.

• 2:54:25John Coogan?

  Yeah.

• 2:54:27Jordi Hays?

  What are you expecting, since it's in six-ish hours, I believe? Hopefully, they're still announcing and launching Grok 4 tonight. What are you expecting out of Grok 4 in terms of, maybe benchmarks aren't the right even way of thinking about it, but in terms of progress?

• 2:54:47Richard Socher?

  My hunch is it'll be more of everything, but nothing like, wow, like, binary, like, a novel thing, right? It'll be more multimodal and deal with better understanding of images and videos and maybe sound. It'll be larger memory, it'll be slightly better reasoning. It'll be probably, I mean, we won't know for most of them, but more parameters and so on. But maybe not like completely novel research that has a capability that no one else has.

• 2:55:17John Coogan?

  Sure. Yeah, that makes sense.

• 2:55:20John Coogan?

  Last question and we'll let you go. What are you finding most exciting on the investing side? For me, $500 million fund, it feels like the foundation model labs, the big training runs, the multi-billion dollar rounds, ship has kind of sailed on that front. So maybe the time is for application layer investing, but what are you seeing? What are you excited about?

• 2:55:41Richard Socher?

  Yeah, we've been actually very fortunate at AI X Ventures to not have, like, to avoided some of these massive rounds. The way I describe that is that not every company that raises a ton of money in a very early stage, like, is bound to fail. At the same time, you'd basically combine a seed-stage risk with a late-stage return in many cases. And that, you know, and expected value just doesn't work out very well. And so there are a handful of foundational companies, like Hugging Face that we invested in at a seed round, and Winserve, and AI.

• 2:56:21John Coogan?

  Congratulations. Those are great companies.

• 2:56:23Richard Socher?

  Yeah, these are all like companies invested in this T round, invested in perplexity and flow and Whisper, Tobit, Ambience, like a bunch of really amazing companies. And so I think there are only if one or two dozen foundational model companies that the world needs. And then there are thousands of application companies. So short answer is yes, you're right. I think you will see a lot more in the applications. I also believe that all the stars are aligning for biology and hence medicine and hence health to have a major moment thanks to AI. Now, software is faster than hardware and hardware is faster than wetware, people and biology, right? And so it takes longer, the cycles are longer, but you have enough data, you have the right compute, and we can eventually

• 2:57:08Richard Socher?

  simulate more and more of biology and then make it into not just, oh, memorize what nature has kind of hackily evolved towards, but make it an engineering discipline. Think about how we can actually change a specific antibody and target a specific gene and like change our epigenetics and improve aging and cure cancer. All of these things I think are within our grasp and then reach over the next few decades. And I think that will be a massive group of applications.

• 2:57:38John Coogan?

  Amazing. Well, thank you so much for stopping by. This is a really great conversation. Yeah. We'd love to have you back later. Have you back on again soon.

• 2:57:46John Coogan?

  Cheers, Richard. Thanks for joining. Good chatting. Next up, we have the founder of Moon Valley coming on the show, talking about generative imagery. We're going to pull up the website. Very, very cool stuff. So, welcome to the stream. Hopefully, we can pull up this website because we have fully passed the uncanny valley. Don't you agree? I mean, this, are you, are you on the website? Can we pull up the website really quickly and show the, the video? So, so everything on your website, this is AI generated? Is that correct?

• 2:58:19Speaker 07

  Uh, that's right. There's some like After Effects stuff on top of it. But yeah, it's basically all AI Mary generated.

• 2:58:26John Coogan?

  It's remarkable. And I feel like it's under discussed. Anyway, please introduce yourself in the company. Because this is.

• 2:58:32Speaker 07

  Yeah, absolutely. Uh, thanks for having me. Great to, great to meet you guys. Good to meet you. So I'm Naeem. I'm one of the founders of Moon Valley. Uh, you know, at a very high level, we're a team of, uh, kind of a unique structure, you know, a good chunk of our team are world renowned researchers. In visual intelligence primarily, but you know, our, our focus, uh, in a specific level is, is we're building the biggest and the most capable production grade generative video models. And on the flip side is we also have a large chunk of our company are filmmakers. So we have, um, we have a movie studio in LA. It's, it's one of the oldest, most well-preserved, uh, sound stages in the world.

