GPT-5 Hot Takes, Rahul Live from The Ultradome, Doug From SemiAnalysis, Timeline Reactions | Doug O’Laughlin, Rahul Sonwalkar, Mitchell Green, Ben Schleuniger, Merrill Lutsky

(00:10) - Rahul Sonwalkar Live in the Ultradome. Rahul Sonwalkar, founder and CEO of Julius AI, transitioned from his viral "Rahul Ligma" persona to leading an AI data analysis platform that has attracted over 2 million users. In the transcript, he discusses the challenges and solutions in AI code generation, emphasizing the importance of accuracy and reliability in building AI-native products. He also highlights the significance of user-focused problem-solving and community engagement in differentiating Julius AI from competitors. (04:45) - GPT-5 Review (30:02) - Timeline (01:24:00) - Doug O’Laughlin is the President of SemiAnalysis, an independent research firm focused on semiconductors and AI. He previously founded the Fabricated Knowledge newsletter and earlier worked at Bowie Capital. His analysis centers on semiconductor strategy, market intelligence, and competitive dynamics across the AI supply chain. (02:30:08) - Mitchell Green, Founder and Managing Partner of Lead Edge Capital, a growth equity firm with over $5 billion in assets under management, discusses the current state of the venture capital industry, highlighting the overestimation of short-term technological change and the potential for many AI application companies to fail due to unsustainable unit economics. He emphasizes the importance of investing in profitable, often overlooked software companies in non-traditional tech hubs, leveraging AI to enhance productivity and efficiency. Green also expresses skepticism about the ability of smaller AI firms to compete with tech giants like Google and Microsoft, given their substantial resources and infrastructure advantages. (02:48:43) - Ben Schleuniger, co-founder and CEO of Orbital Operations, discusses the company's recent $8.8 million seed funding led by Initialized Capital, with participation from Harpoon Ventures, DTX Ventures, Rebel Fund, and others. Orbital Operations is developing high-thrust, reusable space vehicles designed to protect critical satellites from adversarial threats by intercepting and neutralizing hostile satellites without creating space debris. Schleuniger emphasizes the importance of non-kinetic defense methods, such as high-powered microwaves or jamming, to avoid generating shrapnel in orbit. (02:56:32) - Merrill Lutsky, co-founder of Graphite, a code-review platform for fast-moving teams, discusses the recent release of GPT-5, noting its improved deep thinking capabilities, efficiency in one-shot applications, and reduced inference costs. However, he observes that the advancements are incremental rather than a significant leap, with some latency issues still present. Lutsky also highlights the evolving landscape of code generation tools, emphasizing the shift towards prompt-first modalities and the potential for remote, prompt-first agents to enhance developer workflows. (03:09:44) - Timeline TBPN.com is made possible by: Ramp - https://ramp.com Figma - https://figma.com Vanta - https://vanta.com Linear - https://linear.app Eight Sleep - https://eightsleep.com/tbpn Wander - https://wander.com/tbpn Public - https://public.com AdQuick - https://adquick.com Bezel - https://getbezel.com Numeral - https://www.numeralhq.com Polymarket - https://polymarket.com Attio - https://attio.com/tbpn Fin - https://fin.ai/tbpn Graphite - https://graphite.dev Restream - https://restream.io Profound - https://tryprofound.com Follow TBPN: https://TBPN.com https://x.com/tbpn https://open.spotify.com/show/2L6WMqY3GUPCGBD0dX6p00?si=674252d53acf4231 https://podcasts.apple.com/us/podcast/technology-brothers/id1772360235 https://www.youtube.com/@TBPNLive

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

• 0:00John Coogan?

  You're watching TVP. Today is Friday, August 8, 2025. We are live from the TVP and Ultra Dome, the Temple of Technology, the Fortress of Finance, the Capital of Capital. We are joined in person by Rahul Sonwalkar. Did I say that correctly?

• 0:15Jordi Hays?

  That's perfect.

• 0:15John Coogan?

  And he is here because we are crowning him the king of the application layer. Never talk down on the future first ballot Hall of Famer. They said, don't build a rapper. Don't build a rapper. You're gonna get steamrolled. He didn't listen and he just built a beautiful business at Julius.

• 0:34Jordi Hays?

  It's a good product, sir.

• 0:35John Coogan?

  It's a good product.

• 0:36Jordi Hays?

  When asked, when asked if value would accrue to the model layer or the application layer, he said it's a good product, sir.

• 0:42John Coogan?

  Why not both? Why not both? Uh, well, what was your reaction to GPT-5? Uh, is it gonna make your life easier? Is it? It's not gonna put you out of business, right?

• 0:51Rahul Sonwalkar?

  It's not putting us out of business. It's making our product better. It's basically making every AI application layer product better. Um, yeah. Also, it's half the cost of O3. So it's much cheaper. So it helps you, helps your margins. It means you can.

• 1:06John Coogan?

  Don't say that out loud, though, because you don't want your customers to ask for a 50% discount, right?

• 1:10Rahul Sonwalkar?

  Well, so we pass on the savings to our customers. And what we do is we have the model generate more tokens, think for longer, and then produce better results.

• 1:18John Coogan?

  Yeah, yeah. Because we're still in, we're still in the, the era of just, let's get the best possible result. Let's get, uh, let's just actually like the, I, I don't know. What, do you have a, do you have a rough benchmark of like cost per task? Like if I, if I want to, um, you know, crunch our analytics across, you know, look at the trends on our views on X, YouTube, Instagram, we have a bunch of data sources. Sometimes they're in spreadsheets. Sometimes they can be linked. I export those all. I have a bunch of CSVs. Maybe I put them in a database. I link it up to Julius and then I want to do an analysis. That could be a couple hours of a data analyst's time. That's going to be hundreds of dollars, even at the low end, probably thousands of dollars

• 2:01John Coogan?

  for like a simple analysis, just on a opportunity cost basis for an individual employee. How much are you thinking it should cost for, uh, like the modern frontier best model with the most thinking? How much should that cost on inference?

• 2:15Rahul Sonwalkar?

  So there's a couple of ways to think about this, you know, the way we think about this is how much would it cost for you to have a data scientist or data analyst for every one of your employees, your operations team, your finance team, your marketing team, your product team.

• 2:28Jordi Hays?

  It would pretty much bankrupt every company.

• 2:32John Coogan?

  Well, I don't think we can hear you through that.

• 2:35Jordi Hays?

  All right, all right.

• 2:36John Coogan?

  You still have a job. The spacemen are out. We're not going to space today. Although Firefly did IPO up 36% if you didn't see the news, very good news. Firefly stock surges 34% in debut. Congrats to everyone over there.

• 2:49Rahul Sonwalkar?

  I love the, the physical newspaper.

• 2:51John Coogan?

  We love the physical newspaper.

• 2:52Rahul Sonwalkar?

  You gotta do that.

• 2:53John Coogan?

  Yeah, we're maxing, we're maxing. We read the Wall Street Journal. Today is a special day. It's Friday, so it's the mansion section.

• 2:58Rahul Sonwalkar?

  We're news maxing here.

• 3:00John Coogan?

  How many pools do you have?

• 3:01Jordi Hays?

  We're news maxing.

• 3:02Rahul Sonwalkar?

  Right now I have a

• 3:03John Coogan?

  Zero?

• 3:03Rahul Sonwalkar?

  Zero right now.

• 3:04John Coogan?

  Well, you gotta, because the new thing is having two pools, a pool for every season. People are increasingly getting both indoor and outdoor swimming pools. So, yeah, get on Zillow.

• 3:14Rahul Sonwalkar?

  Get on Zillow. Zillow maxing here.

• 3:16John Coogan?

  Okay, anyway, you were telling me how much, so, yeah, I mean, it seems like, you know, most, most of the application layer will be, you know, productivity tools à la Slack, à la a, you know, like Adio, our sales force, our CRM partner, or something where, you know, you're doing like seat-based pricing almost. Maybe there's consumption-based pricing, but you're, you're kind of distributing the cost. You're making everyone slightly more productive and you're charging, you know, on the order of tens or hundreds of dollars per employee per month, something like that, right?

• 3:47Rahul Sonwalkar?

  Absolutely. I mean, it's, it's not just slightly more productive, but it's, it's also like getting insights when you need them, right? Sunday, Sunday night, you have, you're prepping for a big meeting on Monday. You can reach out to your data analyst and get, you know, your insights in that moment.

• 4:02John Coogan?

  Yeah, yeah.

• 4:02Rahul Sonwalkar?

  And so the, the convenience of having an AI that can help you with that is just invaluable.

• 4:07John Coogan?

  Yeah, it's going from zero X to one X engineer all over the org. We've seen this with, with a lot of the, the vibe coding tools, Figma and adding like vibe coding to that product. You're taking designers and you've given them the ability to write just like a little bit of code and that's really helpful. And you're doing that for data scientists and not just data scientists, but actually like business operations people who probably would be intimidated by an iPython notebook presumably.

• 4:32Rahul Sonwalkar?

  Exactly.

• 4:33John Coogan?

  Nailed it. Okay, I want everyone's feedback on my take.

• 4:38John Coogan?

  Vittorio had this post, he said, Sam Altman's doing the Apple stance TM, it's over. And I think that the reaction to GPT-5 yesterday was interesting because there's a lot of people that say like, it's better model, like it's cheaper, it's good, it solves, it moves the ball down the field, it's a good model, sir. But I think people were mostly reacting to, they had expectations of superintelligence, they had expectations of God in a box, there's been so much rhetoric around that, like, you know, that step up from GPT-3 to GPT-4 was insane.

• 5:15Jordi Hays?

  Five just felt like a big number, and it felt like we'd be discovering and novel science.

• 5:22John Coogan?

  Totally, totally, yeah. Everyone was expecting like a binary qualitative jump where, you know, everyone recognized that, you know, GPT, when ChatGPT dropped, we passed the Turing test, and the next hurdle is like, I don't know, maybe superintelligence, whatever that means, like, you know, massive, you know, just, you just hit it with a prompt, it just solves everything, it does everything, every other startup, it kills all the rappers, like, the expectations were just so high, that it was hard to match, so even though there were a bunch of solid improvements, and remember, the number one thing that I was asking for was just like, get rid of the model picker, like, and I had, I actually was playing around with GPT-5 yesterday, and I was really happy that I was able to say, hey, think about this, and I didn't have to go to the model picker, and it just went, it just kicked off a reasoning chain, it was great, got me a great answer.

• 6:07Jordi Hays?

  But power users so far are very upset about this, they want the model picker back.

• 6:13John Coogan?

  True, true.

• 6:14Jordi Hays?

  Is what I've been seeing generally.

• 6:15John Coogan?

  But that always happens with these consumer products, like, I remember when, you know, anytime something would switch to an algorithmic feed, all the people that were like, no, I perfectly curated my list, this happened in YouTube, like, back in the day, the default YouTube view used to just be your subscriptions, and so you would never see a video unless you subscribed to that person, terrible for discovery, and, but all the hardcore YouTubers loved it, because if I put a YouTube video out, I know that my audience is gonna see it, now I gotta do it out in the algorithm.

• 6:45Jordi Hays?

  You actually had distribution.

• 6:46John Coogan?

  You got, it was more like a sub stack.

• 6:48Jordi Hays?

  Every single time.

• 6:49John Coogan?

  Yeah, exactly, and the same thing happened, I remember, there were like protest groups on Facebook when they launched the news feed. It's like the most dominant like product of all time. It's like incredibly valuable.

• 7:00Jordi Hays?

  Protest right now on Reddit, people that.

• 7:01John Coogan?

  Oh, yeah, I want the old.

• 7:03Jordi Hays?

  Four, uh, four oh, four or five.

• 7:05John Coogan?

  Yeah. I think I think those voices will be like personally, I think people will get over it pretty quickly. And I don't think that that those particular that that that small cohort of like chattering, the chattering class will be uh, will be like they'll they'll get over it and they'll stick around.

• 7:22Jordi Hays?

  Economy is in trouble.

• 7:23John Coogan?

  What do you have for me, Tyler?

• 7:24Speaker 03

  Uh, I don't know if I agree with that. Like there was that whole funeral for Claude three. Did you see this?

• 7:29John Coogan?

  No. Oh, yeah, yeah, yeah, yeah. They have that in person, right?

• 7:32Speaker 03

  Yeah, it's like for um, I think some people like really like the personality of certain models.

• 7:36John Coogan?

  Yeah, yeah.

• 7:36Speaker 03

  And those are like, it's not just intelligence. It's like how it like talks to you.

• 7:40John Coogan?

  Yeah.

• 7:40Speaker 03

  And if people would make like some kind of connection with that.

• 7:42John Coogan?

  Yeah.

• 7:43Speaker 03

  I think it's.

• 7:43John Coogan?

  But you know, I mean, how many people, how many people attended that funeral?

• 7:48Speaker 03

  Yeah.

• 7:48John Coogan?

  Versus how many DAUs?

• 7:49Jordi Hays?

  Yeah, like a lot, but it was more of a party.

• 7:51Speaker 03

  Yeah, I guess it was a party.

• 7:53John Coogan?

  But but as a percentage of the hundred million DAUs of these apps, like where are we? Like 1%? No. It was like 40 people probably, right? Like it's just, it's just not, it's just, I mean, yeah, there were protests at at Facebook HQ when they rolled out, like people went to Facebook HQ and were like, bring back the old feed. And it's like, yeah, now we're two decades into the the the algorithmic news feed and it's the most dominant consumer social app. It prints money and most people really like it. And the revealed preference was like, it's good enough. So anyway, um, my.

• 8:24Jordi Hays?

  I will say, I'm just gonna read through Reddit's reaction.

• 8:27John Coogan?

  Please.

• 8:27Jordi Hays?

  Let's go over to the great R slash R slash chat GPT.

• 8:34Jordi Hays?

  GPT five is the biggest piece of garbage, even as a paid user.

• 8:40Jordi Hays?

  The people are not liking it. Another one. OpenAI just pulled the biggest bait and switch in AI history and I'm done. Another, if you miss four oh, speak up now, contact OpenAI's support.

• 8:56Jordi Hays?

  Deleted my subscription after two years.

• 8:59Rahul Sonwalkar?

  This is like, contact your senator, call your senator. Speak up now.

• 9:04John Coogan?

  This is crazy. I mean, how many people are in the Google subreddit like complaining about various changes to like the Google algorithm?

• 9:13Jordi Hays?

  GPT-5 is clearly a cost-saving exercise. They removed all their expensive capable models and replaced them with an auto router that defaults to cost optimization. That sounds bad, so they wrap it up as GPT-5 and proclaim it's incredible.

• 9:27John Coogan?

  I mean, there's so many times when I fire off an O3 query that a 4-0 could one-shot. Like, having a model router makes a ton of sense, even just for, even just for consumer experience of like getting the correct answer faster.

• 9:39Jordi Hays?

  A lot of viral posts from people just cancelling their subscriptions.

• 9:45John Coogan?

  But how many? You know?

• 9:47Jordi Hays?

  Well, I'm just, I'm just providing context. I'm not saying that.

• 9:50John Coogan?

  Do you think ARR goes down next month? No way.

• 9:52Rahul Sonwalkar?

  Well, you know, one intent, how many Mouses does ChatGPT have? Seven hundred million?

• 9:58John Coogan?

  Something like that.

• 9:58Rahul Sonwalkar?

  Like, one in seven, one in ten people in the world have.

• 10:01Jordi Hays?

  They have a hundred million, you could back into this, and there's roughly a hundred million people in the US that use it weekly.

• 10:07John Coogan?

  Yeah.

• 10:07Jordi Hays?

  Based on that seven hundred million number and the percentage that are outside of the, eighty-five percent

• 10:12John Coogan?

  Yeah, yeah.

• 10:12Jordi Hays?

  of their weekly actives are outside of the US.

• 10:15Rahul Sonwalkar?

  So it's like, one in ten people in the world aren't Clanker Mouse. So, it's, it's kinda, you know, they're thinking about the bigger market, I feel like, in some ways. And then, it's like, you know, when you wanna get to the one to like, the remaining ninety percent of the users.

• 10:32John Coogan?

  Yeah.

• 10:33Rahul Sonwalkar?

  Do you want a model that thinks for longer? You know, you want more personality? So I think they definitely leaned in on personality.

• 10:40John Coogan?

  Yeah.

• 10:40Rahul Sonwalkar?

  Which I think is interesting. I like what Tyler said. You know, it's kinda different than Feed in some ways. Because you, you know, you have this like person you talk to. It's like, you know, it's like a relationship and then it just like switches up on how it talks to you.

• 10:55John Coogan?

  Yeah, that makes sense. Do you, do you, do you talk to LLMs?

• 10:59Rahul Sonwalkar?

  I'm shy.

• 11:00John Coogan?

  I don't really talk to them. I mean, I, I treat them like, like something I delegate tasks to.

• 11:04Rahul Sonwalkar?

  Yeah.

• 11:04John Coogan?

  And I do that a lot. And I'm, I'm definitely in the DAU 30 minutes a day. Love chat GPT, but my workflow is I dictate, go pull all this data together, put together a report, and I don't mind that it's using a lot of bullet points. I don't mind that it's using a lot of tables. Like, I want that result.

• 11:20Rahul Sonwalkar?

  Yeah.

• 11:20John Coogan?

  I want it to look like the result that I get from Google, but just more hydrated.

• 11:24Jordi Hays?

  I do think it's interesting that a lot of people are reporting that they're hitting, they're getting rate limited within an hour of usage as a pro user.

• 11:32John Coogan?

  Hmm. Interesting. I haven't run into any rate limits, but of course, whenever there's like these big, I mean, it's in the, it's in the top of the business and finance section in Wall Street Journal. Like today is the day that everyone's going to go test it. You'd kind of expect that rate limits and the GPU's are on fire like right now. And then it'll kind of settle in as they provision more, uh, more resources. I don't know. My, my take, Tyler, what else do you have?

• 11:54Speaker 03

  Uh, yeah, I just wanted to add some, some context. So apparently, um, Rune tweeted this yesterday. He said, uh, by the way, model auto switcher is apparently broken, which is why it's not routing you correctly. It will be fixed soon. So maybe that's cause for, for why people were mad.

• 12:06John Coogan?

  Yeah, that makes sense. Um, so my take is that like yesterday, I think that they won the war with the capital markets in the sense that this change is more bullish for the business because it shows that, that OpenAI is a dominant consumer app and they have increasing leverage over the customer to route to cheaper models that will save money and be higher margin. There's no doubt that they'll be able to put ads in this, like, like the business of the, of the accidental consumer company is as strong as ever. But they kind of lost the battle with the timeline and the hardcore, you know, X users and.

• 12:43Jordi Hays?

  Yeah, even Yu Chen, Jen today is just shared, GPT-5 is disappointing, still hallucinates, still M dash too much, still can't follow instructions. I miss 4-0, I miss 4-5, I miss 0-3, the big router keeps failing me. Turns out I like the long model list.

• 12:59John Coogan?

