Coatue's Public Market Update, Wall Street Sounds the Alarm on U.S. Debt, Nvidia's Business Booms, and Nike Returns to Amazon | Doug Philippone, Divyansh Kaushik, Aaron Ginn

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 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://youtube.com/@technologybrotherspod?si=lpk53xTE9WBEcIjV (01:55) - Coatue's Public Market Update (46:23) - Wall Street Sounding the Alarm on U. S. Debt (57:57) - Nvidia's Business is Booming (01:18:25) - Nike Returns to Amazon (01:29:14) - Doug Philippone. Doug Philippone is the co-founder and General Partner of Snowpoint Ventures, a venture capital firm established in 2021 that invests in dual-use technologies for defense and government applications. He previously served as Head of Global Defense at Palantir Technologies from 2008 to 2024, where he expanded the company's defense business to support over 19 allied nations. A former U. S. Army Ranger, Philippone completed six deployments and was awarded multiple commendations, including three Bronze Stars with two for valor (02:02:26) - Divyansh Kaushik. Dr. Divyansh Kaushik is Vice President at Beacon Global Strategies, where he advises on AI, semiconductors, biotech, and data security to bolster U. S. national security and technological competitiveness. Previously, he served as Associate Director for Emerging Technologies and National Security at the Federation of American Scientists, contributing to AI R&D policy, tech standards, and STEM immigration reform. Kaushik holds a Ph. D. from Carnegie Mellon University, where his research on robust machine learning models earned him accolades from Amazon and the Siebel Foundation. (02:17:51) - Aaron Ginn. Aaron Ginn is the co-founder and CEO of Hydra Host, a platform that simplifies access to GPU infrastructure by enabling data centers to offer bare-metal compute on demand. Previously, he led growth product management at Everlane and StumbleUpon, and co-founded the Lincoln Network, a tech policy think tank. Ginn also serves on the board of the Foundation for American Innovation, focusing on the intersection of technology and national security.

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 TBN. Today is Tuesday, June 3rd, 2025. We are live from the TBN Ultra Dome.

• 0:07Jordi Hays?

  Still gets me, John.

• 0:08John Coogan?

  The temple of technology.

• 0:10Jordi Hays?

  The fortress of finance.

• 0:11John Coogan?

  The capital of capital. We have a great show. We're going through a bunch of stuff. We're covering Co2's public market updates. We're going through some news about Nike, some news about Nvidia earnings. We're going through, we have a couple of great guests today. And we're going to take you through the timeline, of course.

• 0:32Jordi Hays?

  Of course.

• 0:33John Coogan?

  We also have a new Gong Cam, which I think we should show off right now. Jordy, why don't you give it a hit?

• 0:39Jordi Hays?

  Let's do it. Let's do it.

• 0:40John Coogan?

  Let's, let's check it out. The production team's been cooking. Check it out. What are we doing? Do we have the cam? Oh yeah, we have the cam.

• 0:50John Coogan?

  The whole sound of cam is really, really something, really something.

• 0:55Jordi Hays?

  There we go.

• 0:56John Coogan?

  Yeah.

• 0:56Jordi Hays?

  I didn't realize that it would be horizontal.

• 1:00John Coogan?

  Oh, it's great.

• 1:01Jordi Hays?

  But it really is just about seeing the, you want to see the vibrations of the Gong.

• 1:05John Coogan?

  The Gong, I'm close for sure. Yeah, you can see it's swinging, swinging. Every time you switch to ramp.com, you earn the right to hit the Gong. Time is money, save both. Easy to use corporate cards, bill payments, accounting, and a whole lot more, all in one place. Go to ramp.com.

• 1:19Jordi Hays?

  Let's give it up for ramp.com.

• 1:21John Coogan?

  I wanted to cover this yesterday. We didn't quite have enough time, but Mary Meeker dropped the Internet Trends Report. Co2, Phil LaFonte.

• 1:29Jordi Hays?

  Fired back.

• 1:31John Coogan?

  Did not fire back. Very different take.

• 1:35Jordi Hays?

  They're going deck for deck, John.

• 1:36John Coogan?

  They're going deck for deck. The Co2 deck is a little tighter. They use Sam Altman's face instead of, instead of referring to OpenAI as just leading LLM company. They actually come out and say what OpenAI is doing. And, but, but it's a great read through. I gave it, I gave it a full read through this morning and I thought it would be fun to go through on the show. And so this is from mastersinvest.com, I guess is the account. Says Tiger Cub, Phil LaFonte, Co2's public market updates. It's too early to tell, but it's surprising how bad sentiment is compared to economic hard data. And so it's a good read. There's Google.

• 2:12Jordi Hays?

  It's crazy. You can be Phil LaFonte, still be a Tiger Cub.

• 2:16John Coogan?

  Yeah, I know.

• 2:17Jordi Hays?

  Still a Cub. Still a cub.

• 2:19John Coogan?

  I mean Tiger Global is itself a Tiger Cub because they spun out of Tiger Management. Julian Robinson's fund, which is very fun. Still using the Tiger name.

• 2:28Jordi Hays?

  Imagine if Tyler Cosgrove, our chief intern, spins out and just launches TB Global.

• 2:36John Coogan?

  TB, no TB Global.

• 2:40Jordi Hays?

  He fully sensed it. Don't get any ideas Tyler.

• 2:43John Coogan?

  Yeah, yeah. Anyway, this is an interesting fact that they kick it off with. 2025 was the worst start to the year through April 21st. Boo, very depressing news. You hate to see it.

• 2:57Jordi Hays?

  You hate to see it, John.

• 2:58John Coogan?

  But it's really, it's really remarkable how, how quickly the year just turned from the Trump pump to the Trump dump. And it got real rough there for a second. So in the first, in, in the first, what? Three and a half months, four months of the year, there was an 18% drawdown. And that's compared to 2022 and the market drew down 16%, 2001 started the dot com crisis, 12% in, in 2010%. But then they go on to, and man, 1998 was a banger year, up 21%. That's the, the start of the dot com though. It's interesting because it feels like we're in the midst of like the AI boom and yet we had like one of the roughest starts to the year in terms of the market.

• 3:43Jordi Hays?

  Probably, probably healthy in some way.

• 3:46John Coogan?

  Yeah, yeah, yeah.

• 3:46Jordi Hays?

  Maybe, maybe Trump just, you know, the, the 4D chess was, hey, things are getting a little, little overheated. Let's let retail get another opportunity to buy the dip before we go on, you know?

• 3:59John Coogan?

  I mean, I hate to, I hate to somewhat agree with you.

• 4:02Jordi Hays?

  I mean, but there was, there was, I, I do think there was this, there was this sentiment that people were so bearish a couple of months ago.

• 4:11John Coogan?

  Yeah.

• 4:11Jordi Hays?

  That. It felt like retail was going to look really silly for buying the dip.

• 4:16John Coogan?

  Yep.

• 4:16Jordi Hays?

  Because retail over the past five years has just been trained. Always buy the dip.

• 4:20John Coogan?

  Always buy the dip.

• 4:21Jordi Hays?

  Uh, and it, and it's played out generally well.

• 4:23John Coogan?

  Yeah.

• 4:24Jordi Hays?

  Um, and so far.

• 4:26John Coogan?

  Yeah.

• 4:26Jordi Hays?

  So good.

• 4:27John Coogan?

  And so that's the, I mean, I mean, that is the interesting, interesting narrative here is like, is this a crisis or a correction?

• 4:32Jordi Hays?

  Yeah.

• 4:32John Coogan?

  And, um, and is this really like the, the, like the end of the, of the, of the AI boom? Is this the end of all the fun? Is the party over or is this just like some slight turmoil? And so, uh, Co2 does a great job of kind of giving examples of crises and corrections and how they kind of, uh, they bucket together.

• 4:53Jordi Hays?

  Yeah.

• 4:54John Coogan?

  And so, uh, for crises, uh, for crises, they, they highlight in recent memory, uh, the dot com crash, the global financial crisis. And COVID, they put kind of in half crisis, half correction. And this was the question that we, uh, that we were talking about with the tariff. Uh, the tariff drawdown was, is this something that's out of the government's control? Can they pull it? And if they pull back from the brink, it winds up looking more like a quick down and up versus something that's, you know?

• 5:23Jordi Hays?

  It's almost more of a, a reaction.

• 5:25John Coogan?

  Exactly.

• 5:26Jordi Hays?

  Versus a, a, yeah.

• 5:29John Coogan?

  Yeah, yeah, yeah. And, and so, and so it's a little bit, uh, so because it's kind of manufactured by the administration, they can, they can by definition pull back from the edge.

• 5:38Jordi Hays?

  Yeah.

• 5:39John Coogan?

  And that leads to, uh, this falling more in the correction category potentially. But that's the question that Co2, uh, centers in on during this, uh, in this presentation. So, uh, for crisis, for crisis, the first crisis that they highlight is, uh, the 2000 dot com crisis, which was incredibly long. And so the drawdown for the dot com, uh, crash was 133 weeks. So over two years of the market sliding downwards. And then the, and then the recovery to get back to where they were took 242 weeks. Insane.

• 6:11Jordi Hays?

  Yeah.

• 6:11John Coogan?

  Uh, the global financial crisis was similarly long, 74 week drawdown. So a little bit faster on the way down.

• 6:17Jordi Hays?

  Down Z.

• 6:18John Coogan?

  Yeah.

• 6:18Jordi Hays?

  Or even young millennials have not experienced a drawdown like that.

• 6:22John Coogan?

  Like the global financial crisis?

• 6:24Jordi Hays?

  Yeah, really, really ever, right?

• 6:26John Coogan?

  Yeah.

• 6:26Jordi Hays?

  We have like the, the entire, the, the, the new generation of investors has only experienced sort of kangaroo market.

• 6:32John Coogan?

  Yeah, yeah.

• 6:33Jordi Hays?

  It's just like.

• 6:33John Coogan?

  Exactly.

• 6:34Jordi Hays?

  Up and down and up and down and up and down and up and down.

• 6:36John Coogan?

  Yeah, and so COVID was similarly a crisis, very, very significant, but the drawdown was only five weeks. But it was the craziest five weeks where there were circuit breakers breaking on the, on the exchanges and there was a constant like, oh, the market's down another 5%. And then the market's down another 5% or 7%. And so those five weeks were miserable, but then the recovery happened very, very quickly, only 21 weeks to recover and get back to the previous high, essentially. So with, and then they also highlight the, the peak to trough for the S and P 500. So the, you can think of the dot com crisis as like a 49, 50% drawdown. The global financial crisis

• 7:17John Coogan?

  was even worse at 57%. You're thinking about like, you just bought, all you own is S and P 500 index, and you're down almost 60% of like your wealth, all the money that you've had invested. Very, very rough. And there were also commensurate earnings reductions in the dot com and the 2008 crisis. So companies actually started making less money. So it wasn't just speculative. And this happened in, and this happened in COVID too.

• 7:39Jordi Hays?

  29% dot com, 42% in 08.

• 7:42John Coogan?

  Yes, exactly. And so significant impact. And that's the difference between a crisis and a correction. Like, obviously corrections are shorter, but they also don't hit earnings as much because companies don't have enough time to really react and, and drastically change their,

• 8:00John Coogan?

  their strategies, actually lay people off, actually cut back on spending, actually, you know, retool the business.

• 8:05Jordi Hays?

  Or in the case of tariffs, they were sort of temporarily, you know, unsustainable.

• 8:11John Coogan?

  Yes.

• 8:11Jordi Hays?

  And then they got pulled back to the point of still meaningful.

• 8:14John Coogan?

  Yeah.

• 8:15Jordi Hays?

  But potentially less of a, of a broad market impact.

• 8:18John Coogan?

  And so then the fifth, the fifth indicator that CO2 identifies here is the, the weeks of elevated volatility in the VIX. And so the dot com crisis had 41 weeks of higher volatility. The global financial crisis had 49 weeks of, of elevated volatility. COVID had 26 weeks where the market was in turmoil essentially with elevated VIX. But then you go to the other corrections that they highlight, Black Monday, Gulf War. Long-term capital management failure in Asia crisis, sovereign debt crisis in 2011, the Powell pivot in 2018 and the inflation interest rate hike in 2022.

• 8:59John Coogan?

  Now, that the they call it inflation, we call it the end of the Zerp era in Silicon Valley. We call it the SVB crisis. But it but that really was what was happening. There was there was too much money printed during the the COVID relief era. That led to some inflation and that resulted in higher interest rates, which of course blew up Silicon Valley and a bunch of and literally blew up Silicon Valley Bank. And and the inflation correction, they don't put it in the crisis bucket, but it does have similar.

• 9:28Jordi Hays?

  Obviously, the the SVB crisis wasn't directly because of, you know, overinvestment in venture. But venture got so ahead of its skis in 2021 and early 2022 that and that in in some ways like the the failure of the bank was was this.

• 9:48John Coogan?

  Yeah, it was very symbolic, right?

• 9:50Jordi Hays?

  Even though a lot of their issues was that they had a bunch of really long-term loans that were, you know, priced well below.

• 9:59John Coogan?

  Yeah, sort of a sort of mismanaged mismanaged balance sheet. So, yeah, that inflation crisis, just to compare it to.

• 10:06Jordi Hays?

  It is funny that Silicon Valley Bank could not imagine effectively their balance sheet said, we cannot imagine a world with rates higher than 3%.

• 10:15John Coogan?

  I mean, I talked to. Yeah, I mean, I talked to I talked to people in the public markets who who had a similar sentiment that interest rates would never go up because if they did, the the government debt would be so unsustainable. And yet, interest rates had to go up at a certain point because inflation was a was a was a tougher pill to swallow. And so the Fed had to take their medicine and raise interest rates, which caused that correction. Now, that correction was pretty long, 40-week drawdown, 66-week recovery. 2022 was a rough year for sure, and the market drew down 25%. But COTU still puts this in the correction category, not this crisis category.

• 10:51Jordi Hays?

  Yeah, the crisis, just to give you some insight into 08, specifically, Apple. Went from $194 a share to $85 a share, 56% decline in Apple.

• 11:02John Coogan?

  Yeah.

• 11:02Jordi Hays?

  Google fell 55%, 680, Alphabet was 685 to 307.

• 11:08John Coogan?

  And those companies weren't even particularly indexed on housing. It was just that the housing market collapsed and when people lose their homes or their mortgages spike in payments, they stopped buying iPhones. And so it really was just this broad economic sell-off and economic crisis. Whereas the inflation issue, yes, we saw a 25% drawdown in the S and P peaked trough, but the earning reduction was only 1% throughout that crisis, which is pretty remarkable because firms were still able, and maybe that's a function of inflation, but firms were still able to, this was like the other term that was coined by Kyla Scanlon, who we should have on the show, was the vibe session. This idea that the market was in turmoil, everyone was talking about how bad things were,

• 11:51John Coogan?

  but day-to-day unemployment wasn't spiking. It didn't have all of the trappings of like the global financial crisis, even though it felt very doom and gloom at the time. And there was a question about can we get to a soft landing? Can we pull back from inflation? We kind of wound up doing that, but it was still a very tumultuous time.

• 12:07Jordi Hays?

  Yeah.

• 12:07John Coogan?

  And so the big question is like, where do tariffs sit? Like, are we in correction or crisis territory? What, how long will this last? What is the drawdown? Already we're at 19% off of highs or, you know, we were in the beginning of the tariff correction.

• 12:26Jordi Hays?

  And just to give you some insight back into venture, in 2008, in 2008, venture firms raised 25 billion.

• 12:35Jordi Hays?

  2009, people were saying basically, whoa. They only raised 15 billion in 2009, which then obviously last year was over 76 billion. So very, very low.

• 12:50John Coogan?

  Yeah. And so, Co2 goes on to kind of try and define the difference between crisis and correction a little bit more. So crisis, the drawdown, the duration of the drawdown is long, the magnitude is going to be more than 35%, whereas in correction, it might be less than 25%. Earnings cuts are going to be more than 20% with an average of 35% earnings cuts, and corrections are less than 10%. Capitulation, peak VIX is more than a year for the crisis, but just a few months for a correction. And the sentiment, bearish in both cases. Boo. So, the question

• 13:28John Coogan?

  is, is will we look back on 2025 as a crisis or a correction? And we've talked to a lot of people when the tariffs were happening who were telling us that this is an absolute disaster, this is a crisis, this is a permanent change in the dollar, permanent change in the global economic order. And things looked really, really bad as they were selling off. We were, I mean, we saw, the whole day is where the market traded down 5%, but we have obviously built back up. And so, Co2 mentions here that 2025 may qualify as a correction. So, they're tracking the S&P 500 since liberation day. The tariffs came in on April 2nd, just

• 14:10John Coogan?

  the day after April Fool's Day. It's rough, rough timing.

• 14:14Jordi Hays?

  Was this a social media post?

• 14:16John Coogan?

  Yeah, seriously.

• 14:17Jordi Hays?

  Meant to go out a day earlier?

• 14:19John Coogan?

  And so, they highlight two key moments here. Is there a market put? Government announces a 90-day pause on tariffs. That was the actual, the market bottom on April 8th. And then, on April 11th, the regional Fed president says there may be scenarios in which the Federal Reserve would need to add temporary liquidity, saying that if the tariff situation continues to worsen, if companies are really suffering, we might need to stimulate the economy through the liquidity. Temporary, temporary.

• 14:50Jordi Hays?

  Always temporary.

• 14:52John Coogan?

  And so the big question is on earnings per share on corporate earnings, because that is one of the biggest differences between a correction and a crisis. In a crisis, the economy truly stagnates. And we've seen that over the first 15 months on average of a true crisis in COTU's definition, earnings per share dropped by 35%. In corrections, it's more like 3%. And so we are now about halfway. We're about eight months into this crisis as they're tracking it. And 2025 is at just 5% off of earnings. So not really tracking with the average doesn't mean that we couldn't see things fall, but that's where they're seeing that. And then also, the VIX spike was brief.

• 15:37John Coogan?

  The volatility peaked and has since fallen from 52 to 23.

• 15:46John Coogan?

  And if you're trying to track any of this or you're trying to get in on the action, head over to public.com investing for those who take it seriously. They got multi-asset investing, industry-leading yields, and they're trusted by millions, folks.

• 15:58Jordi Hays?

  Serious investing.

• 16:00John Coogan?

  To check it out.

• 16:03Jordi Hays?

  Thank you, Public.

• 16:04John Coogan?

  Let's see. So the question is, where are we today? Forty-eight days in, there's a severe year-to-date drawdown, which we saw 19% peaked trough in the last 24 days. Rapid stabilization.

• 16:17Jordi Hays?

  We love that.

• 16:18John Coogan?

  We love rapid stabilization. So we're up 14% since year-to-date low in the S&P. So the question is, are we on the verge of a breakout? Or is this a false start and we'll retest the lows? And so they introduced the COTU Hard Truth Index, a great coinage.

• 16:34Jordi Hays?

  Love to see a coinage.

• 16:36John Coogan?

  And this is economic hard data divided by sentiment.

• 16:39Jordi Hays?

  I would actually name this the LaFonte Truth Index.

• 16:43John Coogan?

  Truth Index, just the truth.

• 16:45Jordi Hays?

  Just the truth, purely truth.

• 16:47John Coogan?

  And I mean, this is a good, this is a good, kind of more quantitative way to look at what Kyle Scan was talking about with the vibe session, because you can open up the cover of the Financial Times and see a bunch of... Doom and gloom and the sentiment can be very bad even among consumers. But when Christmas comes around.

• 17:04Jordi Hays?

  Negative sentiment is good for the news business. It really is, unfortunately.

• 17:09John Coogan?

  Yeah, and so the question is, is, you know, what is the strength of the consumer's balance sheet? What, how is the strength and the true health of the American consumer? And what's the state of the job market? So they, they, they identify, COTU identifies a few different metrics that they're tracking. So lagging data like job market inflation, leading indicators like consumer spending, orders, bookings and permits. And then bleeding edge indicators like proprietary COTU data.

• 17:35Jordi Hays?

  Their own data.

• 17:35John Coogan?

  Available on a daily basis because of course they're, they're tracking all this stuff very closely. Then on the sentiment side, they're looking at business sentiment. Are businesses investing in growth or delaying capital and hiring plans? Is capex increasing at important companies? Investors, are investors optimistic about future returns? So there are polls that go out to investors just to ask them about their sentiments. And then if you aggregate all of those, you might get a picture of how the sentiment in the stock market is doing. And then you can decide if that is, if, if, if the, if the investor sentiment is out of step with the economic hard data. And then of course, consumer sentiment, you can look at consumer spending or, and saving rates. And so in terms of sentiment, it's not looking good. 25 year sentiment indicators are at peak negativity.

• 18:19Jordi Hays?

  Across every sector, so investors, businesses and consumers, everybody is bearish.

• 18:24John Coogan?

  Everyone's blackpilled.

• 18:26Jordi Hays?

  And I'm a contrarian, John. No, it's funny, I was having a conversation with a buddy of mine, I won't, I won't name him. But he started a, a widely used unicorn.

• 18:39John Coogan?

  Okay.

• 18:39Jordi Hays?

  And we were grabbing lunch last week and the restaurant was just absolutely packed, middle of the day.

• 18:47John Coogan?

  Yeah.

• 18:47Jordi Hays?

  It felt like it was, and it was a restaurant that both of us go to routinely. And we're like, we haven't seen this place this packed.

• 18:55John Coogan?

  Yeah.

• 18:55Jordi Hays?

  In a very long time.

• 18:57John Coogan?

  Yeah.

• 18:57Jordi Hays?

  And it felt like the roaring twenties.

• 18:59John Coogan?

  I was about to say roaring twenties.

• 19:01Jordi Hays?

  Just dropped in there. And granted, that's in Los Angeles, on the coast.

• 19:07John Coogan?

  People are wealthy.

• 19:08Jordi Hays?

  Yeah, but it still felt, you know, in that environment, if you asked everybody individually, how do you feel about the economy right now, whether they're a business owner, investor or consumer? Everybody would have been like, ah, like it feels shaky.

• 19:21John Coogan?

  Yeah.

• 19:21Jordi Hays?

  Yet their actions are saying something else, which is that. The consumer is actually decently strong.

• 19:28John Coogan?

  Yeah.

• 19:28Jordi Hays?

  Right?

• 19:29John Coogan?

  Yeah, yeah, yeah, yeah. It is, it is very interesting. And I mean, it comes back, I mean, we're going to get into this, but it comes back to that idea of like the picking up pennies in front of the steamroller that is AI.

• 19:38Jordi Hays?

  Yeah.

• 19:39John Coogan?

  So there can be like all these crazy things that are happening that makes so much sense.

• 19:42Jordi Hays?

  Yeah, this is what we talked about when the tariffs were initially happening.

• 19:45John Coogan?

  Yep.

• 19:45Jordi Hays?

  It was like, hey, is this a distraction from just winning?

• 19:49John Coogan?

  Yes.

• 19:49Jordi Hays?

  In AI.

• 19:49John Coogan?

  Yes.

• 19:50Jordi Hays?

  And, uh, you know, Jensen is obviously conflicted, right? Like every, every CEO, he's heavily, you know, he's basically an index of, of AI progress.

• 20:00John Coogan?

  Yeah.

• 20:00Jordi Hays?

  But, um, you know, in, in many ways, like if we are entering a new type of industrial revolution in intelligence.

• 20:08John Coogan?

  Yeah.

• 20:09Jordi Hays?

  And, uh, you know, probably that's the only thing that, that matters is to really.

• 20:14John Coogan?

  Yeah. I mean, we should probably cover this when we go through Nvidia earnings, but the, like, as soon as the tariffs hit and Nvidia was hit very hard. I remember there was, it, there was this massive drawdown in Nvidia specifically. Uh, and there was, you know, huge questions about Nvidia's China business and, and just overall GPU demand. Deep seek and Jevon's paradox stuff.

• 20:35Jordi Hays?

  Yeah.

• 20:36John Coogan?

  He was very much saying like, no, like things are going to continue to grow. Like we're going to be fine. And, uh, and the big question is like, is like, was, was that ever cope? Or was he just actually right the whole time? Or did he, more importantly, execute very strategically in a tumultuous time to outmaneuver something that could have actually been pretty bad for his business? And so I'm sure we'll go into that, uh, during the Nvidia segment. But if you're speaking of widely used unicorns, you got to get on Figma, Figma.com. Think bigger, build faster.

• 21:07Jordi Hays?

  Build faster.

• 21:08John Coogan?

  Design and development teams build great products together.

• 21:12Jordi Hays?

  It is a tool we use all day long.

• 21:15John Coogan?

  It's amazing.