• 2:59:12Speaker 07

  Some of the first Charlie Chaplin movies were shot there. Uh, and so it's like kind of at ground zero and, and we have, you know, folks that have won Emmys that have been nominated for Oscars on the team. Uh, and, and so we've just kind of brought both worlds together to figure out how do you take this tech from being, you know, kind of interesting research, uh, and, and, um, you know, cool things that you can share on, on X and actually become things that sort of push the boundaries of, you know, what we sort of, we think of it as like movies and stuff, but these are sort of limited abstractions, more of just like visual media broadly, um, and, and kind of the artistry around it.

• 2:59:48John Coogan?

  So how do you think about the trade off between training new models, being a foundational model company, hiring researchers, huge training runs, and then the application layer, the distribution, actually working with filmmakers that feels like most companies have kind of split between one or the other? Are you doing both right now? How would you describe the shape of the business?

• 3:00:08Speaker 07

  Yeah, you know, it feels a little bit, maybe it's like a bit of a post chat GPT phenomenon, but I, I do think that increasingly foundational companies, quote unquote, are having to think a lot more about the application layer. And, and I think that that's only going to continue to be the case. Like I think a foundational research, which, you know, and you kind of alluded to it in, in your chat with, with Richard, but like there's an element of commoditization that's happening, right? There's an element of, of, um,

• 3:00:39Speaker 07

  You'll get to, there's a point, and this applies to visual media as well, where the, the output of the model, you kind of hit this point of diminishing returns from a consumer perspective, from like a user perspective. So there might be really interesting kind of research thing that's happening. And you, you'll continue to invest in that, but to drive the same amount of like business value as like, you know, a GPT four style leap, that requires kind of thinking about other, other areas. So, and, and the other piece for us is I think it's, it's different with things like L L M's, but with, with visual and video in particular, I think one of the issues is that like, uh, research labs and, and technology companies that have been in this space,

• 3:01:21Speaker 07

  they have been largely divorced from like the end practitioner in, in, in a lot of ways. And for L L M's that are so, such a general technology, I think that makes sense. But in our case, you know, we're building tooling that filmmakers will ultimately use, that like creators will ultimately use. So we have to understand that inside and out, and that needs to help guide the research, rather than the research happening somewhat in a vacuum and then, you know, kind of trickling down to, to the target user.

• 3:01:50John Coogan?

  Yeah, a lot of the crazy technology vision of the future is kind of just like, you're gonna with one prompt, just be like, give, make me a new Top Gun movie and it'll just one shot it. Uh, clearly going to be a while till we get there. Uh, where are you actually seeing value or demand from Hollywood, from filmmakers? Because, you know, AI is so broad, it could mean just like pull a green screen key better, do some rotoscoping, do some camera stabilization. Uh, there's been AI tools in filmmaking for a long time. They're obviously ramping up set extensions. There's so much that you could do in the 3D pipeline, the VFX pipeline and 2D pipeline. Um, where are you seeing actual adoption?

• 3:02:32John Coogan?

  Where are you excited for there to be adoption in the next year or the year after?

• 3:02:36Speaker 07

  Yeah, for sure. I think, you know, it's a good point where, especially in video, I think more than in other kind of fields, there has been this like, you know, when it first started, there was a sense of like, well, you know, kind of like the holodeck, right? Like, that's the world that we're going to move towards. And to an extent, it is. I do think that there's kind of like a misunderstanding, though, of where the value of the end content comes from. And it's sort of like, we're now at the place where you could relatively credibly write a book with an LLM. Like, you could have ChatGPT, you know, publish literature. Problem is, nobody's going to read that literature, right? And like, that's the, that's kind of the missing piece.

• 3:03:16John Coogan?

  People have done it. People have. And if you go on the Kindle store, barely, it's like swamped with AI.