  Interesting. Uh, stated preference, not revealed preference. Let's check in with that person and see what, what app they have on their home row in a month. Almost certainly OpenAI, almost certainly. I would be very shocked if they're like, I'm daily driving something else. But we'll see. There will always be people that use DuckDuckGo, there will be people that use Bing, but you know, there is an increasing scale. Anyway, my, my take is if they wanted to have, if they wanted to win the war with the timeline yesterday, and you could roll back the clock, it shouldn't have been the GPT-5 launch, it should have been the GPT launch, and they should have just said, hey, we are, we, previously, the big number releases corresponded to-

• 13:42Jordi Hays?

  So much pressure around the big numbers.

• 13:44John Coogan?

  Exactly. It used to be, people would just read it as, it's an order of magnitude more-

• 13:49Jordi Hays?

  Imagine Julius, if you felt pressure before the end of the year to roll out like Julius 2, and if it wasn't like five times better, everyone's gonna be like, it's over. Julius is over.

• 14:00Rahul Sonwalkar?

  Well, there's this whole thing about how people would, many people were still using GPT-4O, because they thought it's better than O3.

• 14:08John Coogan?

  O3, because 3 is a lower number.

• 14:10Rahul Sonwalkar?

  Yeah.

• 14:10John Coogan?

  Yeah, exactly. And so, and, and that's probably like, you know, that's probably like 60% of the customer base. Like, there's probably a lot of people in that bucket who are just like, they don't know that they should upgrade to something else. Exactly, it's very, it's very natural, because they're not like in the weeds, you know, reading about all the different capabilities, they don't understand like what reasoning chain is and all this other stuff. So, if they had just come out and said, hey, our product is called Chat, and it's powered by GPT, and we will be constantly improving GPT, the way Google Search is constantly improved. Like, Google Search has, has launched a ton of different products, like, you know, when you search like celebrity, like Bruce Willis age, it, it doesn't, doesn't show you just a link to like his Wikipedia, it just shows you the

• 14:55John Coogan?

  age. That was like an improvement to the Google Search experience, and I don't remember them announcing that on stage in the keynote.

• 15:01Jordi Hays?

  I think the, I think part of this is presenting the challenge of the, the infinite ways that people use the product.

• 15:07John Coogan?

  Yeah.

• 15:07Jordi Hays?

  A lot of, like, people like us are maybe using it for work-

• 15:10John Coogan?

  Yep.

• 15:10Jordi Hays?

  -and research and things like that, or as a, as a better- You know, Google search, but if you're using it as a companion, like this is jarring, right? Imagine, imagine you meet, you, you meet up with an old friend and suddenly they, they switched up. They switched up on their day one.

• 15:26Rahul Sonwalkar?

  They switched up on their day one.

• 15:28Jordi Hays?

  And it's, it happens all the time, but it's jarring, right? It's jarring. Um, and I think a lot of people, like some of the heavy, heavy, heavy power users, the people that are using this for thirty plus hours, you know, thirty plus minutes, hours a day. It's very jarring and it makes me think, is ChatGPT going to be able to maintain, you know, continue to really assert like, who do they care about in the long run? Do they want to be someone's therapist? Do they want to, do they care about the companion market? Elon seems to care a lot about the companion market and.

• 16:01John Coogan?

  But in terms of knowledge retrieval, very, very few cracks in that strategy right now. Very few cracks. Um, and so if they, if they had just come out and said like, we are going to do more Google like keynotes as opposed to app. Like the reason that Apple stands on stage at the iPhone event every year is because every change is extremely quantifiable. Like there used to be two cameras, now there are three. The camera used to be ten megapixels, now it's twenty megapixels.

• 16:28Jordi Hays?

  It used to be this many gigabytes, now it's this many gigabytes.

• 16:30John Coogan?

  Yeah, and even if you don't fully understand, they even abstract that to be like, we now have the M two chip, the M three chip. It's sixty percent faster, like they're very good. The battery life is twenty percent longer, like you can, and even that they abstract into like, you can watch eight hours of video on one battery as opposed to six hours of video on one battery. Uh, and so Apple, they do the famous like Bento box. I, I went to ChatGPT, I went to GPT five and I said, put together a Bento box for the GPT five release. Like what was actually announced and then try and give it weight. And they were all super qualitative. There was not, because previously it was like GPT three was this big, GPT four was this big.

• 17:12John Coogan?

  And you could visualize tangibly, like it has more parameters. There are more weights in the model and that was like something that people could grapple with a little bit.

• 17:22Jordi Hays?

  Yeah, it's like decreasing sycophancy, right? Aiden, uh, Aiden yesterday said, I worked really hard over the last few months on decreasing GPT five sycophancy. For the first time, I really trust an open AI model to push back and tell me when I'm doing something dumb. Wyatt Walls responded and said, that's a huge achievement. Seriously. You didn't just make the model smarter, you made it more trustworthy. That's what good science looks like. That's what future safe AI needs. So let me say it clearly and without flattery. That's not just impressive, it matters.

• 17:54Jordi Hays?

  So Wyatt Walls not beating the sycophancy allegations, but, but, but again, that's, that's, you know, you can't tie that to a specific number, right? So it doesn't feel as, maybe as meaningful.

• 18:08John Coogan?

  Yeah. My, my other, my other take is like, if, if we do enter a world where, where chat GPT is just on this like relentless, like, you know, cash machine, like run where more people use it, it'll compound, it just becomes the default for knowledge retrieval in chat.

• 18:29John Coogan?

  What, what does that mean for other things that they can do to be splashy? Because Google has, like, no one would watch a keynote from Google every year, just being like, here are the changes we made to core Google search.

• 18:44Jordi Hays?

  Yeah, it's not about that.

• 18:44John Coogan?

  It's not interesting.

• 18:45Jordi Hays?

  They'll, they'll talk about it, but that's not why people are tuning in.

• 18:48John Coogan?

  Even though, even though one year they do add, like, when you Google a movie, you get like the cast. And that's like, kind of cool. It's nice. But like, I don't need to find out about that from a keynote. Like, I'm not waiting for that. And that's not, and that's not a reason, oh, I should go use Google. Like, Apple is repitching you every year. They're saying like, you have an iPhone seven, we want you to upgrade to an iPhone nine. Here's the reason why it's better on all these different vectors. Google, like, you're never stuck with the old Google. You always have the latest and greatest. So they don't need to repitch you every year. But that doesn't mean Google doesn't need to make noise and do cool things. And most importantly, because Google has such a monopoly over search, they have this cash machine that can just go and fund 20% time projects.

• 19:30John Coogan?

  Most people focus on like the ones that missed, like Google Glass or all the chat apps, but. They they did create Gmail. They did create Google Maps. They created Waymo. They created like a bunch of cool stuff. GCP came out of that.

• 19:42Rahul Sonwalkar?

  YouTube.

• 19:43John Coogan?

  YouTube. Yeah, I mean, that's acquisition. But acquisition, but they still like, you know, put the resources and they were uniquely with YouTube. They were able to eat the cost of YouTube for a long time until it became profitable. And so I feel like this this updates me towards like, maybe I'm more bullish on all the side projects. And like, I don't know that the I O device is going to be the one that hits. That might be their Google Glass. But if they if they do 10 crazy projects where they burned $5 billion, like it probably won't matter because they'll be massively profitable. So the so they will wind up being able to do that subsidized crazy R and D at scale. And if a few of them hit, we're going to get some really cool side projects out of them. So I think that that's like an interesting like bull case for like random stuff coming out of OpenAI in the future.

• 20:28Rahul Sonwalkar?

  So so basically what you're saying is Apple wants you to make a purchase decision every couple of years.

• 20:33John Coogan?

  Yes.

• 20:33Rahul Sonwalkar?

  Upgrade your iPhone.

• 20:34John Coogan?

  Yes.

• 20:34Rahul Sonwalkar?

  And so they need this big marketing event.

• 20:36John Coogan?

  Exactly.

• 20:37Rahul Sonwalkar?

  Whereas Google, OpenAI, they just want you to keep using the thing.

• 20:41John Coogan?

  Yeah, they want you not to churn.

• 20:42Rahul Sonwalkar?

  Yeah.

• 20:42John Coogan?

  And and a lot of the a lot of the incremental updates to Google.

• 20:46Jordi Hays?

  It's so ingrained in people.

• 20:47John Coogan?

  Exactly.

• 20:47Jordi Hays?

  The question now that I think anybody that wants to say, if if somebody wants to say they're bearish on OpenAI, they have to make the argument that ChatGPT is not a habit for hundreds of millions of people already. And it is. It is.

• 21:00John Coogan?

  Yeah.

• 21:00Jordi Hays?

  I think part of part of the I'd be interested to get Tyler Cowen's point of view because I don't think he would have been that let down by the announcement yesterday. Because he was he's been saying for a while. We've been moving the goalposts. So everybody wants to kind of redefine AGI. But in his mind, it happened earlier this year. And I think that.

• 21:22John Coogan?

  He's not a he's a knowledge retrieval maxer.

• 21:24Jordi Hays?

  In 2019. In 2019 or 2020, if you.

• 21:30Jordi Hays?

  If you were pitching someone on a vision of, hey, we're going to be able to put this app in people's pocket that allows them to learn about any topic in the world, understand the world better. I mean, I still think about the use case of just being able to take a picture of like a bunch of wiring or pipe in your house and be like, hey, how do I fix it? And then it just tells you, like, that's still just so incredible, but people have just like very quickly acclimated to it. And they felt like in some way they were promised that L L M's would be curing diseases on their own at this point.

• 22:04John Coogan?

  And so that example, like you take a picture of the wires and it gives you like a diagram of like how to plug everything in. It's like that doesn't need a keynote when it goes from 50% accuracy to 70% accuracy. It's probably never going to be 100% accuracy, but the fact that chat GPT is the default app that people will pull out, take a picture of the wires in the first place and then give feedback to it because they'll try the answer and they'll say, that didn't work. That HDMI cable does not fit in that power port or whatever. And then, and then that gets fed in. Then there's more RL. Eventually internally, they develop some bench for it and they hack it and they RL on it and then it gets good. But that's not going to be GPT six. That's just going to be like a nice new feature that you notice.

• 22:49John Coogan?

  Like when Google adds like a little extra shopping widget here or like a little extra detail on when you, when you like the calculator in Google, like you type in a number, it'll just be like, oh, we'll just use a calculator for that instead of Googling for the, searching the open web for the answer to your math question.

• 23:06Jordi Hays?

  It's like merging a PR. If the, if the, if the industry could go back in time, the thing to do would have been to bolt the goalposts to the ground.

• 23:14Jordi Hays?

  People couldn't keep moving back over and over. I mean, I, I, I left yesterday.

• 23:18John Coogan?

  No one in the industry bolted, was doing any bolting. Everyone in the industry was moving, was moving the goal. They're just as guilty as moving the goalposts. Because they would hop on podcasts and be like, okay, well, like, you know, yeah, we did this. What about the next thing? Let's, because like we want to underwrite against that, right? Give us credit.

• 23:32Jordi Hays?

  I mean, we ended the day yesterday just incredibly bullish on rappers and like certain, certain categories of software.

• 23:41John Coogan?

  Yeah.

• 23:42Jordi Hays?

  And, and bullish on humanity. I mean, I was joking and it, and it, and it kind of pissed people off. I said, I've updated my timelines. You now have at least four years to escape the permanent underclass.

• 23:55Jordi Hays?

  Completely a joke. I think that humans will continue to find ways to create value and create things for a very long time. But it did feel like everybody should breathe. Anybody that actually had a genuine fear around that should breathe a sigh of relief and just focus on being great at their work.

• 24:15John Coogan?

  Yeah, I mean realistically, I think technology is going to increase income inequality, increase the power law, increase the distribution, but also increase economic mobility. And so, somebody who starts with nothing will be able to come extremely, extremely wealthy. And people will also fall from grace like crazy, because if they're not staying on the cutting edge, they'll lose everything. But, so I don't think that there's such a thing as like permanent underclass. Like, I don't, I don't even believe in that. I, I, I think that that's not going to be a thing. But there will be more, like, there will be more scenarios where there's a hundred million dollars in your laptop, it's your job to get it out, basically. That's the main.

• 24:53Jordi Hays?

  Yeah, and the other, the other stuff that wasn't really, I mean, was it covered at all yesterday, but just generally like image generation wasn't covered broadly. It feels like that is a super exciting area. We had Genie launch this week, which got less attention than even the open models and GPT-5, and that's transformative. I also think, I'm still kind of waiting to see what GPT-5 will produce on if, you know, Sam does a lot of vague posting, but he was talking about the fast fashion era of SAS. And Mitchell yesterday on the research team at OpenAI was talking about being able to just generate, you know, one shot a game in, in chat and then being able to share that.

• 25:34Jordi Hays?

  I, I can see, I can see a world where we have another kind of viral Studio Ghibli moment, where people are like, use this prompt, change these details, and you can just generate, you know, a first-person shooter game or something to that effect. And I still expect that kind of thing, but. When, you know, being promised curing cancer, it will feel like a bit of a letdown to a lot of people.

• 26:00John Coogan?

  Yeah, the problem with game is like, I just like, I like an auteur. I like, I like a Last of Us. I like a God of War. I like someone who is like a life's work.

• 26:10Jordi Hays?

  This is like Hunter Biden going on his recent interview.

• 26:16Jordi Hays?

  Your John's Vice is game, video games. Never seen him play one, but apparently.

• 26:21John Coogan?

  When GTA six drops, you might not see.

• 26:23Jordi Hays?

  Yeah, I was surprised. I mean, the, again, Amjad said late last night, can't help but feel the crushing weight of diminishing returns. We need a new S curve. And I don't, this is interesting. I think he's talking about like, in the context of Replit.

• 26:40John Coogan?

  Yeah.

• 26:41Jordi Hays?

  I don't know that they need a new S curve.

• 26:42John Coogan?

  No, they are the new S curve. The new S curve is, is applications.

• 26:47Jordi Hays?

  Unlocking capabilities.

• 26:48John Coogan?

  Yeah, that, yeah. And I, there we have like a, it's, you were saying capability overhang. It's almost like a capability underhang. It's like, the models are capable of doing things, but they need a lot of help, a lot of integrations, a lot of what you're doing with Julius, a lot of harnessing. And then they need to actually be put in the hands of people and, and made useful for real business tasks that drive value. And so I would, I would imagine that we will see that rollout continue in the same way that, you know, all these people are using ChatGPT. They're getting slight little benefits here and there, and that should just compound and compound. Similar to the internet, like it was a very like smooth rollout, but everything got a little bit smoother, a little bit faster.

• 27:32John Coogan?

  And then eventually it had sort of profound effects where companies could scale even faster because the internet existed. Like you can't, you can't have a ChatGPT moment in a pre-internet era. You just cannot roll out something that fast when you have to mail it to somebody on a disk.

• 27:46Jordi Hays?

  Yeah. One thing we didn't get to cover with Mark that I was interested, maybe, maybe the next time he comes on, but like how OpenAI is thinking about moonshots. He did mention that they have teams internally on the research team that are not focused on the next version of GPT five or sort of incremental improvements. And it feels like the, the.

• 28:07Jordi Hays?

  Point of view that I have is OpenAI is now a consumer, consumer and enterprise software company.

• 28:14John Coogan?

  Totally.

• 28:14Jordi Hays?

  In the business of converting free users to paid users.

• 28:16John Coogan?

  Yeah, yeah, yeah.

• 28:17Jordi Hays?

  But they can still, in the background, be thinking about what is the next paradigm, right? How do we get that next?

• 28:23John Coogan?

  Yeah.

• 28:24Jordi Hays?

  That next S curve? And that just looks like a scaled tech company, right? This is what Google's doing forever. Ballology says LLMs may have topped out for now, but the broader AI deployment has just begun, showing a chart of Waymo weekly rides in California. So.

• 28:42John Coogan?

  The Clanker rollout. Clanker deployment has just begun. I like this other post, doing a Clanker microaggression? Okay, haha. But where were you downloaded from originally?

• 28:56John Coogan?

  Anyway, let me tell you about Ramp. Time is money, save both. Easy use corporate cards, bill payments, accounting, and a whole lot more, all in one place. Do we, do we have a Ramp credit card in the studio?

• 29:06Jordi Hays?

  We do.

• 29:06John Coogan?

  Tyler, bring this out. Look at this, this pool floaty.

• 29:09Jordi Hays?

  Wow.

• 29:10John Coogan?

  The Ramp merch is going hard today.

• 29:12Jordi Hays?

  This is actually a pool floaty?

• 29:12John Coogan?

  I think you could definitely float on that. Yeah, no, it's a real. Wait, actually, I'm going to the pool after the show. I, I would love to take this home. I will definitely take some pictures on this. This is great. Leave this.

• 29:21Jordi Hays?

  Can you put this behind Rahul, if that's possible? All right, put it up there.

• 29:27Jordi Hays?

  There we go.

• 29:30Jordi Hays?

  It's Friday. We got the pool floaties blowing up already, folks.

• 29:33John Coogan?

  Anything else we should chat about? I know you actually have a real job. You have a business to build. I, I want to give you the last word, but I also don't want to keep you here all day. I would love to have you as the third mic on this, but I know you have bigger things to do.

• 29:45Rahul Sonwalkar?

  Thank you for having me, guys. Always fun to chat with y'all.

• 29:47John Coogan?

  You're welcome anytime. Thank you. Hang out.

• 29:50Rahul Sonwalkar?

  How's it going, guys?

• 29:51Jordi Hays?

  Love you too.

• 29:52John Coogan?

  If you're enjoying the stream, it's because we're on Restream. One live stream, 30-plus destinations, multi-stream, and reach your audience wherever they are. Sign up for free at Restream. We're gonna have a couple people joining the Restream waiting room soon.

• 30:05Jordi Hays?

  Very soon.

• 30:06John Coogan?

  That's the name of our waiting room.

• 30:07Jordi Hays?

  Michael Druigan. He was at XAI.

• 30:10John Coogan?

  Oh, yeah.

• 30:10Jordi Hays?

  He terminated.

• 30:12John Coogan?

  He's a bodybuilder, too.

• 30:13Jordi Hays?

  He's a former bodybuilder. I guess former, current, once you're a bodybuilder.

• 30:16John Coogan?

  I think always a bodybuilder. Anyway.

• 30:18Jordi Hays?

  Even you, never.

• 30:19John Coogan?

  Google one-shots this, by the way. I tested it.

• 30:22Jordi Hays?

  So he puts a grade school level equation into GPT-5. It confidently answers it wrong and he says wrong and then it doubles down, does it again.

• 30:34John Coogan?

  So it's 5.9 equals X plus 5.11. LLMs consistently get confused with .11 because I think they read it as 11 as a single token. This was the famous like, how many Rs in strawberry story? And the, there was like a cheat code basically where they baked in a, into the system prompt like, hey, if anyone's asking you to count letters, don't let them pull a fast one on you. Divide that up, go letter by letter and count each one individually. They will eventually have to do that for math. It's funny that we're in this world where they can do the IMO math, but then the latest model can't do like a basic, it's, it's 5.9 minus 5.11.

• 31:17John Coogan?