• 21:15Jordi Hays?

  As you know.

• 21:16John Coogan?

  We love Figma. Uh, anyway, there are some more consumer data points that Co2 calls out here. One from Visa, all spend bans remain resilient and consistent with past quarters. Overall discretionary and non-discretionary spend remain strong. We have not seen any signs of overall consumer spending weakening, says Visa on April 29th. What was that? Pump it up?

• 21:35Jordi Hays?

  That's Ben. That's Ben.

• 21:37John Coogan?

  Okay.

• 21:38Jordi Hays?

  Pipe down.

• 21:39John Coogan?

  Capital One also says spend trends were largely stable through the end of Q1. Bank of America says consumers are still spending money. American Express says we're seeing our customers act as if they have acted in the past. What's happened with the stock market or consumer confidence hasn't been associated with our card member spend. They continue to spend and they're not spending off what's in the market. And so consumers continue to spend. And so there's this, like the vibe session narrative is still going strong, which is very.

• 22:12Jordi Hays?

  Yeah, I mean, it's interesting because obviously we're seeing exceptional growth in AI. But we're also seeing pretty exceptional growth in the core business infrastructure. So Ramp, other companies in the payroll space like Rippling, things like that are seeing tremendous growth as well. And I just, you know, and AI is also a factor in that.

• 22:35John Coogan?

  Yep. And so Co2 actually, Co2 actually charted this hard truth index and they track sentiment as the blue line here. And then they track green and green hard data. And so the Evercore Company Sales Report. And so these should track very closely, like the sentiment should match the hard data. But from 2021, 2022, 2023, sentiment was lagging the hard data, which was very, very positive. And then more recently, sentiment has taken a massive spike down at negative 1.4, where the hard data is basically neutral at negative 0.3.

• 23:20John Coogan?

  And so, yeah, again, we're seeing more quantitative analysis of the vibe session and it just doesn't seem to be going anywhere. And I do wonder. Why we're seeing, you know, this, this data goes back 25 years and the dislocations are pretty, pretty rare. You can see there's, it feels like there's a little bit more, more oscillation where the hard data is a little bit more aggressive than the sentiment. Actually, during the dot com boom, sentiment was more neutral, even though the hard data was worse. And same thing in, same thing in the, in, in, in the global financial crisis.

• 23:57Jordi Hays?

  Everybody's, everybody's like, you know, spraying champagne in each other's faces.

• 24:01John Coogan?

  And the economists are like, this is terrible. Like,

• 24:03Jordi Hays?

  We're cooked. We're cooked.

• 24:05John Coogan?

  You were valuing companies with $5 million of revenue at 10 billion. What, what were you thinking? And everyone was like, it's fine, it's fine. Well, now, now we're seeing the opposite. And so to recap, Co2 sums it up, says, this does not seem like a crisis yet, more like a sharp correction. It's too early to tell, but it's surprising how bad sentiment is compared to hard economic data. And someone must be wrong between Wall Street and Main Street. And so this is, this is the question that we're trying to, trying to dig into. So sentiment, sentiment alone, they say, is not enough of a buy signal. When business sentiment is below the 10th percentile, the S and P 500 has top 20% one-year return 35% of the time. 8% of the time, when business sentiment is below the 10th percentile, the

• 24:49John Coogan?

  S and P 500 has a bottom 20% one-year return. And, and, and you don't know, 57% of the time.

• 24:56Jordi Hays?

  More than half the time, you just don't know.

• 24:59John Coogan?

  You just don't know. So based on history, they're looking at next 12 months, price to earnings of the S and P 500, and the market still looks expensive. But of course, a lot of that is driven by tech companies that, that are growing very quickly. We talked about this interesting data point that something like the Mag 7 grew revenue in Q1 at something like 30% annualized, where the rest of the, of the Fortune 500, the, the 293 that aren't magnificent, apparently, they grew at like 8% average.

• 25:30Jordi Hays?

  Less magnificent.

• 25:31John Coogan?

  A little less magnificent. And so, I mean, the interesting thing here is that tech has seen a notable multiple reduction. And so if you can track the price to earnings multiple of all the tech companies, which here are in, where, which one is which? So the tech companies are in blue and the non-tech companies are in purple. And the tech companies, you know, you go back to the dot com boom, they were trading at incredible price to earnings multiples up in, up at forty five X on average. And then post COVID, there was a dislocation again where tech was pulling away, but got up into the twenties and thirties, but is still trading at, at twenty four X earnings,

• 26:16John Coogan?

  where the non-tech companies are at eighteen X. So there's still this, there's still this spread. So during COVID, there was an eight X spread, AI had a nine X spread, and the current spread is six X. And so AI is not the, the subcategory, but like the trend that kicked off in twenty twenty four, when the, when the AI trade got really, really heated up. And so some tech franchise names look more reasonable today.

• 26:40Jordi Hays?

  You know, the, we keep coming back to this, but Google is actually down three percent over the last year. So again, despite being, you know, one of the greatest AI innovators, just not getting any credit for that.

• 26:54John Coogan?

  Should be a massive beneficiary, even, even this year. But of course, the stock has traded up a bunch. And so some tech franchise names look more reasonable today. Reddit is down forty nine percent. Tesla's down forty percent off of the fifty two week high. Arm is down thirty four percent. Shopify is down twenty three percent. Nvidia is down twenty three percent off the peak. Amazon twenty two percent. Meta off nineteen percent. And so there are still some, some tech companies that are, are lagging their all time highs. And it's always interesting to kind of go to the, the, the, the public filter for what are the kind of power law, super dominant tech companies that are still in founder mode, still led by founders, and, and, and investigate those businesses and see if they

• 27:39John Coogan?

  do have, if they are set up for the next, for the next wave, they could be good, they could be opportunities, especially if they're getting beaten up for kind of some macro trend that they will, that you would expect a tech founder to be able to dig their way out of the hole, like what happened in COVID, and like what happened during the.

• 27:59John Coogan?

  During the Powell pivot and the interest rates, like when interest rates went up, Shopify, Palantir, who else? I mean, a lot of these tech companies got absolutely beaten up. And the ones that really emerged, a lot of them were founder led, a lot of them were willing to not really change course. Or if they needed to change course, they did it quicker than the other companies. And so they include a quote from Charlie Munger here, all the way back from 1998. Charlie says, forget what you know about buying fair businesses at wonderful prices. Instead, buy wonderful businesses at fair prices. And so the question is, is the glass half full or empty? Half full? You know, the bull case here, AI is exploding.

• 28:43Speaker 02

  Clearing order inbound.

• 28:45John Coogan?

  Macro is he macro will heal it will hear will heal itself. The half empty, the value investor, they say there's a recession on the horizon. They say there's tariffs. Berkshire Hathaway has a $350 billion cash pile. Lots of things that look not great. And so what is COTU's view? They believe that tokens are more important than tariffs. And this is the, this is the AI being more important.

• 29:10Jordi Hays?

  So COTU is launching a crypto coin.

• 29:12John Coogan?

  No, no, no. Don't even joke about that.

• 29:16Jordi Hays?

  Yeah, don't we don't joke about that.

• 29:18John Coogan?

  That's the one thing we will never joke about.

• 29:20Jordi Hays?

  Because it'll there'll be a pump fun about it with.

• 29:23John Coogan?

  Yeah. In fact, just to clear the, just to clear the view, let's tell you about Vanta automated compliance, manage risk, prove trust continuously. The, the opposite of a, of a fly by night meme coin, one of the most reliable businesses in the game. Vanta's trust management platform takes the manual work out of your security and compliance process and replaces it with continuous automation, whether you're pursuing your first framework or managing a complex program.

• 29:47Jordi Hays?

  Some of the best businesses in the world use Vanta, including Ramp.

• 29:51John Coogan?

  Yeah.

• 29:52Jordi Hays?

  Duolingo, Intercom.

• 29:53John Coogan?

  Very cool.

• 29:54Jordi Hays?

  Mistral.

• 29:55John Coogan?

  Really?

• 29:56Jordi Hays?

  The French prominent French AI company.

• 29:57John Coogan?

  I love it. We gotta, we gotta get someone from Mistral on.

• 30:00Jordi Hays?

  Iceland Air.

• 30:01John Coogan?

  We haven't talked to them yet.

• 30:02Jordi Hays?

  People never think about Iceland Air being on the cutting edge of compliance. I have.

• 30:07John Coogan?

  You have. Was it nice?

• 30:08Jordi Hays?

  Uh, I had to go there. I, I once was in Africa.

• 30:12John Coogan?

  Okay.

• 30:13Jordi Hays?

  And I, I was in college and I had four hundred dollars in my account.

• 30:18John Coogan?

  Okay.

• 30:18Jordi Hays?

  And I had to get back to America.

• 30:19John Coogan?

  So you went through Iceland?

• 30:20Jordi Hays?

  And I, and I charted the most heinous route from like, from, from Morocco to London to through Iceland, back to San Francisco, and I made it back.

• 30:33John Coogan?

  What's the bull case for Iceland Air?

• 30:35Jordi Hays?

  And the, and the, and the, the flight, uh, that was going to and from Iceland was,

• 30:42Jordi Hays?

  uh, it, the, the chairs didn't, were, were like bench seats and like almost made of plastic.

• 30:49John Coogan?

  Okay.

• 30:49Jordi Hays?

  It was like a really, really long flight.

• 30:51John Coogan?

  Like a bus.

• 30:52Jordi Hays?

  Uh, but I made it home.

• 30:53John Coogan?

  Nice.

• 30:53Jordi Hays?

  I made it home.

• 30:53John Coogan?

  I feel like the bull case for Iceland Air is probably Greenland becoming a state or protectorate or something.

• 30:59Jordi Hays?

  Yeah.

• 30:59John Coogan?

  Many people go there and then Iceland Air probably is gonna be the one to get you there, at least in the short term.

• 31:05Jordi Hays?

  Totally.

• 31:05John Coogan?

  They're gonna have a direct flight from, uh, where will people be going to Greenland from? Probably Park City. Anyway.

• 31:14Jordi Hays?

  Straight from Park City.

• 31:15John Coogan?

  Co2 goes, uh, goes into OpenAI and they're digging into this thesis that tokens are more important than tariffs. And so they ask, what just happened at OpenAI? The number of monthly active users, MAUs, post-launch. And so, uh, uh, the, they're tracking the number of months post-launch for all of these companies. Uh, you can see Twitter now X, uh, over ninety-six months, they grew to two hundred and eighty-eight million, uh, uh, active users, monthly active users. Um, Instagram's over a billion, Facebook's over a billion, TikTok's over a billion, over that ninety-six month launch period. And you can see that these, these, these social networks, they grow exponentially,

• 31:56John Coogan?

  but it, it, it's, it looks like a complete grind compared to what OpenAI is putting up. And of course, that's because OpenAI can travel so much faster because they can leverage the virality of the social internet and everyone already has phones and internet. Whereas for something like Instagram, many people didn't even have iPhones yet. And of course, Instagram launched exclusively on the iPhone and took them a while to launch an Android phone. And I imagine that 36-month bump is probably them launching on Android or maybe desktop, who knows. But OpenAI launched Deep Research and Operator just 24-ish months after they launched the original product and they jumped from 400 million users to 800 million users.

• 32:41John Coogan?

  And this, of course, is based on a quote from Sam Altman, who says, "The users doubled in just weeks." And so it's a little bit of like, they're creating this graph somewhat speculatively. They're not exactly sure all the numbers. They're trying to work backwards. And there are, of course, questions about who are those users? Where are they? How monetizable are they? But all of that stuff is kind of something that investors will be just digging into down the road. Right now, it's very clear that OpenAI is breaking through in a massive way all over the globe, honestly. And so Co2 also highlights the comments of Satya Nadella for Microsoft, talking about a major AI inflection. Microsoft says, "We processed over 100 trillion tokens this quarter, up five acts a year

• 33:24John Coogan?

  over year, including a record 50 trillion tokens last month alone." So that quote just really says like exponential growth in inference. And this is going to be very, very important for our discussion on Nvidia earnings because Jensen previously had revealed the ratio between inference and training loads and he hasn't given as much guidance on that now. And so there's a big question about how fast is the shift actually happening? How much demand is there if you can compress these models and deliver a great product with less GPUs? Like, basically, you could see exponential growth in token generation, but if you see

• 34:08John Coogan?

  exponential savings in the amount of GPU cycles it takes to create a token, you see flat GPU adoption.

• 34:18John Coogan?

  And roll out. No one's really expecting that. Everyone's building tons of these massive AI factories. And Jensen did actually go into unpacking the AI factory idea a little bit more, which I'm excited to talk about. But Jensen continues, this is from the Microsoft earnings call on April 30. While we continue to bring data center capacity online as planned, demand is growing a bit faster. Therefore, we now expect to have some AI capacity constraints beyond June, which is interesting because he was saying, oh, like, maybe I'm going to be a leaser, maybe I'm not going to.

• 34:47Jordi Hays?

  Market clearing order inbound.

• 34:48John Coogan?

  The market is definitely clearing.

• 34:49Jordi Hays?

  He's excited to be a leaser.

• 34:50John Coogan?

  Yeah.

• 34:51Jordi Hays?

  He said, you know, he said earlier this year, he was canceling some projects, but he said he's excited to be a leaser.

• 34:57John Coogan?

  And we saw, and we saw actual capacity constraints at Google in their, in their last earnings, remember?

• 35:03Jordi Hays?

  Yeah.

• 35:04John Coogan?

  And so it'll be interesting.

• 35:06Jordi Hays?

  We see capacity constraints every day with you and VO.

• 35:09John Coogan?

  I know, I really.

• 35:10Jordi Hays?

  Throwing your phone across the room, hitting, hitting, getting rate limited.

• 35:13John Coogan?

  I need to like, set a recurring reminder on my calendar for every night.

• 35:17Jordi Hays?

  Use every.

• 35:18John Coogan?

  Yeah, because if I miss a day, it's like, oh, I can't get those back because I only get like three a day and I'm paying the max. So the actual, the actual best practice is to like, set myself a 15 minute calendar hold where I, you know, use VO to the max, basically. Although there's probably a better way to interface with it over the API or something like that. But anyway, Satchel goes on to write, with deep reasoning and agent flows like Copilot Studio, customers can build agents that perform more complex tasks and also handle deterministic scenarios. Now, there's this interesting debate going on. We, I don't think we got to it in the timeline, but the founder of Zapier was Wade Foster, not Mike, who's been on the show. Wade was saying like, we are doing a lot of stuff with

• 36:03John Coogan?

  agents at Zapier, and he kind of mapped out one of his agentic workflows. And somebody was kind of chirping at him, being like, this is just a workflow. This isn't. This isn't actually like fully, this isn't AI because like you defined, for example, like you would have one agent that processes an inbound form and then another agent that, so like, let's say that we're doing inbound sales. You have a, you have a website and a landing page and then if somebody's interested, they fill out a form and say where they're from, what size company they work for, that type of stuff. You have a, you have one form that processes that and then that hands it off to an agent and hydrates and says, hey, go scrape their LinkedIn and see who they're, who else they're associated with. Are we affiliated with them? Are we already selling to them? Kind of like fact check that.

• 36:45John Coogan?

  Then you might have a different agent that sits there and triggers, okay, based on what we know about them, now that we've hydrated the, the account, let's send them an email or let's send them a phone call or let's route it to Steve who's already been talking to somebody else at that company.

• 36:56Jordi Hays?

  Yeah.

• 36:56John Coogan?

  Right? And, and then, and then on and on and on. And so these are, these are like workflows, but they're powered by L L Ms at every phase. But there's this question of like, are they agents or are they not? It almost doesn't matter. All I care about is business value.

• 37:12Jordi Hays?

  People, people wanna chirp at Zepier because they're an established, large company that's been operating forever. But you would have to apply the same rigor and framework to every company that says they're an AI agent right now.

• 37:26John Coogan?

  Yeah. I, I think people are maybe overly obsessed with the idea of, of, and, and I've certainly fallen into the trap before. Uh, this idea of like end to end learning, one shotting, this idea that like it is like creating an ensemble approach of different models, different technologies, some business logic, some deterministic logic, some, some, uh, non deterministic, uh, AI generating, uh, tokens to, and reasoning tokens to, to get you the result. It's all semantics. I mean, it does have an impact on like the super long-term future and kind of the way we design these systems. But, uh, at the end of the day, most businesses just care about resolution.

• 38:05Jordi Hays?

  Results.

• 38:05John Coogan?

  Right? Results. And so we're seeing that at Microsoft. Their, the Azure revenue, their cloud is accelerating. Uh, so Microsoft Azure's revenue growth on a percent year over year basis, um, through, uh, up in March of 2021, they were growing at 55%. That, that went down to 25% in March of 2023. And then it grew to 35% in March of 2024. It was down at 31% in September. And now it's on an up, and now it's on an upswing again.

• 38:41Jordi Hays?

  We're incredibly back, is what Satya's saying. He also reported in that last earnings call that already 70% of the Fortune 500 is using Microsoft Copilot for a bunch of AI tasks.

• 38:53John Coogan?

  70%?

• 38:54Jordi Hays?

  Yeah.

• 38:55John Coogan?

  The last 30%? We know what they have to do.

• 38:57Jordi Hays?

  Which is, again, it's kind of like Google saying, we already have a billion people using AI overviews, or whatever the metric is, because they're just sort of slotting it in.

• 39:06John Coogan?

  Yep.

• 39:07Jordi Hays?

  Because, you know, I'm sure that 70% of the Fortune 500 already runs on Microsoft Teams, or whatever infrastructure they have set up.

• 39:16John Coogan?

  Or they run on Linear. Linear is a purpose-built tool for planning and building products. Meet the system for modern software development, streamline issues, projects, and product roadmaps. Linear for agents.

• 39:26Jordi Hays?

  Check it out.

• 39:27John Coogan?

  Speaking of agents.

• 39:28Jordi Hays?

  If you're not on Linear yet, what are you doing? They got Cursor, Runway, Flexity, Retool, Mercury, Ramp, OpenAI, Scale, Fercell, Arc.

• 39:41John Coogan?

  Absolute dogs.

• 39:42Jordi Hays?

  They're absolute dogs over there.

• 39:44John Coogan?

  It's fantastic.

• 39:45Jordi Hays?

  They probably wouldn't describe themselves like that, but we do.

• 39:48John Coogan?

  Yeah, we do. So, speaking of agents, the reasoning unlock, this is back in the Co2 deck, agents thinking on their own, solving problems creatively. Quote from Sam Altman, "We view this as the beginning of the next phase of AI, where you can use these models to do increasingly complex tasks that require a lot of reasoning." And so, chain-of-thought reasoning is multi-step trajectory where the model thinks, and iterates, it writes code, it searches the web, it creates the reports, build tables, and all of these. The model keeps asking, "Does this make sense? I should verify the source. Let me edit my work." And so, all this, this reasoning revolution, this agentic workflows, it feels very much like this narrative of like, "Oh, we kind of capped out on the previous thing, we need a new buzzword."

• 40:31John Coogan?

  But it's actually showing up in the data, and we're seeing it in upward revisions to cloud capex, when you add up Amazon, Microsoft, Google, Meta, Oracle, and Tesla.

• 40:43John Coogan?

  Oh, we got the big six and it's a different six.

• 40:45Jordi Hays?

  It's a different six.

• 40:49John Coogan?

  Capex has gone from $213 billion to $310 billion, a 70% jump. And today, the capex forecast is up at $365 billion. It's pretty crazy.

• 41:03Jordi Hays?

  But again, Tesla's up here. Good work getting in.

• 41:06John Coogan?

  Yep.

• 41:07Jordi Hays?

  Not a huge contributor to this.

• 41:09John Coogan?

  Yeah.

• 41:09Jordi Hays?

  Their expected capex is going to be around $10 billion.

• 41:12John Coogan?

  Yeah, it would be interesting to see how Tesla and XAI kind of partner on the capex side, build these like hyperscale data centers because you're already kind of seeing that take shape with Stargate where it's a separate entity. And within Stargate, there are also separate entities where who owns the land? Who owns the power production? It doesn't necessarily make sense to always bundle all of those in the same company.

• 41:40Jordi Hays?

  Yeah, so Oracle's projected capex for 2025 is 16. So between Oracle and Tesla.

• 41:48John Coogan?

  Yeah.

• 41:49Jordi Hays?

  You still have over $300 billion, well over $300 billion.

• 41:54John Coogan?

  Yeah.

• 41:55Jordi Hays?

  Just coming from the core four, Amazon, Microsoft, Google and Meta.

• 41:59John Coogan?

  Yeah, I mean, this is why we refer to the core four as like the hyperscalers truly.

• 42:04Jordi Hays?

  Yeah.

• 42:04John Coogan?

  And when you look at Amazon, Microsoft, Google and Meta, you're seeing high double digits of capex in the billions, 60, 70, 80 billion dollars going into capex. And that's driving the majority of that 365 billion of overall capex. But if AI wasn't real, if there wasn't real demand, it would be extremely hard to justify this level of capex investment.

• 42:24Jordi Hays?

  Yeah.

• 42:25John Coogan?

  And so this is all driven by actual demand for Google Cloud, actual demand for Azure, actual demand for reasoning tokens.

• 42:32Jordi Hays?

  Actual demand, I mean, Meta was in the news this week talking about how building they want to ultimately create the ads that they run.

• 42:39John Coogan?

  Yep. Well, speaking of ads, let's run an ad for Numeral, numeralhq.com. Sales tax on autopilot. Spend less than five minutes per month on sales tax compliance.

• 42:49Jordi Hays?

  There is a fantastic company that runs on Numeral. Lucy.

• 42:54John Coogan?

  Lucy. Yeah, my company runs on Numeral. Anyway, going back to COTU, they say tokens are greater, greater, greater than tariffs exclamation point, exclamation point. I love it. This deck is, you know, obviously built by a crossover fund, hedge fund, like very successful, like very serious on Wall Street.

• 43:11Jordi Hays?

  Bring a little personality.

• 43:12John Coogan?

  Yeah, I see them as, yes, they are a major player in venture, but they're also a major player on Wall Street. I see them as like a respected institution. And yet they're having some fun with the deck. And most importantly, they're clear. It's very clear, digestible, not too much jargon. Yes, there are some very small bullet points or footnotes that I haven't been reading, but in general, done a great job of summarizing these things. They have three takeaways. From a market perspective, we remain vigilant, but have confidence in the AI trend. Completely agree. Remaining flexible, tracking bleeding edge data carefully. AI could be such a game changer. We need to capture this trend. I think that's spot on, spot on. And so that's their conclusion.

• 43:50Jordi Hays?

  My only, I know they can't give, you know, investment advice here, but I wish they took a slightly firmer stance and said, AI will be a game changer. We need to capture this trend. They sort of, you know, leave some ambiguity there. But yeah, I think that that's, you know, drawing it back to earlier stage venture that feels like, you know, people are doing rounds that they feel are quote unquote overpriced, that they're a little bit uncomfortable with valuations or the amount of investment that's being made at oftentimes, you know, with just a deck and a team. But at the same time, you know, they, nobody can afford to miss AI. Like if you come out of the next five years and you don't have.

• 44:35Jordi Hays?

  You know, multiple bangers don't expect to be a, you know, serious fund over the long run.

• 44:41John Coogan?

  Yeah. So the poly market on the US recession in 2025 is down at 30%. Still a little bit higher, like, wouldn't be that crazy if it did wind up happening, but in general, that's, that's looking pretty positive. On, on liberation day, it was at 42% on April 1st, the day before tariffs. So it was already climbing. I think people were expecting something to happen. It was very low at the start of the year, February of 2025, this was down at 22%. Spiked all the way up to 66% post-trade war, was kind of hovering around 50, 60%. More likely than not to happen recession, and it's since been dropping and dropping.

• 45:23John Coogan?

  And basically every day for the past few weeks, it's dropped and is now around 30%. But we gotta get it to zero, folks. We gotta get it to zero. It's a team effort over here.

• 45:34Jordi Hays?

  It really is.

• 45:34John Coogan?

  In the American economy. Let's make it happen.

• 45:37Jordi Hays?

  Don't, you know, next time you're frustrated with the economy, don't be thinking, what, what's the economy gonna do for me? Ask yourself what you can do for the economy.

• 45:45John Coogan?

  Exactly. Don't take it, don't take your frustration or your consumer sentiment out on the economy. It's okay if somebody calls you up, hey, I'm from Pew Research, how you feeling? You can, you can tell them the truth. You can tell them you're not feeling good. But when it comes time to do some Christmas shopping, just go all out. Just go all out. Just get on Bezel. Just buy the most expensive watch you can possibly afford.