• 3:03:21Speaker 07

  It's like ninety percent, yeah.

• 3:03:23John Coogan?

  And every once in a while, these things break out, but it's more of like a novelty. Like, oh, wow, like, somebody actually did this thing. Like, let me leaf through it. Wow, yeah, it's, you know, they hit the periods and there's tons of M dashes.

• 3:03:32Jordi Hays?

  I think it might just end up reflecting human creation where it's ultimately creativity, creative products are a hits business, where there's a lot of AI songs right now, but the only AI artist that I can think of is that the Velvet Sundown or whatever. That's, that's, that's gotten popular in the last month. And so it's, yeah, I just think it's like this ultra power law, potentially.

• 3:03:56John Coogan?

  A lot of media properties also, and art generally is also very story-driven, like, the story behind it. Like, part of the reason why I like to go see a Tom Cruise movie is because I've heard the story that he's doing the stunts.

• 3:04:08Speaker 07

  Because we know who he is.

• 3:04:09John Coogan?

  Yeah, we know who he is. We know the story behind the story. And, and that's what drives a lot of value in art is like, oh, this, this painter really spent years doing this thing and he then got cut off his ear. So that this painting has a crazy story behind it, so it's valuable, even if like my kid could do it. It's like, my LLM can do it, but yeah, your LLM didn't.

• 3:04:30Speaker 07

  Hundred percent. Yeah. I, I think it's like, in AI music, I think you're kind of starting to grapple with that a little bit where it's, you know, you can, you can use a lot of these tools. I, I think that there's like kind of lowest common denominator content. Like what, you know, what you don't see as much anymore is like blog spam that was just like, you know, crazy in the 2010s, right? Nowadays, that's just replaced with AI. Yeah, exactly. I think that with AI music, it's like, there's certain strands of like top forty kind of radio, you know, where it's like, it's already a very commoditized, you know, sort of form. That's what it does well, but. I I just don't see a world where a transformer model replaces, you know, Kendrick Lamar. Like that's that's it's so, you know, there's such a big gap there.

• 3:05:14Speaker 07

  So so we think about it like internally, it's the same way we we, you know, like John Carmack calls it like power tools and and and that's that's largely the model we use. I think in film as well is very acute because to your point like, unlike other spaces, it's actually it's a continuation like there. A lot of the things that AI video enables, it's not novel like, you know, you'll hear studios that we talk to, they'll say, you know, a research company came to us and they said, hey, you can do all these new things with with these video models. And they have to remind them that, no, we can do all of these things, right? Like what what we're talking about here is potentially doing them in an easier or more flexible or more powerful way. But with VFX, like there's nothing you can do today with in in terms of like the output that you're creating that you couldn't do with VFX.

• 3:05:58Speaker 07

  It's it's a workflow thing, right? Like we're just making that process easier, that process more affordable and and that kind of thing. So.

• 3:06:06Jordi Hays?

  It's SaaS.

• 3:06:06Speaker 07

  Yeah, we we look at it as that.

• 3:06:08Jordi Hays?

  We're selling SaaS.

• 3:06:09John Coogan?

  We're selling SaaS.

• 3:06:10Speaker 07

  Yeah.

• 3:06:11John Coogan?

  That's what the market needs.

• 3:06:12Jordi Hays?

  What about, um, what about, you know, it's been interesting to see, X is its own kind of universe in terms of AI content, what what gets picked up. A lot of it ends up being stuff that that's getting made, shared on TikTok or other platforms. And there's been this idea of like an AI content creator, which is like a new personality that is just being generated by a human that's creating, you know, using a a video or an image model to generate, uh, generate this person, you know, going about their life. Um, and then there's the sort of like the the what's considered the slop, like the Italian brain rot, all all that stuff.

• 3:06:55Jordi Hays?