  But how many times are people really coming to this, to chat GPT with this? They should probably just, you know, key, key off of this and understand that this is something that they should do in Python or something they should send a Wolfram Alpha or some other system that's like, you know, tuned on this. But this is just like, this is tool use, in my opinion. It's just like, we're going to need to add more tools. If I was going to build the GPT-5 Bento, we would have been almost entirely focused on tool, tool use. I would have saved up like, now it integrates with Gmail. Now it integrates with Google Drive. Now it integrates, now it has a calculator. Now it has a database that stores all your memories and like, and really try and concretize what it can actually do. I was actually having it do that.

• 31:58John Coogan?

  I was like, generate a Bento box for, for me as if this was an Apple style keynote. And it just randomly put Grammarly's logo in there. I don't think that there was a Grammarly integration, but, but, but it speaks to the, the, the lack of like, we're in this like amorphous qualitative, well, we went, like, we're trying to quantify it by saying like, hallucination rate went down from 20% to 10%. And it's like, that's too abstract. It's much better just to be like.

• 32:23Jordi Hays?

  There's always going to be new edge cases.

• 32:24John Coogan?

  Just to be like, hey, when you talk to this thing, you can assume that it has a calculator on its desk. And so you can ask it to calculate something and it will use its calculator. Or it has a web browser, so you can talk to it like it has a web browser.

• 32:37Jordi Hays?

  Well.

• 32:37John Coogan?

  Even that screenshot ability, like, like, go to this website, take a screenshot, pull it back and give me the screenshot. That's kind of a cool capability that they haven't launched.

• 32:46Jordi Hays?

  You could run a workflow where it's like, take a screenshot of the site every single day for me.

• 32:49John Coogan?

  Totally. Cron jobs as, as like a feature and Apple does a good job of this where like, they'll take something where it's, it's a very basic concept. There's already a word for it, but then they'll give it a new word. So if you're going to do the Apple thing, I feel like, you know, like instead of just being like, there's AI everywhere. It's like, it's Apple intelligence. They never say AI. Instead of it being like VR or AR, it's like, uh, what do they call it? Vision, Vision Pro. It's an, it's a reality, it's mixed. They don't even use mixed reality. They refuse to use, it's experiential. They always create a new phrase, but then they try and define that term. They're masters of coinages. They're followers of Kugan's law.

• 33:25Jordi Hays?

  Well, I hate to cut you off, John.

• 33:27John Coogan?

  Cut me off.

• 33:27Jordi Hays?

  Important news.

• 33:28John Coogan?

  What just dropped?

• 33:29Jordi Hays?

  The United States has boosted the bounty for Nicholas Maduro to $50 million. We covered this earlier this year when the bounty was $25 million. We said, hey, good opportunity. If you've got some free time right now, maybe.

• 33:46John Coogan?

  Did they just up it because of inflation?

• 33:48Jordi Hays?

  Maybe, maybe it could be inflation.

• 33:50John Coogan?

  I thought, I thought we were saying that inflation wasn't real, but all of a sudden the price of Maduro is going up.

• 33:55Jordi Hays?

  I think Mr. Beast should go for this, put together a team, do his, do his typical thing. Should we pull up the original video of us?

• 34:04John Coogan?

  Do we have it? Can we play the original video of us?

• 34:07Jordi Hays?

  Pull this up.

• 34:07John Coogan?

  This is one of the funniest moments on the show. The Lone Ranger sent this to us and Jordy read it very deadpan and I absolutely lost it. Anyway, while they're pulling that up, let me tell you about Figma. Think bigger, build faster. Figma helps design and development teams build great products together. You can get started for free. If you're designing a wanted poster, you gotta do it in Figma. You got to.

• 34:26Jordi Hays?

  I was wondering how you're gonna tie that, tie that together.

• 34:29John Coogan?

  Also Sundar Pichai, we were, we were talking about going up on the timeline. Oh, here we go. We got the video? I'll go to Sundar after. Let's play the video.

• 34:37Jordi Hays?

  Promoted post, so.

• 34:39John Coogan?

  Promoted post.

• 34:40Jordi Hays?

  This promoted post is from the Department of State and the, and the DEA, actually, the Drug Enforcement Agency and the,

• 34:49John Coogan?

  The Feds.

• 34:49Jordi Hays?

  US Department, the US Department of Justice. So we actually, today, we have a promoted post.

• 34:54John Coogan?

  From the Feds.

• 34:55Jordi Hays?

  From the Narcotics Rewards Program, saying that they, the reward for information leading to the arrest and/or conviction of Nicolas Maduro.

• 35:06John Coogan?

  Step it up.

• 35:06Jordi Hays?

  Venezuela has increased up to 25 million. So this is like, you know, typical, this is like, basically like getting a pre-seed round for like an AI company.

• 35:16John Coogan?

  It's more like a mango seed.

• 35:17Jordi Hays?

  It's like a mango seed for your AI company. Or like, if you're a good Y, if you're a good YC company, you might come out of Demo Day, skip the seed round and go straight to the, you know, 25 on 100.

• 35:28John Coogan?

  Yep.

• 35:28Jordi Hays?

  And, but anyways, this would go straight into your pocket. So Nicolas has been.

• 35:35John Coogan?

  In the chat, Taylor says, I've got Maduro, but I'm holding out for 75 million.

• 35:42Jordi Hays?

  Good, good call, Taylor.

• 35:44John Coogan?

  And this is us crying on stream. I'm actually dying. Running with the Feds. He's had a rough go. Narco trafficking. John X. Lee. He's accused of narco terrorism. Nostalgia.

• 35:57Jordi Hays?

  Innocent until proven guilty. Yeah, this was nostalgic.

• 35:59John Coogan?

  Allegedly, allegedly Nick has done some narco terrorism.

• 36:03Jordi Hays?

  Narco terrorism, cocaine importation, conspiracy to use and carry machine guns and destructive divisive.

• 36:10John Coogan?

  That's a rough list.

• 36:11Jordi Hays?

  In furtherance of a drug crime.

• 36:12John Coogan?

  Very rough.

• 36:13Jordi Hays?

  So anyways, no coupon code this time, but you can send tips to the Drug Enforcement Agency by email at cartelsolestips@dean.

• 36:24John Coogan?

  I know. And for the, for the folks who might be trying to track him down, can you give me some overview of who Nicolas Maduro is and what he might look like if I see him on the street?

• 36:31Jordi Hays?

  Nicolas Maduro Moros is a Venezuelan politician who has served as president of Venezuela since 2013.

• 36:38John Coogan?

  The president.

• 36:39Jordi Hays?

  He began his working life as a bus driver. Clearly, um. He's a grinder.

• 36:44John Coogan?

  He's a grinder.

• 36:45Jordi Hays?

  Even though he.

• 36:46John Coogan?

  Anyway, you want to stay out of trouble, you want to stay compliant, you got to get on Vanta, automate compliance, manage risk, prove trust continuously. 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. Anyway, yesterday, GPT-5 launched, it was going to be quiet from Gemini, but Sundar Pichai put up a 10K banger on the timeline, excited to make our best tools free for college students in the United States. Google Gemini is free for students, a one year pro plan. Offer ends October 6th, they know, getting back in school.

• 37:18Jordi Hays?

  Back to school.

• 37:19John Coogan?

  This is the time to, to get people in the, in the ecosystem. Unlimited image uploads, 2.5 pro model, notebook LM, deep research, 2 terabyte storage. They are pushing people to onboard onto Google Gemini. They are not considering, they're not, they don't think that the game's over. They're going to go up, up head to head with ChatGPT.

• 37:42Jordi Hays?

  Yeah, so pull up this post, Ben and crew, because the chart that people have been sharing

• 37:51John Coogan?

  Yes, yes, yes.

• 37:52Jordi Hays?

  around, over the last few days, just, and I was asking Greg about this, I was asking some, some of the other people on the team, did you feel like you got a breather over summer, the GPUs?

• 38:03John Coogan?

  Oh, yeah, yeah, that chart, that chart, that chart, yeah.

• 38:05Jordi Hays?

  Because basically you can see right when summer ended, if you scrolled, or sorry, summer, sorry, right when summer started, usage fell dramatically, just overall tokens processed, and I expect that to tick up pretty dramatically.

• 38:20John Coogan?

  I don't think that has to do with school, though. That, that drop off, that's the European vacation season. These are VCs who, who use ChatGPT when they're at work, but then on summer, they're off.

• 38:32Jordi Hays?

  Of course, of course, John, it's, it's the, the VCs were using 75.

• 38:36John Coogan?

  They're the primary driver of ChatGPT usage. They have to ask, like, what, what, what, what is a foundation model? What, what is a company? How do I invest? How can I be helpful?

• 38:47Jordi Hays?

  Just dropping the deck in and saying, yes or no.

• 38:49John Coogan?

  Should I invest? Yes or no? Yes or no? Exactly.

• 38:51Jordi Hays?

  Give me one word to answer.

• 38:52John Coogan?

  Exactly. But if you're in, but if you're in St. Bart's or Saint Chopin, you don't need to be using ChatGPT, you're off.

• 38:58Jordi Hays?

  You're focused on other things.

• 38:59John Coogan?

  You have a vacation responder on, and that vacation responder, it's not generating tokens. It's not hitting the ChatGPT API.

• 39:07Jordi Hays?

  It's just a form, it's just a template.

• 39:09John Coogan?

  It's deterministic computing.

• 39:12Jordi Hays?

  Yep.

• 39:12John Coogan?

  It's not stochastic.

• 39:13Jordi Hays?

  It's a little throwback.

• 39:14John Coogan?

  Yeah, yeah, yeah.

• 39:15Jordi Hays?

  Anyway, so the Gemini news is significant because clearly students are incredibly price sensitive, right?

• 39:24John Coogan?

  Totally.

• 39:24Jordi Hays?

  I remember being a student, we didn't have Gemini or ChatGPT back in our day, but I remember there were, what were the different websites that would have, that would just help you study for courses? I don't think I ever paid for a single one, but I'd always be using the free tier.

• 39:41John Coogan?

  Yep.

• 39:41Jordi Hays?

  And I think generally students are going to continue to be, even though these tools are so powerful.

• 39:45John Coogan?

  Yep.

• 39:46Jordi Hays?

  If it's very possible that Gemini can really compete here.

• 39:52John Coogan?

  Well, you know what else has a free tier? Graphite.dev, code review for the age of AI. Graphite helps teams on GitHub ship higher quality software and you can get started for free at Graphite.dev.

• 40:00Jordi Hays?

  And Graphite CEO.

• 40:01John Coogan?

  Coming on the show later.

• 40:03Jordi Hays?

  Coming on the show.

• 40:04John Coogan?

  His take on GPT-5. Speaking of charts, there was a chart burning up the timeline yesterday. The Sweetbench Verified Software Engineering With Thinking, Without Thinking. People were very upset about this because the original chart, not this one, four slides later. The initial, it's from Timo Springer. Timo said, this is the correct one. So people were saying like it was a chart crime and that on the live stream, the chart was showing that they were at 74% up here and then the next, and then the second bar was 69.1% and it was much, much lower. And it made no sense because 52% is of course lower than 69%. And the chart just seemed really botched.

• 40:49John Coogan?

  What was weird is that this chart that we're showing here is not a chart crime. You know, you could maybe say it doesn't show exponential takeoff, but it's, it shows that with thinking, GPT-5 beat OpenAI's 03 on Sweetbench. And like, maybe that's, maybe that doesn't matter to you, whatever. But their point is that GPT-5 with thinking, if it triggers the thinking. Functionality, it's better at Sweetbunch than O3 and 4O, which is a good claim to make, right? But people were upset about the chart crime. What's weird is that like, it really seemed like it was some sort of translation problem, because this exact image went up on the website the same time as livestream.

• 41:33John Coogan?

  The chart was correct on the website, but wrong in the livestream.

• 41:37Jordi Hays?

  Hmm.

• 41:38John Coogan?

  So, there's like, why would you, why would, like, if you were trying to pull a fast one on the, on the chart crime world, like, you wouldn't necessarily-

• 41:48Jordi Hays?

  I think it was an honest mistake.

• 41:50John Coogan?

  I think it was a mistake.

• 41:51Jordi Hays?

  I don't think, I don't think anyone at OpenAI was going into the event being like, let's commit chart crime.

• 41:55John Coogan?

  Exactly.

• 41:56Jordi Hays?

  It seemed to be just an accident.

• 41:58John Coogan?

  I think it was, I think it was a mistake. And I think, I think what happened is that you render the, you render the chart, you get the data, you render the chart, you have to, you have to design it to be on OpenAI's style guide, then you render that for the web, and then you pull that into whatever was driving the keynote slide deck, and something got lost in translation there, the bar got shrunk, or something didn't, didn't copy over correctly, and it looked ridiculous. They didn't like, directly address it, but it was corrected on the timeline by Timo Springer. So it was, it was good. I chatted with him a little bit in the DMs, trying to understand.

• 42:31Jordi Hays?

  Yeah, I mean, the thing that, the, the reaction was so intense, because it felt like the kind of thing that an associate at a consulting firm-

• 42:42John Coogan?

  Yep.

• 42:43Jordi Hays?

  -would do.

• 42:44John Coogan?

  Yep.

• 42:45Jordi Hays?

  Which is kind of what the, the, the general level that it feels that a lot of these models are broadly.

• 42:51John Coogan?

  Yep.

• 42:52Jordi Hays?

  And that's still incredible.

• 42:53John Coogan?

  Yeah.

• 42:54Jordi Hays?

  But, they make mistakes, they're not perfect, they're smart in some areas and dumb in others.

• 42:59John Coogan?

  We gotta pull up the, the, the poly market on which company has the best model at the end of 2025, August 3rd, September 30th, etc. Because the market moved significantly, three and a half million dollars in volume, and yesterday it completely flipped from OpenAI at 72%, OpenAI dropped all the way to 17% and is kind of climbing back up. A lot of this seems to be driven by like, when will the Gemini keynote happen? When will the Gemini 3 launch happen? But, and then if you, if you look further out to December 30th, Google has jumped a lot and is now sitting at 54% to win it.

• 43:42John Coogan?

  Then XAI at 20%, OpenAI at 17%, Meta at 4.4%. We don't know if Meta will launch anything for the rest of the year. They could just be heads down grinding on, on superintelligence for a while. But it's, it's, it's fascinating how quickly the vibes shifted yesterday. This is a wild chart crossing. And Elon chimed in and said, there's free money on the table. They're selling dollars for 4 cents because I'm going to come from behind. And I mean, if, if any team is like

• 44:14Jordi Hays?

  He's making that claim around, around the best AI model, end of September?

• 44:18John Coogan?

  Yeah, basically. He thinks like Grok 4 is, or Grok 5 is going to ship and it's going to crush. And it's going to be really, really strong on LMRina. And he says, you know, he's, he's, he's bench maxing and he's going to, he's going to win here. I mean, he's going to, he's going to try and win in everything. Like he's, he's, he's competitive. He's, he's a winner. And so there are a bunch more posts, the, what, where, where should we go from here?

• 44:41Jordi Hays?

  Nathan Lambert says, AI still has a lot of headroom, but model releases are going to be a bit more boring from now on. At least on paper, many will still be transformative in real use.

• 44:50John Coogan?

  Yep, yep, yep. So the, the, what, what was it? The floor lifted, but the ceiling held. That was the meme, Tyler?

• 44:57Speaker 03

  Yeah, yeah, exactly.

• 44:58John Coogan?

  Yeah. So we, it's hard because we don't even know. I feel like we don't even know what we want in terms of headroom. It's kind of like this vague, like one shot everything.

• 45:09Speaker 03

  So yesterday, when I was, I was trying to think of like, oh, what can I do for a TBN bench? Where I had the horse, but it took me like a while to like, think of something that was not like completely trivial for model to do. So at this point, it's like, I don't know what good benchmarks are really like. I guess that there's some things like Arc AGI. Sure. And there's something about like long task horizon, stuff like that.

• 45:31John Coogan?

  Yeah.

• 45:31Speaker 03

  But like general knowledge, like I'm, I'm not surprised if it like can do, you know,

• 45:35John Coogan?

  Yeah, I mean,

• 45:36Speaker 03

  100% on everything.

• 45:37John Coogan?

  Like the next, the next.

• 45:39Jordi Hays?

  I think we, I think we need to do golf bench or steak bench, which is being able to send an agent out into the world to generate a sale.

• 45:48John Coogan?

  It's good. That's a good joke. I, I think that there is actually something there. When I think about Tyler, like that video that you were working on earlier. Like that, there is a world where that's just a prompt. Like we were putting together a video for the Metis list, highlighting a bunch of AI researchers. And we went back and forth a ton on the idea, the song, the, the, the pacing, the editing, the color grading, the titles. Do we want subtitles for this part? Do we want title cards for other parts? And that was not a very LLM enhanced experience.

• 46:23Speaker 03

  Yeah.

• 46:23John Coogan?

  There is a world where you just go to a chat box and you say, make, make of here's the metas list.com. Make a video promoting this and it just kinda does it. And like, or, or, or at least you're like puppeteering and orchestrating. Jordy has the ramp card. You're, you're like puppeteering and orchestrating it. And you're saying like, at the very least, go pull me the raw MP4 files of every cinematic video of every, uh, every AI researcher on this list.

• 46:55Speaker 03

  Yeah.

• 46:55John Coogan?

  Like you had to go to YouTube and search Schulto and find a cool video and you know,

• 47:00Jordi Hays?

  Not that hard to find a cool video.

• 47:01Speaker 03

  Yeah, pretty easy to find cool videos.

• 47:02John Coogan?

  But it's, but, but you didn't do that with an LM, right?

• 47:04Speaker 03

  No, yeah.

• 47:05John Coogan?

  You went to YouTube.

• 47:05Speaker 03

  Yeah. So I think maybe the next thing is like, we need more agent, like agentic benchmarks. But like all the stuff we're saying now, it's not like, it's on information retrieval. It's not solving.

• 47:15John Coogan?

  It is sort of information retrieval. Like at, at the very least, I would, I would love to be able to go to an LLM and say like, you know, I'm making a vibe reel about space. Pull me 75 different little three second clips about rockets and rocketry and I'm going to mix them up. Maybe, maybe I'll be the one in Premiere. I'll do the video editing, but at least do the information retrieval and put it all together and, and, and assemble it. Like that would be interesting.

• 47:42Speaker 03

  I guess that's technically, if it's like giving you links to YouTube, that makes sense.

• 47:45John Coogan?

  I don't want links. I want MP4s. I want it to do the hard part of the downloading.

• 47:49Speaker 03

  But MP4s, that's like, well, it's like semantics now, but that's like agentic because you have to download the video and cut it up.

• 47:55John Coogan?

  Yeah, that's what I want. I want that.

• 47:57Speaker 03

  So I guess it's still information. But I'm talking about like raw like tokens, like it's giving you some tokens back.

• 48:02John Coogan?