• 46:04Jordi Hays?

  Do it. You're contributing to GDP.

• 46:06John Coogan?

  Yeah. I mean, your Bezel Concierge is available now to source you any watch on the planet. And what could help build the American economy more than fantastic luxury watches available on demand at getbezel.com? Anyway, the other side of this narrative going even, yes, going even broader is there's now.

• 46:27John Coogan?

  Questions about the US debt. And so, Wall Street has been sounding the alarm on the US debt. This time, it's worth listening, says the Wall Street Journal. Jamie Dimon says, you are going to see a crack in the bond market. And he has plenty of company here. So I wanted to give a little bit of a review of this because even Elon Musk has been talking about the struggles of the government and how some of his optimism around writing the budget and creating a budget surplus did not come to fruition like he was hoping for. So, the big question is, is the US going broke? It's not possible. Joe Weisenthal, we print dollars, we're good.

• 47:08Jordi Hays?

  We have a dollar machine.

• 47:09John Coogan?

  We have a dollar machine.

• 47:11Jordi Hays?

  Yeah, the other element, this went out right as we were about to go live, but Elon posted at 10:31 about an hour ago, I'm sorry, but I just can't stand it anymore. This massive outrageous pork-filled congressional spending bill is a disgusting abomination. Shame on those who voted for it. You know you did wrong, you know it.

• 47:34John Coogan?

  Wow.

• 47:35Jordi Hays?

  So not mincing words.

• 47:37John Coogan?

  It's rough.

• 47:38Jordi Hays?

  And breaking rank from...

• 47:42John Coogan?

  Well, he's not an employee anymore.

• 47:44Jordi Hays?

  He's not a government employee anymore.

• 47:45John Coogan?

  He's just a citizen and he can voice his opinion however he wants. I think the bigger question is like, this, yes, like this might be depressing to Elon. This might not be the outcome he wanted, but in many ways, this is business as usual. And so, how can the US economy steer its way through? And how can markets react? And how can companies build through what is, continues to be a pork-filled spending package, as it has been for decades, right? And I think the answer, we're going to come back to again, is just, is just continue to dominate on the frontier of technology, continue to win in AI and space and all of the companies that Elon is already working on.

• 48:27John Coogan?

  So Elon is kind of refocusing on the thing that actually helps.

• 48:31Jordi Hays?

  He had already shared, something like a week ago, that he said, I'm not convinced we can solve our... Problems politically.

• 48:38John Coogan?

  Yes.

• 48:39Jordi Hays?

  Through the government.

• 48:39John Coogan?

  Yes.

• 48:40Jordi Hays?

  We need to just grow GDP.

• 48:41John Coogan?

  Exactly. And so if GDP does start growing at five, 10% because of all the technology that folks are working on building right now, well, then that probably actually does start solving the budget deficit unless we just find ways to spend more pork. Who knows?

• 48:55Jordi Hays?

  Pork.

• 48:55John Coogan?

  Hopefully.

• 48:56Jordi Hays?

  Pork-filled spending bills.

• 48:58John Coogan?

  Hold it in. So featuring an illustrated Uncle Sam with pockets turned inside out. That was the cover story of America's most influential news magazine in March of 1972. Sounding the alarm about a debt crisis has been great for companies shilling gold coins and flashy financial products, but has made smart, sincere people look silly when nothing happened. Financial markets equivalent of Y2K. So why are several people suddenly worried? Because the math is getting daunting with interest on the debt blowing past $1 trillion annually and Washington acting recklessly. Even people who have issued past warnings deserve a second or third or fourth hearing and they link to something which I'm sure is

• 49:38John Coogan?

  someone who has warned many, many times. So hedge fund manager Ray Dalio does have something to sell. His book, How Countries Go Broke, out Tuesday.

• 49:46Jordi Hays?

  Yeah. So he launched this this morning.

• 49:47John Coogan?

  Oh, cool.

• 49:48Jordi Hays?

  It's available now.

• 49:49John Coogan?

  Let's, let's invite him on the show. It'd be great to have him.

• 49:51Jordi Hays?

  Yeah.

• 49:52John Coogan?

  But the world's 172nd richest person is hardly staking his reputation on royalties and his arguments are compelling. Again, Ray Dalio, I actually did a, I made a YouTube video about like, like when is a, like, how, how would you quantitatively define kind of a, like a fake guru, someone who talks about business, but doesn't actually, like, like what is the difference between like an entrepreneur or an investor that just get talks or writes a book versus media is their only thing? And, and Dalio, you can kind of, yes, he has, he has incentives around his business, but he does not make the majority of his money from his book.

• 50:34John Coogan?

  And so you could, you could, like, the optimistic case is that his book is, is, is less about just selling copies.

• 50:43Jordi Hays?

  Yeah.

• 50:43John Coogan?

  It's more about actually.

• 50:46John Coogan?

  Like sharing his worldview or or or trying to influence like his broader business. Even even maybe like hiring at Bridgewater could be more of a more of a needle mover for him than just selling copies. So I think it's worth worth investigating. Dalio told Bloomberg, he gives America, America three years, give or take a year to avert an economic heart attack. Peter Orzag, chief executive of investment bank Lazard and former budget director, wrote last week, those who bemoaned the unsustainable of deficit spending and debt levels back during his time in government seemed to cry wolf a lot. Now he's worried too, because the wolf is lurking much closer to our door.

• 51:24Jordi Hays?

  Yeah, so this is what Elon was alluding to. The package of tax and spending measures sent to the Senate now officially called the one big, the one big beautiful bill act could act like budgetary wolf bait. It would add around three trillion to debt levels over the next decade compared with existing estimates and five trillion if certain temporary features were made permanent, according to the nonpartisan Committee for Responsible Federal Budget. For perspective, the federal interest this fiscal year already will be more than the defense budget and more than Medicaid, disability insurance and food stamps combined. Moreover, the Congressional Budget Office estimates assume that the bond market will not only tolerate a surge in spending but become more relaxed about it with lower yields.

• 52:08Jordi Hays?

  Consider if the yield on the 10-year Treasury note stayed at today's level around 4.4% for the coming decade, then the CRFB estimates it would add another one point trillion in interest costs over that period.

• 52:20John Coogan?

  Wow.

• 52:21Jordi Hays?

  And what if yields surge instead in a vicious cycle? JP Morgan chief and absolute Chad Jamie Dimon warned on Friday of the consequences, you're going to see a crack in the bond market. Okay?

• 52:31John Coogan?

  Yeah.

• 52:32Jordi Hays?

  So.

• 52:32John Coogan?

  Yeah, yeah, it's interesting. I feel like I was a grub.

• 52:34Jordi Hays?

  I would like to, we should try to pull up. What he was saying exactly before and after that because I'm assuming that it adds some important context.

• 52:43John Coogan?

  Please, yeah, go pull it up. I'm just thinking about like throughout my life, there's been whole news cycles around this idea that the defense budget is so massive and it's this massive part of the federal budget overall or Medicare and Medicaid and disability insurance. These are, these are huge, huge costs and they, and they drive the majority of the, of the federal budget. And now we're at a point where people would always talk about the defense budget or Medicaid as being maybe wasteful or maybe unoptimized, but at least you're getting something for that.

• 53:21John Coogan?

  You know, like, like with those budgets, even if it's, even if it's 60% or 50% or 20% less efficient than it could be, at least you're getting something. With interest, you're literally getting nothing. You're just paying the debt. And that's it. It's like, it doesn't even have the opportunity to create, to create any like value or security or healthcare for someone. Like it's pure just, just paying back for something that.

• 53:45Jordi Hays?

  Yeah. So after, after Jamie Dimon said, you're going to see a crack in the bond market. Okay. He says, and this is why the journal didn't want to include it because it's, he says, after stating this quote, Dimon emphasized that this bond market fracture is inevitable, though he is uncertain whether it will happen in six months or six years. He warned regulators directly that you are going to panic, but he himself would not panic and expects JP Morgan Chase to manage through it. He also highlighted that current bank regulations restrict banks' ability to hold bonds, limiting their capacity to provide liquidity during market disruptions, which could exacerbate the crack in the bond market. So.

• 54:23John Coogan?

  Yep.

• 54:23Jordi Hays?

  Anyways, he's, he's seemingly, you know, frustrated with the new spending bill and spending broadly.

• 54:32John Coogan?

  The Wall Street Journal continues, "Yet the bond market isn't exactly collapsing, even if 30-year yields recently hit a post-crisis high." So who are you going to believe, millions of fairly relaxed investors or some wealthy pundits? Another hedge fund manager, Paul Tudor Jones, calls the paradox an economic kayfabe, a term from professional wrestling.

• 54:51Jordi Hays?

  Let's give it up for professional wrestling.

• 54:52John Coogan?

  We love professional wrestling on this show.

• 54:54Jordi Hays?

  Round of applause.

• 54:55John Coogan?

  WWE, if you're listening, I'm ready to get in the ring. Let's do it.

• 55:00Jordi Hays?

  Let's do it.

• 55:01John Coogan?

  We could be the absolute, it's heel that everyone hates. They'd be like, "These slick, like, tech bros, like that tech bro." And then we just get destroyed by like the...

• 55:10Jordi Hays?

  Logan Paul.

• 55:11John Coogan?

  Yeah, Logan Paul. Great. So he says, "Those who know that the numbers aren't sustainable are happy to suspend belief while the show continues." Treasury Secretary Scott Bessent reiterated this past weekend that the U.S. will never default on its debt, but it doesn't have to. Rapid inflation would accomplish the same thing if the Fed had to ride to the rescue through a measure called fiscal dominance." What is the tipping point for the bond market to go from mild anxiety?

• 55:39Jordi Hays?

  Why did they name a bad thing something so cool?

• 55:42John Coogan?

  I know.

• 55:43Jordi Hays?

  Sounds great.

• 55:44John Coogan?

  We do have fiscal dominance. Former IMF Chief Economist Kenneth Rogoff, an authority on debt crises, explained in April that they are never a matter of simple arithmetic. Almost every country default, either through outright default or high inflation, occurs long before debt calculus forces it to. Despite Dalio's guesstimate, knowing when doomsayers will be proven right is impossible. Consider Stein's Law. If something cannot go on forever, it will stop. Contrary to urban legend, that line wasn't uttered by Ben Stein, who played the boring economics teacher in Ferris Bueller's Day Off, but by his father, Herb, an actual economist. Life comes at you fast. Very rough. Well, if you're losing sleep over the tumult in the public markets and

• 56:29John Coogan?

  the global economy, you gotta get an eight sleep. They have a Pod5 Ultra, five-year warranty, 30-night risk-free trial, free returns, fast shipping. Are you, are you about to tease what I'm going to tease?

• 56:39Jordi Hays?

  Yeah, I was going there.

• 56:40John Coogan?

  I mean, we can riff it out, riff it out.

• 56:41Jordi Hays?

  I don't know if we should riff it out. John's had a good bit lately that eight sleeps are just so comfortable that they actually, they should test them on animals.

• 56:51John Coogan?

  Well, recently, I've been doing some animal testing at home, actually, with my eight sleep.

• 56:56Jordi Hays?

  With your own dog.

• 56:57John Coogan?

  Yes. So, my dog, obviously grumpy because there's now kids around the house and I think he's getting less attention and also he's just a grumpy old 10-year-old Newfoundland. But I come home and he's always sleeping on the bed, on my bed, on my eight sleep. And he's doing it more, and I don't know if it's correlation or causation, but I think he loves the eight sleep.

• 57:14Jordi Hays?

  Yeah.

• 57:15John Coogan?

  But he sleeps right in the middle. So, he's getting like warm on one side, cold on the other side. He wants a blend.

• 57:19Jordi Hays?

  Well, that's good. You can kind of change your...

• 57:20John Coogan?

  So, he can just roll to one side. Yeah, yeah, yeah. So, proudly, proudly animal-tested.

• 57:24Jordi Hays?

  You can change the temperature on either side. It's perfectly adjusted.

• 57:28John Coogan?

  Once he learns to use the app, it's gonna be a game changer for him.

• 57:31Jordi Hays?

  You should get him an iPad by the bed that he just taps around.

• 57:34John Coogan?

  Yeah, with just his nose.

• 57:36Jordi Hays?

  Yeah. How'd you do last night? I got an 87. I'm not proud of it, but...

• 57:40John Coogan?

  I was up a little bit late, but I kind of slept in a little bit. I bet I got crushed on the, on the regulation.

• 57:46Jordi Hays?

  The consistency.

• 57:47John Coogan?

  The consistency. 82.

• 57:48Jordi Hays?

  82. Okay. I just, I got an 87. I just need to put up seven straight nights of...

• 57:53John Coogan?

  Okay, let's see it.

• 57:54Jordi Hays?

  Of sleep dominance.

• 57:56John Coogan?

  Sleep dominance.

• 57:57Jordi Hays?

  We'll see you tomorrow.

• 57:58John Coogan?

  Nvidia earnings. So, from the Wall Street Journal, Nvidia's business is booming despite being shut out of China. We've been covering this for a while. Jensen's been running around the globe, building AI factories everywhere on an absolute tear. And most recently, the Nvidia shares surged 5% after hours as quarterly revenue surged to a record $44 billion. Let's hear it for Jensen. I think you should hit the Gong for Jensen. I mean, 44 billion...

• 58:25Jordi Hays?

  Why don't you hit it, John? I want, I want to see you on the, can we get the Gong cam pulled up?

• 58:29John Coogan?

  Let's get the Gong cam pulled up.

• 58:35Jordi Hays?

  There we go. There we go. It just keeps ringing too.

• 58:41John Coogan?

  Yeah, yeah, it just keeps going.

• 58:43Jordi Hays?

  When we hit the soundboard, it's pretty quick.

• 58:45John Coogan?

  Soundboard's in and out in like five seconds, but the gong, the real gong.

• 58:48Jordi Hays?

  The gong remains.

• 58:49John Coogan?

  You can't, you can't beat it. It's the best.

• 58:52John Coogan?

  And so Nvidia's business is still booming, even with the company effectively shut out of one of the world's largest markets for advanced AI chips. The chip titan has been on a roller coaster over the past few months after the Trump administration moved to limit sales on chips to the Chinese market. We're having Aaron Gin come on later in the show and he'll break down kind of what's happening most recently with Nvidia and chips. He's the GPU whisperer. You of course know him if you've been watching the show. Nvidia, which has emerged as one of the most valuable companies because its chips provide the computing power needed in a global AI. Arms Race posted another quarter of record-breaking sales on Wednesday. Let's hear it for them. Revenue reached 44 billion for its first fiscal quarter, a 69% increase that was curtailed

• 59:35John Coogan?

  by Washington's new limit, new limits on Chinese chip sales. The company was unable to ship 2.5 billion of its H20 processors and projected 8 billion in lost revenue for the current quarter due to the policy.

• 59:48Jordi Hays?

  It's just a flesh wound, John.

• 59:50John Coogan?

  So you lose 8 billion in revenue, which is high-margin revenue too. It's, this is not, we're not talking Amazon here and, and you still put up 44 billion and your stock goes up 5%. It's fantastic. Nvidia's longer-term outlook in China remains a major question mark. The company admitted on Wednesday that has limited options.

• 1:00:07Jordi Hays?

  The significant thing here, Nvidia surpassed Meta in quarterly revenue.

• 1:00:12John Coogan?

  Yeah. Wow. That's insane.

• 1:00:15Jordi Hays?

  Insane.

• 1:00:17John Coogan?

  Yeah. Yeah, and I mean, yeah, absolute dominance of the Nvidia CUDA ecosystem, the number of developers on Nvidia has been surging as we saw in Mary Maker's trends report. And the company seems very, very well run. At the same time, Dylan Patel, George Hots, putting the screws to ARM. ARM seems to be, or AMD seems to be catching up, seems to be taking that feedback and trying to solve some of the problems that have been keeping developers off of that platform. Even though the cost per flop has been quite good on AMD, the ecosystem hasn't been quite there. But obviously, everyone there is, you know, well aware of the opportunity of, of, of taking a little bit of Nvidia's market share. And so, this is an interesting

• 1:01:02John Coogan?

  takeaway. Nvidia credited its new Blackwell gaming processors, part of the same family as its current lineup of AI chips that are seeing red hot demand. "Blackwell for gaming is a home run," Nvidia CFO Colette Crass said in an interview. For the current quarter, Nvidia projected revenue of 45 billion, plus or minus 2%, compared with analysts' view of 45.84 billion. The company expects meaningful decrease in data center revenue from China as a result of the H20 ban. And so, this is the interesting takeaway from Ben Thompson's post-earnings analysis. So, he said, he is really focused on the difference between the, the transition from training, build-outs to inference. Because training, we've seen

• 1:01:46John Coogan?

  the scaling law there. We kind of know, you know, the race to get a build a 20K cluster to 100K cluster, and that's pretty, it's pretty easy to forecast because the CEO of a foundation model company comes out and says, "We're going to build 100K cluster," and you know they're going to buy that many GPUs, right? But the inference is much more consumer demand-based. And, and it's always unclear. These products seem great, but how are they actually going to get installed? How many tokens are they actually going to be generating? And then, and then what is the trade-off within those tokens of reasoning and heavy test-time inference workloads versus more, more like lower, lower-volume workloads?

• 1:02:27John Coogan?

  And so, Ben Thompson says, "Last year, I expressed concern that inference workloads were not increasing as a proportion of Nvidia's sales." So he says, "It's worth noting, though, that while the company reported that 40% of its chips were used for inference, that is the same percentage as the last quarter." So, keep that in mind. 40% of Nvidia chips are used for inference. It's 60% training. I, I think that's the breakdown when, when he's talking about AI specifically. Granted, that is a large increase in absolute terms, by and large, matching Nvidia's revenue increase.

• 1:02:58John Coogan?

  And of course, training large models requires ever more GPUs, but the arrival of meaningful AI workloads will be marked by an increasing percentage of chips being used for inference, assuming, of course, that inference workloads will be run on Nvidia chips. And there was always a question of like, maybe you train the model on a big Nvidia cluster, and then you bake it down so small that it runs on the iPhone locally, or it runs on a CPU, or runs, I mean, unlikely that that would ever happen. But, but people have been able to distill models down so far that you can inference them on other, on other chips that might be more affordable. But that really hasn't happened because of the CUDA ecosystem. And it feels like, in general, most of the inference has stayed with Nvidia, and we see that in their earnings. But

• 1:03:38Jordi Hays?

  Yeah, now you have the TPU, and then Meta's Artemis.

• 1:03:41John Coogan?

  Yep. And, and so Amazon has, has Tranium and Inferentia. So they have a training chip and an inferencing, and an inference chip. There's different, I think it's Inferentia. But, but both of those are in-house chips. But for most companies, they're training and inferencing on Nvidia. And so, on the latest Nvidia earnings call, Jensen Huang and Collette Crass, the CEO and CFO of Nvidia, were adamant that workloads for inference were skyrocketing. And here are a couple quotes that Ben Thompson highlights. "AI workloads have transitioned strongly to inference, and AI factory build-outs are driving significant revenue." This is from Collette Crass. And so, I think, we, we were, we were kind of

• 1:04:23John Coogan?

  asking the question of AI factories. Is that just some buzzword? Are we, is there a distinction there? And what's, and what I'm hearing there is the start of AI factory means more data center that's more, that's more

• 1:04:37Jordi Hays?

  Producing intelligence.

• 1:04:38John Coogan?

  Exactly. It's more inference-focused

• 1:04:41Jordi Hays?

  Yeah.

• 1:04:42John Coogan?

  data center design. Which I think there are specific trade-offs that you would need, because you don't necessarily need to run the same code over the entire data center. You can, you can shard it up a little bit more, because one inference job can be done on the single rack. And so maybe linking all the racks together is not as important, potentially. I don't know enough about how training breaks down.

• 1:05:03Jordi Hays?

  You were right, by the way. Amazon's in-house AI chips are called ADIPUS Tranium and AWS Inferentia.

• 1:05:09John Coogan?

  Let's go. Let's hear it from my memory.

• 1:05:11Jordi Hays?

  Yeah.

• 1:05:12John Coogan?

  Still got it.

• 1:05:13Jordi Hays?

  Golden retriever mode.

• 1:05:14John Coogan?

  Yeah. Colette Kress went on to say, "We are witnessing a sharp jump in inference demand. OpenAI, Microsoft, and Google are seeing step function leap and token generation, which we saw from that Satya Nadella quote. Microsoft processed over 100 trillion tokens in Q1, a five-fold increase on a year-over-year basis." And so she's now quoting Satya, talking about token increases. Wong says, "Reasoning is compute-intensive, requires hundreds to thousands of times more tokens per task than previous one-shot inference. Obviously, the difference between 4.0, one-shotting something, and deep research, which sits there generating tokens for 20 minutes, wildly different. Reasoning models are driving step function surge in inference demand. AI scaling laws remain firmly

• 1:05:59John Coogan?

  intact, not only for training, but now inference 2 requires massive scale compute." Wong goes on and says, "The first positive surprise is the step function demand in increasing reasoning AI. I think it's fairly clear now that AI is going through an exponential growth phase, and reasoning AI really busted through concerns about hallucination or its ability to really solve problems. And I think that a lot of people are crossing that barrier in realizing how incredibly effective agentic AI is and reasoning AI is. So the number one is inference reasoning and the exponential growth there, demand growth." And so Ben goes on to say, "This is all great news for Nvidia,

• 1:06:40John Coogan?

  specifically, and AI generally. But what was missing was an update on that percentage of chips used number. It certainly sounds like it's more than 40%, but it would have been nice to receive concrete information that that number has in fact increased." And so, I don't know how we get that information. We were talking to Dylan Patel on Friday. We can kind of see if he has a way or a methodology to try and figure that out. But that does seem like a very, very interesting question to ask. It might just be too soon to really be shifting, but maybe the plan for the next data center and the order hasn't hit Nvidia yet will be more inference-focused, and we could see a boom in, and we could

• 1:07:24John Coogan?

  see a shift in that number. And maybe it just hasn't shifted yet. In in Q1 revenue, but it's totally possible that Jensen has visibility into Q2, Q3, Q4 orders.

• 1:07:34Jordi Hays?

  Yeah.

• 1:07:34John Coogan?

  And sees the demand is going to go crazy for inference specifically. We're going to be looking at 10% training, 90% inference. But he can't say that yet because the orders haven't actually been placed and he's only looking backwards. So he's trying to kind of like, you know, message that inference is picking up. You can see a bunch of public data points from Sacha talking about this, but, uh, but nothing to report on the actual order side just yet.

• 1:07:58Jordi Hays?

  Yeah.

• 1:07:58John Coogan?

  And so he doesn't want to send the message that it's not moving because then people will be like, oh, well, maybe it'll never move. So I don't know. That's my, that's my reading on that.

• 1:08:05Jordi Hays?

  Yeah.

• 1:08:05John Coogan?

  Anyway.

• 1:08:05Jordi Hays?

  That's right.

• 1:08:06John Coogan?

  Uh, let's go into Nvidia's China argument.

• 1:08:09John Coogan?

  So the upside surprise for investors is that Nvidia is growing just fine without selling to China. Although, uh, again, although Ben Thompson says, I'm sure, I'm not sure this is a surprise. Nvidia's sales have not been gated by demand, but by supply for a long time.

• 1:08:22Jordi Hays?

  You making this exact statement last year.

• 1:08:25John Coogan?

  I got it from Alex Wang.

• 1:08:26Jordi Hays?

  Yeah. Why do we need to sell to China at all when there is effectively there?

• 1:08:32John Coogan?

  Yeah. Larry Ellison and, and Elon Musk are getting dinner with Jensen, saying, we will buy as many GPUs as you can produce. Like they are good for the deal. Like you, you, you can just sell to them. But of course, uh, if you're a global company, like there isn't, there is a shareholder responsibility to have some diversity of revenue. And then there's also that interesting argument of is there value to?

• 1:08:55Jordi Hays?

  Be dependent on.

• 1:08:56John Coogan?

  Yes.

• 1:08:56Jordi Hays?

  American AI.

• 1:08:57John Coogan?

  Yeah.

• 1:08:57Jordi Hays?

  But.

• 1:08:57John Coogan?

  Yeah. We, I mean, I mean, the hypocritical thing here is that we, you know, I'm, I'm sure we have said, hey, uh, you know, it's not fair that TikTok operates here while Facebook operate, while Facebook can't operate there. Well, now what, what would we be talking about right now if Facebook was actually in China operating? Would we be like, they shouldn't be?

• 1:09:17John Coogan?