  What about like, do you expect to see like an entirely new class of filmmakers in like, you know, like basically like net new YouTube channels, things like that of people that are just a, you know, could be a teenager or just somebody sitting in a room by themselves focused on that storytelling, focused on basically creating, um, you know, the internet was beautiful because it lowered the cost of uh, distribution to zero and, you know, mobile devices lowered the cost of content creation to zero or effectively zero. And now, um, The the cost of of producing films is not going to go to zero, but but may as well on a

• 3:07:36Jordi Hays?

  long enough time horizon. And so I'm curious when you think that moment will be where we start to see kind of the the velvet sundown equivalent of of filmmaking.

• 3:07:49Speaker 07

  Yeah, I would say that like, we're a lot closer than people think. So, you know, we like Moon Valley models, because we have, you know, clean models or models that have been trained on licensed data, they've been the first models that studio, you know, legal teams have really like allowed them to use. And so that's been part of why, you know, when you heard about Sora like a year and a half ago, since then, there hasn't actually been that much AI adoption in the industry. Now it's starting to pick up a little bit. I would say that like, the the the point where the technology is capable of doing that kind of thing, we've already reached.

• 3:08:30Speaker 07

  And there's places, it's there's pockets of the world where especially like smaller film communities in different parts of the world, where you're starting to see like real world productions, often people aren't necessarily aware of it, but very large parts of not just the pre and post production, but even the production process itself are being driven by these models. Now, I think that there's like, beyond, especially in this industry, beyond the technology, there's a lot of other barriers to adoption here, right? Like, you have to, it's it's a whole new, you know, it's a whole new set of tools that you have to figure out. It's a whole, you know, the adoption curve is very different. And of course, you know, for better

• 3:09:10Speaker 07

  or for worse, there's like, there's a big kind of dialogue around AI in movies and what that means and, you know, how we feel about it. But to your point, like, what we get excited about internally is there's this dialogue of like, you've got on one hand, just like day to day people like myself, that maybe, oh, now I'll be able to create a movie. On the other hand, you have the far end of well, now studios will be able to make the same movies for much cheaper. And that seems to be where a lot of the focus is. To us, the area that we're the most about is that middle where you essentially have this band of millions of creative people in the world like artists, people who have real tastes and talent and ability. But they don't have necessarily the access and the infrastructure to do that, right?

• 3:09:55Speaker 07

  And that's not necessarily like, you know, we have a um one of our alpha users is this uh he's a filmmaker in Senegal. And like he's been he's been a filmmaker for over a decade. His sting, his thing, or you know, his his focus is on uh doing like music videos for local artists. And and it's like this kind of funky like Afrobeat style, uh you know, West African kind of flavor. And now he suddenly started making those music videos using generative AI. And like the production quality of these have soared. And he's had a number like he went from being just like a very obscure, you know, person in his local community to he's had some videos that have gone up like ten million views on YouTube now.

• 3:10:36Speaker 07

  And nobody has any idea. They just think, oh, this is just like a sick artist that like I haven't heard before and, you know, cool visuals. So it's that middle layer. It's like the independent filmmakers who today, unless you're friends with one of the top five studios in the world. You have no capability of making a big budget production. Now you'll be able to do that, right? And that's not just, you know, uh uh obviously this individual is is one example, but for instance, we have like somebody like Natasha Lyonne, who we work really closely with. She's, you know, an industry insider. She's a a, you know, one of the the kind of top people in the industry today. But she's working on this new movie that's like she's been leveraging AI to help do it.

• 3:11:17Speaker 07

  Because this has been something that she's wanted. This is a movie she's wanted to make for well over a decade, but she just couldn't. She would do like she talked to the major studios and it's like, hey, it's gonna cost us thirty million dollars to do this, right? And and we we just can't, we can't do that. Now it's like, well, if I can suddenly potentially do it for fifteen million dollars. Now I can, you know, I can make this thing happen, right? And and so it's there's there's there's this like idea that you'll be able to do, you know, movies for cheaper. But really what we're seeing in the studio is A, existing movies. You're now just doing more than you expected to do before. You're now having to compromise less like directors on saying, hey, I had a $75 million budget. Now I'm going to do it for 50 million.