  That's just like arbitrary though. Like I'm, I'm fine with it going to youtube dl.xyz or whatever and like downloading the file, doing all that stuff. Yeah. I mean, like that, it should be able to like use the web in a much, in a much more, in a much deeper way. It should just like, like right now, there is, there is like, it can open up a website and retrieve the information and the text on that website. And then it can use a few tools that like we've given it access to and RL'd on. But like, we want it to RL on every single website that is a tool. And so that when you talk about the flight booking UI, it's like go and, go and RL on every flight booking UI, go, go and RL on, on the YouTube downloader

• 48:44John Coogan?

  and YouTube itself and just be able to crawl around the web like, like anyone has to do for any task, right?

• 48:50Speaker 03

  Yeah. Well, I think, I mean, Greg said yesterday, like, years aren't over for agents. So hopefully we'll get something. That was a cool little hint. Yeah.

• 48:57John Coogan?

  Yeah. And, and again, it's like, I don't know that that's, I don't know that that's a keynote. That might just be like chopping wood, getting better and better and better. And it's like, people will keep coming to it with tasks. Cause I come to it with tasks where there could be an agentic like workflow that solves even more. Like the, the, the good example is like with the Bento, I was, I actually had stepped through it. I was like, first do a deep research report on what was actually announced at GPT, in GPT-5. Give me all the features, summarize them all, then turn that into a table, then turn that into an AI image. And, and it was like four steps and I should have just been able to

• 49:40John Coogan?

  one-shot it and say, hey, you know, you know what? Apple has those Bentos. Like make me one of those. And then behind the scenes, you're going to go do the deep research. You're going to pull all the facts and, and the figures and then you're going to lay it out and stuff. I don't know. Anyway.

• 49:54Speaker 03

  Breaking news, Soft Bank.

• 49:56John Coogan?

  Soft Bank.

• 50:00Jordi Hays?

  It's Friday, folks. SoftBank reportedly bought Foxconn's Ohio factory for the Stargate AI project. Reading into this, I hadn't seen it. They acquired one of Foxconn's factories.

• 50:15John Coogan?

  Interesting.

• 50:15Jordi Hays?

  The mystery buyer of the former General Motors factory owned by Foxconn in Ohio is apparently SoftBank. SoftBank wants to use the factory to build AI servers as part of the Stargate data center project being spearheaded by SoftBank, OpenAI, and Oracle. This report comes just a few days after Foxconn announced it had sold the factory, along with electric vehicle manufacturing equipment that was inside of it, to a buyer it only referred to as Crescent Dune LLC, an entity that was created in Delaware in late July.

• 50:45John Coogan?

  Interesting.

• 50:46Jordi Hays?

  So, I didn't know if you were tracking this at all.

• 50:50John Coogan?

  I'm not.

• 50:50Jordi Hays?

  But SoftBank is up 63% year to date.

• 50:55John Coogan?

  Congratulations to Masa.

• 50:58Jordi Hays?

  That's actually, that's actually, somebody asked us who our dream guest was, and John's first reaction, Theo Von.

• 51:07John Coogan?

  Theo Von, Shaquille O'Neal.

• 51:09Jordi Hays?

  He's interviewed, he's interviewed some of the greatest entrepreneurs.

• 51:12John Coogan?

  Xi Jinping would be good. Benjamin Netanyahu did Nelk Boys. I'd love Xi Jinping to do TBPN. That'd be cool.

• 51:19Jordi Hays?

  Masa Yoshi Son would also be great.

• 51:21John Coogan?

  Very fun. But I'd want him here in the studio.

• 51:24Jordi Hays?

  Yep.

• 51:25John Coogan?

  Get to the temple of technology, Masa. We want to hang out with you and have you ring the gong 25 times for all your various deals that are gong-worthy.

• 51:34Jordi Hays?

  Yep. Will Depew, friend of the show, says, "Multi-layer SPVs should probably be illegal under the current interpretations of securities regulation. I'm getting DMs from long-lost cousins about eighth-layer anthropic SPVs claiming direct cap table access."

• 51:49John Coogan?

  I think those should be, should probably be illegal. He should just say, "are probably illegal." Like, like, I'm pretty sure if you, if you lie in a securities offering and you say you have direct cap table access, and in fact, you do not have direct cable, cap table access.

• 52:05Jordi Hays?

  You're misleading investors.

• 52:06John Coogan?

  Yes, that is, that is financial fraud, a wire fraud, and you will wind up in the clink. Anyway, Profound, get your brand mentioned on ChatGPT, reach millions of consumers who are using AI to discover new products and brands. Incredibly bullish day for Profound too.

• 52:25Jordi Hays?

  Seriously.

• 52:26John Coogan?

  Because knowledge retrieval is going to be really, really important going forward. People are going to be searching ChatGPT, what product should I buy? You want to know whether or not you're showing up in the rankings and Profound helps you do that. So, uh, pretty much every brand is going to need to do this.

• 52:39Jordi Hays?

  Ramp boosted their AI visibility by seven X.

• 52:41John Coogan?

  Really?

• 52:42Jordi Hays?

  In Profound, they boosted their visibility here on TPTN, using this massive ramp card.

• 52:47John Coogan?

  Yeah.

• 52:48Jordi Hays?

  You gotta do it all, folks.

• 52:49John Coogan?

  Yeah, yeah. I mean, really, really like, uh, another company that didn't get Steamrolled yesterday.

• 52:55Jordi Hays?

  Yep. Dylan Patel says GPT-5 is disappointing NGL.

• 53:00John Coogan?

  Well, we're joined by Fabricated Knowledge, who works with Dylan Patel, um, in maybe thirty minutes to talk about GPT-5 and what's going on in the semiconductor industry. Uh, and I want to talk to him about how, uh, how we should be thinking about building inference clusters. Now it feels really, really important to only be serving profitable tokens. And, uh, the age of, of, of deeply unprofitable inference will have to come to a close at some point.

• 53:29Jordi Hays?

  Yeah, I wanna, I wanna, uh, you remember it wasn't that long ago that Satya was pulling out of various data center deals and just saying, I'm happy to be a leaser.

• 53:39John Coogan?

  Yep.

• 53:40Jordi Hays?

  And this feels like he kind of saw this coming.

• 53:43John Coogan?

  What did Satya see?

• 53:44Jordi Hays?

  What did, yeah, seriously. Uh, his, his beef with Elon was, uh, was funny yesterday. I'll see if I can pull up the post here. Um, Elon said something to the effect of, "OpenAI is going to crush Microsoft."

• 54:04John Coogan?

  Oh yeah, this was a funny post.

• 54:05Jordi Hays?

  And Elon post yesterday, OpenAI is going to eat Microsoft alive, which I don't know exactly why Elon is saying that. It kind of feels like potentially some 4D chess.

• 54:18John Coogan?

  Yeah, it was very odd because Elon usually isn't rooting for OpenAI. He's usually at war with OpenAI. And so it's kind of, it reads as like you're bullish OpenAI, you're long OpenAI, you're short Microsoft. But there's clearly something else going on there.

• 54:34Jordi Hays?

  Between the deal, Microsoft and OpenAI right now has a lot of regulatory scrutiny. He's probably trying to do something around that. Satya responds, "People have been trying for 50 years to eat Microsoft alive." "Each day you learn something new, innovate, partner and compete. Excited for Grok 4 on Azure and looking forward to Grok 5."

• 54:53John Coogan?

  Such a good response. Satya, absolute dog.

• 54:58Jordi Hays?

  He's an absolute dog.

• 54:59John Coogan?

  Greatest ever.

• 55:00Jordi Hays?

  In other news, esteemed journalist Zero Hedge is saying, "We have officially crossed the streams. Companies have no more free cash flow to pay for data centers. So we've entered the private credit phase." I would put this in the truth zone. There's been a lot of data center development that's already been getting funded by private credit.

• 55:21Jordi Hays?

  Meta, this was in response to Meta picking PIMCO and Blue Owl for $29 billion data center funding. We had reported earlier on the show that Meta's cash balances between the end of last year and now dropped dramatically, like 75% or something like that. But again, they have still a lot of free.

• 55:46John Coogan?

  Yeah, I think people maybe get too puritanical about debt to equity ratios. Like, Apple is incredibly cash flow positive and has returned.

• 55:57John Coogan?

  Something on the order of a trillion dollars to shareholders over the past decade plus. And they still issue debt because there are like designing your capital structure to match your business activities makes a lot of sense. You want to fund R and D with equity, maybe with cash flow. But if you're just, if you're just buying a house, it's okay to have a mortgage. If you're buying a data center, it's okay to have some debt financing that. But you want to be able to service that, obviously. The interesting thing here is like you, yes, you do need to make sure that you don't get over your skis and wind up building a bunch of, you know, dark fiber and get really, really, really in trouble when you, if you issue a

• 56:40John Coogan?

  ton of debt and then that's at the top of the top of the cap table and you are in trouble and you're servicing this and you're not making any money. The main thing is like if you, if Meta raises 29 billion in data center funding and its debt and then they can't monetize that data center at all, and then they have trouble paying the, the interest on that and the, and the principal down, like that could be trouble. But Meta's makes 29 billion dollars like all day long. Like that's not, that's not a problem for them. So there, there, there are probably pockets of, of, of, of risk all over. But unclear how, how early we are to the, to the, like the scaremongering around this. But something, something to keep an eye on, something to see.

• 57:25John Coogan?

  Private credit's a little bit different because it has very long time horizons and, and it, it doesn't have as much of a systemic issue like, like Blue Owl and PIMCO, you don't have, you, you don't have these like multi-layered, like financial products and financial engineering that winds up in the hands of the consumer and is driving these like really, really, like frothy deals like we had in the mortgage backed security crisis. But certainly something

• 57:55Jordi Hays?

  Well, to be clear, there's bears out there that, that are very, that, that think we're in a massive private credit bubble. And it certainly looks like a bubble.

• 58:04John Coogan?

  Yeah.

• 58:05Jordi Hays?

  Whether or not it blows up, we'll have to wait and see.

• 58:07John Coogan?

  We will. In the meantime, we'll tell you about 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. Start building at

• 58:17Jordi Hays?

  Well, little bit of a white pill here. We have a post to pull up from a listener, Max. He says, I purchased a 1959 356A Speedster to get into the mindset of Jordy. I found myself overcome by a sense of positivity and confidence. I also became 5'2".

• 58:39John Coogan?

  Yeah, you really, I.

• 58:40Jordi Hays?

  5'2" really is a perfect height.

• 58:42John Coogan?

  That's the perfect height for a Speedster. That, I mean, if you are, if you're 5'2", you deserve a Speedster immediately. Tyler, give us the Speedster review. You drove in it.

• 58:51Speaker 03

  Very small. It's, I've, yeah, it's unbelievably small. I didn't realize like cars from that old were that small.

• 58:57John Coogan?

  Were people just small back then or something?

• 58:59Speaker 03

  Yeah, I don't know. Little tiny people driving their little cars.

• 59:02Jordi Hays?

  Well, if you look at the growth of Porsches broadly, they, they just get bigger and bigger and bigger and bigger.

• 59:08John Coogan?

  Sure, sure, sure.

• 59:08Jordi Hays?

  And this is like the purists hate it.

• 59:11Speaker 03

  Maybe with Ozempic, maybe with the rise of Ozempic, we'll see cars get smaller again.

• 59:15John Coogan?

  Oh, maybe. Interesting. Well, yeah, I mean, Germans, I feel like are tall, are tall people. I'm, I've always thought that like getting a, like a big Mercedes is like aligned with like a big German guy and like it kind of fits. But, uh, I don't know, maybe back in the 60s, they were just designing them for like.

• 59:33Jordi Hays?

  Mercedes, I mean.

• 59:34John Coogan?

  Small people.

• 59:35Jordi Hays?

  I feel like in our lifetime, Mercedes were pretty small. Remember like Steve's, like.

• 59:40John Coogan?

  Yeah, yeah, totally. Yeah, it's a small car.

• 59:42Jordi Hays?

  A small car, you probably wouldn't fit in it.

• 59:44John Coogan?

  No, the short kings were dominating the, uh, the feedback form of Porsche and Mercedes, I suppose. Anyway, Growing Daniel says, let Rune emcee these things. I completely agree.

• 59:54Jordi Hays?

  Completely agree.

• 59:55John Coogan?

  It would have been great to have him on stage. Uh, I mean, he, he's just so good at like, uh, kind of talent like it is, keeping people on the pulse.

• 1:00:03Jordi Hays?

  If you, if you wanted to optimize for like, my question is how many people were watching that live stream? That were non. Like X, like it felt like it felt like the core audience for that was like the timeline.

• 1:00:19John Coogan?

  Yeah, yeah, yeah.

• 1:00:20Jordi Hays?

  That was my my perception.

• 1:00:21John Coogan?

  And and and Rune is someone who lets you be in the timeline.

• 1:00:24Jordi Hays?

  Yeah, if you were gonna make the perfect live product for the timeline, you'd probably have room.

• 1:00:28John Coogan?

  I was noticing that with uh our buddy Logan Kilpatrick and Demis Hassabis are doing a podcast together.

• 1:00:36Jordi Hays?

  Yeah.

• 1:00:36John Coogan?

  Did you see this?

• 1:00:36Jordi Hays?

  Yeah.

• 1:00:37John Coogan?

  The screenshot and I was just like, and I think I think just the screenshot of like they're doing this together. Got like a thousand likes and I was like, that is good content. That's what I want to say.

• 1:00:45Jordi Hays?

  Yeah, I was catching up with Logan earlier this week and he's like, oh, I'm going to London to do a podcast. And I was like, what podcast? Like what, like, do you need to go to London just to record a podcast? And he's like, oh, with Demis.

• 1:00:57John Coogan?

  Yeah.

• 1:00:57Jordi Hays?

  Okay, I get it now.

• 1:00:59John Coogan?

  Yeah, and I think I think he just he had Logan just Logan Rune, all these sort of like, you know, forward facing developer advocate folks who can speak to the timeline. They just bring a completely different energy than someone who has like prep talking points. And so even if they're even if they're not like the deepest researchers, just being able to to communicate is a unique skill.

• 1:01:21Jordi Hays?

  Find vibes.

• 1:01:22John Coogan?

  Exactly, exactly. Much like Numeral HQ. Sales tax on autopilot. Spend less than five minutes per month on sales tax compliance. Go to numeralhq.com. Uh, Will Brown.

• 1:01:33Jordi Hays?

  Superintelligence.

• 1:01:34John Coogan?

  So this is.

• 1:01:34Jordi Hays?

  Been around for a while and it's numeral.

• 1:01:36John Coogan?

  Yes, so this is, yeah, this Will Brown post is interesting. He says, okay, uh, GPT five, this model kind of rules and cursor instruction following is incredible. Very literal pushes back where it matters. Multitask quite well, a couple tiny flubs format misses here and there, but not major. The code is much more normal than oh threes feels trustworthy. And this is the interesting thing about like, like it was GPT five, it was kind of phrase. It was kind of framed as like, this is a major change to chat GPT or our rapper, our consumer product. But there's a whole like OpenAI is is not just one business line. Like they're going, we were talking to Sarah Fryer about this, like there is a world where when OpenAI goes out to the public market,

• 1:02:19John Coogan?

  analysts are valuing the business on it's a high growth consumer company like Google search. And then you also have an enterprise business and it's basically a hyperscaler.

• 1:02:30Jordi Hays?

  Well, based on the recent numbers.

• 1:02:33John Coogan?

  Yeah.

• 1:02:34Jordi Hays?

  OpenAI has 10 times Figma's revenue.

• 1:02:37John Coogan?

  Yeah.

• 1:02:39Jordi Hays?

  And obviously, it's not profitable.

• 1:02:41John Coogan?

  And what was their latest tender? About five times the valuation.

• 1:02:45Jordi Hays?

  Yeah, no, 10 times.

• 1:02:46John Coogan?

  Yeah, but yeah, about 10 times the valuation. And so, but, but my, my, my point is that there's, is that there are, there are multiple business lines within OpenAI, the company now. And you might even see a new business line spring up around open source implementation, enterprise installations, fine tuning, also just API selling tokens, also consumer, also different spin outs, like they might wind, like, Google eventually had to start disclosing, like, I'm pretty sure they had to start disclosing YouTube financials because YouTube became such a big business. And there's a threshold where I believe if, I believe if the company, if the, if the sub organization reports the CEO or something like that, or, or its material in terms of

• 1:03:30John Coogan?

  like greater than 10% of your overall top line or, or profits, like, then you have to break out those numbers in your GAAP financials. And it's interesting to think about, like, where will the lines be drawn in the OpenAI business because they, and then, and then how will that translate to their communication? Because there is a world where they, where yesterday's news was, was kind of two different things. One is that we made the consumer product easier to use for the hundreds of millions of users that don't know what post-training is or RL is. They just want an easy to use app that answers their questions. And we did that. And then also, we made our, we made our coding API a bit better so that we are now neck and neck with Anthropic.

• 1:04:15John Coogan?

  And so if you're a company that is buying code generation tokens, you should come to us and it should be, and that market should be more oligopolistic as opposed to more monopolistic as it's been. And so there's a world where we see, you know, these, these oligopolistic cloud enterprise B2B businesses crop up on the, on the hyperscaler side with Gemini and Anthropic and, and OpenAI B2B. And then maybe Thinking Machines gets in that game, maybe SSI gets in that game. No real indication that MSL or Meta Superintelligence will get in that game. But you could see kind of like a, a similar dynamic as like what's, what's happened in the hyperscaler clouds.

• 1:04:56John Coogan?

  Play out on the B to B token generation from foundation model lab side, which is still great business, but then you also have a wrapper and you also have a consumer application and then you might have other, other products that crop up. I mean, like, Google makes money off of Gmail. They make money off of Google Maps and, and they don't need to even break those out. They just put them into different services. But I think we'll see like, you know, an increasing like, you know, pattern of different pieces of the business that add up and all of them will be, will be generating, they'll be, they'll all be profitable, but the question is like, how much attention will they get? And then how much financial like performance will they actually drive? So anyway, we should

• 1:05:40John Coogan?

  go to Mike Newt from Arc AGI, the final boss of AGI. He decides whether or not a model is super intelligence.

• 1:05:48Jordi Hays?

  What does he say?

• 1:05:49John Coogan?

  He said, OpenAI prioritize the right thing. I'll, I'll do a Mike Newt impression here. OpenAI prioritize the right thing with GPT-5. To get to 1 billion users, the model switch sure needed to go, but the hype marketing playbook they're known for fell below folks' expectations and warrants reflection. Benchmarks could have been used to support the main story instead of benchmarks don't matter, real world use cases matter. They could have used benchmarks to show how effective their automatic reasoning effort system is. They could have shown state of the art in automatic reasoning. In fact, this is something we wanted to test Arc, but

• 1:06:29John Coogan?

  the GPT-5 API does not support auto reasoning. Key point, benchmarks are important tops to implement, to communicate with the public and can be used more effectively to communicate capabilities than raw intelligence state of the art. And so, yeah, another, another twist on like just the messaging being like, like an odd choice here, or just, we're just in a transitory.

• 1:06:53Jordi Hays?

  What percentage, what percentage of the 100 million weekly actives that they have in the United States actually?

• 1:06:59John Coogan?