  Like it's, it's a powerful tool. It's beneficial. Google is there. That's a beneficial tool. Why are we helping them? So like, we're in this weird dynamic where, where you can't, you can't, you can't say both, right? You can't say it's wrong that it's wrong that, that, uh, companies are banned in China. American companies are banned in China, but also the ones that aren't banned should like self ban.

• 1:09:36Jordi Hays?

  Yeah.

• 1:09:36John Coogan?

  When in fact, most, most American companies for a long time have, but this is all part of like the shifting narrative and the shifting geopolitical equation.

• 1:09:42Jordi Hays?

  Yeah.

• 1:09:42John Coogan?

  So it is unclear.

• 1:09:43Jordi Hays?

  Ben goes into the timeline.

• 1:09:45John Coogan?

  Yep.

• 1:09:45Jordi Hays?

  Somebody's quoting a post from Financial Times. Jensen saying, "Four years ago Nvidia had 95% market share in China. Today it is only 50%," the CEO said, criticizing the curbs for spurring rivals such as Huawei to develop their own AI products. Balding's World says, "This has been the story of every CEO that has gone to China." How do these... I'm not going to say that. How do these guys not get this story yet?

• 1:10:10John Coogan?

  You won't even see.

• 1:10:11Jordi Hays?

  I won't call a big tech CEO an idiot.

• 1:10:13John Coogan?

  Yeah, it's disrespectful.

• 1:10:15Jordi Hays?

  I can't do it. Anyway, so Ben says, "What I believe Balding is referring to is the pattern in which a multinational moves manufacturing to China at the cost of a joint venture or technology transfer, only to see their market share competed away by Chinese competitors benefiting from their technology. This is, of course, the exact opposite of what is happening to Nvidia. The company's market share in China is falling because of the US government's export controls, not because of Chinese government policy." Is that...

• 1:10:43John Coogan?

  What?

• 1:10:45Jordi Hays?

  Is that fully true?

• 1:10:46John Coogan?

  I think so.

• 1:10:46Jordi Hays?

  You don't think competition is factoring in there at all?

• 1:10:50John Coogan?

  No, no, no. I mean, because if you look at the cost per flop, Huawei Ascend is more expensive on a per-cycle basis. And so if it was a truly free market, you wouldn't see nearly as much demand for that. And also, in the same way that demand for GPUs is uncapped in America, it's uncapped in China. Like, they want to build 100,000 cluster right now. They would if they could.

• 1:11:12Jordi Hays?

  Yeah.

• 1:11:13John Coogan?

  They have the money.

• 1:11:14Jordi Hays?

  I'm sure in a supply-constrained market, that would naturally help other upstarts get market share, even if they're selling an inferior product, but if customers can't access... But you'd rather have a Huawei GPU than no GPUs at all, right?

• 1:11:27John Coogan?

  Yeah, yeah, yeah, totally.

• 1:11:29Jordi Hays?

  Moreover, unlike the vast majority of other product categories, one would in fact expect Nvidia to maintain its market share if it were able to compete. The difference, of course, is software. Nvidia chips are not just about GPUs, but about the CUDA software layer, which has network effects. Nvidia not only has the best-performing chips on the market, matched at times in pure performance by AMD, they also by far have the largest ecosystem of software developers, which makes them the first choice for everyone if you can buy them. Wong's argument is that not only does Nvidia want to sell to China, but the US should want him to sell to China too, from the call.

• 1:12:02John Coogan?

  This is a tough argument to make, but you know, let's hear him out. He says China's AI moves on with or without US chips. It has to compete to train and deploy advanced models. The question is whether China will have AI. It already does. The question is not whether China or whether or not China will have AI. It already does. The question is whether one of the world's largest AI markets will run on American platforms. Shielding Chinese chipmakers from US competition only strengthens them abroad and weakens America's position. Export restrictions have spurred China's innovation and scale. The AI race is not just about chips. It's about which stack the world runs on. As that stack grows to include 6G and quantum, US global infrastructure leadership

• 1:12:43John Coogan?

  is at stake. And yeah, it's interesting. Like, is, like, the, the control over Facebook was so strong that, because there's network effect, but also all of the data is run on Facebook servers, that Facebook really has an insane amount of control. When you hand over a GPU, obviously, there are, there are some value to the ecosystem and the lock-in, but you can kind of do whatever you want with it because it's hardware and you're not maintaining the software and gating access. So there is something, there, there is something different there. But, but I, but I do take his point. And so Ben Thompson goes on to say, it's, it seems clearly in America's interest for China to have a dependency on US software, on a US

• 1:13:28John Coogan?

  software platform. Then again, it also seems to be in the, in the, in America's interest to have China dependent on Taiwan for chips, but that argument is not winning the day either. This, this article goes on, it's great, and you should subscribe to Techery to, to get the full thing. Anyway, we, we should go to this, this Bloomberg piece that Ben highlights a little bit. Nvidia's open ecosystem to rival chipmakers is in global push.

• 1:13:54Jordi Hays?

  They're opening AI ecosystem to these chipmakers, yeah.

• 1:13:57John Coogan?

  So Nvidia Corp. Chief Executive Officer Jensen Wong outlined plans to let customers deploy rival chips in data centers built around its technology, a move that acknowledges the growth in-house semiconductor deployment, development by major clients such as Microsoft. Amazon. On Monday, Wong kicked off Computex in Taiwan, Asia's biggest electronics forum, dedicating much of his nearly two-hour presentation to celebrating the work of local supply chain partners.

• 1:14:23Jordi Hays?

  Sizhong for two-hour presentation.

• 1:14:26John Coogan?

  Oh, okay, yeah.

• 1:14:26Jordi Hays?

  It sounds crazy, the fact that he's going and opening up this conference and giving a two-hour presentation.

• 1:14:31John Coogan?

  It's pretty awesome.

• 1:14:32Jordi Hays?

  But then I remember we, we come up here and do.

• 1:14:34John Coogan?

  And do three hours a day.

• 1:14:35Jordi Hays?

  Every day.

• 1:14:36John Coogan?

  Well, he should come do the show with us sometime. Do the whole show.

• 1:14:38Jordi Hays?

  Yeah, let's do the whole show. Imagine, imagine ripping some timeline with.

• 1:14:41John Coogan?

  Be great.

• 1:14:42Jordi Hays?

  Jensen. We'll make it happen.

• 1:14:44John Coogan?

  It'd be electric. But his key announcement was the new NVLink Fusion system that allows the building of more customized artificial intelligence infrastructure, combining Nvidia's high-speed links with semiconductors from other providers for the first time. And so this is a little bit of what we're seeing where there's now chip startups that are building chips for specific, for specific, you know, use cases. So an example would be like Etched, they're bake, they're baking the transformer architecture down onto silicon. But you could even look at Apple silicon as something that might benefit from the NVLink Fusion system potentially. I don't know if it's actually.

• 1:15:24Jordi Hays?

  They're saying, hey, we know you hyperscalers are building your own chips.

• 1:15:28John Coogan?

  Yep.

• 1:15:28Jordi Hays?

  We still want you to be dependent on our software, even if you're going to plug in.

• 1:15:31John Coogan?

  Ecosystem, yep. And so to date, Nvidia has only offered complete computer systems built with its own components. So you buy the, all the chips and all the racks and everything wires together very nicely. And that is very important for data interchange and especially while you're training. This change gives data center customers more flexibility and allows a measure of competition while still keeping Nvidia technology at the center. NVLink Fusion products will provide customers the option to use their own central processing units with Nvidia's AI chips, their CPUs. Now pair with Nvidia's GPUs or pair Nvidia silicon with another company's AI accelerator. So you could kind of do the inverse and bring bring up a specific accelerator for a specific use case.

• 1:16:14John Coogan?

  Santa Clara, California-based Nvidia, they love to throw in the location of these companies. It's very funny.

• 1:16:22Jordi Hays?

  Oh, yeah. Everybody associates Nvidia with Santa Clara.

• 1:16:26John Coogan?

  I guess. They're trying to shore up its place at the heart of the AI boom and keep the surge going in the face of concern that spending on data centers isn't sustainable. The company relies heavily on a select group of giant cloud providers known as hyperscalers for much of the revenue, and all of those hyperscalers are, of course, thinking about building their own chips. Because if they're going to be ordering so many, the margins are so high, why not just go to TSMC directly? And so this bit of news, this is back to Ben Thompson, this bit of news from Competex two weeks ago, is a reminder that CUDA isn't Nvidia's only mote. The company is also dominant in networking, particularly the link, the ability to link multiple chips together so that they function as a single large chip.

• 1:17:07John Coogan?

  The key to this is so to the so-called scale up capability is NVLink. And so Nvidia will license its chip-to-chip C2C technology to enable custom configurations. For example, Grace Hopper was an Nvidia ARM CPU and an Nvidia Hopper GPU. Oh, I didn't realize that. Grace Blackwell is an Nvidia ARM CPU and two Nvidia Blackwell GPUs. If you don't want that configuration, you're out of luck, or at least you were, because now you can license Nvidia's C2C technology, and license seems important there, to make any number of combinations. And it doesn't have to be Nvidia chips that are being combined, although Nvidia is obviously confident that you'll choose their GPUs, because yes, they are the best in the business. Fascinating.

• 1:17:52John Coogan?

  Anyway, we should move on to this Nike story in The Information, because there's a very, very interesting chart, again, from Ben Thompson, that I thought everyone should be thinking about in any of their business. So the big news is, this is from The Information in May 2020, May 21st. So it's a little bit of an older article, but Nike announced that they are going to sell on Amazon for the first time since 2019. So it's been six years off. So six years ago-

• 1:18:20Jordi Hays?

  It was when they went all in on D2C.

• 1:18:23John Coogan?

  Yeah.

• 1:18:24Jordi Hays?

  They really got the D2C bug.

• 1:18:25John Coogan?

  They did.

• 1:18:26Jordi Hays?

  And they said, they read the thought pieces.

• 1:18:27John Coogan?

  Yep.

• 1:18:28Jordi Hays?

  They read the newsletters.

• 1:18:29John Coogan?

  Yep.

• 1:18:30Jordi Hays?

  Yeah, they they wanted, they they were pissed at the middleman.

• 1:18:30John Coogan?

  Cut out the middleman. Yep.

• 1:18:33Jordi Hays?

  They tried to cut him out.

• 1:18:34John Coogan?

  And it didn't seem like it worked.

• 1:18:36Jordi Hays?

  With the middleman.

• 1:18:37John Coogan?

  And so, uh, six years after Nike stopped selling through Amazon in favor of going direct to customers through its own stores and websites, the two companies are getting back together. I'm sure it was super rough because tons of people probably went to Amazon every day, typed in Nike and just got Nike knockoffs, right? Um, because they were just used to buying on Amazon. Amazon plans to start selling Nike products with supplies coming directly from the company. An Amazon spokesperson confirmed Wednesday, winning back one of the world's best-known brands is a victory from Amazon, uh, for Amazon, which has long tried to expand its fashion business by wooing skeptical brands. Nike's deal with Amazon meanwhile comes as the sneaker maker is trying to revive slumping sales. So, Amazon is going to buy Nike for, uh, buy from Nike for the first time since 2019.

• 1:19:19John Coogan?

  Um, and this is, uh, this is all an effort to revive slumping sales. Now, um, uh, Nike's revenue is down a ton, uh, in the most recent quarter, it fell to 11.3 billion, down 9% from the same period a year earlier, while wholesale revenue fell 7% to 6.2 billion. Uh, and so Ben Thompson calls this Nike's disastrous pivot. Uh, he says, there's a lot that has been written by Nike's struggles over the last few years.

• 1:19:49John Coogan?

  Including a LinkedIn post by former Nike's executive.

• 1:19:54John Coogan?

  And there, and he, he outlines three key mistakes here. The elimination of categories like running, basketball, etc. A massive deprioritization of wholesale in favor of direct-to-consumer sales and a shift away from brand marketing to direct response.

• 1:20:08Jordi Hays?

  Trying to avoid middlemen in business is rough. It's like, oh, we're gonna have owned, we're gonna have, we're gonna have our own retail stores.

• 1:20:15John Coogan?

  Yep.

• 1:20:15Jordi Hays?

  And it's like, okay, well, you have a landlord.

• 1:20:19John Coogan?

  Yep.

• 1:20:19Jordi Hays?

  So, he's your middleman now.

• 1:20:20John Coogan?

  Yep. And so, uh, yeah, the, the middleman analogy.

• 1:20:24Jordi Hays?

  Selling online. Okay, welcome, meet Mark Zuckerberg. He's gonna be your new middleman. It's like, trying to avoid the middleman is

• 1:20:31John Coogan?

  Yeah.

• 1:20:31Jordi Hays?

  very difficult, right?

• 1:20:33John Coogan?

  It's interesting because the middleman analogy has actually worked just fine. And Ben Thompson has this cool chart of the CPG value chain and shows that Procter & Gamble literally does not cut out the middleman. In fact, they leverage the middleman and they're doing fine. So what does Procter & Gamble do? They do research and development and they do manufacturing, but they don't handle the middleman. So they don't handle logistics or retail, but they do dominate shelf space and with trade marketing and then marketing, like brand marketing. And so CPG companies like P&G harvested most of the value by integrating research and development, manufacturing, marketing, and shelf space. Raw materials, retail, and logistics were modularized and commoditized.

• 1:21:18John Coogan?

  D to C companies meanwhile saw research and development as increasingly unnecessary in over-served markets, as I noted in the context of Dollar Shave Club. Razors are a particularly salient example of over-serving. And shelf space on the internet was effectively infinite. Their goal was to integrate marketing, retail, and manufacturing. And so the theoretical, if you scroll down, the theoretical D to C value chain is no R&D, just manufacturing, no logistics, but yes, retail. You don't have shelf space, but you do the marketing. And so Ben Thompson says, "The problem, though, is that marketing on the internet was inherently different than the analog marketing that previously dominated the CPG industry.

• 1:22:01John Coogan?

  Their being good at advertising, whether it be coupons in the Sunday paper or television ads during the evening news, was mostly a matter of the ability to spend, which was itself a matter of scale." Digital marketing, though, didn't really work at scale, at least relative to TV. In fact, it only made sense if you could target consumers with advertising and track how it performed. On the one hand, this was a critical factor for making D to C companies viable. The advantage of targeted advertising is that it takes a lot less money relative to TV to reach customers who are actually interested in your product. The problem, though, is that getting good at targeted advertising requires massive amounts of both research and development to build the capability and inventory across a sufficiently large customer base to make the whole effort worthwhile.

• 1:22:44John Coogan?

  In the end, no D to C company was actually good at marketing. They outsourced it to Google and Facebook, which both had the inventory and the capability to spend billions necessary to develop sophisticated targeted advertising. The problem is that in the process of depending on Google and Facebook for marketing, the D to C companies gave up their planned integration in the value chain and the associated profits to Facebook and Google. And so the actual D to C value chain is they're not a manufacturer, they don't do retail, they don't do logistics, they don't do marketing. Instead, they just do R and D and ad inventory and so the actual customer is just completely owned by Facebook. And that's why you see a lot of D to C companies that have really, really struggled. So the actual integrated players, Google and Facebook, integrate customers and research and development to dominate marketing.

• 1:23:27John Coogan?

  D to C may have online retail operations, but that is a modularized and thus commoditized part of the value chain. And, oh yeah, he calls that brand list, the D to C kind of like roll up that had a whole bunch of products. And, and he said, here's the problem for D to C companies. Facebook is really better at finding them customers than anyone else. That means the best return on investment for acquiring customers is on Facebook, where D to C companies are competing against all the other D to C companies and the mobile and the mobile game developers and the incumbent CPG companies and everyone else for user attention. That means the real winner is Facebook, while D to C companies are slowly choked by ever increasing customer acquisition costs. Facebook is the company that makes the space work, and so it's only natural that Facebook

• 1:24:12John Coogan?

  is harvesting most of the profitability.

• 1:24:13Jordi Hays?

  Yeah, it's such an interesting dynamic where Meta is incentivized to make customer acquisition, like basically extract as much of the profit from the ecosystem as possible without putting the companies out of business.

• 1:24:28John Coogan?

  Yeah.

• 1:24:28Jordi Hays?

  Right? And so it's this infinite dance.

• 1:24:31John Coogan?

  Yeah, I mean, that's actually a very simple equation. It's take all the net profits.

• 1:24:37John Coogan?

  But not any further.

• 1:24:37Jordi Hays?

  Yeah.

• 1:24:38John Coogan?

  So that the company can continue to go, but the equity value is effectively zero.

• 1:24:42Jordi Hays?

  And this is why when Sean Frank from Ridge was on the show one or two times ago, we were talking about how historically I've seen D to C brands benefit from net new platforms, like a lot of brands exploded from cheap advertising on TikTok.

• 1:24:57John Coogan?

  Yep.

• 1:24:58Jordi Hays?

  Right? If, you know, it seems like L L Ms are an interesting new acquisition channel, still relatively small channel for a lot of brands, but it's possible when ads hit L L Ms that they're cheaper and that that could drive, you know, a period of where brands say, hey, let's like shift a bunch of spend over here because it's, you know, really efficient. But who knows? Facebook is still the best marketing channel in the history of mankind.

• 1:25:25John Coogan?

  It's the second best, in fact, the number one, obviously, Adquick.

• 1:25:28Jordi Hays?

  Adquick.

• 1:25:29John Coogan?

  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. But seriously, like Nike is the king of billboards.

• 1:25:42Jordi Hays?

  Yeah, they really are. I mean, they used to be.

• 1:25:43John Coogan?

  They used to be, and the billboards were fantastic. And everyone remembers a Nike billboard. No one remembers a Nike direct response ad on Instagram.

• 1:25:50Jordi Hays?

  Yeah.

• 1:25:50John Coogan?

  Like, I'm sure people clicked on them and I'm sure they drove some sales, but the economic equation just didn't quite work.

• 1:25:56Jordi Hays?

  Yeah, well, we walked by some billboards today that are funny. There is a huge billboard campaign across L A called Just Blood.

• 1:26:05John Coogan?

  Oh, yeah.

• 1:26:05Jordi Hays?

  Talking about, basically, it's a campaign to prove that Elizabeth Holmes is innocent. So there are effectively, I think there's got to be 20 billboards up around L A. So I'm interested to follow along with this campaign. If you go to justblood.com, it's quite a lot of A I generated assets. And it's kind of an angry website, but I'm interested to dive deeper there. Going back to some of Nike's errors.

• 1:26:39Jordi Hays?

  They deprioritized wholesale and then the big one was a shift away from brand marketing to direct response marketing. So when people think about why they love Nike, maybe sometimes it's about the product, but a big part of it is how the Nike brand has made them feel over time. And it's really hard to make people emotional through direct response advertising because direct response advertising is like problem, solution.

• 1:27:05John Coogan?

  Yep.

• 1:27:06Jordi Hays?

  It's not about the emotion.

• 1:27:07John Coogan?

  Yep.

• 1:27:08Jordi Hays?

  And when I think about the moments in my life where I've, where I've paid attention to Nike and, you know, been made, made to feel anything by Nike, it was these sort of bigger brand campaigns.

• 1:27:19John Coogan?

  Yep.

• 1:27:19Jordi Hays?

  And brand marketing does provide a halo effect that can reduce overall customer acquisition costs because if you see some Nike campaign that inspires you or makes you emotional and then you see a direct response ad later, you're more inclined to actually click through. And so, um, big miss by, uh, John Donahoe, uh, to just sort of not realize that so much of Nike's dominance was around the brand. The other thing is like, you know, you look at these upstart players in apparel, things like Vori, ALO, Lululemon, they're all, you know, and we talked about this on the show before, Nike missed wellness, right? They missed this trend that a huge amount of the population, people, you know, consumers with, um,

• 1:28:03Jordi Hays?

  a lot of discretionary incomes stopped seeing themselves as athletes and started seeing themselves as, you know, yogis, people that meditate, people that eat healthy, but don't necessarily see themselves as I'm an athlete. So, big miss. Um, that I, I believe they're still trying to actually get tapped into, but.

• 1:28:23John Coogan?

  Yeah. Well, it seems like they're, they're pivoting back to, uh, the more traditional strategy and probably we'll see some refocusing on brand marketing because they'll just be everywhere and they won't, they won't try and cut out the middleman anymore. Just be everywhere and hopefully we'll see some amazing Nike ads coming up soon.

• 1:28:41Jordi Hays?

  I would love it.

• 1:28:42John Coogan?

  Uh, we have our first guest of the show, Doug Philippone from Snowpoint Ventures, joining us.

• 1:28:45Jordi Hays?

  We'll let you take the intro.

• 1:28:46John Coogan?

  Perfect.

• 1:28:46Jordi Hays?

  I'll be right back.

• 1:28:48John Coogan?

  Uh, Doug, how are you doing today? Let's bring him in here. I'll give a little bit of background on Doug in the meantime. He has a degree from West Point, spent 17 years in the military and then another 17 years at Palantir, building the defense business from nothing into a global defense lead. So we're excited to talk to him about that. And it'll be very interesting to cover the Ukraine drone attack, which we talked a little bit about yesterday. But there's a lot more that we can dig into there. So Doug, how are you doing today?

• 1:29:18Speaker 03

  Great. Thanks for having me.

• 1:29:20John Coogan?

  Thanks so much for joining. I'd love to kick it off with just a little bit of your background first, and then we can go into the latest news in Ukraine.

• 1:29:29Speaker 03

  Yeah, no, that's great. Yeah, so what is it? Well, I've been on a life journey. I'm I've done a lot. Everything has been hard. I think about everything that I've done in my life, people have told me I couldn't do it. And I sort of thrive in that world.

• 1:29:46John Coogan?

  That's awesome. That's always the case, right?

• 1:29:48Speaker 03

  Yeah, well, look, nothing, nothing worth doing is, you know, is easy. Yeah, no, I think when I was a young man, I was just, I went to college for just a minute and then I was like, this is stupid. I'm in the hamster wheel. And I said, I wanted to join the army. I went into the Rangers, enlisted guy, and then, you know, got into West Point a little bit later. While I was there, I studied math. All my friends made fun of me. They're like, what are you gonna do with math? And I definitely got the last laugh there.

• 1:30:17John Coogan?

  That's amazing. But they're just saying like, like, computer nerd type jokes, or?

• 1:30:23Speaker 03

  No, it was just like, I mean, basically, you gotta remember, I'm a little bit older, but I, in the 90s, it was like, it was before the modern internet era and so forth. And so, you know, computer science was like a hobby more than a real thing. You know, the internet, you know, was just coming out while I was in school. And so it was, it was just like the idea of like, you're gonna be a high school math teacher. And that's like, the, that's the end of what math is for. And so, look, my focus was, I'm gonna go be an army officer, I'm gonna go back in the Rangers, and that's gonna be my career. But, you know, I did six tours in the war and got hurt.

• 1:30:55John Coogan?

  Wow.

• 1:30:56Speaker 03

  And so. You know, at that point, I went back to grad school and then found a job in the very early days of Palantir. And literally, like, the only reason I got hired was they were trying to start their defense business. And they sort of thought that, like, a terrorist hunter mathematician was a really cool thing.

• 1:31:14John Coogan?

  Yeah.

• 1:31:15Speaker 03

  I sort of found, like, the perfect first job.

• 1:31:18John Coogan?

  Yeah, how did, walk me through how you actually met the Palantir folks? What was the first day on the job like? Who was around the table? Was Sean Sankar there?

• 1:31:27Speaker 03

  Look, it was.

• 1:31:28John Coogan?

  Who else?

• 1:31:28Speaker 03

  Yeah, that was fascinating. So, so back in the day, it used to be carp, you know, it's like maybe 50 people there.

• 1:31:33John Coogan?

  Yeah.

• 1:31:33Speaker 03

  You know, they had a product. But the interesting thing, so one of my very best childhood friends, Dan Cerbelli, he was one of the best engineers at Palantir, period. He was like an alternative student. I say alternative, he's like older again, his bachelor's when he was like 32 or something.

• 1:31:48John Coogan?

  Yeah.

• 1:31:49Speaker 03

  And he was, he was interviewing at Facebook and Palantir. He's like, Doug, you gotta see this, you gotta come over. And, and then he had just joined. And so when I saw, like, the first demo, even though it was all intel-based, it was very clear. I just went back to my time as a commander in the Rangers. It was just, I was just, I was convinced that if I had this, I could have done everything better. And I, and I really was, you know, a lot of my friends were still going back to the war and getting wounded or killed. And so it was just, for me, it was about purpose. You know, I think you probably, you probably know a lot of Palantir people, but we're all like in this, you know, strange family that is Palantir. Everyone is uniquely driven for a sense of purpose.