• 3:12:01Speaker 07

  They're saying, hey, with my $75 million and my team, I'm going to go and now do all the things that I couldn't do before unless I had a $100 million budget. So that's like one thing we're seeing. And then the flip side of that is you walk into any studio for every one good production that's live. There's 10 that weren't greenlit because they just couldn't get the budget. Right now, suddenly you'll have a lot more of that. So that's like high level. How, you know, I, I think that the way that this stuff is actually getting implemented. It's happening in a different way than I think where there's been a lot of fear. Um, and, and, you know, I, I think it's totally justifiable fear, but I do think that ultimately it's the artistry that wins out more than like, you know, budget requirements through budget constraints.

• 3:12:44Jordi Hays?

  Yeah. And the, I mean, the exciting thing from my point of view is if movie studios keep budgets relatively the same because there is this incredible demand for content. But then you can take a $100 million budget and it can now go to 10 different films. You get 10 more shots on goal. It's 10 more teams and maybe the underlying teams even can create, you know, better margins themselves. So very exciting.

• 3:13:06John Coogan?

  Yeah, this is awesome. Thank you so much for stopping by. Hope you have a great rest of your day.

• 3:13:10Jordi Hays?

  Yeah, come back on when you have news.

• 3:13:11John Coogan?

  Talk to you soon.

• 3:13:12Speaker 07

  Awesome. Thanks for having me, guys.

• 3:13:13Jordi Hays?

  Talk to you later.

• 3:13:15John Coogan?

  Um, and that is our show for today. Jordy, do you have any other breaking news you want to share?

• 3:13:20Jordi Hays?

  Breaking news, Brandon Jacoby.

• 3:13:22John Coogan?

  Trade deal.

• 3:13:22Jordi Hays?

  Well, I guess now's a good time as any for some personal news. After a wild chapter at X, I've officially wrapped up my time there. I'm extremely proud of the work we did and you'll see more of it soon. More to come on what's next, dot, dot, dot. Uh, Brandon has been a dear friend for a long time and, uh, I'm excited for his next chapter.

• 3:13:40John Coogan?

  Me too.

• 3:13:41Jordi Hays?

  And, uh, I'm going to miss being able to text him when I have bugs. Uh, but, uh, Tyler, you're up next. Uh, expect some bug reports, but, um, yeah, fun show. Um, trying to think if there's anything else that we, that we missed.

• 3:13:57John Coogan?

  I don't think so. We hit all of our ads. Chamath was saying that Meta switches to Sonnet for coding instead of using Llama, that they had fine tuned on Meta's own codebase. Now they're just one-shotting everything with Sonnet. So, very interesting. Since the change code suggestions are generally better, engineers can change back to Llama and occasionally do, when the fine tuning makes a difference. Internally, this is a big change, given how big, how heavily Meta has invested in the Llama project or product. This move officially acknowledges that Anthropic's models are currently far ahead of Meta's own LLMs, even when fine tuned. I suspect Meta will double down and try and make their next Llama versions more capable for coding, but until then,

• 3:14:40John Coogan?

  it doesn't want to hold back its engineers. So, very interesting that they're using Anthropic and just kind of letting it rip.

• 3:14:47Jordi Hays?

  Anthropic is cooking. Last post to end it, from @JarvisBest. He says, he's sharing a screenshot of Lynda Yaccarino, saying, "After two incredible years, I've decided to step down as CEO of X." Obviously, it's a much longer post, which we covered earlier, and Elon just comments, "Thank you for your contributions." Jarvis says, "Alameo, cold as dry ice." Anyways.

• 3:15:15John Coogan?

  Thanks for watching.

• 3:15:17Jordi Hays?

  At least they were cordial.

• 3:15:18John Coogan?

  Yeah, at least they were cordial. Leave us five stars on Apple Podcasts and Spotify, and stay tuned for our stream tomorrow.

• 3:15:23Jordi Hays?

  Can't wait.

• 3:15:24John Coogan?

  And hope you're having a great summer.

• 3:15:25Jordi Hays?

  Have a great evening.

• 3:15:26John Coogan?

  Talk to you soon.