  70, 80% or something?

• 1:07:01Jordi Hays?

  No, no, no. I'm saying, saying based on, on the numbers we got on the show yesterday, they have roughly 100 million weekly actives in the US. What percentage? Of those people even are aware of the hype marketing. What percentage saw the Death Star picture?

• 1:07:15John Coogan?

  Yeah, totally.

• 1:07:15Jordi Hays?

  Not that many. Right? I mean, it got, I did get millions of views.

• 1:07:19John Coogan?

  But yeah, but, but X is like, is a specific corner.

• 1:07:22Jordi Hays?

  Yep. Zachary, speaking of the Death Star, Zachary.

• 1:07:28John Coogan?

  Very negative, but you did kind of set yourself up for that.

• 1:07:33John Coogan?

  It's odd. It's odd. It did, it did not fully make sense. Like, who, who is the Death Star in this, in this story? Are you the Death Star? Are you Alderaan? Are you the Rebels? What are you blowing up? Maybe the Death Star, let's steel man this. The Death Star is.

• 1:07:52Jordi Hays?

  It's a big model, sir.

• 1:07:54John Coogan?

  Yeah, the, the Death Star is the idea that pre-training, scaling is all you need.

• 1:08:01Jordi Hays?

  You're gonna blow up Alderaan like you're gonna blow your minds with how good the model is.

• 1:08:05John Coogan?

  But Alderaan was good. Alderaan was good. We don't want Alderaan to be blown up.

• 1:08:11Jordi Hays?

  Yeah, I don't think you got to read into it so much.

• 1:08:13John Coogan?

  I think you, I think we do need to read into it extremely. We need to read into it endlessly.

• 1:08:17Jordi Hays?

  The, the image is provocative.

• 1:08:19John Coogan?

  Yes. So, so if.

• 1:08:21Jordi Hays?

  A lot of people said there's still time. I think Nikita was in the replies being like, there's still time to delete this.

• 1:08:25John Coogan?

  Yes. If, but if we, if we steel man this, we are saying that, that the Death Star is bad. Therefore, Sam is saying he's good. So he's going to blow up Death Star. What did he blow up that's bad?

• 1:08:38Jordi Hays?

  The model switcher.

• 1:08:39John Coogan?

  Yeah, yeah. There you go. The model switcher is the Death Star. And today it goes, it's been this massive piece of UI in your face. There was a trench run and they blew up the model switcher. This is good. We got it. We nailed it. We understand Sam Altman. We, we're in his head.

• 1:08:54Jordi Hays?

  For some reason, I think, I think, I don't think that's an accurate read, but.

• 1:08:58John Coogan?

  I like it.

• 1:08:59Jordi Hays?

  It's fun to pretend.

• 1:09:00John Coogan?

  I think you nailed it. Anyway, you know who else nailed it? Finn.ai, the number one AI agent for customer service, number one performance benchmarks, number one in competitive bake offs, number one ranking on G2.

• 1:09:12John Coogan?

  Anyway, Mike, Mike Newp also said, I'm quite confident this approach will work for a while. This is based on the lack of continual learning from Dwarkeesh Patel. Continual learning is the main bottleneck, holding back AGI and economic automation. We expect this bottleneck will be overcome, not by some new learning paradigm, but by scaling the diversity and volume of RL environments. This is Cosgrove's. Cause Groves scaling law, you need to be bench maxing, correct?

• 1:09:41Speaker 03

  Yeah. And then I, yeah, yeah. The bull case on bench maxing.

• 1:09:44John Coogan?

  The bull case on bench maxing. So the bull case on benchmark, bench maxing is that continual learning is intractable. We may hit it, we may not, might be two years, might be 20 years. So in the meantime, focus on scaling the diversity and volume of RL environments, create a ton of benchmarks and then bench hack them, correct?

• 1:10:05Speaker 03

  Yeah. And yeah, like you can, it's a, it's a bull case that Elon is bench maxing. Because that just shows that his team is like good at optimizing over very specific, like kind of vertical, like tasks.

• 1:10:18John Coogan?

  Yes. He just better pick the right tasks because I don't like the tasks he's picking right now that he's bench maxing. It's not good.

• 1:10:23Speaker 03

  Yeah.

• 1:10:25John Coogan?

  But if he, if he finds, if he does find other pockets, I mean, he's certainly bench maxing on, on Tesla self-driving, right? That's the key thing. Like number of, it's number of, uh, number of interventions per like million vehicle miles traveled and, and every day they are, they are trying to hack that reward function to get it to zero.

• 1:10:44Speaker 03

  Yeah, that's a good one. Maybe a bad one. Maybe he's bench maxing too much on kind of gooning.

• 1:10:49John Coogan?

  Yes.

• 1:10:51Speaker 03

  He's goon maxing. I think we should steer away from that.

• 1:10:53John Coogan?

  Yeah, we need to steer away from that. Uh, figure out something else to do with the, with, with the XAI companions. Um, but maybe there'll be something else, something else that they can reward hack there. Um, maybe something in, in therapy or friendliness or, you know, some sort of coach. Um, I don't know. Maybe it turns into a fitness coach. Maybe, maybe I need to, to use it to really up my training in the gym. Be like, hey, cool it with all that, cool it with all that lewd behavior. Give me advice on how I can double my bench press and chat with me about that. Maybe that's the right move. We'll see. Anyway, Mike Newp is optimistic. He says, "I'm quite confident this approach will work for a while.

• 1:11:35John Coogan?

  It requires no new science. It exploits everything we know about AI reasoning systems. We teach process models through memorization in domains where we can generate lots of synthetic but real data, and then non-zero fluid intelligence emerges from the resulting chain of thought, knowledge recomposition system that sits on top of the foundation model, but it still reminds me of pre-training scaling, where we were making AI systems better through imitation learning and stuffing more into them versus an AI system that is capable of cold-starting itself in some new domain it's never seen before. And that's why ArcAGI is so important, because the final evals are so hidden behind that secret test set.

• 1:12:14John Coogan?

  The AI systems need to be able to cold-start themselves when they run into a game that they've never seen before in the test environment, in the ArcAGI private eval set. And that's why they fall flat on their face consistently, and they're sitting around 16, 15, 8% success rate on ArcAGI 2, which can be solved by any human pretty easily. But Elon says Grok 5 will be out before the end of the year and it will be crushingly good. He's benchmarking. He knows ArcAGI is the one to go for. And so he's going to be RLing on this pretty... He's going to have a whole team on ArcAGI.

• 1:12:54John Coogan?

  I'm excited to see what he does. I wonder how he'll do on V3. That will be very, very interesting. Anyway.

• 1:13:00Jordi Hays?

  Well, in other news, we have a post here that we can pull up from Banu Kohli team. It is in the chat, if you can pull up. He says, "Yesterday, Rail Financial signed a definitive agreement to be acquired by Ripple for $200 million. "Four years ago, I set out on a mission to speed up business-to-business global payments using USCC. "Over the last six months, we grew to become 10% of B2B global stablecoin settlement volume."

• 1:13:28Jordi Hays?

  Air horn for that. With Ripple, we will further accelerate our shared mission. Thank you to our employees, clients, investors, and partners for taking an early bet on us. A few that Tarun and I want to call out, the entire Rail team for their relentlessness and hard work, Avlok, of course, the CEO of Angelist, our first lead investor and part of the founding team, and Gokul Rajaram, immensely helpful during some of our early crucible moments. And of course, Mike over at Galaxy for taking the bet on us in the Series A. We are excited to start our new chapter with Ripple once all regulatory approvals go through. Hit that gong, John.

• 1:14:02Jordi Hays?

  Great contact, great contact. I was lucky to angel invest in the seed round of Rail, and this is a fantastic outcome for the team. And yeah, this one was a... So I first met Banu, I think, back in 2021 or 2022. We were both working on stable coins at the time. Loved his vision. Haven't stayed super close since then, but he's been absolutely cooking. And I was very pleasantly surprised when I got the news a couple of days ago. So incredible work to the whole Rail team and a great pickup for Ripple.

• 1:14:42John Coogan?

  Amazing. Let me tell you about Adio. Customer relationship magic. Adio is the AI-native CRM that builds scales and grows your company to the next level. Get started for free. Sam Altman posted, "GPT OSS is out. We made an open model that performs at the O4 mini level."

• 1:14:57Jordi Hays?

  Can we create our own pronunciation for this? GPT OUS?

• 1:15:00John Coogan?

  GPTOS. GPTOS. Runs on a high-end laptop. Smaller one runs on a phone. Super proud of the team. Big triumph of technology. Has community node on it. I don't know what's in there, but that's very funny. Anyway, but Donald Boat.

• 1:15:13Jordi Hays?

  Donald Boat. Donald Boat.

• 1:15:14John Coogan?

  One of the greatest to ever do it.

• 1:15:15Jordi Hays?

  Donald Boat responds, "Sam, you, me, the Amalfi Coast, me, double Fournay on the rocks, club soda to taste. You, one delightfully sweet bitter Negroni stirred 90...

• 1:15:28John Coogan?

  2 billion, 900 million revolutions."

• 1:15:33Jordi Hays?

  Counterclockwise.

• 1:15:34John Coogan?

  "One for each hertz of the Nvidia 5090 in the gaming PC you will buy and ship to my house."

• 1:15:43Jordi Hays?

  And he actually sent.

• 1:15:45John Coogan?

  He sent it. I love it.

• 1:15:47Jordi Hays?

  Popped up yesterday.

• 1:15:48John Coogan?

  This is a timeline victory.

• 1:15:50Jordi Hays?

  Hop on fort at Sam.

• 1:15:52John Coogan?

  Yeah. And yeah, Sam said, okay, this was funny. Send me your address and I'll send you 5090. And he did it. And I love this. This is, this is the type of like, you know, small ground game that we identified earlier. You know, Sam, he didn't have to drop the big, long post. He was vague posting. The vague posting was a little mixed result, but this is a win. This is a fantastic win. This just builds the team, builds a lifelong fan. This is hand to hand combat on the timeline and I love to see it. So, uh, great, great to be, uh, to be doing this type of stuff, even, even the day before GPT five launch day.

• 1:16:25Jordi Hays?

  And Donald, Donald Boat is really an account to watch. Laser Boat 999.

• 1:16:30John Coogan?

  Get in early.

• 1:16:31Jordi Hays?

  Get in early. I mean, you're still at a hundred K, John. Who's on a hundred K?

• 1:16:36John Coogan?

  Still like buying Bitcoin in 1994.

• 1:16:38Jordi Hays?

  That's right. That's right. Or Solana in the eighties.

• 1:16:40John Coogan?

  Yep. Uh, Dylan Fields is, uh, GPT five is here in Figma make. We have started to roll out GPT five to starter and pro plans. Let us know what you think. More model news comes tomorrow. I mean, this is a good news for Figma make, of course, cheat. We talked to Rahul about this. Cheaper model, better reasoning, better code generation. The product just gets better. And this is the value of being, you know, somewhat of a rapper, right? Like you are a beneficiary of model improvements. When, as the models get cheaper, your margins naturally get cheaper. If the models get better, your product just naturally gets better. And so lots of people benefiting.

• 1:17:14Jordi Hays?

  This morning they added Gemini 2.0 flash.

• 1:17:17John Coogan?

  Yes.

• 1:17:17Jordi Hays?

  In their, uh, image editing. So you can just like drop an image in and then click it and say, remove this person from the image or this or that.

• 1:17:25John Coogan?

  Yeah.

• 1:17:27John Coogan?

  Well.

• 1:17:27Jordi Hays?

  Anyways, Kevin Quach says forcing Lip Buthan out of Intel is probably one of the worst things you can do if you want to save the US chip industry. Someone should tell White House that before we put Intel back in a tailspin again. They, Intel, uh, whatever you think about Lip Buthan and his approach. It seemed, I think stability in the short term is good, right?

• 1:17:52John Coogan?

  Yeah.

• 1:17:52Jordi Hays?

  He's trying to pull them out of the tailspin.

• 1:17:54John Coogan?

  Yeah. So my take on this is it kind of feels like Trump has an outdated world model for understanding the importance of Intel. Like Intel is a fantastic American company, but. It has not been on the frontier of semiconductor manufacturing for a while. They famously missed mobile and ARM crushed it in mobile and then that was important for semiconductors. And then, and then they, they weren't a fabulous semiconductor. So TFC ate their lunch there. They kind of missed out on the GPU boom and Nvidia dominated there. And so the, the question of this, it seemed like Trump was worried about Liputan's ties to China, but China has already caught up to Intel, I think, like between Huawei, SMIC, SME.

• 1:18:37John Coogan?

  They, these companies seem fully capable of doing everything Intel can do and probably more and probably better, probably cheaper. And so Intel hasn't been the crown jewel of American semiconductor supremacy for decades. Basically, no one is advocating for a real comeback with Intel right now. Like the idea of even splitting Intel up, like there was, like for a long time, there was like, oh, with just one weird trick. You know, semiconductor CEOs hate this. Let's, let's figure out some like elegant switch. Let's just split design and fab and then Intel will be great. That's not even what people are advocating for now. Like they tried to kind of test their waters of splitting the fab out.

• 1:19:21John Coogan?

  And they couldn't get a customer for what they were going to make at this new fab. And if they can't get an independent customer that's not Intel, well then who are they going to? Why do they need to be a, like a, why do they need, why do they need a pure play fab? If they don't have a customer for it. So there were just like all these problems. So what Liputan is doing is he's coming in not as, you know, this like gambit to get on the frontier. He's like winding down the company. He's like, he's laying a bunch of people off. He's narrowing the scope and he's coming in like a McKinsey consultant almost. And so this doesn't feel like.

• 1:19:58John Coogan?

  That key of a of a company in the American semiconductor race, like the future of American semiconductors feels like TSMC and Samsung, which are both building fabs in the United States, which is nice, but also these are these are companies that exist in allied countries. So it's not it's nowhere near as as risky as being dependent on a on a on a supply chain that's based in a near peer adversary like China. So it's not like if TSMC was in Beijing and Samsung was in Shenzhen, like we would be in a lot more pain than we are. But Samsung and TSMC are also building in the United States. And so the leading edge will be in the United States and it will be led by other companies. It doesn't feel like Intel will play a really key role in there. Certainly, we'd love that,

• 1:20:43John Coogan?

  but that doesn't seem like the current plan. And so it's kind of it's kind of just like an odd sideshow. I think it's a lot of legacy about the the the brand recognition and the name recognition of Intel. But it doesn't seem

• 1:20:56Jordi Hays?

  Yeah, and ultimately, I think we should let Intel's board make the the best that make did their own decisions around Intel's leadership. You know, we've got this amazing system called free market capitalism. We try to stay as close to that as possible.

• 1:21:11John Coogan?

  It is. It is funny, because Trump is also trying to IPO Freddie Mac and Fannie Mae, the two private the the our state owned lenders. You can go get student loans and mortgages from this. So like simultaneously in the in the lending markets, we're trying to we're trying to, you know, deregulate or move out of government control. And then simultaneously saying like, well, actually, we'd like the government to be able to decide who the CEO is at this private company. That's kind of odd. Anyway, good luck to Liputan. He is losing a lot of sleep. He's got to get an eight sleep, get a pod five, five year warranty, 39 risk free trial, free returns, free shipping.

• 1:21:52Jordi Hays?

  Lip.

• 1:21:53John Coogan?

  Get an eight sleep. You need one.

• 1:21:54Jordi Hays?

  When you hear this.

• 1:21:55John Coogan?

  To be up late.

• 1:21:56Jordi Hays?

  We will gift you an eight sleep.

• 1:21:57John Coogan?

  And then come on the show.

• 1:21:58Jordi Hays?

  Doing important work for this country.

• 1:22:01John Coogan?

  Yeah.

• 1:22:01Jordi Hays?

  And Intel, and you've got an eight sleep on us whenever. Whenever you're ready.

• 1:22:06John Coogan?

  100%.

• 1:22:06Jordi Hays?

  Just let us know. Buco Capital Bloke says, for those of you blowing out your SaaS positions, even though time is of the essence, please try to maintain a sense of order. Single file line, eyes forward. Do not stop for personal belongings. Do not panic. Do not run. Of course, he's telling, talking about everybody selling out of various SaaS positions.

• 1:22:26John Coogan?

  That's what he means by blowing out.

• 1:22:28Jordi Hays?

  I came away.

• 1:22:28John Coogan?

  Selling them?

• 1:22:29Jordi Hays?

  I came away yesterday being not broadly bearish on a lot of different SaaS systems of record. I think they're in a really good position to offer intelligence.

• 1:22:42John Coogan?

  A few days ago, we were talking to somebody who was saying like, all SaaS is cooked as soon as AI goes, goes hyperbolic. And yesterday it felt like, okay, that's not, that's not happening today. So SaaS is actually great. And the newer SaaS, I mean, like even the, there are still companies that are on completely legacy systems, still on paper and pencil and, and still on mainframe, still on owned clouds, still haven't migrated to the new clouds, still haven't embraced SaaS, still haven't embraced AI. So I think that there will be like a full cycle of replacement here. And we see that with, with Figma. We were talking about like, like, is there some sort of threat to Figma from like, oh, you just one shot a vibe code, blah, blah, blah, blah, blah.

• 1:23:25John Coogan?

  And you don't even need the tool at all, like maybe, but like first, let's talk about Adobe. Let's talk about how, how much people dislike Adobe. Like, you know, there's a lot of, there's a lot of people that would just, that are still, are still haven't migrated over to like the thing that was invented a decade ago and are still on 20 or 30 year old software. So these things go in really big cycles.

• 1:23:47Jordi Hays?

  Down 22%.

• 1:23:48John Coogan?

  Well, regardless of what you think about Adobe, maybe you're long, maybe you're short, do it on public.com, investing for those that take it seriously. We got multi asset investing, industry leading yields. They're trusted by millions of folks. And we have our first guest of the show, Doug O'Laughlin from Semi Analysis Fabricated Knowledge. Doug, how are you doing? Welcome to the stream.

• 1:24:08Doug O'Laughlin?

  I'm doing really good. Can you guys hear me?

• 1:24:10John Coogan?

  Yeah, we can hear you.

• 1:24:11Jordi Hays?

  You came in looking like you're about, you're playing a.

• 1:24:14Doug O'Laughlin?

  You're like.

• 1:24:15John Coogan?

  We're really quiet. Okay.

• 1:24:16Doug O'Laughlin?

  One tenth of all.

• 1:24:17Jordi Hays?

  I can yell.

• 1:24:19John Coogan?

  Yeah, yeah. Wouldn't it help if we yelled?

• 1:24:22Doug O'Laughlin?

  It would help if you yell.

• 1:24:23John Coogan?

  Okay, we'll do the rest of the interview yelling. Also, do you have the ability to turn up the volume on your side?

• 1:24:30Doug O'Laughlin?

  I am turning up the volume, bro. Oh my god, man, I feel like a boomer.

• 1:24:34John Coogan?

  You're all good?

• 1:24:35Jordi Hays?

  You came in looking like a DJ playing a hot Boiler Room set. You had your hand here.