• 1:32:34Speaker 03

  And for me, it was like, I wanted to do something where I could give back. And if I, you know, if I'm honest, if I would have stayed in versus, obviously, I was hurt, so it didn't matter. But like, I have easily contributed a thousand times what I would have if I just stayed in. Towards the, you know, towards. I feel quite proud of that.

• 1:32:54John Coogan?

  So while you were in the service and you see what Palantir can do, could you give us a more concrete example of like what you're thinking? I mean, I often give, there's a little bit of a meme online, like what does Palantir actually do? And the example that I often give is like, think about if there's IEDs all over the place, some of those IEDs are going to have C4, some of them are going to have nails. And if you put those all on a map, you can decide, you can start to see clusters of trends just on a map. And then you can decide, okay, there's a bomb maker in this town, we should go and investigate that. That's the most concrete example I've been able to come up with that I've read just from the literature. But as someone who was there, what was exciting to you?

• 1:33:33Speaker 03

  Definitely like that. That would be the 2010 version.

• 1:33:35John Coogan?

  Sure.

• 1:33:36Speaker 03

  You know, just sort of like, you know, at the core, it's like, they make a software architecture that helps combine a myriad of data systems. So like all these legacy systems, if you think of the defense world, all these different areas, whether it's commercial businesses or the military, the larger they are, the more that they all look the same. The military might be the most like complex, but it's all similar in the sense that you have a myriad of legacy technology that's built and modeled around information and capabilities at a certain time. And in the course of history, it's like hard to get rid of those old systems. So if you look at the IT infrastructure of the Department of Defense, it's like you have old mainframes on one end that's modeled certain things,

• 1:34:21Speaker 03

  you know, on the edge. And then you have like the most exquisite AI sensor that's real time data and computer vision on the other end. And as a commander, what you're trying to do is assimilate the real world in real time. So it's like you're looking at a map, you're looking at all of your feeds from either videos or satellite footage to understand what's going on and what's changing. And then if you're ever going to go, like to understand what's going on in the real world. So you're understanding things and you're making decisions based off that data that you might have to go without Palantir, you have to go 100 different places. So that was like the existing paradigm that we were replacing is how do you? If you, an old school analyst or an operator would have to literally go individually

• 1:35:05Speaker 03

  search a hundred different systems and use an individual tool for each one of those systems that may or may not be good. And then they would put all that stuff in their mind and they write it back on PowerPoint. And then that's how, and you'd have no legacy search and discovery. You would be violating all of the like handling of the data. You lose all the security of it and it's just like on a flat file and you're emailing it around. I can't tell you like how long that was the paradigm of the military and most corporations.

• 1:35:33Jordi Hays?

  Can you, can you talk about the practical challenges of that? There's this concept of the fog of war and I imagine you experienced this on your different tours where you have a bunch of data, but parsing through it and fully understanding. And I can imagine in many ways Palantir, if you can more quickly and accurately process information from more sources, you can reduce that sense of, of sort of unknowing that, that seems to be historically, you know, uh, common across every different type of battlefield.

• 1:36:07Speaker 03

  Yeah, no, I mean, the short answer is like, it will save your life and you can have a successful mission or not. I mean, the, the historic vignettes that are like pretty powerful for regular people to understand is like, um, as the military would plan a mission to go in and out, like forget about the real time stuff that is obviously very relevant of just like knowing what's going on and how strategic things are moving around and if someone's attacking you, like you have to have that side of it, which Palantir does a lot of. But like from a historic perspective, once you're planning a mission, to be able to understand the full history, if you're staring at a piece of dirt or you have like, hey, we, we think the bad guys are at this compound or there's a military, a legitimate military

• 1:36:49Speaker 03

  target that you're going to strike, to understand the whole corpus of data that you may know about that for the last 10 years. So to give an example of like, you know, the failures of, um, The Afghan war, or Iraq for that matter, just using the American experience, you can do this just about any war is that, you know, as units would go in and out of a region, you would have these like learning experiences that would last three to six to 12 months. And then they would, at best, they would put all the information that they learned, whether it's like, say, so say I went on a mission, I interviewed somebody and I, I took fingerprints, I took pictures, I would write a little note that say,

• 1:37:30Speaker 03

  here's the, here's the human terrain of this area, this is what the people care about, here are the projects. Um, here's where we did a mission, you know, they usually do an after action mission report about it.

• 1:37:41Aaron Ginn?

  Yeah.

• 1:37:41Speaker 03

  And you put on a hard drive and then the new commander would come in, you hand it to them. And then they would probably look at it for two seconds and then, I mean, that's literally how it was done for 20 years.

• 1:37:49Aaron Ginn?

  Yeah.

• 1:37:50Speaker 03

  And you're, you want, you're like, how can this with, with all of our might and all of our superiority in every way and the money that we're throwing at this, why does it suck so bad? Anyway, so that was, you know, Palantir's mission was to like, how do we change that paradigm? So that, you know, the interesting thing, if I give a, one of the compelling things, we did this with the British, um, you know, with, with, uh, I don't even know if I want to say this, but think of their most sexy unit, the Brits.

• 1:38:16Aaron Ginn?

  Yeah.

• 1:38:17Speaker 03

  And they were, they were going into, um, a specific area. And what they didn't realize over the past five years, they had, every time they flew a helicopter into a region, you know, they have this hosted analyst that are like, they work with helicopter pilots. And they do menswear graphics, so you understand the exact perfect helicopter landing zone for the mission. And what they didn't realize was that each new team would come in and they would always do their expert analysis. And then always pick the same exact place.

• 1:38:49Speaker 03

  And so then all of a sudden, when we integrated all this data for them, they saw for the first time, holy cow, every single time for the last five years that we've gone into this valley, we always landed in the same place. So it ends up being like a very easy, low tech thing for the enemy to put a bomb at the middle of the HLZ. And they're like, anytime Americans come, just blow up the bomb. Um, but that's like, uh, they call that knowledge management, which is like, that's a little bit old school, but it's like, that was a very unsolved problem forever. And then now, if you get to like real time, what we're doing now, it's like, okay, well now you're taking.

• 1:39:23Speaker 03

  Real-time signals intelligence, you're taking real-time video feeds where you're overlaying what the video of the surveillance aircraft will be looking at, and then with the entire corpus of information you would know about the area. So as soon as you're looking at a piece of ground, you're like 10, 10 reports pop up of everything you know about it. So you immediately have situational awareness, that'll help say, help you stay alive. That's really important.

• 1:39:46John Coogan?

  Can you tell us the story of D-SIGs and the distributed common ground system? Like how that played out and like the lawsuit, to any, at any level of detail that you think is appropriate?

• 1:39:56Speaker 03

  Yeah. No, I don't know. I mean, look, that was my personal Vietnam, except for I won. So it's like, it's okay.

• 1:40:03John Coogan?

  Congratulations.

• 1:40:05Speaker 03

  Yeah. Think of a different long war that's, that somebody won and all, and that'll be it. But it was like 10 years of my life.

• 1:40:10John Coogan?

  Wow, 10 years.

• 1:40:11Speaker 03

  Yeah, no, it was, it was wild. And I will tell you that there's a lot of times when I just didn't think or win. I literally flew up to New York one time and, and rode in the car with Dr. Karp. And I was like, sir, do you still want me to do this? You know, because it's like, I don't know if there's like any amount of hard work or expertise that is going to allow us to win. And he had this like great moment of leadership where it was like, um, if any soldiers are still asking, this is maybe 2012, I forget exactly. But he was like, if any soldiers still want this, it's worth fighting for. It's too important. And you know, it was just that moment of leadership that I needed. So I got out of the car and, um, you know, and then like just a, you know, a few, maybe the next week,

• 1:40:56Speaker 03

  I had some massive win on Capitol Hill. Um, but it was, I mean, look, I credit that. I mean, it's the, the reason I started Snowpoint and, um, like the, the modern defense tech landscape exists because Palantir was able to break that paradigm. And, you know, if you think of the new executive orders, kind of like really focusing on acquisition reform. So, you know, it was like an old nineties thing. Um, the lawsuit was about this, but there's an old nineties, it was called the Federal Acquisition Streamlining Act, I think in 94. But it's during the Clinton days. Um, I don't know how old you guys are, but it's, it was basically, um, there were these scandals about the $400 toilet seat and the $200 hammers.

• 1:41:39Speaker 03

  That sounds cheap by modern standards. I feel like every day I see a Soap dispensers or something. There was a soap dispenser that was like $50,000 or something. No, but it's the same BS. And so the interesting thing is, so before 1994, and I might be screwing this year up by a year or two, but Yeah. Um, before then, the, there was this old term called milspec. Yep. And the milspec idea was that the preference of the US government was to buy custom things as the priority. And so all of those scandals turned it on its head and created this idea where you have a commercial item preference. And so, you know, this is sort of like the, when I talk about the invention or say that, you know, the start of the modern defense tech era,

• 1:42:22Speaker 03

  it was the winning of the lawsuit, which I think was 2016 or so. Um, it was the first time since a lot of impasse had actually been enforced. So our, our lawsuit was like the precedent setting thing. And all we were finding out, they have like, there's protests all the time, like almost every major contract gets protested. So that part of it wasn't, um, unique. What was, what part of, that was unique about this was, uh, we weren't, it was called a pre-award protest. And so normally a protest is like somebody else wins and then Lockheed gets pissed at Raytheon and then they just argue about who's better. And then the court decides. Um, our protest was that, um, we thought we were getting screwed by the army, which we were, where they specifically wrote

• 1:43:07Speaker 03

  the contract where I had put so much pressure on the army to expose all the flaws of D6. Like D6 was like simultaneously failing while they spent billions of dollars on it. While over half of the army's brigade commanders were requesting urgently Talenteer. So there's this huge battle where, you know, it was like units would request Talenteer, the army would block it. I would go to Congress, expose it, and then there was just this back and forth and, and I was like enemy number one for years. And this is where all my warfighting skills came into play. It was like, in many ways, fighting bureaucrats was just as hard as fighting terrorists. And so I had that like, it was good that I had. This is why people call you a boardroom general, right?

• 1:43:52Speaker 03

  Yeah, I was on the front line, so. Uh, but anyway, yeah, so, so in this particular case, so the lawsuit, it was interesting because this is another experience of like, you know, between Peter Thiel and, and Karp, it was like, they trusted me. And, um, I couldn't have done it like, it's very unique in the Palantir world that like, they would, that, uh, everyone said we were gonna lose, period. And I think like statistically, they weren't wrong. I think the, the, the chances of winning these cases are like 3%. So it was like clear, and then if we won it, so basically this is, so everybody was like, you guys are crazy. And they were like, Doug, just do this. And, um, but it was like, we were uniquely driven in the sense that we had the moral high ground, we had all the evidence, it was,

• 1:44:35Speaker 03

  it was the perfect setup. Um, but, but anyway, long story short is, uh, we did end up winning. And then we won the appeal three to zero. Uh, and so it sort of set up this thing where, you know, at the end of the day, we, when we won, we didn't get any money. It was like, basically, we just burned three million, three to five million bucks in the hallway on legal bills. Um, but then we had to go compete for the original D6 contract. So it wasn't sure, like, I was halfway terrified with all this trouble. And then the army would blackball us, um, which could have happened. But long story short is, that was sort of the, the real, um, legitimate beginning where it was no longer a guerrilla campaign for Palantir, where we were just winning enterprise contracts, you know, on the run, and then on the merits.

• 1:45:17Speaker 03

  And it's just, you know, the software is 10 times better. I mean, it's just, it's so impressive, uh, to watch. I mean, obviously I'm officially retired, but it's like, I'm in, I'm in the mafia for life.

• 1:45:28John Coogan?

  Yeah. So can you, can you talk about like the, the long-term build out of the defense business at Palantir? Where it is now and then where you're seeing opportunities in defense tech? Whether on top of Palantir with their AIP program or just generally outside of the, it just seems like the army is modernizing and the DOD is modernizing generally. So, uh, companies won't need to go through the same 17-year journey necessarily.

• 1:45:52Speaker 03

  No, I mean, look, that's the whole reason I started Snowpoint was the idea was like, you know, during my journey, say I did 100 things right and a thousand things wrong. It's like, how can I help other companies? Accelerate through that, that cycle and, and, you know, ultimately help, help our whole society. It's like having everyone succeed, including for the services. Um, it's, it's a win for everybody, long story short. But, you know, I think it's like, it's interesting. Uh, you know, cause during like early years, I was, um, I got the seed corn in across like SOCOM and JSOC and then a few initial army units. And then that was kind of growing, but we were still searching for the elusive program record. And then we went to, you know, across, there's like 17 different countries that we kind of got started in.

• 1:46:37Speaker 03

  The military business, I was flying on airplanes everywhere. And we got the seed corn done and then there's like NATO is like, it was kind of the inside joke of like, that's never going anywhere. And then now, you know, of course, this is 18 years later. It's like, we finally, you know, won this huge contract with NATO. I'm like, you know, it's taken forever, but it's, it's, it's been fascinating to watch. And I think that like,

• 1:47:03Speaker 03

  what I, what I determined, you know, again, this is rewinding a little bit was like, we have to win in the US. And then once we won in the US, it was sort of like this, the dominoes started falling where, and this is a deep history with Palantir. And I tell a lot of my portfolio companies the same thing is this idea of like exigent crises is that, you know, many different companies with a lot of different technology, well, they all look similar on paper. And so it's like, how do you prove it? And one of the like defining things that I believe about Palantir in particular, but a lot of my, I hold my portfolio companies the same standard is this idea that when there is a moment, an exigent moment where it really matters. And so in the military context, that means that like a commander is doing something, people are dying.

• 1:47:49Speaker 03

  You have to win. Then at that point, all the bullshit goes away. And you have to have something that actually works, that's, that's real. And that is something unique in the sense that like Palantir has never screwed that up. And, and it was just sort of like knowing that it's like, you gotta, obviously it took us forever, but it's like, we're past that, we're way past that, you know, say by a couple of years, but past that momentum point where, you know, you were always fighting. Like the biggest barrier to entry was like some. Loser CIO or CTO inside a corporation or the government saying, "Don't worry about this. I have this PowerPoint slide and I can build this cheaper, faster, better."

• 1:48:34Speaker 03

  And then all the incentives are wrong and then they would slow roll you and you wouldn't make anywhere. And so the challenge where we would always say is that the open door was around, "Who cares?" And are you actually talking to the profit-loss owner? Like where it actually matters, where the bottom line matters. And in the military, that was like the operational commander. Like if you got buried in Pentagon where they're talking about programs, you can't walk four feet without running into like a $300 million disaster. They're all in denial about it and it's like, because it like either tests out on paper or they're like, "It's coming. It's gonna be here. It's gonna be so awesome." Just don't buy Palantir. It's too expensive. We're gonna do something. You know, I mean, dude, don't even get me started.

• 1:49:20John Coogan?

  We're getting you started.

• 1:49:23John Coogan?

  Let's flip to something much more concrete and timely. What's going on in Ukraine? What's been your reaction? And what is the solution or impact to the defense tech ecosystem?

• 1:49:35Speaker 03

  Yeah, you know, it's interesting. I traveled to Ukraine in the very early, when Palantir was just getting started there. In the very early times of the war, I went to Kiev just to see what was true and what wasn't true as we got kind of started. And you know, it's fascinating to think there's a deeper political thing and there's obviously a military and technology thing about this.

• 1:49:58Speaker 03

  But it also applies to NATO and like what's, you know, the defense tech market in Europe versus the United States and what the hell is Europe gonna do now that like they have to, you know, do something real and stand up their own capabilities? I think this is like a fascinating time of like accountability. And I think it's good. I think it's good for the world.

• 1:50:22Speaker 03

  I do believe that the world is better when the US is the hegemon. I believe that deeply. It's like we can argue about whether or not we can afford it. But I'm like a firm believer in terms of like what I'm doing in the defense tech market. But it's also good for Palantir. All the companies, it's like with less budgets. I mean, I suppose it's always good with more budgets, but it's like with less budgets or trimmed budgets, it's like if you need something real.

• 1:50:47Speaker 03

  And you have like a short timeline, that's the perfect environment. There's no free chicken. Like the entrepreneurs still have to actually deliver on what they said they're gonna do. They have to deliver, but that's the time when you can really succeed. Because when it's like you're kind of doing nothing and you're just like talking about these like five year programs. You, the tendency is just to waste money. So going back to the Ukraine example.

• 1:51:13Speaker 03

  You know, in many ways, like Zelensky single-handedly saved NATO. You know, because it's like Biden's plan was to get on a helicopter and get out of there. Like it was just on the heels of the failures in Afghanistan and then it was like, it was clear like enemies of the United States. This is your time. Screw with America as much. Do whatever you want. Biden's not gonna do anything. So it was a very, so it was a very tricky time. The fact that he decided to stay and fight, you know, was super impressive. It definitely saved NATO. And you have to think also initially, and this kind of goes to like the deeper problem of like what's, how are, what's the resolution of this? And what can we learn from it? And I'll try to go faster, but think of this initially is Ukraine stopped Russia by themselves in the beginning.

• 1:51:59Speaker 03

  That's something to like really pay attention to. And there was, there was a few scenes early on. Because I used to model this of like China versus Russia is like the Russia was the real military. And China is like this paper tiger. And I just kind of like flip flopped all that in my head now, but it's like. Russia could not have screwed up more than they did. And you know, there was those scenes of like, I was like, God, if we only had a squadron of A-10s on board, we could have like. You know, I don't know. You had this like trail of tears of like, it was literally just like the first Iraq war. Where it was like a, you know, a 10 or 20 mile convoy of like every military vehicle in Russia was stuck on one road. And I was like, please, baby Jesus, where is an A-10?

• 1:52:41Speaker 03

  Who this, all we need right now. But look, there's.

• 1:52:47Speaker 03

  There's a very deep asymmetry with Russia versus Ukraine. I think the truth is, you know, I don't have a good filter here, but it's like the truth is that both armies suck. Both militaries suck and they've devolved into some sort of World War One BS thing. If you look at the numbers, it's like, you know, in terms of people.

• 1:53:11John Coogan?

  Pushing back there. This drone attack seemed extremely sophisticated. This did not seem like it evolved.

• 1:53:16Speaker 03

  You're not wrong. You're not wrong, but, but, but that is, that is, it's a brilliant move. Will it have any impact on the course of the outcome of the war? Untold. Does it also mess up the peace talks?

• 1:53:35John Coogan?

  Yeah.

• 1:53:36Speaker 03

  Yeah.

• 1:53:36John Coogan?

  It is a strike deep in Russian territory. It could be seen as aggressive.

• 1:53:40Speaker 03

  Look, you could, you can talk about this like there, it is a, it is a massive and incredibly laudable tactical victory. It's impressive in every possible way. I love it, you know, in a lot of ways, you know, because you sort of think of the, you know, again, this is a very asymmetric fight. If you look at like, you know, people, it's like 1.3 million on the Russian side for active duty, 200,000 on the, on the Ukraine side. But they've just kind of devolved into this like frontline thing. And so like, is, is the deep attack going to actually change? The front lines or the course of the war? I'm not convinced of that at all. It definitely, the, the challenge here is like, how do you degrade the ability of, of Russia?

• 1:54:23Speaker 03

  Because they, they have a huge like production problem, like they have, they, they outnumber, if you look at tanks and armor, it's like, you know, 17,000. But so it's, I, you know, it's like, one of the interesting statistics here is that Russia has like 17,000 tanks. But they've lost during the war, they've lost 8,000 tanks. The US only has forty-six-hundred tanks. Just to put it in perspective. But but it hasn't made Ukraine win. You know, like, they're still stuck with this sort of like, hey, how do we do so this is incredible like.

• 1:54:58Jordi Hays?

  But tactically tactically is this return to World War One style, almost trench warfare? That we're seeing is that a byproduct of new technology coming on to the battlefield that is asymmetric? And, you know, generally, both armies don't fully understand how to deal with yet.

• 1:55:19Speaker 03

  Yeah, the interesting thing is like, you know, if I say to my, you know, military colleagues, it's like, there's a lot to learn from what's going on, but don't learn too much. Because this is a very unique thing in the sense that Russia, in particular, but Ukraine as well, have have completely failed to be able to execute a joint combined arms fight. And so this is this is the thing that the United States is uniquely the best in the world at. In a sense where like, what does that mean? It means that you integrate space, air, land, sea artillery all into one. Like, you have a decisive point of the battle, you have a bunch of shaping efforts to the battle,

• 1:56:04Speaker 03

  and then you can succeed and you can pour troops into and accomplish something. The US, this is the most complicated thing you can do, and it's super expensive. That's why we have a eight-hundred-plus-billion-dollar budget. And that's what the US is like a thousand times better at than anyone else in the world. And what I can tell you is the Russians, the reason that they lost against Ukrainians by themselves is because they don't know how to do that. They were treating air force as like artillery. None of it was combined. They totally failed like in terms of communications, the ability to communicate and command and control, like all of that stuff, total disaster. And here we are, four years into it or whatever, it's like, what's the outcome?

• 1:56:45Jordi Hays?

  I'm curious how I'm I'm curious what Russia's early-stage defense tech market even looks like. I imagine it's a lot of it is government-directed, but how are they adapting? Are there?

• 1:57:00Speaker 03

  Well, you see, yeah, like, the thing about Russia is like.

• 1:57:06Speaker 03

  Again, they've been very good at advertising specifically like very low production or one production type things where they're like.

• 1:57:19John Coogan?

  Exquisite systems.

• 1:57:20Speaker 03

  Right exquisite systems and then they have two of them and then the the the majority of their stockpiles are Soviet era bullshit that's horrible. And if you think about it like this, think of the Soviet Union back in the day, it's like, and they're still not good at this, is that or even you go back all the way back to World War Two, it's like they've never been good at manufacturing, like, think of how many cars are made in the Soviet Union or Russia, right? How many real planes do they make, right? And so like all that stuff is like, they can build one or two out, but they're fully reliant on the West for all this stuff. They've never been good at it. What they've been good at is like, can we stamp out thousands of really cheap attributable systems? And

• 1:58:03Jordi Hays?

  And do tanks fit into that category?

• 1:58:06Speaker 03

  Yeah, but but but they're not fighting with them because then you could argue that like because of the tactics, how relevant are they on the modern battlefield? You know, and I think Ukraine with like a ridiculous underdog approach has been able to use cheap drone war. I like, to be clear here, I think that Ukraine is probably the best in the world at drones. And they have really at a tactical level. Again, it's not changing the outcome, but they're at least holding the status quo.

• 1:58:32John Coogan?

  And there are millions of them, like they they figure out.

• 1:58:35Speaker 03

  No, and it's great. And they're legitimately good. Yeah, I mean, that part is fascinating to watch. I just don't know that like, the way that we fight, if you were to put the US, if you take away the nuclear component of this, which always makes it tricky, the reason we have nukes is to make it tricky, right? So you don't do these things. But I'm just not convinced that we would do it this way at all. And how quickly would we would we win? That part's fascinating.

• 1:59:02John Coogan?

  How do you think about counter UAS technology right now? You have to imagine that Russia's thinking about every and any and every response to make sure this never happens again. What are you seeing?

• 1:59:13Speaker 03

  Yeah. And look, I was, I was, I apologize for being like too bearish about like, how much does this matter? The the attack is like stunning. It's it's almost, it's not quite as good as the Hezbollah beepers, but it's pretty close.

• 1:59:24John Coogan?

  It's up there. Okay.

• 1:59:27Speaker 03

  Hezbollah beepers, I did my master's thesis on Hezbollah. So it gave me like, you know, specific joy, but. I, you know, the, the idea that like the uncertainty and kind of a step back that it would take within Russia. So now basically now they're searching every single truck, you know, they're like super heightened security. This has caused mass chaos across Russia. Now they can't mass those, those jets together anymore. So you have to space them out. So this has like serious consequences to their like strategic capability, let alone their ability to just go bomb Ukraine.

• 2:00:02Jordi Hays?

  Do you think that, uh, do you think that going forward, various militaries, Russia in particular, will seek to place strategic bombers and aircraft like that in hangars and provide some type of defensive mechanism? Cause the fact that they were just sitting out in the open, we had some on yesterday.

• 2:00:20Speaker 03

  No, I, I actually think that there's like, there's, I don't know specifically this, I'll have to look it up, but there's like, there is like, it's part of like the, um, there's a part of a nuclear treaty is that.

• 2:00:30Jordi Hays?

  Yeah. So, so it mostly got rolled back. Russia rolled it back at the beginning of the war from what I've seen. But you can imagine, but you can imagine they would say, hey, we're not going to participate anymore, but they wouldn't necessarily build all the structures necessary to actually adapt.

• 2:00:45Speaker 03

  Yeah. No, I mean, look, all this stuff takes time too. I mean, that's the, the biggest thing is like, you know, for the, a lot of those plane, I mean, first of all, they're going to have to do that. Whether there's a treaty that says they have to be in plain sight or not, we're going to have to do that. I mean, so this is like, this, this attack has caused a strategic impact. Whether that gets Russia to the, uh, to the table faster or better, or it gets land concessions for Ukraine, or it gets them, I'm not convinced of that. But it definitely is like a very successful thing. And we also don't know the ramifications. Like, you know, does this up the ante? Does this get us towards World War III? I don't know. That part scares me. I do want the war to end.

• 2:01:29Speaker 03

  And it definitely gets into the Trump administration is trying to end the war and neither Putin or Zelensky are like playing ball. It's like that's kind of the disappointing part of this.

• 2:01:40John Coogan?

  Well, I mean, we have to have you back on. I feel like we could go all over the world and talk about geopolitics for four hours. So expect to get another calendar invite because this is fantastic conversation.

• 2:01:51Jordi Hays?

  Yeah, thank you for jumping on.

• 2:01:52John Coogan?

  I really appreciate it.

• 2:01:53Speaker 03

  Thank you both.

• 2:01:54John Coogan?

  We'll talk to you soon, Doug. Thanks so much. Bye. And we have our next guest already in the studio. So we'll bring him in. We're going to talk, we're going to recap some of the Middle East AI deals, talk about geopolitics in AI, some of the chip stuff. I still have yet to figure out what the horse means.

• 2:02:15Jordi Hays?

  I just love horses, John.

• 2:02:16John Coogan?

  You just love horses?

• 2:02:17Jordi Hays?

  I grew up, I wasn't a horse guy. I have an extreme respect, admiration.

• 2:02:22John Coogan?

  My mom texted me after the show last night. She said she was watching the show and because you were playing the horse sound, her dog was running around looking for a horse. So give, give the dog some horse. For all of the dogs that are listening, you're now on the hunt.

• 2:02:36Jordi Hays?

  For all the dogs.

• 2:02:38John Coogan?

  Anyway, welcome to the stream. How are you doing?

• 2:02:41Speaker 02

  Good. How are you?

• 2:02:43John Coogan?

  Great.

• 2:02:43Jordi Hays?

  Welcome.

• 2:02:44John Coogan?

  Thank you so much for joining. Would you mind kicking us off with a little bit of introduction on yourself for everyone who's listening?

• 2:02:49Speaker 02

  Yeah. So to be honest, I am a beacon global strategies for national security advisor. So basically what I do is, you know, work with US industry on how to be better national security partners to the United States.

• 2:03:04John Coogan?

  Great. And I wanted to have you on to kind of look at a retrospective on what happened in the Middle East. We saw Jensen Huang go over there. I think Elon and Sam and Alex Wang and all the big tech CEOs went over. What, what is your read now that we have a little bit more distance from how those relationships are changing, what we should expect, what the actual trade deal came, how everything netted out, basically?

• 2:03:29Speaker 02

  Yeah, I think it's, it's a very interesting thing that happened over there because you look at what the Biden administration did in January. They they tried to approach AI diffusion with like three key strategic objectives. They're like, we want to prevent offshoring to the Gulf. We want to prevent these chips being smuggled into China through, which is mostly a Southeast Asia problem. And the third one, like we want to prevent remote access, where Chinese entities are just using these chips through the cloud. Like, there are hyperscalers trying to build big data centers for Chinese companies and Malaysia and all. Uh, using this technology as a tool of economic state crap, I think, was a secondary objective, not a primary.

• 2:04:11Speaker 02

  Whereas I feel like what has happened, what we've seen with the Gulf trip is more of an upside down. Uh, where we're using this technology as a tool of economic state crap. We're trying to get concessions. Like, we're going to give you these steps, but we want reciprocal investment in the United States. We want one-to-one investment. And we want certain security conditions. Now, a lot of that is yet to be cleared out, right? We haven't finalized, it seems, per media reporting on what the security conditions are. Whether they apply to specific entities or whether they apply to the UAE government or the Saudi government as a whole. Do they get to host Huawei chips or Huawei infrastructure in the same data centers where they're hosting US chips?

• 2:04:55Speaker 02

  Right? Like, there are reasonable concerns that some people have raised, and those are things, obviously, I think the security details will will probably be figuring out. Uh, because if you remember, Microsoft and G forty-two did a similar deal at a company level last year in April. That was accompanied by an intergovernmental assurance agreement, which required G forty-two to do certain things, like not have Chinese hardware in certain number of years. Uh, just, you know, restrict access for military or intelligence purposes. Like, that deal was really well drafted. There were a lot of things that people pointed out that could be done on top.

• 2:05:36Speaker 02

  So I think we'll see how this shapes out in the next coming few weeks, how we see the security guarantees coming together. Uh, but overall, I think this is in line with what the president has said, that. We'll give you our technology, but what will you give us in return? So that's the theme that I expect to continue. Art of the deal.

• 2:05:58John Coogan?

  Art of the deal. How how important is Llama in this emerging geopolitical narrative around AI? We're hearing that these, I I've been calling them like kind of jump ball countries. They're countries that aren't full allies and they kind of could do business with China. And that's kind of the geopolitical backdrop for all this. If they don't do a deal with Nvidia, they're probably going to run Huawei Ascend and DeepSeek and Manus on top of that. Is an open source stack important to some of these countries?

• 2:06:30Speaker 02

  Yeah, no, I think there are two questions in there. First, whether China can even export. Which there are actually, the the data suggests, you know, China has enough dies that TSMC shipped to China. Or TSMC shipped to Huawei in violation of US export controls, like about two point nine million dies enough to produce a million nine ten Cs. Or nine hundred nine ten Bs.

• 2:06:57Speaker 02

  Now, you know, that's that's a lot of GPUs, but they also have a lot of domestic demand. The question becomes like, will they be able to meet their domestic demand, let alone export? I don't think that they have the capacity to produce domestically at scale to export. There was this announcement from Malaysia recently, which the minister walked back afterwards. Where which made for a flashy headline that Ascend data center is coming online in Malaysia. But if you look at the details, it was three thousand Ascents by twenty twenty six.

• 2:07:31John Coogan?

  Yeah, it's nothing.

• 2:07:32Speaker 02

  So they can't meet that. That's that's one thing. It's like a thing to your point, right? Because some of these countries have worked with China a lot.

• 2:07:41John Coogan?

  Yeah, of course.

• 2:07:42Speaker 02

  Well, one of the things of bringing countries into our fold is that we have to work with countries that are in China's fold right now.

• 2:07:47John Coogan?

  Yeah.

• 2:07:48Speaker 02

  That is a precursor of bringing them into our fold.

• 2:07:51John Coogan?

  Yeah.

• 2:07:52Speaker 02

  But you have to be realistic what the risks are and how do we mitigate them? So these countries have been doing joint military exercises in Xinjiang. Of all places are hosting military bases. And Saudi Arabia, I believe, like a month or two months ago, their national telecom champion did a strategic. Announcement with Huawei. And so you have to be realistic and put put in place those mitigation agreements. But separately, to your point on open source, I think we should be flooding the zone with American open source stack at the expense of Chinese models.

• 2:08:30Speaker 02

  Uh, I, I think we're not paying enough attention to what can happen when a state controlled company, to some extent. Now, there are a lot of PLA ties that DeepSeek has been scrubbed from the internet. Now,

• 2:08:48Speaker 02

  if the state wanted to, there was a great anthropic paper last year, uh, I'm not sure if people remember, but on sleeper agents that can be added into models.

• 2:08:58John Coogan?

  Yep.

• 2:08:59Speaker 02

  If the Chinese state really wanted to, you know, cripple US infrastructure or get into your phones,

• 2:09:07Speaker 02

  why wouldn't they just put in sleeper agents that would activate in a year or two years?

• 2:09:12John Coogan?

  Yeah, if it runs into critical infrastructure, it changes the way it reasons.

• 2:09:17Speaker 02

  Exactly. And so we should be bearing I C T S action, right? Like, we're doing a lot of export controls on American tech not going to China. But there's the import actions on preventing this Chinese tech from coming into the United States or helping other countries deploy American tech. Like, look, come on, let's be real, nobody in Kenya is going to pay $200 a month to access advanced AI models. We should be deploying American open source stack there.

• 2:09:48John Coogan?

  Yep.

• 2:09:49Speaker 02

  We should be incentivizing companies with like loan programs from the Development Finance Corporation, Exeter Bank, not.

• 2:09:56John Coogan?

  Yeah, kind of a new AI Belt and Road strategy, something like that.

• 2:09:59Speaker 02

  Exactly.

• 2:09:59John Coogan?

  Makes a ton of sense.

• 2:10:00Jordi Hays?

  Yeah, do you, do you think we'll see something to the, to the effect of a Stuxnet within AI in the next 10 years, 15 years?

• 2:10:11Speaker 02

  I'd be surprised if there are not zero day attacks that have already been exploited.

• 2:10:16Jordi Hays?

  Yeah.

• 2:10:18Speaker 02

  That we don't know yet.

• 2:10:20Jordi Hays?

  Yeah, that makes sense.

• 2:10:21John Coogan?

  Um, might, uh, there's been a lot of talk around Nvidia's earnings around the shift from, uh, training to inference and we saw with DeepSeek, uh, some really, really creative engineering around, uh, distilling models and switching to, I think FP8 and Floating Point, uh, and just a whole bunch of optimizations to, to get a really great result out of less significant hardware. And so, uh, I wonder if there's, is there any risk that the, uh, as pre-training plateaus, we wind up with a scenario where the distillation process continues and inference shifts onto

• 2:11:03John Coogan?

  lagging edge semiconductors and all of a sudden the, the, the gap between TSMC's leading edge 3 nanometer and China's ability to produce in mass at 7 nanometer, even beyond 10 nanometer beyond, um, that, that actually changed the dynamic?

• 2:11:23Speaker 02

  Yeah, and I think, uh, you know, right now we have the lead there, uh, it's, it's possible that that happens and the answer I would tell you that many people in the US government would give you is we should not be complacent about it.

• 2:11:39John Coogan?

  Mm-hmm.

• 2:11:39Speaker 02

  Right? Uh, we should not be providing components to Chinese companies to build semiconductor manufacturing equipment there.

• 2:11:47John Coogan?

  Yeah.

• 2:11:48Speaker 02

  To produce these semiconductors.

• 2:11:49John Coogan?

  Right? Yeah, we, so, so what is your take on, on, uh, the, the chip ban and this idea that like you kind of either need to be all in or all out, like it's either don't just worry about the chips, but also worry about the entire supply chain? Or is there, is there a creative argument that you could potentially make where there is value to the American semiconductor and, and I guess Western semiconductor stack, ASML, TSMC, uh, actually having a, a, a benefit in China? It, it feels very counterintuitive, but I was just remembering a decade ago, everyone in technology was making the argument that Facebook and Google should be allowed to operate in China and now we're making the argument that the other tech company should

• 2:12:33John Coogan?

  not be allowed to operate in China. And I, I kind of agreed with both of those, but they do seem at odds. Walk me through that argument.

• 2:12:40Speaker 02

  Yeah, I think, look, there are choke point technologies, right, where we do not want the PRC to gain access. Like, there are multiple arguments for why you should not get them, but the effectiveness really depends on whether it's a choke point technology or not. ASML's machines, when we export controlled extreme ultraviolet photography, then, well, China has not been able to produce anything domestically. They are still stuck on seven nanometer

• 2:13:15Speaker 02

  dual node pattern, multi-patterning, right? And I think that set them back by seven to 10 years at least. But, so export controls are not about the point that they will never develop that technology.

• 2:13:30John Coogan?

  Yeah.

• 2:13:31Speaker 02

  Buying time and space so that we can extend our lead.

• 2:13:34John Coogan?

  Sure.

• 2:13:35Speaker 02

  And that is what matters. So if we say tomorrow decide, you know, further tools should not go to China, or other semiconductor should not go, or as it happened, EDA software should not be sold.

• 2:13:52Speaker 02

  We also need like some promoted agenda to really extend our lead.

• 2:13:56John Coogan?

  Yes, so Huawei Ascend versus Nvidia, is this a quality or quantity battle? How, like, what is the shape of that differentiation?

• 2:14:05Speaker 02

  I think it's both. Quality first.

• 2:14:09Speaker 02

  Success yields, you know, they're at about 20% or so when producing the dies for Ascend.

• 2:14:16John Coogan?

  So just cost?

• 2:14:17Speaker 02

  It's extremely, you know, inefficient. And so without state subsidies, the latest Huawei server that came out, it is using technology that Nvidia was using seven years ago.

• 2:14:29John Coogan?

  Wow.

• 2:14:29Speaker 02

  Right? It's putting more GPUs on the same server to come at the same amount of memory and interconnect bandwidth and whatnot.

• 2:14:39John Coogan?

  Yeah.

• 2:14:40Speaker 02

  Now, yeah, can they, they have a state-controlled economy, they can do a lot of this.

• 2:14:47Speaker 02

  It's not sustainable at the end of it. So that's one thing. I, I think there are a couple of other things with regards to should we be okay, for instance, if it turns out? That so many of these technologies like look to be real China is a an economy that has an art. It is a system of government with an explicit civil military fusion strategy. Every research and development project that happens for civilian purposes is and will be used for military purposes. The Vice President of Research for Shingguo said that explicitly like so.

• 2:15:27Speaker 02

  Are we okay with them developing technology that may be used to kill American soldiers? Or threaten America's allies in the South China Sea or, you know, take over the Taiwan Strait?

• 2:15:44Speaker 02

  So those are questions that are, you know, they're very nuanced questions and hard to answer, but the. Normally, but in this scenario, I would say perhaps not. Perhaps it's not okay for us to benefit PLA's modernization. So while we can do what it is doing right now, I don't think it can scale. Uh, I think the US export controls to much extent are working. Question is, how do we extend our lead further?

• 2:16:15John Coogan?

  So reviewing this year so far, do you think we're in a better position than we were last year? Or are we trending in the correct direction, I guess?

• 2:16:27Speaker 02

  Yeah, I think overall we would, you know, depends on what? How do you define the strategy here, right?

• 2:16:36John Coogan?

  I think the strategy is to win. I mean, yeah, the the the goal is to win.

• 2:16:39Speaker 02

  If the strategy is to stop their development of the technology altogether, that's not going to happen, right? Technology races never stay one. The Soviets learned that.

• 2:16:50Speaker 02

  So Chinese have learned that too. But if the the idea is to maintain a lead, then they come second, we come first. Yeah, I think we're good. We're headed in the right direction so far. Now, I have tried to weaponize like to try to mimic what BIS does with export controls. Through their own export controls, but yeah, their export control system is just like five years old. They're law passed in twenty twenty. The nuts and bolts rules for dual use items, they did not arrive until December of last year. So they're very much in amateur state over there with regards to this. So the US does have a leader on that as well.

• 2:17:33John Coogan?

  Very cool. Well, thank you so much for joining. This was fantastic.

• 2:17:36Jordi Hays?

  Super insightful.

• 2:17:37John Coogan?

  Uh, we'll have to have you back and talk, talk more soon.

• 2:17:39Speaker 02

  Awesome.

• 2:17:40Jordi Hays?

  Thank you very much.

• 2:17:41John Coogan?

  Have a great rest of your day. We'll talk to you soon. And next up, we have Aaron Gin, the GPU Whisperer himself to take us further into the, the discussion around AI chip controls, geopolitics and all of the fun things that go along with that. Jordy, I'll let you take the intro and I will be right back.

• 2:17:59Jordi Hays?

  Perfect.

• 2:17:59John Coogan?

  Aaron, welcome to the studio. Play some soundboard.

• 2:18:03Jordi Hays?

  Let's go, let's go. The GPU Whisperer is back. It's great to have you. What's happening?

• 2:18:10Aaron Ginn?

  When I come visit you, I'm gonna bring you this.

• 2:18:15Jordi Hays?

  Wow. Is that a new, is that for the gong?

• 2:18:18Aaron Ginn?

  No, it's not a gong. No, it's also not a sexual toy. So, so it's called a talking stick. So in Kenyan culture, I got this in Kenya, uh, the, the basically the person that would represent the tribe would carry this around. And whenever we'd show up at a tribe, you would, you would show them this and they're like, so like, hey, like I'm, I'm coming to the, the TVBN tribe. Who should I talk to? Right? And then you find the guy with the talking stick.

• 2:18:43Jordi Hays?

  You gotta find the guy.

• 2:18:44Aaron Ginn?

  Yeah, you find the guy, right? And, and so, yeah, the Kenya, if you represent your sort of head of your tribe or head of your family, you carry that around. And then, and the great thing is like you can, uh, when you're in tribal meetings, uh, it's like, you know, someone's arguing, you hold the talking stick, right? And you're like, hey.

• 2:18:59Jordi Hays?

  Yeah.

• 2:19:01Aaron Ginn?

  Yeah. So it's like, you know, so we can span two different continents. You have the gong represent my Chinese heritage. And now you have, you know, something from the African continent. So you just gotta find something from Europe.

• 2:19:10Jordi Hays?

  I like that. Maybe, maybe we could make it the, uh, Sam Lessin from Slow was, was on the show talking about the potential of the e-cane. You know, uh, sort of a smart cane device. Maybe that could be the American equivalent of, of a, of a, of a talking stick is a, is a smart cane that, that the leader of an organization carries. Definitely something in there. Uh, what's on your mind this week? I know you've been busy, uh, publishing, uh, also scaling Hydrohost. What's, what's going on in your world?

• 2:19:39Aaron Ginn?

  I so Nvidia released its numbers. I frankly was surprised they still beat expectations despite having a lot of regulatory headwinds for at least a quarter. And of course, like as you all have covered, those rules changed. And now we're back to sort of October 2023 rules, which still had restrictions, but it was a little bit more friendly to some of the countries that were trying to form deeper relationship with AKA Europe. So like previously, half of Europe was on, you're on the crap list, you're a bad boy.

• 2:20:13Jordi Hays?

  Switzerland, Switzerland.

• 2:20:15Aaron Ginn?

  Yeah, yeah. Switzerland was bad. Austria is bad. Greenland was bad. We can buy the country, but can't sell them GPUs. And Mexico as well, which assembled 90% of all of our GPUs. So that's all gone. So a new era has already say returned to the old era, which is 2023. And we have this kind of new thing, which I've talked about previously on the show, which is the sovereign AI with America being deployed into regions. The biggest one was the G42 slash Saudi Arabia to build out GPU capacity within regions. And and this will, I think in the next coming years, Americans will see gradually over the course of time, how important both its infrastructure is to the world,

• 2:20:56Aaron Ginn?

  but also how we ourselves will most likely become a default exporter, like Boeing, like a default exporter of this technology, not necessarily like we're always using it, but the rest of the world is using it and they deeply rely on our infrastructure. That's the trajectory this this is heading. And and what was surprising from the Nvidia numbers, which I know that John mentioned was that Jensen has jumped more headfirst into politics. Under Biden, he was very hands off. He's just like, I don't support this stuff. But now he was meeting Trump in Mar-a-Lago.

• 2:21:36Aaron Ginn?

  He's basically proactively advocating both at conferences and in earnings calls, a actual posture about how the world should work and how the world should operate according to, you know, Nvidia preferences. But Americans then Americans then accept that Nvidia is our champion. They are a national champion. If they lose, we lose. Like we're tied together at the hip. And if they go down, we go down with them. There's not like empties.

• 2:22:01Jordi Hays?

  It makes sense that he's getting involved with politics when. And you know, or geopolitics when Nvidia is valued at the GDP of the United Kingdom.

• 2:22:13John Coogan?

  Yeah, I was thinking about that. It is in many ways just a function of the size and scale of that company. Because you don't see the same, yeah, you're not seeing the same behavior from like the other pieces of the stack, like the DRAM supplier, or the transformer supplier, or the energy provider, I mean, to some degree, but you know, certainly not getting as much face time, because it's like just a less critical piece of the economy.

• 2:22:37Aaron Ginn?

  And the, and some of the important things he said in the earnings call was that Nvidia lost 50% of its market share in China over the last four years. And he mentioned the acceleration of Huawei from seven nanometer to five nanometer processes. So when we as Americans think about GPUs and export controls, we're kind of battling two different metaphysical complexes that we don't fully accept or understand. We have one, which is generally was part of the Trump train back in 2016. China hot, they're a threat, they're taking our stuff, you know, they're breaking into Jordi's house, stealing his watches, you know, they're following John, trying to take a couple inches off his height, right now, like Chinese are everywhere, they're in

• 2:23:22Aaron Ginn?

  our cities, they're taking our research. That was like Trump, Trump 1.0, Trump 45, we gotta be aggressive. And he changed America's view on China. Him alone, like he was the lone Republican on stage, and in fact Rubio and Rand were saying that he's saber rattling, and the whole stage was like, no, we gotta engage them. But then there's this new version, which has co-opted itself into, which is part of the accelerated altruist people, mixed with anti-trade, mixed with protectionism, who took that, laundered it. And are using it as justification to be China Hawk. And this is goes to my most recent piece, uh, which was, which we most journal, which is that America has to be AI exporter.

• 2:24:06Aaron Ginn?

  Under, I'm like OG China Hawk. I'm like, we gotta win with commerce, the dollar, free trade, sell to many people as possible, like Boeing. As many Boeing aircraft in the world, because it's a point of leverage, it's a point of us being able to spread human rights, freedom, Western values, and not have to have bombs attached to it on the airplane, right? It could be passengers, rather than bombs. And this other wing, which are small, but very loud, they've, they've, they've co-opted themselves into the altruistic, you know, basically these deceleration people. Kind of like protectionism, anti-trade unions and China Hawk people. They're the like, abandon Taiwan, don't sell to anybody.

• 2:24:47Aaron Ginn?

  We, if giving it to the Gulf region means giving it to China, which is bizarre, it's a 12 hour flight away. I don't, I don't understand that. And it was also insulting to the Saudis. They're like, like they, they actually will use it. It's them saying the Jerusalem arm of China. It's, it's like, it's all this complex kind of vagaries around patriotism. Like after that earnings fall, uh, people called Jensen unpatriotic. Well, you got to put profits, you know, above patriotism, right? And it's this really bizarre, like world that these people live in, where they think that like, well, if we just don't sell them it, there's no harm, right? They can just wait. They can just wait for us.

• 2:25:23Aaron Ginn?

  When Huawei is like, please do. And, and the, the customers in China, uh, that they were part of the information, they, they had this on the, the publication. The, the customers of GPUs in China, they said that like by the export controls, they created the market for Huawei. Uh, so we, we only have two options as, as a country. We either win or we lose. Like that's it. There's no way between. There's none of this like, well, we'll just choke you off, right? It would just was hold you on the inside. You, you can, you can see this just using a non-technology example. Is when we done this with food aid, when we done this with other semiconductors, like when the first semiconductor came out, we structured it into India and China, China. All of them. Produce their own industry.

• 2:26:05Aaron Ginn?

  And in fact, there's a famous, there's a famous episode between, I think it was Johnson and Gandhi, whenever she was prime minister, when, when Johnson was like, hey, India, you've got to back us on Vietnam. Otherwise, we're going to gradually send this food aid, there's massive famine going on. And, and Gandhi, she said publicly, I will never depend on America ever again. And after that, she spent all of her money, invested in agricultural improvements that became self-suffering. So this is not a weird abstraction of, well, well, this is only unique to the situation. When they have the engineering horsepower, they cover 90% of all rare earth mineral production, not ownership, but just production. They build, they have their own foundry program, it's already active, we don't have one.

• 2:26:48John Coogan?

  Yeah.

• 2:26:48Aaron Ginn?

  And it's the focal point of all the accessory parts of a server, like fans, cables, things like that. And we're like, well, we'll just take you off and just wait whenever we want to give it to you. It's like, no, like, why would they ever do that? They, they just build their own and they show that they can. So in that world, the Gulf Stargates, we should have a South America Stargate, we have a European Stargate, we need one in Africa. We have to own footprint, otherwise Huawei will just go out, sell its cheap gear, own the footprint, own this rare, like, you know, data center space is not prolific anymore. Own that, and then all the government data in those regions will be running on Huawei's stuff, which is, which is, which will hurt our national security interests.

• 2:27:25John Coogan?

  Yeah, what about actually selling to the Chinese directly? Like, should we be building a Chinese Stargate? There's this like weird, like, thread we've been pulling on.

• 2:27:35Jordi Hays?