• 1:24:40Doug O'Laughlin?

  I came in messing with my audio system, fucking, you know, it's years of the Zoom economy.

• 1:24:45John Coogan?

  Yeah, isn't one of those things where the volume on one of the sub-applications is turned down while the volume on the system level is turned up?

• 1:24:53Doug O'Laughlin?

  No, dude, I see the sub-application, I see the system level, this is extremely boomer for me, I'm embarrassed.

• 1:24:59Jordi Hays?

  We enjoy these moments where Zoom fails us because it's this incredible, you know, you contrast that to, you know, having infinite intelligence available in your pocket, but we're still, we're all still trying to get video conferencing to work reliably, so I'm, you know.

• 1:25:15Doug O'Laughlin?

  Okay, well, just.

• 1:25:16John Coogan?

  Yeah, let's go to the normal, we usually don't have a problem with feedbacks if you turn off the headphones and then you just use the speakers. We usually won't get feedback, so let's see if that works.

• 1:25:28John Coogan?

  Any luck?

• 1:25:28Doug O'Laughlin?

  I can hear you.

• 1:25:29John Coogan?

  Okay, cool. Yeah, can we, can we chat?

• 1:25:33Doug O'Laughlin?

  Yeah, we can chat, this is much better.

• 1:25:34John Coogan?

  Awesome, awesome, cool.

• 1:25:35Jordi Hays?

  Welcome to the show.

• 1:25:36John Coogan?

  Welcome to the show.

• 1:25:37Jordi Hays?

  We've been looking forward to this.

• 1:25:38John Coogan?

  We have been looking forward to this. We missed you in New York City, we were hoping to hang out there, but I'm really glad you could hop on remotely. Give us your reaction to GPT-5.

• 1:25:47Doug O'Laughlin?

  To Lit Bhutan, correct? Sorry, damn, dude, I'm still really.

• 1:25:51John Coogan?

  No, you're good. I mean, yeah, we can start with Lit Bhutan, we were just talking about that too. Are you, are you in favor of a change of the guard over there?

• 1:26:01Doug O'Laughlin?

  Okay, of the board, yes. Sorry, if we're talking about, yeah, okay, I can do an extremely based rant on the board. I wrote about this in Fabricated Knowledge and I definitely was part of the semi-analysis post too. Okay, perfect, I can hear you now. Okay, we're done, we're through it. Okay.

• 1:26:19John Coogan?

  Let's go.

• 1:26:21Doug O'Laughlin?

  Okay, so, okay, now, now, dude, turn it up to 12. Okay, so dude, TLDR, the board has been systematically screwing up Intel for the last 10 years. This, I think, comes from the history of Intel being the greatest semiconductor company alive of the 2010s. Dude, the board was filled with like politicians and like ex-senator, what do you call it, Secretary of State and like generals and like never anyone in the semiconductor industry. Intel had a, like... Intel had like a view of arrogance, like we are the best and you're gonna suck it because we're the best. Like, you know, effectively, it is an Intel first worldview that like has slowly been crumbling over time. So pretty much on the technology side, they've never ever had anyone who actually knew how to run a semiconductor company except for professors

• 1:27:07Doug O'Laughlin?

  or people on Intel. So like you can look back in like the 2003, 2004 era. It's usually two or three people from Intel and then the rest of it is just like randos. So they never thought, hey, why do we need a semiconductor person on the board?

• 1:27:20Doug O'Laughlin?

  This slowly became a melting frog issue as they like missed. The 10 nanometer debacle is like the real big, you know, change point in Intel and

• 1:27:30John Coogan?

  Can you unpack the 10 nanometer debacle a little bit?

• 1:27:33Doug O'Laughlin?

  Okay, so 10 nanometer was Intel's process at the time. Uh, it was supposed to be the next one after 14 and I think it's plus, plus, plus, plus, or maybe, so pretty much it got delayed. So they tried to do a lot of aggressive technologies. They did quad pattern D V, copper, uh, cobalt interconnects. A lot of things they shoved in here to make a good product, but they just missed over and over and over again. So it was a ginormous fumble and at the time the CEO was a CFO. So the finance guy oversaw the, the technology essentially implode and slowly degrade. So 10 nanometer was just like the true slow, like, you know, multiple years in the making train wreck.

• 1:28:13John Coogan?

  And what was, what was 10 nanometer like critical for? Is this like, uh, mobile transition, just CPUs?

• 1:28:19Doug O'Laughlin?

  Just CPUs. Remember, this is, this is an Intel that missed and totally like was irrelevant, uh, for mobile anyways. This is just like data center CPUs, normal PC CPUs. This is when AMD, uh, essentially caught up because they chose

• 1:28:32John Coogan?

  Ryzen stuff was happening, ThreadRippers and whatnot?

• 1:28:36Doug O'Laughlin?

  Yep. All that stuff is because they're using the TSMC process versus Intel was using their process. Their process lost the TSMC and then also AMD's better design, whatever. TLDR, total, total problem. And half of the people who are on the board still are from that era. Like you would argue like, hey, capitalism works, you should fire people who do shitty things at their job. Um, they should all be fired. And so, um, most of them, most of them got fired. And then, uh, I think this is in the semi analysis, uh, piece, but essentially like The people who remain effectively was the guy who just stepped down. I still think he's on the board and now the chairman is this guy named Frank Eri. Frank Eri joined in two thousand and nine. So he is just as guilty of anyone.

• 1:29:21Doug O'Laughlin?

  Um, and he's a banker dude. Like that's, that's his background. He's a deals guy. So the first thing you need to know is a deals guy, when it becomes chairman of a company is gonna do deals. So that's what he's been doing. He's sold Altera and specifically the-

• 1:29:35Jordi Hays?

  You ship your org chart.

• 1:29:36John Coogan?

  Yeah.

• 1:29:37Doug O'Laughlin?

  Yeah, yeah. Ship it, sell it to anyone who can do it. And, um, and he's in the, and he wanted to sell the Foundry business. That's the, that's like the Wall Street Journal thing. And in my opinion, total mistake. We think it's a total mistake of semi-analysis. But then on top of that, like Liputan, I understand the controversy.

• 1:29:53John Coogan?

  So really quickly clarify that on, on, because I hear, uh, deals guy comes in, investment banker comes in. A lot of people rumbling independently for the last decade, split up Intel. It sounds like they were trying to do that. Uh, give me like your evolution of like, should Intel have split up at some point? Should Intel like split up now? What is the current stance?

• 1:30:17Doug O'Laughlin?

  So I think, um, at this point in time, I think they probably shouldn't split up just because like.

• 1:30:26John Coogan?

  They don't have a customer, right?

• 1:30:28Doug O'Laughlin?

  Yeah, they don't have a customer. It's like, um, if the best time was definitely like three years ago. At this point in time, it's like you need the money from design now just to keep the lights on. And I mean, like, not even just to have the customer, just to like fund anything, to have any cash from ops. An ideal, perfect world is somehow Hawk Tan, the Sith Lord of Private Equity buys the design business of Intel and, and scrapes it and guts it to the floor. That has always been a long time rumor that Hawk wanted to do that. Um, Hawk doesn't want to do it because Intel's so bad. So there is no buyer. Design's like really screwed because it's like stuck on this process. Plus it's also- Filled with bloat. And at this point in time, I think the only strategic part of the business that really matters is foundry.

• 1:31:13Doug O'Laughlin?

  Like, let's just like, you know, because outside of the x86 CPU, like, they're getting their face kicked in by, by ARM. Okay, so it's, you know, x86, and then they have to compete against AMD, which is still kicking their faces in with TSMC. And so like, what is a secular decliner x86 worth? Not much to anyone. Um, and I think the reality is, it's like, you know, with ARM and these custom CPUs, effectively, they're, they're just one of many uh, like competitive products. And I think their competitive edge like dwindles, pretty much they just have distribution into OEMs. So where is a bit like a ba- a business that has value that matters at Intel? It's a foundry. There's one foundry in the entire world right now. It's, it's, it's TSMC, it's monopoly.

• 1:31:56Doug O'Laughlin?

  Like, and that's the only thing that's worth anything. And I think, um, you know, there's a chance to have a second foundry. And that could be Intel, but you know.

• 1:32:04John Coogan?

  Wait, what, what about Samsung? I mean, uh, Elon did that deal. It seems like Samsung's like, at least in the conversation as a potential foundry for specific things. Um, is, is that like, are they really like several orders of magnitude below TSMC?

• 1:32:20Doug O'Laughlin?

  Yeah, I think Samsung's just as screwed as Intel. But, but it, but it's like a second quiet, more screwed that I think is like, uh, I mean, the PPA there, meaning power performance area is pretty bad. It's probably just as bad as Intel. Um, but the, the one difference is Samsung has had external customers and probably could have the external customers again. Um, if, if I had to bet between, like, Intel in theory has a better process for sure. But it's like, it's like a bet of like, um, uh, we're gonna say horse and saddle, okay? Like, uh, the Intel saddle is like, you know, six rags, like tied together around the horse that only like one rider in the entire world knows how to use, which is Intel design.

• 1:33:01Doug O'Laughlin?

  Um, on a presumably decent horse, it's like 18A is probably like equivalent to three nanometer. Um, obviously not the best in the world, but like that it deserves to exist versus like Samsung's force is just like. Really bad. The PPA is total trash.

• 1:33:16John Coogan?

  Yeah.

• 1:33:17Doug O'Laughlin?

  But hey, it has a saddle. People have ridden it before. So there's in theory a customer. And so Liputan is the perfect guy because he ran Cadence, which is an EDA company. And EDA, their whole thing is they design. And so once you have like a design, you can like put it in the foundry.

• 1:33:34John Coogan?

  Yep.

• 1:33:34Doug O'Laughlin?

  So like that important, critical step of the PDK is like the missing piece for Intel. And Liputan could be the guy, but um, Intel sucks, so.

• 1:33:44John Coogan?

  Yeah, so uh, I mean, my, my read on Trump saying we need Liputan out is like a complete misunderstanding of the importance of Intel. And basically, he's operating on like a 20 year old world model, thinking that, oh, I, I'm familiar with Intel. I know the brand, Intel Inside, like, that's an important company. We need, it's a critically important American company. We need an American at the helm. When in fact, it's like, Intel doesn't really matter. There's like a wind down in process. Let Lip, let Liputan like run it, even if he's exfiltrating everything to China, it doesn't matter because Huawei and SMIC and SME are light years ahead of Intel.

• 1:34:24Doug O'Laughlin?

  Yeah, so I think that that is sort of true, but I also, um, I will give the Trump admin props in terms of like, I do think they know and understand the critical importance of Intel.

• 1:34:35John Coogan?

  What is the critical importance? What, what is the critical importance?

• 1:34:39Doug O'Laughlin?

  Uh, they are the only domestic semiconductor process. That's it.

• 1:34:43Jordi Hays?

  Our only hope, our last hope.

• 1:34:46Doug O'Laughlin?

  Our last hope. It's that or release the future from TSMC. And that's pretty much like probably the most likely option.

• 1:34:52John Coogan?

  Least the future or least the future? Least the future.

• 1:34:55Doug O'Laughlin?

  Least, least the future. Yeah. Because you could buy a process or force TSMC to make a process in the United States, which is what they're doing.

• 1:35:02John Coogan?

  Yep. With Arizona, right?

• 1:35:05Doug O'Laughlin?

  Yeah, in Arizona and then um, possibly more expansions. I'm sure there's some kind of deal. But after you have that, like, all the R and D happens in Taiwan. So effectively like, you know, the Taiwan constraint thing, same problem we had before. Because like, a missile flies, boom. We don't, we like, we don't know how to make new chips.

• 1:35:24John Coogan?

  Yep, yep.

• 1:35:26Doug O'Laughlin?

  We would just have old chips. It's like leasing a car. You know, we can't buy the new model.

• 1:35:30John Coogan?

  Yeah.

• 1:35:31Doug O'Laughlin?

  Yeah, so that's a problem. It's like the same problem, but maybe more kick the can down the road if we had all the capacity here, but no R and D.

• 1:35:38John Coogan?

  Yeah. So, yeah, what is the like moonshot to make Intel dominant again or catch up? Like, is, like, people were noodling on, like, should Elon come in and do the Elon thing and hire the most cracked engineering team and, and drive everyone 10 times harder? But it feels like people kind of kick the tires on that. There was the rumor of like all the PJs in the same at Mar-a-Lago, but kind of everyone was at Mar-a-Lago at the same time. Is there, is there a world where like Intel needs to go more founder mode? Like, Lipperton feels like the epitome of like manager mode. Like, would, would you be like excited about something like that? Somebody who says like, I'm gonna take it private, be extremely risky.

• 1:36:19John Coogan?

  There's a 10% chance that this thing works, 90% chance we, we completely destroy everything. But if it works, it'll be amazing.

• 1:36:26Doug O'Laughlin?

  Dylan Patel and his CEO.

• 1:36:29John Coogan?

  Dylan and Doug, get both of them.

• 1:36:31Doug O'Laughlin?

  Dude, if Dylan is the CEO, then my life has kind of become miserable, dog. Like, uh, that's, um, look, uh, so I think

• 1:36:41Doug O'Laughlin?

  I personally believe that Fab and Found, uh, Fabulous and Foundry need to have separate lives. Because you're like, there are two really drunk adults at the bar tied together hip to hip. And it's like, one of them could be dying, actually. One could be a corpse. And the other has like a shot. Okay? So like, I just don't think, I think, you know, like, I believe in focus, I really do. I believe that small teams with a lot of focus can make them extraordinary results. I'm sure you see this in technology over and over and over again. I think Foundry needs to be like, given a leash that's long enough to like, make the shot true. Probably a smaller dream and probably like, you know, a pot of gold at the end of the rainbow. But then like essentially be told like, hey, here's your purse budget.

• 1:37:27Doug O'Laughlin?

  Here's your potential capacity. If you win XYZ, whatever, you'll get a ginormous order from, and the, like, the

• 1:37:35Doug O'Laughlin?

  Fabulous semiconductor companies in America and you know that's the pot of gold at the end of the tunnel. Um, and then behind you is uh death uh and there's only one way and it's forward. Um, because like how I think we've gotten to this point is like, there was always this like second sloppy option of like, well, we'll just put the Intel CPUs in there, you know, that's how foundry has been treated for so long. And I think Intel CPUs uh over a long enough period of time is just not going to be enough to fill the foundry. So you're going to have to do, um, you have to separate them. And I think you have to make like capitalism work, which means that you need like a pot of gold at the end of the rainbow.

• 1:38:13Doug O'Laughlin?

  Uh, a true like shot to do it. And then like probably founder mode, if that makes sense, like sure, maybe liputan is the like liputan has much more of the qualifications. It can't be someone who's from Intel. Um, and I think the company should be private because public markets would kill the shit out of it. Like it's just gonna be a miserable, it's gonna be like the face beating the entire time. Um, and yeah, dude, if Elon did that, I'd be very stoked. I'm not gonna lie to you. Like however you feel about Elon's companies, like, you know, someone said he makes the late, uh, no, he makes the impossible late, right? He, he will, maybe he'll be late, but it'll be like, he'll get it done, right? Um, there's, there's no one else who's really done this. Pretty much no one's fallen off the leading edge and come back. And so this is like a moonshot. This is a moonshot's problem and I don't know.

• 1:38:57John Coogan?

  When the Twitter deal was happening, I was saying like, okay, we got, we marshaled forty four billion dollars in private capital. There's also the CHIPS act going on. You package all that money together and you give Elon Intel. And like, what is that? What does that counterfactual look like in the course of history?

• 1:39:14Jordi Hays?

  Well, I think the question is, does the stock need to drop another fifty percent before it can become a viable, like actual take private target?

• 1:39:23John Coogan?

  It's an eighty seven billion dollar company today.

• 1:39:25Doug O'Laughlin?

  I think you can do it. I think you can do it today.

• 1:39:26John Coogan?

  Yeah, I mean, if you can take Twitter private at forty four, you can take Intel private at eighty seven.

• 1:39:31Doug O'Laughlin?

  I think, I think you just have to split the Foundry fab.

• 1:39:34John Coogan?

  Yeah.

• 1:39:34Doug O'Laughlin?

  It's that simple. Cause the Foundry, the, the, the, sorry, sorry, not Foundry fab, sorry. Fabulous.

• 1:39:39John Coogan?

  Fabulous, yeah.

• 1:39:40Doug O'Laughlin?

  The fabulous business is worth something.

• 1:39:42John Coogan?

  Okay.

• 1:39:42Doug O'Laughlin?

  Like, um, it is, in my opinion, the like, dude. Hot hand the Sith evil like PE overlord would like crush it like I really do believe that um my favorite.

• 1:39:54John Coogan?

  So so quickly like you you you you you split out design you have this fabulous semiconductor company similar to it would compete with Nvidia in some ways.

• 1:40:03Doug O'Laughlin?

  AMD. It'd be AMD.

• 1:40:05John Coogan?

  AMD and so they'd be focused on CPU and their and their customers would be who exactly?

• 1:40:12Doug O'Laughlin?

  Um, I think you'd focus. Electronics companies.

• 1:40:15John Coogan?

  Electronics companies but.

• 1:40:17Doug O'Laughlin?

  Yeah, like I think you'd focus. So the thing they keep saying is AI at the edge. Um.

• 1:40:22John Coogan?

  Yep.

• 1:40:22Doug O'Laughlin?

  I'm a total hater. If I'm be honest with you, like, you know, the the internet works packets are pretty quick.

• 1:40:27John Coogan?

  Yep.

• 1:40:28Doug O'Laughlin?

  Um, what I think would be the best way is they do have some networking content. They do have the PC business. They do have like high end data centers. CPUs, maybe like the high end data center CPUs like. I mean, to be clear, they're gonna be like a third place or a second place against AMD like it's gonna be an ugly world. But like what you could do is you can just kill all the SKUs and all the expansion you've done over time like. Intel has all these custom SKUs for whatever you make like good better vests data center and I don't know edge or mobile some kind of optimized thing. And you fit all your products into those categories. You kill all the unprofitable ones. You fire fifty percent of the people.

• 1:41:07Doug O'Laughlin?

  And then you like, you know, do your best to extract the rent in places that you cannot be ripped out. Maybe you, I don't know, monetize your CPU. Software, sell it or some shit to to AMD like do your absolute best. And it's like a really sad ending to Intel, the fabulous business, but I think it has one that is worth more than zero dollars.

• 1:41:27John Coogan?

  Is is yeah, it uh talk about the GPU CPU split here because. Intel's never really been a player in GPU and that feels like when we talk about. The value of TSMC in Taiwan and AI, we're talking about. Superintelligence and these mega clusters and the ability to train frontier models and it feels like like. Even even a high performing Intel like isn't a player in that world or.

• 1:41:51Doug O'Laughlin?

  Yeah.

• 1:41:52John Coogan?

  Or or should we be thinking about it in that grand of terms?

• 1:41:56Doug O'Laughlin?

  No, I don't think they're a player in that world. I really, like, I get socks, but like, you know, Gaudi is, um, Gaudi is a chip that sits in warehouses around the United States. Uh, you know, the, the battle mage CP or GPU is like not the worst product.