  Chinagate doesn't have a great ring to it.

• 2:27:39John Coogan?

  But, but I mean, I, I, I know it is different, but I want to kind of unpack all the different ways it's different. Um, because for years, uh, tech was beating the drum of, uh, Google should be able to operate in China. Uh, Facebook should be able to operate in China. This would be a net win for the United States if we could operate there. GPUs are different because it's more in the supply chain and there's different things you can do with it. We might be powering adversarial dual-use technology. Um, but, uh, is there, is there a world where these two situations are more similar than they are different?

• 2:28:13Aaron Ginn?

  Yeah, they, the dual-use argument is an argument in vacuum, it's an argument from ignorance. We don't have any example of what this dual-use could be. And, and there was a response to Jensen in some article I read somewhere, where like they could use AI for missile targeting, you're like. They don't need AI to do missile thing, or they have perfectly fine missile technology to target.

• 2:28:33John Coogan?

  What about, uh, wait, wait, what about just the, the idea that like, you know, large language models, chat models, they increase productivity. And so, you know, if you give a, if you give a soldier on a base, chat GPT, they will be able to inventory the rations faster and that will increase military productivity.

• 2:28:55Aaron Ginn?

  Oh heavens, right. Like, it's a, so like, one is that by us not entering in the Chinese market, we created a TikTok problem.

• 2:29:02John Coogan?

  Yeah.

• 2:29:02Aaron Ginn?

  We created an Alibaba, we created like, like, maybe it's because.

• 2:29:06John Coogan?

  I, I, I unpack that because I feel like we, we definitely tried to enter the social media market in China. We were blocked and then I, I don't understand how we created that problem.

• 2:29:16Aaron Ginn?

  Well, it's, it's because like, we wanted to enter on our own terms.

• 2:29:19John Coogan?

  Oh, sure.

• 2:29:19Aaron Ginn?

  So, so like, yeah, like, I'm not saying we have to do business with them always. Like, that's, that's not what I'm saying. I don't, I don't want to sell F thirty fives. I don't want to sell F twenty twos. I like logical, like things. When we sell F, uh, triple seven, it should logically have our GPS technology removed, anything that's aligned with like kind of our connectivity. Sure. Like we are doing that today. That's fine. They, they, but when you, when it comes to actually like core platforms, GPUs is not just the car. Because just because, um, you know, you own a, a, a G sixty three Mercedes, doesn't mean I can build one. They like, there's just like misunderstanding of like, Jinson is pursuing a three nanometer, two nanometer sort of direction of this company. They don't have the ability to do that.

• 2:30:01Aaron Ginn?

  And just because I own a cheap wagon, doesn't mean I know how to build one. Doesn't mean I can build one. And there's a disconnect between that. So one is that we should restrict anything that is on the supply chain level. I'm totally cool with that. If we want to target foundry equipment, if we want to target data center equipment, totally cool with that. Problem with that, we don't build any of that stuff. Other countries do.

• 2:30:21John Coogan?

  Yeah, but we, I mean, we have American IP, so we actually do have a point of leverage over ASML equipment, if I'm remembering that correctly.

• 2:30:28Aaron Ginn?

  Yeah, yeah, foreign direct rule, right?

• 2:30:29Jordi Hays?

  Yeah.

• 2:30:29Aaron Ginn?

  So, so, so, yeah, so it's a stretch because like Japan can still do what it wants.

• 2:30:35Jordi Hays?

  Yeah.

• 2:30:35Aaron Ginn?

  Like, it doesn't, it doesn't have, America has limit, limit, like, the

• 2:30:38Jordi Hays?

  Limited leverage.

• 2:30:40Aaron Ginn?

  Yeah, the regulatory framework of commerce is limited to its ability to, to basically tax authority.

• 2:30:45Jordi Hays?

  Yeah.

• 2:30:45Aaron Ginn?

  So if you have money in America, then they could do something. But if you don't have money in America, and you say foreign direct rule in Japan, it does, like, like,

• 2:30:51Jordi Hays?

  Yeah.

• 2:30:51Aaron Ginn?

  they're gonna be like, okay, that's nice. Thank, thank you for your memo.

• 2:30:54Jordi Hays?

  Mm-hmm.

• 2:30:54Aaron Ginn?

  Like, it, so, I, I, but, but again, it goes to like how we treat GPUs, that if we wanna create a, a point of leverage between the Dutch and Japanese over, over founder equipment, we should probably not cut half of the Dutch economy off from GPUs, which is what we did. So, so if we wanna be allied with them, we should realize what's important, what's not important. To me, supply chain production is important, not consumption. Consumption is not very important, mainly because there's another risk factor, which is significantly more important, which is like, is it worse for the world if Huawei is everywhere? Or is it better for the world that Nvidia is everywhere? And, and, and when you're talking about the dual use question, it's like they don't even think about that, well, if we, if we don't actually engage them on our own platforms, we finance their current platforms,

• 2:31:38Aaron Ginn?

  and we encourage them to do that. They will still do it. Like, I, I, I, I think we have to understand that it's a both and, eh, framework in China. I, if we, if we sell them a fighter jet, they'll buy the fighter jet and make their own fighter jet. But, but the point is that they, is to starve and to use, like, doesn't starve the local economies as much as possible, and to create dependency on us. The more dependency on us, like, the less likely of a war. Also, we can maybe gain leverage on, like, other trade issues, like, you know, cheap goods, fentanyl, Taiwan. There's a whole other layer of additional things, and just saying dual use, which, which, which, again, we don't know what that means, people just say it, and they, eh, we don't, eh, I, I don't know what it means. And as well, you can still do it with Huawei, so like, eh, like, what does it matter?

• 2:32:22Aaron Ginn?

  Like, eh, eh, it's this kind of vague biggeries around it, eh, without understanding the clear differentiation between production, consumption, title ownership, cloud consumption, and building their land. All those are co-mingled around Nvidia, when each of those are distinct different things, um, that shouldn't be co-mingled, because then you confuse the

• 2:32:38Jordi Hays?

  Can you, can you give us an update on, on, eh, the Biden administration in January was focused on remote access? Is that a wide-scale problem today? You can imagine it's a lot easier to access GPUs remotely in another country. If you want to train a model than it is to smuggle them in across different borders and things like that.

• 2:33:01Aaron Ginn?

  Yeah, the January controls assume two things and it'll be 100% wrong. One, how close was Huawei? They assumed like five years, totally wrong. It was like basically 12 months. The other one is that LLMs are a moat, and they're not. So like, what does it matter? They like, if DeepSeek is the number four, right? Because mainly because it's open source. That's the main reason. And it became a brand name as people know it. But there's lots of alternatives to DeepSeek. There's lots of different reasoning models, there's lots of foundational models and multimodal models. So it's not a moat, but what does it matter? They make their, okay, we make another model. Like, it's not an innate, just use a different model. So we're not going to prevent them from making models. They're going to do what they're going to do.

• 2:33:44Aaron Ginn?

  The question is, we're not, we're going to be better. So it's like, if you're like racing a car, I'm going to have one race in Canada next week. If the F1 driver is staring at the guardrail, is he going to win?

• 2:33:56Aaron Ginn?

  And that's what we're doing. We're like, looking at it. You're like, oh my God, right? Like, are we looking at the finish line? Are we looking to win? Because if we win, it doesn't matter because we choke off the local industry. We become the global dominant player. And then they become Comac, which is the Chinese version of the airline, their alternative Boeing and Airbus. It's going to be decades before they get anywhere with that airline. And it's because Airbus won, Boeing won. And market penetration is a moat. And we, not everything that happens in China is just because they copied us or they stole, or they stole something. Like, they're legitimately good at engineering. And this is what the point that Jim's been making. Is that when half of all AI researchers are Chinese, we can't just be like,

• 2:34:40Aaron Ginn?

  you know, can't see it, can't see it. Like, we gotta engage with it. Because at least it's better that it's on our platforms. And if the federal government wants to spy on that, like, why not? Like, it's like, we can't even appreciate the asymmetrical style of that of like, imagine if we sold them the video stuff and we just spied on it. Like, it's like, let's do what they do to us. But it's there like, oh, right? Like, dual use, like, oh, military. It's bizarre to me.

• 2:35:05John Coogan?

  What's been your reaction to the Russia-Ukraine development? I've always been struck by the fact that Russia has produced so many incredible mathematicians and yet seems so irrelevant in the AI conversation. Any chance that that changes? You know, you talk about dual use. Seems like they can barely, you know, deal with any technology over there. Yeah, they make a few drones, but like they're they're years behind the AI race.

• 2:35:34Aaron Ginn?

  Yeah.

• 2:35:34John Coogan?

  We're certainly not testing the limits of artificial intelligence on the battlefield over there.

• 2:35:38Aaron Ginn?

  The, uh, let me tell you this, that, uh, so with our with our company being international, we come across all sorts of characters. So in Riyadh, I met a Russian who Russian, I should broader Caucasus. So he speaks Russian, but he's not really Russian. We were at the data centers in the region and he was telling me that about like what Russia is doing. And he said that like, don't underestimate them being quiet doesn't mean they're not doing something. And and this goes to the the Stargate thing and proliferation is like when somebody does something bad with this, which is gonna happen, is without a doubt it's gonna happen. The Ukrainian attack on Russian planes wasn't AI, it's just fancy remotes and

• 2:36:20Aaron Ginn?

  there's no evidence that had a model that was, I don't even know why you would need a model. You can look at the plane and just like, uh, yeah, like that it was a it was a very bizarre way of kind of reading that situation was very clearly like remote controlled. But, uh, the the, uh, if when someone does something bad with this technology, which is inevitable, the world will be very woken up to how one, the powerful this technology is, but two, how lazy they've been on some of these things that we're talking about, where it matters if we're everywhere. Because if if we're everywhere, unless they stuff something, someone does something bad with us, what does that mean?

• 2:36:59Aaron Ginn?

  That means that we have the ability to project influence now across the hundred countries that are have our infrastructure. That that could be everything from utilizing the infrastructure in a way to bring along allies to counter something, but as well as creates a new type of NATO, a new type of framework, which is the defense of the next century. And there is China.

• 2:37:21Aaron Ginn?

  We'll pursue, it's almost like a known quantity. China's been China. There's very little things we can actually can do to impact the directory of 1.3 million people outside of the natural entropy of China itself. China has imploded seven times in its whole, basically, 6,000 years of history. So, yeah, exactly. Sure, please, right? So communism is just the next iteration of whatever revolution, the Qing Dynasty, the Shan Dynasty, the Shang Dynasty, the Mongols, right? All of those were different iterations of the same, millions of people die, build a new regime, billions of people die, build a new regime. The ability of us externally being able to influence it is very limited, unless we do what we did to Japan and South Korea,

• 2:38:06Aaron Ginn?

  which is we totally obliterated the entire society. We built spaces there, we gave them democracy, and we gave them markets. Then you can influence and they can be part of the order. But they don't want to do that. So China's going to China. What we have to do is we do our best, which is win, trade, commerce, be the best, make, give as, invest as much money as possible into Nvidia products. With their recent announcement, I don't know if it's selling Computex, but they had this, basically, Nvidia Link as a platform, is the best way to understand it.

• 2:38:36Jordi Hays?

  Yeah, break that down for us.

• 2:38:37Aaron Ginn?

  So, yeah, so because all of this new GPUs are coming out, like the Grok Pos drones, Huawei, the most viable parts of Nvidia's infrastructure is its interconnect. And interconnect is both software-defined and hardware-defined. Nvidia is the king. Like, on the GPU level, Huawei is getting closer and closer, as is AMD. But from an interconnect level, Jensen's in the stratosphere, like he's so far beyond. So as an effort to keep them in the CUDA system, which is this most significant software mode, he's releasing Nvidia Link as a platform, to where you can plug in other GPUs and you can work through Nvidia Fabric. As John just said... The conference is going to foreign direct rule the asset I think so it's probably not gonna make it into China. And that actually has legitimate claim like you know we made this software we produce it.

• 2:39:22John Coogan?

  Yeah.

• 2:39:22Aaron Ginn?

  And it goes versus Japan is a little bit looser claim. Uh, and so I don't think it's going to make it in China, but that's the premise is that. He's trying to protect the CUDA mode. The CUDA mode is the mode of Nvidia and if Huawei continues to accelerate. Open source framework accelerates Nvidia's mode declines, which means more Huawei product uh basically gets released into the wild. More models are defined by Huawei.

• 2:39:44John Coogan?

  I- i- i- is that NVLink um uh licensing more relevant to uh international companies that want to. Combine different CPUs and GPUs together? Or is it more relevant to just maintaining dominance in the American market?

• 2:40:01Jordi Hays?

  Yeah, with hyperscalers that are developing their own chips, things like that.

• 2:40:05John Coogan?

  Yeah.

• 2:40:06Aaron Ginn?

  Yeah, it the pitch is to hyperscalers, but the actual target is is China. They I'd say that that is the that's the goal.

• 2:40:13John Coogan?

  I mean, but you I mean, you're predicting that it won't make it to China, so why? Why even like pitch that if it's it has very low shot of actually getting through?

• 2:40:22Aaron Ginn?

  I mean, they they have seventy five percent margins, so they could do lots of things that don't go anywhere. And and and also they they view that there's two risks to Jensen, just as putting on Jensen hat. Yeah, I'm not an investor, I'm not talking my own book, I'm not I'm not Chamoff, I'm not talking my own book. So they they are is. Public cloud with their GPUs, which goes to this NVLink platform in Huawei. Those are the two risks, so he's targeting to both, but. The issue with the uh what Public Cloud is doing is that they are trying to deleverage from them as much as possible, which is why most of the future deployments. I suspect in public I'm going to CoreWeave, CoreWeave is like a third party just reseller into to cloud.

• 2:41:01Aaron Ginn?

  But his real angle is to Huawei gear where they do not have the ability to build this interconnect. Uh, via the Huawei products, uh cloud matrix is closest and it's still pretty far behind. As well as you look at the networking expense like in terms of the margins and they're in the on the public reporting. Did it there is still growing in revenue like significantly on networking side, but they're not making very much money. It's because they view networking as the mode, so they're really just trying to push something in to the Chinese market. So they can retain that CUDA advantage. Uh, because they they do think that China is accelerating. On the most important models, which are the open source models that that if Nvidia sees. The more and more open source accelerates, the farther and farther it gets ahead, the more

• 2:41:45Aaron Ginn?

  that it's going to basically cannibalize Nvidia's footprint. Because if Nvidia is only selling to closed source models, that again limits their ability to sell widely and to keep our platforms. America has to realize, like, I'm not just talking about Nvidia. Like, that's our national champion. So it's like Lockheed. It's like a Boeing. It's like, it is our expression into the world of what the future should be, and the ability to have our values built into technology, which is privacy, security, Western values, freedom of thought, freedom of information on the internet. And so I'm fine with the product idea. I don't think it's a risk really much to anything. But most likely Commerce will restrict it. Because if they're already restricting found in equipment, which I generally agree with, because it's

• 2:42:30Aaron Ginn?

  found in equipment costs $100 million in the size of the house. Like, you can regulate that. We export control airplanes. Well, yes, because you have to put on a ship where you fly it over there. That's not something you can go buy at that spot and put in your backpack. Like it.

• 2:42:43Jordi Hays?

  I mean, Nathan Fielder was able to buy an airplane recently for a show. I want to switch gears for a second. There was some news this morning that Meta is partnering with nuclear energy company Constellation Energy to power some of its AI, I guess, AI factories, data centers for the next 20 years. Post these new executive orders on nuclear energy, do you expect to see a lot more deals between hyperscalers or foundation model companies and various nuclear players?

• 2:43:18Aaron Ginn?

  Unfortunately, not. I'm a big fan of fusion. I'm a realist when it comes to politics. I'm conservative through and through. Adam Smith, you know, Milton Friedman, Thomas Sowell, like, they're my heroes. But I'm a realist when it comes to DC, because DC is ideology is an excuse for decisions that are self-serving. It's the way DC works. Nuclear, I love the technology. I think it's immensely safe. I don't believe in irrational phobia related to it. It has, you know, the third party or the existential causes of the pollution or whatever of the energy is put in a barrel, put underground. It's like, so amazing. But and even that, they're making recycle like 98% of it now.

• 2:43:58Aaron Ginn?

  But power generation is very different than energy. America's really good at energy. It's really bad at power because power is a federalized decision. And I just don't see a significant amount of willingness to change about that. I hear lots of talk, but the talk is also a little bit like Doge, which is the operational mandate of Doge is discretionary. And even that, it has to get the deference of the secretary. It doesn't have a lot of power. You have to have mandatory spending, get a Congress do something because it's the way it works. Same with power is like Department of Energy can't just say, do it, right? Like the state, because it's federalized, that's the whole point of freedom is that if the state says no, they're going to say no.

• 2:44:41Aaron Ginn?

  It's not going to happen. So maybe on federal lands, maybe Indian lands, that stuff makes sense. But it's, I think it's extremely unlikely. I think it's more likely the like Stargate is essentially a sovereign power infrastructure where they're buying natural gas turbines, which we have a significant amount of natural gas. They build it and deregulate energy environments and they attach it to the data center. I think that's more likely because that doesn't require 10 years of approval. And you know, people who have degrees who have never done anything in the world showing up and telling you how to do business. Like it doesn't require any of those things. It's natural gas. It's fine and their pipes are everywhere. So what we hear on the data center level is much more of a trajectory towards natural gas. And that nuclear, while there's entertaining, there's, I want this stuff to happen. I'm just a realist.

• 2:45:26Aaron Ginn?

  And I think it's, you shouldn't bet on it. And many of those contracts you see, they're more like LOIs if you like dig into it. Because the Amazon, the Microsofts, the Facebooks of the world, they know the regulatory hurdles of doing this stuff is years. And so they're basically using the announcement as a means they're trying to press through the regulatory cycle and to get stuff done.

• 2:45:47Jordi Hays?

  Well, just to give you some more insight, this deal in particular. Is for a a power plant called the Clinton Clean Energy Center. So it's from a different era, right? It's not a it's not a it's it's taking an asset that we've already had. And then doing a net new deal. It's not as exciting as hey, some, you know, new nuclear company just signed a 20 year deal with with Meta. So.

• 2:46:11Aaron Ginn?

  But they didn't have the approval of putting servers in the building or putting it around the building. Like, that's not something that's gonna be easy there. Yes, exactly. Like, it's a the fear of nuclear is is unfounded.

• 2:46:23John Coogan?

  Yeah, but it's still real.

• 2:46:26Aaron Ginn?

  It's it's real. And and and this is democracy. Like, you don't get everything you want. And and if people don't want in their backyard, they don't. And it is what it is. So like, but yeah, but I'm pro those things. I'm pro clean fusion, like low heat, like coal nuclear reactors. I think all those are super cool technologies that we should embrace.

• 2:46:44Jordi Hays?

  Yeah, this thing is is interesting because the the reactor at this site was going through a decommissioning process. So they're effectively bringing it back online.

• 2:46:53Aaron Ginn?

  Oh, great.

• 2:46:54Jordi Hays?

  Similar one to the deal that Constellation did with Microsoft in Pennsylvania with the Three Mile Island plant last year. So, um, so, yeah, at least at the very least, it's great to see plants that are clean and functioning, staying online.

• 2:47:10John Coogan?

  Yeah.

• 2:47:10Jordi Hays?

  And serving a purpose.

• 2:47:11John Coogan?

  Anyway, thanks so much for stopping by. This was fantastic. We'll talk to you soon.

• 2:47:15Jordi Hays?

  Always a pleasure.

• 2:47:16Aaron Ginn?

  Yeah, see you guys. Yeah, see you, man.

• 2:47:17Jordi Hays?

  Cheers.

• 2:47:17John Coogan?

  We'll talk to you soon. Uh, let's close it out with some timeline. Uh, there's news about perplexity. Uh, Apple is reportedly planning to adopt perplexity as an alternative to Google search on the iPhone, as well as a replacement for ChatGPT integration with Siri. This is kind of rumor mill at this point, but apparently perplexity is also in talks with Samsung. Uh, could become a default installed, uh, search provider on Samsung Galaxy phones and Android phones.

• 2:47:43Jordi Hays?

  Arvin's cooking.

• 2:47:44John Coogan?

  Arvin's cooking. Yeah, it's interesting. It's like. Obviously, the product is not like completely broken through, but.

• 2:47:48Jordi Hays?

  Do you think this is because they sponsored an F1 team?

• 2:47:51John Coogan?

  Maybe, maybe it's not. Didn't they do a Super Bowl ad? Or no, they just did a really cinematic ad. But they've definitely been been out there sponsoring stuff and raising.

• 2:47:59Jordi Hays?

  Perplexity sponsored Ferrari.

• 2:48:02John Coogan?

  Ferrari, really? No way. That's awesome.

• 2:48:03Jordi Hays?

  They just fully sent it.

• 2:48:05John Coogan?

  That's amazing.

• 2:48:05Jordi Hays?

  Tim Cook saw that. He goes, okay, let's talk. It's time to talk.

• 2:48:07John Coogan?

  Okay, let's talk, yeah. Yeah, I mean, certainly smart to break through. And I mean, a lot of these, a lot of these companies like win on these default installs. It's always tough when there's another company that's like going viral and just growing like crazy like ChatGPT. But you got to get creative and figure out where the value is and who's hurting. And Apple and Samsung seem like they're at the top of the list for needing a partner to really keep up with ChatGPT in some ways. Anyway, we should talk about Wander. Find your happy place.

• 2:48:39Jordi Hays?

  Find your happy place.

• 2:48:41John Coogan?

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

• 2:48:48Jordi Hays?

  Go figure out plans for summer.

• 2:48:51John Coogan?

  Yep.

• 2:48:52Jordi Hays?

  Book a home on Wander.

• 2:48:53John Coogan?

  Yeah.

• 2:48:54Jordi Hays?

  And report back.

• 2:48:56John Coogan?

  We also have some cool, probably AI images from if Tesla was made in the 1980s. I don't know how I found this. It only has five likes and 220 views, but I really like this. I thought it was cool design. Looks kind of like an Aston Martin Bulldog. Or there's a lot of Aston Martin in there. But yeah, I hope, I hope with Elon spending more time at Tesla, we get some crazier designs. I want to see a convertible. I want to see something that competes with a Jeep, a full-size SUV, the Cyberbon, the Cybertruck converted into an SUV.

• 2:49:25Jordi Hays?

  I mean, we've talked about this. A sedan with the aesthetics of the Cybertruck would.

• 2:49:31John Coogan?

  Super cool.

• 2:49:32Jordi Hays?

  Rip.

• 2:49:32John Coogan?

  The Cybercon, the Huracan version of the Cybertruck, like the new Roadster with the Cybertruck aesthetic. I mean, I still think the Cybertruck, the Cybertruck aesthetics are really cool, but it's just, it's just like not everyone needs a full-size truck.

• 2:49:46Jordi Hays?

  You never see somebody with a Cybertruck using it as a truck.

• 2:49:49John Coogan?

  I've never seen anything in the bed.

• 2:49:51Jordi Hays?

  Yeah.

• 2:49:52John Coogan?

  But also, we're in LA, so most of the Cybertrucker influencer based. Semi analysis breaking down Tesla's optimists, speaking of Tesla. Ever wondered how those humanoids are dancing in the videos? Check out Tesla optimists here hitting a smooth shuffle. Let's dive into one of the methods they may have used. In the paper ASAP aligning simulation and real world physics for learning agile humanoid whole body skills. The researchers did train the humanoid to perform these actions and simulated environments, but there's more to this. So we've been talking a lot about simulation in the context of robotics. It seems to make a lot of sense that you could model all of those joints in a physics engine, run that in Unreal Engine or something. I mean, it does look remarkable.

• 2:50:34John Coogan?

  I don't know if you can see that, Jordy, but the, I mean, the dance is definitely not the Biden walk, right? So the problem.

• 2:50:41Jordi Hays?

  Play it, let's see it.

• 2:50:42John Coogan?

  Yeah, yeah, here, there you go.

• 2:50:44Jordi Hays?

  Okay.

• 2:50:45John Coogan?

  What? What are you thinking? Conspiracy time?

• 2:50:47Jordi Hays?

  No, no.

• 2:50:48John Coogan?

  It's pretty good, right?

• 2:50:50Jordi Hays?

  I mean.

• 2:50:50John Coogan?

  It's definitely a unitary level.

• 2:50:53John Coogan?

  And I don't see why they'd be any farther behind unitary. But obviously, there's a lot of.

• 2:50:57Jordi Hays?

  Gen Z would say the robot low key has aura.

• 2:51:02John Coogan?

  Aura, yeah. The problem, the robot policies like guidebooks for performing an action trained in simulations often stumble when transferred into a physical robot. This is called the Sim to Real gap. We'll have to talk to more folks in robotics about that. Many complex interactions can occur in real life that are difficult to model. ASAP decides to train their policy in simulation by using retargeted human motion like Ronaldo's SUI celebrations motions, but mapped onto a humanoid so that it can produce the same motions in its own body. However, to mitigate the issues upon transferring to real life, they then deploy the policy onto the unitary robotics G1 humanoid. This is from a researcher and train a delta action model.

• 2:51:44John Coogan?

  The model watches and learns what the differences are between the desired simulated motion and the real world.

• 2:51:52Jordi Hays?

  This clip in particular, this jumping motion.

• 2:51:55John Coogan?

  It's wild.

• 2:51:56Jordi Hays?

  It's wild.

• 2:51:57John Coogan?

  Wild, the jumping, because you.

• 2:51:59Jordi Hays?

  Because that's using same. Effectively the same physics as a human to do that.

• 2:52:06John Coogan?

  Yeah.

• 2:52:06Jordi Hays?

  And it just feels a lot more.

• 2:52:08John Coogan?

  So they do a bunch of simulation, they transfer to the robot, then the robot does it and messes it up because there's all these like fine details that emerge when you're crossing that sim to real gap. That delta correction is then fed back into the simulator, effectively aligning the virtual simulated world and robot with reality. The result is significantly improved agility and coordination and now fluid reproduction of famous celebrations. ASAP is a major leap forward for humanoid robots, but there still remains some challenges in simulations. And semi-analysis says, what do you think? And so it's interesting because it's basically creating a real life feedback loop for humanoid robotics based on simulated data.

• 2:52:53John Coogan?

  So you go and simulate the robot to get it like 80 or 90% of the way there. Then you run those simulations on the real robot and let it make a bunch of mistakes and then feed all of that data back in. So you're generating a lot of robotics data and you can actually have like a learning loop to improve this. So still unclear how close we are to like fully reusable, fully useful humanoid robotics, but it does seem like more and more algorithmic progress is being made, more and more like AI training strategies are being made to really make this stuff valuable. And then of course.

• 2:53:27Jordi Hays?

  I care about we're getting closer to the robot games where they're going to have these robots do surfing at Jaws, cliff diving, things like that.

• 2:53:37John Coogan?

  Can't wait.

• 2:53:38Jordi Hays?

  Getting closer.

• 2:53:38John Coogan?

  Uh, let's tell you about Adio. Adio is customer relationship magic. Adio is the AI native CRM build that builds, scales and grows your company to the next level. You can get started for free at.

• 2:53:51Jordi Hays?

  They have range in their customers. Everyone from Union Square Ventures uses them to Coca-Cola.

• 2:53:57John Coogan?

  Wow, that's a big range.

• 2:53:59Jordi Hays?

  Big range and TBPN, of course.

• 2:54:01John Coogan?

  Of course. When I first opened Adio, I instantly got the feeling that this was the next generation of CRM.

• 2:54:06Jordi Hays?

  Is fast, smooth. If you're doing deals, get on Adio.

• 2:54:11John Coogan?

  We also have some news. There's a new company launching, Amy from Joe Perkins, the AI agent for private market investors. Stop wasting 30% of your week on busy work. Amy handles sourcing, diligence, ops, admin, and research 24/7, remembers every interaction, and sharpens over time.

• 2:54:28Jordi Hays?

  Yeah, this is interesting. I have the website pulled up. They do deep diligence. So you can imagine some type of deep research product, watch list monitoring, anti-portfolio analysis, which is fun. Basically, track, track your passes, memo drafting, exit planning, customer diligence, auto sourcing, market mapping, team evals, meeting prepper. Pretty extensive. It's cool.

• 2:54:52John Coogan?

  Well, the timeline was in turmoil as Meghan Nivold kind of sort of anonymously called out Alex Lieberman for co-founding too many companies.

• 2:55:02Jordi Hays?

  Oh, wow. That was, I saw Meghan's post.

• 2:55:04John Coogan?

  You saw that post?

• 2:55:05Jordi Hays?

  I had no idea.

• 2:55:06John Coogan?

  I had no idea who it was either. And Alex kind of self-doxed himself here. And he says, "Someone called me out publicly for co-founding five businesses." What? A man can't co-found five businesses? Come on. I think I've actually co-founded maybe four businesses at this time, although I kind of moved on. I wasn't doing them all at the same time.

• 2:55:22Jordi Hays?

  You were doing one at a time.

• 2:55:23John Coogan?

  It was one at a time, yeah. But I love the reaction. It makes total sense. So I thought I'd explain, says Alex Lieberman, the business barista. He says, "I very much don't recommend people do what I do. History has proven time and time again that relentless focus on one thing for decades is how you build anything of consequence. I didn't set out to build a startup studio and co-found five companies. It was a result of trying to optimize for my two highest order goals post-exit. Be an A-plus entrepreneur and an A-plus family man. Read, have full control over my schedule and time. Spend 90% of my time in the negative one to one of business. Early-stage businesses make me feel like a kid in a candy store. I do not work 120 hours a week. I work about 50 hours a week. Most mornings, I start drinking coffee, walking the dog with my wife. Most days, I finish eating dinner and walking the dog with my wife. Those moments are sacred for me."

• 2:56:08John Coogan?

  I have an amazing co-founder and CEO for each one, each of my businesses. So he's not the CEO of these businesses. That would be very, very difficult. Who I trust deeply and gives me space to focus and time. I view myself as a media company that creates surface area for an array of opportunities. So yeah, a little bit of an uncommon decision, but he's certainly enjoying it. And so, yeah, hats off to him.

• 2:56:27Jordi Hays?

  Yeah, I mean, I think the thing that matters is ultimately having a CEO that is

• 2:56:33John Coogan?

  Yeah.

• 2:56:34Jordi Hays?

  regular founder as incentivized

• 2:56:36John Coogan?

  Yep.

• 2:56:36Jordi Hays?

  as a, as a traditional founder.

• 2:56:38John Coogan?

  Yeah.

• 2:56:38Jordi Hays?

  Or over time, you'll get cooked by

• 2:56:40John Coogan?

  Totally.

• 2:56:41Jordi Hays?

  a founder, a truly founder-led company.

• 2:56:43John Coogan?

  True, to, to, to, totally, totally. So, so yeah, there's, there's a big question about like, you can be a small angel that owns point one percent of a business. You can be a VC who owns 20% of a business and uses the word we when describing the company. Then you can be, you know, an incubator or a silent co-founder, or you can be the co-founder CEO, the founder CEO. And, and these are kind of a spectrum and everyone kind of plays in different roles, but you know, historically, it's, it's the, served to, to work at kind of the fringes of those, but there's different models that work for different folks. Uh, this is an interesting trend that I want to dig into, kind of the future of Hollywood. We've been joking about this, but

• 2:57:20John Coogan?

  there is something interesting with, uh, what Tony Lashley, Lashley says, uh, Sequoia investing in Essence and Mubi and Thrive investing in A24 in the past four years.

• 2:57:30Jordi Hays?

  Pronouncing Essence properly, John.

• 2:57:32John Coogan?

  Yes. So just sense.

• 2:57:36John Coogan?

  And Thrive investing in A24 in the past four years is quite fascinating. Um, and so apparently the Essence investment maybe didn't do so well. Definitely they're clearly, clearly struggling, but the model works. And so Sequoia is getting into the independent movie business. Thrive is already in with A24. And so, uh, very, very interesting to discuss, like the impact of AI on Hollywood and independent movie making as these movies, it feels harder and harder to get the, the power law outcome in movies, the Avengers moment, the Avatar moment, the Top Gun moment. But A24 has clearly made a different strategy work and they're breaking through all the time. And so, uh, it's justifying increased investment. Um, yeah. Uh, another perplexity news, they, they, they did the thing that we've been talking about.

• 2:58:21John Coogan?

  Like you can now travel, search and book on, uh, on perplexity. No scrolling. Eight hundred and forty seven hotels and photos trying to spot a decent gym. I asked, find me a hotel in Amsterdam with a serious gym, walkable to conference venue. Use under three hundred euros per night. Result, perfect recommendation, the exact hotel I actually used.

• 2:58:39Jordi Hays?

  Could you actually click book?

• 2:58:41John Coogan?

  I think so. I think so. And so they're definitely working on it. And this is like an, uh, like an obvious, uh, uh, agentic workflow. But Simon Taylor, let us know. Were you, did you actually book? And did you go through with the booking? And was it easier than just going to the website? Or was it merely better search? Because, uh, I think people won't be fully satisfied until it's an entirely chat based workflow. And they don't need to do anything and they never get routed to another, another website.

• 2:59:05Jordi Hays?

  Yeah.

• 2:59:06John Coogan?

  Um, David Sacks is a little, uh, review of Mountain Head. He says, Mountain Head costume designer, Susan Lyle on the All In Pod. It was very good source. It was a very good source for research for me. One of the hosts, Chamath Palihapitiya, went to the inauguration of President Donald Trump, and he showed pictures of all the things he wore. I couldn't believe it. He had a Laura Piana jacket here and a Brunello Cucinelli there. He obviously really knew his stuff.

• 2:59:29Jordi Hays?

  So I mean, uh,

• 2:59:30John Coogan?

  That's off to

• 2:59:31Jordi Hays?

  Very, very cool. That said, it shouldn't take too much research to understand that capital allocators enjoy Laura Piana and Cucinelli.

• 2:59:39John Coogan?

  Yeah. It's good stuff. Uh, this is an interesting post by, uh, Ashay Sangvi. Uh, uh, so Anthropic just went from one billion in annualized revenue to three billion in annualized revenue in five months. Crazy growth at this scale. And, uh, Ashay says, I remember the days when Snowflake doubled at five hundred million ARR in a year, and people lost their minds. And yeah, the numbers have gotten so big in the AI race that, uh, going from one to three billion is like, what have you done for me lately? Claude, step it up. But yeah, congrats everyone at Anthropic. We're having some Anthropic folks on the show this week. Fantastic growth.

• 3:00:15Jordi Hays?

  Extremely impressive, but I don't know why that is super surprising. It's impressive, but shouldn't be surprising if you're paying attention.

• 3:00:26John Coogan?

  Given the actual technology. You mean that? That just that how useful these tools are?

• 3:00:30Jordi Hays?

  Yeah, if you just look at Anthropic trailing, trailing OpenAI, they have less of a, they have less significant of a consumer business, but it's still very big in enterprise.

• 3:00:42John Coogan?

  Loved by developers.

• 3:00:43Jordi Hays?

  Yeah.

• 3:00:44John Coogan?

  Yeah. What else do we want to go through? Yashua Bengio has a new nonprofit research lab called Law Zero. Sharon Geffery has the story in Bloomberg. She's coming on the show soon. And I thought this is interesting because I was, I was wondering if like, has anyone in AI safety actually just tried to use Isaac Asimov's three, three laws of robotics to design a safer AI system? Like, it would be very ironic and hilarious if that was the, the solution all along, was just hard code in, don't hurt humans, which is basically what the, what the Isaac Asimov three laws of robotics are. But of course, the, the premise of the Asimov movies is, and books is that even though they try to encode that,

• 3:01:29John Coogan?

  it still goes wrong. So there's still a little bit of an AI doom scenario, but he raised $30 million of it on it. So congrats to Yashua. And hopefully there's some good AI research that comes out of it. And as we've seen, even if you don't believe in the AI doom scenario, the paper clipping, there's still a ton of other ways that AI can go wrong and have negative effects, even if it's just creating overly addictive products or dual use technology. There's a bunch of interesting, the Manchurian candidates and the, and the sleeper agents that Anthropic discovered or hypothesized.

• 3:01:59Jordi Hays?

  AI's stuck's net.

• 3:02:00John Coogan?

  Yeah. And so I think this is worth funding. I think this is worth, worth researching, but you have to take it with a grain of salt and you have to realize the, the full picture and the full dynamics of, of geopolitics in the AI race before you actually go and execute against what one of these nonprofits is saying.

• 3:02:17Jordi Hays?

  Yeah.

• 3:02:18John Coogan?

  I thought this post from Justin Moore was hilarious.

• 3:02:20Jordi Hays?

  Have you seen the new Google AI feature? It's on Gemini. It's literally on AI Studio. You can probably find it on Google Ultra One. Dude, it's on Flow. It's a Search Labs Labs original. You can find it in Google Docs. It will appear as a pop-up when you least expect it.

• 3:02:36John Coogan?

  So ridiculous and so true. Just put it, just put it in the Google search bar if you care so much.

• 3:02:40Jordi Hays?

  They just want to test their product market fit. They want to see how hard they can make people work for it and still get adoption.

• 3:02:47John Coogan?

  Yeah.

• 3:02:47Jordi Hays?

  You know, they're built different.

• 3:02:49John Coogan?

  Yeah.

• 3:02:51Jordi Hays?

  We have some, some news separately. Toma Bravo.

• 3:02:55John Coogan?

  Oh, yeah.

• 3:02:56Jordi Hays?

  Has announced this morning the completion of fundraising for new buyout funds totaling more than 34 billion.

• 3:03:02John Coogan?

  That's got to, we got to hit.

• 3:03:06Jordi Hays?

  Yeah, hit the. Can we get the gong view, please? Can we get the gong view? There we go. Nice hit, John.

• 3:03:12John Coogan?

  For Toma Bravo.

• 3:03:13Jordi Hays?

  Nice hit. And notably, they soft circled 1.8 billion out of the 34 billion for Europe.

• 3:03:20John Coogan?

  Oh, interesting.

• 3:03:21Jordi Hays?

  So.

• 3:03:22John Coogan?

  There we go.

• 3:03:22Jordi Hays?

  Uh, you know, not.

• 3:03:24John Coogan?

  Get ready if you're a, if you're a software company over in Europe.

• 3:03:29Jordi Hays?

  If your growth is, if your growth is good, but not great.

• 3:03:32John Coogan?

  Yeah.

• 3:03:33Jordi Hays?

  Get ready to meet Orlando.

• 3:03:35John Coogan?

  On optimization. Get ready.

• 3:03:36Jordi Hays?

  Yeah.

• 3:03:37John Coogan?

  Good to see private equity finally, finally raising some real money.

• 3:03:40Jordi Hays?

  Yeah.

• 3:03:40John Coogan?

  You love to see it.

• 3:03:41Jordi Hays?

  Getting some real size.

• 3:03:42John Coogan?

  Uh, in other news, Open Evidence, the Sequoia-backed AI medical assistant is reportedly raising $100 million with $3 billion valuation just months after its $75 million Series A at 1 billion. GB and Kleiner Perkins are in talks to lead the round, though details are still being finalized. Soon as it's finalized, got to have the CEO on the show.

• 3:04:00Jordi Hays?

  Let's do it.

• 3:04:01John Coogan?

  Some of the investors. It'd be interesting. Uh, I, I am very interested in this, like the, the, the, the vertical, it's like vertical SaaS, right? Uh, the niche verticalization of the platform, uh, layer. Everyone's agreeing with like value accrual at the application layer. The question is like, how many applications will there be? Right? Will there be five or 10 or 50 or 100? There seem to be a lot of companies getting into the unicorn territory. How many will make it through and win?

• 3:04:27Jordi Hays?

  Yeah.

• 3:04:27John Coogan?

  But it's all exciting. Also, Chime has just launched their IPO roadshow. Dan Primack has the story in Axios.

• 3:04:34Speaker 02

  Clearing order inbound.

• 3:04:36John Coogan?

  A $9.1 billion market cap if it prices in the middle.

• 3:04:39Jordi Hays?

  Hari says.

• 3:04:40John Coogan?

  The 25 billion market cap valuation. VC-backed unicorns are maybe, are finally done clinging to their Zerp era valuation, seeing this more and more, and we covered.

• 3:04:49Jordi Hays?

  Taking their medicine.

• 3:04:50John Coogan?

  Yeah, they're taking their medicine.

• 3:04:51Jordi Hays?

  Hari calls out, I think they bid it up to 12 billion or so during the roadshow and pops up to 15 billion on IPO day. Fair value is in the high teens.

• 3:04:58John Coogan?

  Hmm, yeah.

• 3:04:59Jordi Hays?

  Is his point of view.

• 3:05:01John Coogan?

  Yeah, but we saw this in the information. A lot of private companies are, you know, done with their, their, their venture journeys. They're ready to go out into the market as soon as the IPO window is open just enough to get through. And so they might take their medicine. They might take a slight down round going when they're going out. But then historically, that's, that hasn't been that bad in letting them actually perform. Once they get into the market and go public. So good luck to them.

• 3:05:27Jordi Hays?

  We should have lesson on this next one to discuss this next post from Buxate. Very exotic sounding. He says, clearly intern son or VC scout daughter, which is.

• 3:05:40John Coogan?

  I love that Roy is in the comments immediately. Let me get both.

• 3:05:44Jordi Hays?

  You gotta have Roy, you gotta have Roy back on to get the update because he and the team seem to just be wilding out right now. It's actually insane. I see, again, I'm starting to feel like a bit of a boomer because I see some of their exchanges.

• 3:05:58John Coogan?

  And I'm like, oh, this, yeah.

• 3:06:00Jordi Hays?

  I'm like, there's no way this is real. There's no way. There's no, you know, it can't possibly be real. But I don't think they ended up hiring 50 interns.

• 3:06:09John Coogan?

  Yeah.

• 3:06:10Jordi Hays?

  But it seems like they have a lot. Got to have them back on to break it all down.

• 3:06:14John Coogan?

  We should have all the interns on. We should have him with all the interns standing behind him and they can just shout answers over each other. Loudest intern wins.

• 3:06:21Jordi Hays?

  He had an interesting, so he, he had a post that went fairly viral yesterday. He was quoting somebody who said, what genuinely pisses me off about younger founders or just new people getting into startups is how obsessed they are with raising. Goes on and on.

• 3:06:37John Coogan?

  Roy said that?

• 3:06:38Jordi Hays?

  No, no, no. Roy quotes that and says, hot take, founders need to focus more on hype chasing.

• 3:06:44John Coogan?

  Okay.

• 3:06:44Jordi Hays?

  Startups don't live and die by a product being 5% better. They die because of lack of money or delusion. Hype chasing helps with both. I don't know how hype chasing helps.

• 3:06:55John Coogan?

  Yeah, you still get a better product, but distribution is really important. And so like you can.

• 3:06:58Jordi Hays?

  He said inflated revenue is still user, is still revenue. Users who pay out of curiosity are still users and good engineers who are down to interview after a cool launch video are still good engineers. Baryral moments are not so easy to come by and the potential upside of making the most of them is higher than you think.

• 3:07:13John Coogan?

  I like this because like it's it's it's it's a debatable point. Roy, you know, his story is clearly going to break one way or the other. It'll either be a breakout success or kind of a learning lesson.

• 3:07:24Jordi Hays?

  He had another post that I saw where he said he's paying founding engineers like hundreds of thousands of dollars in cash because he said that he can just raise infinite amount of equity, which is.

• 3:07:36John Coogan?

  Built different.

• 3:07:38Jordi Hays?

  He's just built different. And yeah, I'm I'm just interested to follow on. I'm rooting for him despite him being controversial.

• 3:07:47John Coogan?

  Yeah.

• 3:07:48Jordi Hays?

  I want to see him succeed. I think he is.

• 3:07:52John Coogan?

  He's very good at causing controversy like that. Even just that, the idea of like, oh, we're not giving equity, we're giving all cash. Like, that's a controversial approach.

• 3:07:59Jordi Hays?

  Some equity, but he's just like, I value, I value equity way more. I'm just going to pay.

• 3:08:04John Coogan?

  Yeah, but he's selling the equity at high value. It's like you could do that with the shares. It's very odd, but it's like good bait.

• 3:08:10Jordi Hays?

  No, I mean, if he says my, if he believes that his equity is worth a multiple of what.

• 3:08:15John Coogan?

  Yeah, but he's selling it to pay the cash. He's not making money.

• 3:08:18Jordi Hays?

  He has cash in his bank account today. He says, I'm in a Forex.

• 3:08:22John Coogan?

  Sure, sure, sure, sure.

• 3:08:23Jordi Hays?

  In a couple of months.

• 3:08:24John Coogan?

  Yeah, makes sense. Anyway, interesting post from Eperus. We haven't had them on the show yet, but we have to at some point. So quoting Defense Index unstoppable, China can produce 500,000 FPV drones every month and scale up to 700 in wartime, which actually feels like roughly the same scale as as Ukraine, maybe within an order of magnitude, which is shock. It's actually kind of lower than I expected, but it's obviously a lot. And Eperus says this is not unstoppable.

• 3:08:53Jordi Hays?

  Yeah, so Ukraine is doing just under 400,000 a month right now at their current rate.

• 3:08:58John Coogan?

  Okay.

• 3:08:58Jordi Hays?

  But they're doing that basically in a cave.

• 3:09:00John Coogan?

  They have.

• 3:09:00Jordi Hays?

  With scrap, you know, like China has all of the, you know, so I imagine, I imagine China could actually do well beyond this.

• 3:09:09John Coogan?

  Yeah, it's also a weird narrative because like in what scenario, like are these FPV drones, can they get over the Taiwan Strait? Because like I believe they're pretty short range. And so it's it's more for like. Like, what is the trench war scenario that would happen over there where these would be super relevant?

• 3:09:25Jordi Hays?

  Yeah, it's interesting to think about. They could have basically a bunch of floating docks.

• 3:09:29John Coogan?

  Yeah, I guess that's it.

• 3:09:31Jordi Hays?

  And just boats.

• 3:09:32John Coogan?

  I mean, especially if you can just put them into a shipping container and then move the shipping container. So it's like, instead of an aircraft carrier, you just have a shipping, like a cargo ship.

• 3:09:40Jordi Hays?

  Yeah, the interesting thing about, um, yeah. So with Epirus, I'm interested to see how Epirus is actually doing against these FPV drones. Soren yesterday said he hadn't seen an American electronic warfare.

• 3:09:52John Coogan?

  They could really bring them down.

• 3:09:53Jordi Hays?

  Company reliably take down FPV drones. I'm sure, I'm sure Epirus can in certain conditions and it should be a part of a broader system.

• 3:10:00John Coogan?

  Yeah, so they say that their, their mission is to overcome the asymmetric, asymmetric challenges inherent in the future of national security. Uh, and so good luck to them. You know, we want, we want, we want everyone to win here who's working for America.

• 3:10:13Jordi Hays?

  And, uh, we should note, uh, earlier today Chamath, uh, was sharing, uh, an image of a, of a, I forget what machine this is. It's not a scale. You, I think you hold these devices that.

• 3:10:26John Coogan?

  Like an in-body.

• 3:10:27Jordi Hays?

  Yeah, that, that sort of track your body fat. He says, hot girl summer, bring it. She's putting up 11 and a half percent body fat.

• 3:10:34John Coogan?

  Pretty good.

• 3:10:34Jordi Hays?

  Uh, at, uh, allegedly six-two. And, uh, Delian responded and saying, are you trying to get your body fat percentage as low as the IRR of anyone that invested in your 2021 SPACs? Fortunately, that would be, I don't think it's possible to go negative, uh, on the body fat, uh, front. But, uh, then Chamath made a very lewd comment. Uh, Delian fires back. And I, uh, said, brothers, this conversation is unbecoming of the high technology industry. I propose we shift the conversation to what really matters, capital. Would you both like to join TVPN today? And Chamath, uh, unfortunately turned it down. Uh, so we didn't get here, but.

• 3:11:16John Coogan?

  Maybe in the future.

• 3:11:17Jordi Hays?

  But he's got a, he's busy podcasting.

• 3:11:19John Coogan?

  Capital allocators fighting. I like everyone working together to maximize returns at all times.

• 3:11:24Jordi Hays?

  Yeah, I, I think we need to work on our pay-per-view format, get the boxing ring set up. Imagine hitting this, imagine smashing the soundboard as two allocators just duked it out. I mean.

• 3:11:35John Coogan?

  Yeah.

• 3:11:35Jordi Hays?

  Yeah. No better entertainment.

• 3:11:37John Coogan?

  It'd be spicy. Um, but that'll have to be for another day. Anyway, thanks for watching. This has been a fantastic show.

• 3:11:43Jordi Hays?

  Thank you, folks.

• 3:11:44John Coogan?

  We will see you tomorrow.

• 3:11:45Jordi Hays?

  Looking forward to it. Have a great afternoon.

• 3:11:47John Coogan?

  Bye.

• 3:11:47Jordi Hays?

  Cheers.