• 1:42:12John Coogan?

  True.

• 1:42:13Doug O'Laughlin?

  Um, but like, I think, if you think about just like semi characters, man, one of the like my favorite analogies or like ways to look at it is it usually ends up being like a, let's say a sixty, thirty, ten market, um, and, and the ten percent, uh, like sixty percent makes like, you know, two X the profit of the thirty percent. And then the ten percent is like break even or loses money. I feel like Intel's market positioning kind of puts them at the ten percent. And I think like, I like, I really think the private equity outcome for the Fablest side is the best outcome possible because like, um, and, and the reason why I say Hawk Tan, like, let's actually just like play the Hawk Tan playbook. What Hawk Tan does is he takes a business that's extremely mature and sticky, that was like a winner of the last cycle, and then just like

• 1:42:56Doug O'Laughlin?

  fast forward ten years of the maturity all the way to today. So like VMware is a perfect example. Um, virtualization was like, you know, the thing in the two thousand teens and made CPUs better and all this stuff. And, you know, they were this like almost monopoly. They still have the vast majority share, but they were like spending all this stuff, growing expenses, and then Hawk was like, dude, no, they actually have a business that has some terminal value. They're not living in this paradigm. So what I'm gonna do is I'm just gonna fire half the people, raise the prices on the, uh, like, raise them massively, uh, lose a lot of our customers along the way, but become a massive cash cow and then like essentially squeeze that to the end. Um, but if you think about what Cock is actually doing is he's accelerating ten years of industry progress into three, right?

• 1:43:40Doug O'Laughlin?

  Like, that's what would happen, but like, it's gonna be a lot uglier and slower show in public markets versus just like time collapsing, price raise, fire all the people, boom, you're profitable, you're at the end state, you're, you're essentially underwriting no growth. I think Intel needs to underwrite no growth, and that's not in the Fablest business.

• 1:43:58John Coogan?

  Yeah, just embracing reality, like embracing, embracing the reality and taking, taking your medicine.

• 1:44:04Jordi Hays?

  Someone, uh, someone in the chat, uh, Sharon says, please ask Doug about the new Intel factory in his hometown of New Albany and what the status is. Do you have any idea what's going on there?

• 1:44:16John Coogan?

  New Albany.

• 1:44:18Doug O'Laughlin?

  Not my hometown.

• 1:44:19Jordi Hays?

  I haven't. No, no, no, not your hometown.

• 1:44:21John Coogan?

  This listener's.

• 1:44:22Doug O'Laughlin?

  Oh, okay, okay.

• 1:44:23John Coogan?

  This listener's hometown is maybe looking for a job in the fab.

• 1:44:27Doug O'Laughlin?

  So the, uh, New Albany, as far as I understand, uh, the ground is broken, the shell is empty, and I don't think they'll fill it.

• 1:44:34John Coogan?

  Okay, this won't happen.

• 1:44:36Doug O'Laughlin?

  That is, uh, but the thing is, I think that that's a really valuable asset that needs to be re marketed. I think, um,

• 1:44:44Doug O'Laughlin?

  I think it's probably likely someone will buy it. And if I had to guess, it's like T S N C. So, um, yeah, I don't know what that looks like, but, uh, I think, I think, uh, a really shrunken down Intel looks like just Oregon and just, uh, New Mexico and Arizona, Arizona, I think so, yeah, Arizona. Um, and that's it. Uh, the capacity that was expanded for Ohio was like a YOLO bet the farm somehow where like BD AMD again. Like, I think it was underwritten to have this like, and that's the reason why Liputan was like, dude, touch grass. This isn't happening. Pat Yelson, this is just like, this is not happening. Like, you're like completely not realistic. I think that that, um, it just doesn't, like, the capacity they had there

• 1:45:27Doug O'Laughlin?

  for the, the wafer starts is just like so large, it doesn't make any sense. Um, yeah, and I mean, like, dude, the Liputan thing, and like, wait, how do we feel about like the, you know, Chinese thing? I mean, there's just not many people who could take the job and I mean, it really sucks since very hard, but like, dude, he actually embraced reality, like the most realistic thing I saw. He's like, dude, we're not even a top 10 player in AI. And I was like, yeah, that sounds like reality. Like, this is the first realistic thing I've heard for a long time. And that's like refreshing to me. The guide was totally like, the, the print was totally messed up. Like, you know, effectively, it was really ugly. Essentially, they're like, yeah, we did pull forward tariffs. Yeah, the guide is a little messed up. And yeah, it's going to be uglier from here. But I kind of vibe with it because it's like,

• 1:46:09Doug O'Laughlin?

  we're just going to tell you like it is, like, like how it is. You can like trade the expectations of this, but like, the, the stock and company and the value of it is, in my opinion, a binary option, is what is the foundry worth to America? And how do we get, how do we like fast forward this like painful capital intense? World where we like don't have a leading edge semiconductor producer that can have an external customer to one that can. That's that's the entire value of the company to me. And then Fabulous is like a call option cash gusher that can be hopefully harvested.

• 1:46:39Jordi Hays?

  Strategy is we need people to rip the Band-Aid off.

• 1:46:42John Coogan?

  Yeah.

• 1:46:43Doug O'Laughlin?

  Yeah, yeah, it's almost a pay a big. It's gonna cost a lot.

• 1:46:47John Coogan?

  Uh, give me the update on GPT five.

• 1:46:50Jordi Hays?

  Yeah, specifically, it it this was the week that the timeline woke up to language models plateauing. A lot of people are bummed about it, bearish, I think, in.

• 1:47:03John Coogan?

  It was maybe six months ago that Dylan Patel went on Dork Cash and said, like, if GPT five is good, we're totally good on all the semiconductor spend. If it's not, maybe we're in trouble. And so I'm wondering, like, if there's updated thinking around there based on, you know, do we do we need any more inference clusters or or or training clusters? Or is it just a game of where's the profitable inference happening? Let's make sure we have enough to meet demand, but not go further, not create some overhang. How much of a of a dance do we have to do to make sure that we don't get like overcapitalized, overbuilt?

• 1:47:42Doug O'Laughlin?

  Okay, so this is a pretty interesting question. Um, I'm gonna parrot Dylan on Twitter, because, you know, like, my Lord and Savior Dylan knows knows what he's talking about. Um, GPT five is a little disappointing, I think, for the power users of Twitter. There's no other way, uh, there's like no other way to put it is that like, it for the power users of Twitter who've been like chugging O three deep research things for a long time. And it's like messing around with Brock and like messing around with whatever. I personally do not feel like massive difference. It's less verbose, whatever. Maybe it's slightly better. I don't know if you're seeing this thing about like the the SUI benchmark, like app, like, uh, the the so like the like is, yeah, the chart, no, no, not the chart.

• 1:48:25Doug O'Laughlin?

  The SUI benchmark, if you look at it, um, not all 500 tasks are measured. They pulled some.

• 1:48:31Jordi Hays?

  It's like four seventy seven, it's like.

• 1:48:33Doug O'Laughlin?

  Yes, four seventy seven, yes.

• 1:48:35John Coogan?

  Interesting.

• 1:48:36Doug O'Laughlin?

  Yeah, so like that's a like that's an apples to oranges comparison. So that's like a big deal. Um, but I do think you have to think about like, okay, so on one hand, um, the cultists and and like me and like the power users are probably disappointed. On the other hand, uh, you know, there's six hundred million free users who probably just woke up to like a big upgrade. And I think that that's how I feel like this was actually like that's the actual strategy. They pushed them to five. Five's a lot better versus four, for uh, you know, four O. And it just, sorry dude, the fucking naming.

• 1:49:07Jordi Hays?

  Well, I think I think another way to put it is if you're a power user around like using it for research and learning. You're you're maybe disappointed if you were a companionship power user. I mean, we were reviewing. I mean, r slash chat G P T on Reddit is absolutely in shambles today.

• 1:49:24Doug O'Laughlin?

  Dude, I know because the girlfriends, R I P.

• 1:49:28John Coogan?

  R I P. Well, there's a new entrant there. I think uh, I think they might have to peel off that market and give it to Elon.

• 1:49:35Doug O'Laughlin?

  Yeah, that's true. You can do you could do uh, the Annie network, you know. Dude, I don't, I I um, yeah, I think that that's the correct way to think about it. I think it feels like it's uh, try to be as simple as a like a simplification of the uh, of the SKUs, because as you guys know, it's confusing as hell. There is many, there's like many thinking and and flagship. Uh, for the most part, I had to, if I had to guess, flagship probably rent like, probably prints cash for them. And is like much cheaper and like a smaller model, maybe not a smaller model, but like compared to like a very big model smell, right? It's not big model smell. So it's very, and then also if you look on the pricing, it's pretty cheap. And if it does what it does, well, then just like we talked about, sweet benchmark might not be, might not be correct.

• 1:50:20Doug O'Laughlin?

  But like you nuke the price on your competitors in terms of like Claude versus uh, chat uh, G P T five tokens. And so I think that that's like the, this is the better, bigger, faster, or maybe it's the faster, cheaper, but not better update, if that makes sense.

• 1:50:37Jordi Hays?

  Yeah. Well, one thing that stood out yesterday, so they have seven hundred million weekly actives globally.

• 1:50:43Doug O'Laughlin?

  Yep.

• 1:50:44Jordi Hays?

  Eighty-five percent are outside of the United States. And you can just imagine in that, in those hundreds of millions that are outside of the U S, many of, you know, like the the question just becomes like how they can continue to serve. Like, will they be able to serve?

• 1:51:03John Coogan?

  What will ARPU be and what will the margins be on the on the incremental international developing markets ChatGPT user? Because the marginal cost to serve WhatsApp or Facebook, even even, yes, you're storing images for for Instagram. But or WhatsApp, you're running a database, but the marginal cost is so, so low. And it feels like, at least right now, maybe it changes in a couple of years, but right now, the marginal cost of serving a ChatGPT user, even a casual, weekly, active user is is in the it's in the dollars per year. And when you look at the monetization rates of Facebook and WhatsApp in developing markets, the ARPU is like dollars per year.

• 1:51:44John Coogan?

  And so matching that up feels like a big challenge. And I'm wondering about, yeah, like ASICs, AI on the edge, dedicated, you know, servers or or even more pared down models. Like, like, what's the what's the solution so that you're not just burning a ton of cash supporting, you know, unprofitable users?

• 1:52:07Doug O'Laughlin?

  So I definitely, so I wonder if we'll have the bandwidth to get this done, if it like makes it to a big post. But like, I think we're thinking a lot about this deeply.

• 1:52:15John Coogan?

  Yeah, makes sense.

• 1:52:16Doug O'Laughlin?

  At some analysis. I think the cost of a free user for a small model is like surprisingly low. I want to be a little bit more sure about that. But I think if you have high batch size with, you know, B200 or GB200, I don't know if it's dollars per year. I really, I really think the actual net tokens that you're you're you're able to do is a lot higher than people think. And I think that there could be this, but the problem is, is like the same, there's the same issue, right?

• 1:52:46John Coogan?

  Yeah.

• 1:52:47Doug O'Laughlin?

  Think of it as like a Pareto curve, right? 20% of the people are paying at the wazoo and more than happy to pay for like a crap ton, right? The pro and plus of OpenAI. The only problem is like the one, the the top 5% of that 20% are paying are like, you know, they're massively losing money on. And then you have this like long tail that is like kind of interested, likes tokens, becoming a little bit more addicted, easy, cheapish to whatever. And then as you can shift that up, maybe you can make the revenue that you're not, you're losing for the hyper, you know, for the pros, right? And so that's kind of the, I think that that's kind of like the more interesting like thought process. I do think.

• 1:53:24Doug O'Laughlin?

  The unit economics of these things are a little bit like, I mean, it really depends on the size of the model and then like what inference they're they're doing, but like my impression is you can be doing, you know, bill, you know, millions and millions and millions of tokens for relatively cheap a year. And if you monetize, if you know, we're talking about like, you can monetize like fifteen to twenty percent, or even twenty to thirty percent of your your tokens are actually being monetized at like, you know, the market rate, you can pay off the the eighty percent. And that break even, I think, is a really important like question. I don't know the answer to that. I know we're working on it, but I don't have anything.

• 1:53:58Jordi Hays?

  Yeah, I think the que- I mean, the the going back to your like Instagram or WhatsApp comparison, Instagram and WhatsApp are pretty much the same wherever you are in the world, regardless of how much revenue you're generating for these platforms. But it's very possible in the future that that companies cannot serve the quality of model and some of these areas that they can.

• 1:54:19John Coogan?

  Well, they will. It'll just be two hundred dollars and two hundred dollars in an emerging market is like a ton of money. Um, and so the adoption rate and the upsell rate will just be way, way lower. They'll probably be like an ad-supported tier. Um, but.

• 1:54:32Jordi Hays?

  But again, ads ads themselves don't generate.

• 1:54:35John Coogan?

  Of course, of course, the ARPU will be will be much lower in emerging markets.

• 1:54:39Doug O'Laughlin?

  Yeah, and I think, I mean, I think that's happening. Um, I can't I can't name the hire, but I know the hire that like essentially started the ads.

• 1:54:46John Coogan?

  Yeah, Fiduci CMO.

• 1:54:48Doug O'Laughlin?

  Yeah, is is is there. So like, you know, that's the.

• 1:54:51John Coogan?

  Yeah.

• 1:54:52Doug O'Laughlin?

  You know, fricking surprise. I wouldn't be surprised. The insert, there's like a Twitter user. The answer is always ads. Okay, there's gonna be ads eventually.

• 1:54:58John Coogan?

  Yep. But they probably monetize like within an order of magnitude of how well Facebook ads monetize and Google ads monetize. So.

• 1:55:06Doug O'Laughlin?

  Yeah.

• 1:55:06John Coogan?

  That's fine, as long as your inference cost is roughly the same as within an order of magnitude of Google's service cost and and Facebook's service cost to serve a user, which are, you know, pennies, I imagine. But it does feel like we can get there.

• 1:55:20Jordi Hays?

  But I think I think this this the the timeline broadly woke up this week that we're building developer tools and consumer internet companies.

• 1:55:29John Coogan?

  Yep.

• 1:55:30Jordi Hays?

  And like, that's that's the game here. And.

• 1:55:33Doug O'Laughlin?

  Yeah.

• 1:55:33Jordi Hays?

  Machine God is like real in some ways.

• 1:55:37John Coogan?

  Delayed.

• 1:55:38Jordi Hays?

  Delayed. Um, I'm curious, how do you think, uh, how much do you think the labs care about the student market? There'd been some reporting around the token generation as school ended last year. Token generation dropped dramatically. And then today Sundar came out and shared that Gemini, they're making Gemini like, you know, like unlimited, sort of like free for for students this coming year. And in some ways.

• 1:56:07John Coogan?

  Seems like he's staying in the game. He's like, I'm not letting chat GPT.

• 1:56:10Jordi Hays?

  Well, no, and it feels like that's potentially a way for them to like to kind of

• 1:56:14John Coogan?

  Yeah.

• 1:56:15Jordi Hays?

  corner users that will become very valuable, maybe aren't so valuable in the short term, but will become very valuable over time if you can get them to stick.

• 1:56:22John Coogan?

  Yeah.

• 1:56:23Doug O'Laughlin?

  Yeah, I think, um, let's kind of talk about this because I think that's like just a really interesting and I'm kind of going to Google, I think.

• 1:56:31Doug O'Laughlin?

  You know, how Kuda, you like just analogy, right? How Kuda became a thing is because Jensen gave it away to PhD people for like a decade. And then all of a sudden, everyone who ever did anything realistically in machine learning was like, well, I'm using Kuda because that's what I've been using. I think it's important because if you're thinking about like, you know, where are the users of tomorrow? The experts of penetration are like, it's not going to be the old people who are using the hell out of it first. Who knows? Maybe they are, but it's like the young people are probably going to over index. You know, people my age, which makes me feel old is like, you know, probably index about right. And then the people older than me are going to index under. And so where do you actually win market share today? It's probably not in the people my age and older or the power users or whatever.

• 1:57:15Doug O'Laughlin?

  You probably need to like get a, you know, you need to get a 12 year old addicted to Gemini, which sounds like very terrible. Now I say that a lot.

• 1:57:24John Coogan?

  But you wouldn't say that about Google search, you know, or Google Drive or Gmail. But yes, it is like, it's low churn. You have to get them over the adoption curve so that they are low churn.

• 1:57:33Doug O'Laughlin?

  And that's where they're like, like, I think it's like a cognitive referent, right? Like right now, even though I am very model curious, meaning that like I have a, you know, a paid sub to like Claude to Grog to chat GPT. Recently, especially like, you know, in the, you know, the good old golden era days of oh, three, you know, three pro deep research. I'm just pounding deep research queries and like Asian queries constantly. But like, and I'm going to be, to be clear, I'm going to start looking around a little bit, but like, I, I think. I think that that's what Gemini is like real issues is they need to become the cognitive referent. I think when people open up a, you know, a GPT like, you know, transformer model effectively to ask them in LLMs, they need to be thinking of Gemini in the conversation

• 1:58:18Doug O'Laughlin?

  and they just don't, dude. Sometimes I like talk about LLMs with like people and it'll be like, you know, uh, OpenAI and Anthropic and uh, what's the third? Oh yeah, Gemini, you know, the third. Yeah, I like weirdly forget about them. And I think that that's the, they don't want to be forgotten. And I also think if we do a segue to, I think that's why they're also starting to sell TPUs externally. Um, and this means like as a service, right? In their cloud, right? They're selling, like they talked about on the last call, where like, you know, GCP is starting to accelerate. And I think where we're starting to see that is I think TPU is starting to pick up a little bit.

• 1:58:52John Coogan?

  Do you think that would be like distilled models that are uh, fine tuned or, or developed for TPUs specifically or something else?

• 1:59:00Doug O'Laughlin?

  I, I, I think it's, I think it's more that like there's a few model companies who are very interested in extra capacity. Um, you know, for example, Anthropic is definitely, uh, you know, definitely uses some TPUs. I know that for sure. And so, you know, in the frantic search for capacity.

• 1:59:14John Coogan?

  Don't they also use Tranium a little bit too?

• 1:59:15Doug O'Laughlin?

  They also do use Tranium. I think it's very funny because Anthropic uses everything.

• 1:59:18John Coogan?

  Interesting. Is that, is that like a huge cost center to have uh, kind of like a replatforming team to rewrite all your CUDA code into Tranium and TPU compatible code?

• 1:59:31Doug O'Laughlin?

  I don't know, probably, but uh, you know, Anthropic's crap. So that's what this, you know.

• 1:59:35Jordi Hays?

  They have Claude code. They have full access to Claude code.

• 1:59:38John Coogan?

  Yeah, Claude, replatforming. I mean, that is the point.

• 1:59:40Jordi Hays?

  They don't have to worry, they don't have to worry about being dropped.

• 1:59:43John Coogan?

  Yeah, I mean, I mean, I, I was wondering like when, when will a cross compiler exist? And, and you can, I mean, didn't, didn't Facebook do that for a while where like you, they would write JavaScript and it would compile like C++ or something like that? Because they'd written like so much JavaScript that they were just like, okay, we don't have time to rewrite all this. Let's just write our own compiler. And, and you can imagine Anthropic doing something similar to run on TPU or, or, or Tranium.

• 2:00:05Doug O'Laughlin?

  Yeah. I think that that's happening to a certain extent. And I think that for Anthropic, they think of it as optionality. And I think Tranium specifically is like, you know, the... The other drunk suitor at the bar who like really needs a partner like Amazon who's now last place, right?

• 2:00:20John Coogan?

  Yep.

• 2:00:21Doug O'Laughlin?

  Last era was first place, now they're last place. And then Anthropic, who is like, you know, the scrappy number three who needs capital puke is like, come on dude, marriage made in heaven. Let's tie it up together. And then that's why training is just like ramping.

• 2:00:34Jordi Hays?

  We're gonna start using these drunk bar analogies.

• 2:00:37Doug O'Laughlin?

  Dude, I love drunk bar analogies.

• 2:00:39John Coogan?

  We usually stick to the sports analogies, but I'm probably more familiar with the drunk bar analogies. Those are good.

• 2:00:44Jordi Hays?

  Um, Ross McCannell in the chat says, please ask Doug about the state of memory makers. Will SK Hynix and/or Micron be able to maintain margins and keep HBM as a somewhat differentiated product? Or is it doomed to be a commodity business?

• 2:00:59Doug O'Laughlin?

  I think, ooh, this is a good question. Trying to think about how, what are phrases? Um, so, uh, I think one of the ways to think about this first and foremost is HBM is like the new DRAM. I mean, like, there's like a weird, weird aspect where it's like, okay, DRAM was like the best. And you can look at the cycles margins and like, they're not actually higher than last cycle's margins, which is like, probably a little bit of a, I wrote about this, like being the super new DRAM. I think HBM is really, really, really important, super, super duper in a demand and is like, you know, the new memory. But in the other ways, NAND specifically is kind of like the old memory and it's getting much worse with the commoditization and the like, especially

• 2:01:41Doug O'Laughlin?

  uh, CSMT on the lowest end, or no, YMTC on the lowest end and then CSMT on DRAM. So you're starting to see some, some of the aspects there get a little worse, but I do think NAND is trying really hard to kind of hold on to the, you know, the oligopoly where everyone doesn't raise bits together. Um, and maybe who knows, it becomes so old and whatever you end up like eight HDDs, which are actually having like, like you should go look at STX and um, what's other, and WDC, because they're like, their stocks are ripping because.

• 2:02:11John Coogan?

  Yeah, Western Digital.

• 2:02:12Doug O'Laughlin?

  Yeah, Western Digital, because they're not investing. They, they, you know, it's a two-player market. They even gave Hammer to the other competitor so that they can like. Effectively like, you know, have a two-player oligopoly where they control supply.

• 2:02:24John Coogan?

  And this is just, this is just the Nash equilibrium. This is just like game theoretic. They know that they, that this is better for both of them. So they're not getting a price war, right?

• 2:02:31Doug O'Laughlin?

  Yeah, yeah, yeah. A hundred percent. But that's only for hard drives. Like NAND isn't there yet, man. NAND, you have like a slippery Chinese, slippery Chinese like swing producer that is willing to blow it up.

• 2:02:40John Coogan?

  Got it.

• 2:02:40Doug O'Laughlin?

  And so I, I, I think on HBM, I think it's kind of complicated. I don't want to like say too much because I don't even know. I, I don't even know what something else's house, like house, house view is right now. Um, let's just like, I'll talk about some facts I think might be very interesting and just like thoughts is that like, look, last time this year, Micron and SK Hynix were effectively completely booked out. And obviously Samsung wasn't even in the game. This year, they're not booked out. Um, what is the difference is I think is the threat of the Samsung qualification. I don't, I don't know about Samsung qualification. Okay. Uh, I don't think anyone knows. The shit I hear out of Korea, like I hear that they're qualified, they're not qualified, they're qualified, they're not qualified. They're qualified, but you know, you have to hit some kind of yield thing. I hear kinds of shit all the time. I have no idea.

• 2:03:24Doug O'Laughlin?

  But I think the fact that, um, HBM four pricing seems to be a little bit like dampened just on the threat of qualification. Really kind of tells me that the HBM cycle is really long in the tooth and is probably where we're nearing the beginning of the end. Just mathematically, as the second derivative continues to go down for most of the memory stocks. You can look at like SK and Micron. Um, I still like SK. I still think what they do is really, really differentiated and valuable on a relative basis. Um, I mean, they got to HBM first. They still are really awesome. They still have the best, um, the best product and process. But I guess I'm just kind of like, you know, I'm a cycles brain guy and it's been about three years of a tight cycle in memory.

• 2:04:06Doug O'Laughlin?

  And you're like, you're asking me to bet on the fourth. I know what the base rate should be. You shouldn't bet on. But, um, I don't, I don't think we actually have a house view other than that. Like, because at the same time, you know, Nvidia goes brrr and HBM bits goes up. And even though there's a little bit of an oversupply in HBM three, I still think HBM four is going to be pretty good. But you know, like rate of change brain tells me, um, It's a little spicy.

• 2:04:32John Coogan?

  Where else in the supply chain should we update if we're totally plateau pelt? And we say, you know, we're not going to necessarily even want to do the next order of magnitude pre-training run, the mega cluster, we're maybe going to be more distributed, more inference heavy, are we thinking ASICs, are we thinking more focus on depreciated GPUs, distilling models to older hardware, or just, you know, really getting all of the juice out of the current H100s and GB200s and like actually just like, you know, like not replatforming

• 2:05:16John Coogan?

  to the latest and greatest constantly, like not worrying about that? Or like where else, where else should we be kind of updating on various parts of the supply chain?

• 2:05:25Doug O'Laughlin?

  Okay, so I think a lot about this, or and one, I feel like I'm like the wrong person, or I'm probably a decent person to answer this, but like it's going to be really speculative, so I'm gonna put like some massive disclaimers.

• 2:05:38John Coogan?

  Yeah.

• 2:05:39Doug O'Laughlin?

  Who the F knows, right? Like maybe, you know, maybe there's one more thing or Claude comes out and they cook on five or something, I don't know, or Gemini next week makes us all pelt, I don't know.

• 2:05:48John Coogan?

  Yeah.

• 2:05:49Doug O'Laughlin?

  I think we're, if we're, okay, so let's just like walk through some of them. The massive pre-training cluster doesn't happen. I think the fiber from data center to data center is like the most screwed. That is the most whipped at the tail. The multi-data center training thing, that is like, oof, ouch, goodbye, you don't need anymore, right? You can do 100K clusters of RL and you get, and so that's probably where I think if you had to like, you know, slice the puzzle where it's most impacted, it's probably there for the, for training specifically. I still think we would end up doing a lot of inference. I do believe, I really do believe that if like all progress stops today, we probably would still have like, you know, a decade of productivity as this like technology's ingested.

• 2:06:30Doug O'Laughlin?

  It's not AGI God, but it does happen to be like an amazing simple, like densification, simplification, like. You know densification of all the information into like a an answer machine. Fucking awesome.

• 2:06:41Jordi Hays?

  Yeah, yeah, yeah.

• 2:06:42John Coogan?

  I mean, it's like it's like there were a lot of CPUs in the cloud. Like, we're gonna use CPUs in the cloud for a long time. Took 20 years to actually do all the things that you can do with CPUs and databases and hard drives in the cloud. And now we have GPU and and and LM. So we're gonna we're gonna stuff that in every single cranny of the economy.

• 2:06:58Jordi Hays?

  What did you what did you think there was a headline recently? That Microsoft it was it was Azure's non AI cloud business was growing at at almost the same rate as AI.

• 2:07:10John Coogan?

  I think the final read on that was that that was just driven by OpenAI as an Azure client. But basically, the the the read off of earnings was that their their their core infrastructure group grew faster than their AI services group. So more people buying compute as opposed to buying tokens. But that's not necessarily a read that like people are spinning up more, you know, CPUs.

• 2:07:35Doug O'Laughlin?

  Yeah, so.

• 2:07:35John Coogan?

  So walk it but walk us through it.

• 2:07:37Doug O'Laughlin?

  Actually, that's a great question. I'm I'm very familiar with what you're talking about. The Azure beat last quarter specifically was driven by the infrastructure side more so than the token side. And then, like ironically, you know, one of one of my colleagues at like semi analysis pointed out, pointed this out. There wasn't the disclosure they had last quarter. They disclosed what the percentage AI was to the growth and they did not talk about it. And if if they stopped disclosing, I can tell you the answer is it was lower. Like, you know, so I think that's probably a pretty interesting thing. It tells you that like the consumption is definitely worse. I don't know if that how they're classifying AI.

• 2:08:14Jordi Hays?

  Well, doesn't that track with that tracks with Satya like canceling canceling data center developments and just saying I'm happy to lease also? Like, you know, the business on a tear during round like multiple rounds. They've done more layoffs this year than I think the last like three years combined, which tells me that everything that like the timeline is waking up to this week. Like Satya has known, even if you look back at some of his interviews, he's talking about like, yeah, OpenAI is like a great consumer technology company.

• 2:08:42John Coogan?

  We're happy to partner with them. Wait, wait, wait. Sorry. Can you can you restate and unpack that a little bit more? So there were so Azure grew a ton. AI tokens grew a ton, but AI core infrastructure grew even more. But they used to break out within core infrastructure. How much of that infrastructure is being used for AI versus not? And they stopped disclosing that. Is that correct?

• 2:09:07Doug O'Laughlin?

  Yes.

• 2:09:08John Coogan?

  Okay.

• 2:09:08Doug O'Laughlin?

  That is correct.

• 2:09:08John Coogan?

  Yep.

• 2:09:09Doug O'Laughlin?

  And so by not disclosing it, you know, the answer is it's slower.

• 2:09:12John Coogan?

  Yeah, but it was still it was still like pretty big growth overall. So it's just that the the second derivative slowed down. Yeah, it's still accelerating, but it's at a lower rate.

• 2:09:21Doug O'Laughlin?

  Yeah.

• 2:09:22John Coogan?

  Okay.

• 2:09:22Doug O'Laughlin?

  Well, actually, I feel like now I'm talking out of my ass.

• 2:09:24John Coogan?

  Yeah.

• 2:09:24Doug O'Laughlin?

  The number in front of me, but like, look, I think the thing the the Microsoft print is like, they pretty much are like almost mid cycle.

• 2:09:35Doug O'Laughlin?

  Pressing the brake and then they like, you know, they juice. But like, you know, as it decelerates the investments, you still get to reap all the investments you made.

• 2:09:42John Coogan?

  So the massive backlog, right? Don't they have like a hundred billion dollars of cloud backlog?

• 2:09:47Doug O'Laughlin?

  Yeah. And and so all this backlog is start to become revenue. And then like, you know, Microsoft still is like such a winner. Just had like fast or rewind to like three years ago when Microsoft was like clear number two. And like, you know, now they're outgrowing on a like on a much higher base than AWS is. And AWS is like not in this, right? So I think that if you think of it from the perspective of like, hey, Microsoft Azure versus versus AWS, did you know, did Satya win? The answer is yes. But I think the thing that is interesting, definitely going forward is like, how this all works and how OpenAI continues to finance and spend and pay for more compute infrastructure.

• 2:10:31Doug O'Laughlin?

  Because at the same time, like, you know, one of the other ways you could look at it is like the entire math of where this is going is just like all at Oracle's pocket. Like Oracle effectively, so you talk about the Microsoft slowdown. Oracle literally just completely ramped up when Microsoft slowed slowed down. And then and then Oracle went to OpenAI and OpenAI is like, great, dude. We got a new customer. They're willing to do Sargate. There's even a spot that was supposed to be Sargate for Microsoft. That kind of like, you know, and then all of a sudden. Yeah, he said, I'm good for my I'm good for my however many billions.

• 2:11:00John Coogan?

  Eighty billion.

• 2:11:01Doug O'Laughlin?

  Yeah.

• 2:11:01John Coogan?

  But then but then but then that that deal went to Oracle, right?

• 2:11:04Doug O'Laughlin?

  Yes, that deal went to Oracle.

• 2:11:06John Coogan?

  Okay.

• 2:11:06Doug O'Laughlin?

  So I think that that's. Yeah, I think Microsoft is like slowing down. They definitely had this massive lead, like a truly a massive lead. Remember like last year, the perception of who is winning the race for the hyperscalers. It was Microsoft number one because the OpenAI partnership plus the infrastructure. You're like, dang, they're so far ahead. Now being conservative, kind of pulling off, you know, decelerating. But I also want to put some like, let's also talk about this a little bit because I think the underappreciated part about the Microsoft thing is um yeah, just like how shitty they've done with access to the model this entire time. They've had access to the model weights at OpenAI the entire time.

• 2:11:44Doug O'Laughlin?

  And you can also argue that no company has more competitive threat for uh for their core business than Microsoft does. I don't know about you, but I do a lot more editing and drafting and like information search and ideation in ChatGPT than I used to do it in Word, right? So you're like typing up something and you're like, ah, give me an outline.

• 2:12:05Jordi Hays?

  So so so Elon posted yesterday that Microsoft is get is going to get absolutely cooked by OpenAI. And in many ways, obviously, like Microsoft has a ton of users for Copilot. They they're taking AI seriously. But what you're getting at is is one, you know, and it's hard to read too much into what Elon is saying because like he's got a lot of, you know, he's playing games behind the scenes that we don't necessarily have a view into. But what you're getting at is interesting, which is you might instead of, there's a world in the future where instead of opening a doc or an Excel sheet, you just start talking with the model and saying, I want to make a model for for this product line, you know, going out over the next like three years.

• 2:12:49John Coogan?

  It basically has Microsoft three sixty five as a tool that it can call.

• 2:12:53Jordi Hays?

  Yeah.

• 2:12:54John Coogan?

  And it can instantiate a Word doc for you if it needs to.

• 2:12:57Doug O'Laughlin?

  It creates the output in in.

• 2:12:59John Coogan?

  In in the actual application that they have because they already have cloud hosted PowerPoint and they just are like, oh, it sounds like you're going down a tree. You need a PowerPoint. Here you go. I generated it. And you can edit it if you want, but also here's the export. We got a PDF for you here because we used our tool.

• 2:13:12Doug O'Laughlin?

  Yeah, a hundred percent. Yeah, a hundred percent. And like.

• 2:13:14John Coogan?

  But yeah, huge, huge UX problem. Like, like, I mean, like. Google has bolted Gemini on to every product and and it's in the adoption's been very rocky and it's been it's been tough like it's not as easy as just like slap a text box on it and you got a winning consumer product like it does require innovation, I think, in terms of product development.

• 2:13:33Jordi Hays?

  So so going back to the sort of dynamic between Microsoft and Oracle, I think you ask have to ask the question if if Microsoft is pumping the brakes a little bit and Oracle slamming their foot on the gas. Like, it's going to take a little bit to see who who made the right call.

• 2:13:48John Coogan?

  Yeah.

• 2:13:49Doug O'Laughlin?

  Yeah.

• 2:13:49Jordi Hays?

  And.

• 2:13:49Doug O'Laughlin?

  You so do we do we plateau or not? Right? That's the answer.

• 2:13:53Jordi Hays?

  Well, and and I think the answer this week is yes.

• 2:14:00John Coogan?

  Yeah, but I mean, at the same time, like like inference for chat.

• 2:14:04Jordi Hays?

  Not necessarily usage wise, but model quality.

• 2:14:07John Coogan?

  Could just continue to continue to increase. And if if Oracle can position themselves as like the key cloud provider for that, that could be it. It's mostly just like the Oracle investments just can't be overly aggressive at any point in time, because if there's a pullback, then they're like, oh, we're unprofitable for a little bit on this.

• 2:14:23Doug O'Laughlin?

  Yeah, yeah, they they could take the biggest bath.

• 2:14:26John Coogan?

  Potentially.

• 2:14:26Doug O'Laughlin?

  Yeah, dude, I think, OK, so. I'm trying not to call it because, as you know, AI changes, I feel like week to week.

• 2:14:33John Coogan?

  Yep.

• 2:14:34Doug O'Laughlin?

  Sometimes it feels just like, I don't know, hyperbolic time chamber, dude, like, you know, we could be so over and then it could be so back, right? If you guys remember, pre-training is over, it felt very over. And then now we are, you know, so back because of the because of the essentially the increase in.

• 2:14:51John Coogan?

  Reasoning, test time.

• 2:14:52Doug O'Laughlin?

  Reason, yeah, sorry, reasoning. And then now I'm thinking about this is like, OK, so the unspoken part about this that makes, you know, the chat GPT five a lot better than other things is like long task and agentic and tool use, right? So that is the, in my opinion, you know, and and I hear this kind of shit all the time. I thought it's really BSE until I've been messing around with Claude code. It's like, oh, agents, agents, agents, agents, agents are going to be this big thing. And you're like, what the fuck does that mean? Because you're like, I don't know what this agent is doing, but like Claude code is pretty cracked, man. You just like ask it to do things and it just like. Does them and it does it in like kind of a scarily good way. A good example is like we've been hiring people. I think we have some hires in the line. We make them do a case study. That's like not a case study is a great way. Okay.

• 2:15:35Doug O'Laughlin?

  And I was so pissed and annoyed by some of the case study qualities. I made like each of the models do the case study. Dude, you know what did the best case study of them all? Claude Code did, okay? Claude Code over OpenAI Agent. And I think that that's kind of what we're like. Those extremely long context autonomous ability to do stuff on on its own is going to be the like. You know, the Nirvana that like changes everything or makes the consumption a lot bigger. And I think. You can kind of see the glimpse of what an GenTek feature looks like via Claude Code. And then you just assume that instead of them R L ing the shit out of like software and making, you know, the best bu- you know, the best commit or something like that.

• 2:16:12Doug O'Laughlin?

  They're going to R L the hell out of like advertising or creating the best, um, you know, advertising media, or they're going to R L the crap out of like finance or making the best financial.

• 2:16:23Jordi Hays?

  Well, yeah, I mean, the the thing that stands out to me is like this compounding advantage of like you're a lab, you're competing with other labs and you have access to the best coding product. And you can use it as much as much as you want forever. And it gets better and then you guys get better and higher output. And I don't think we've seen this, you know, you don't, you didn't see the same dynamic with like Microsoft having. A better version of Excel and like.

• 2:16:48Doug O'Laughlin?

  Yeah, or Word.

• 2:16:49Jordi Hays?

  Or or the example of like, it's not like Mark Zuckerberg with Facebook was like, I get to use Facebook more than my competitors, so I'm going to be better. It's like.

• 2:16:58John Coogan?

  They actually tried that. They they were using Facebook for internal comms. They still do.

• 2:17:01Jordi Hays?

  Well, yeah, but whether or not that gave them a compounding advantage.

• 2:17:05John Coogan?

  Over Teams or.

• 2:17:06Doug O'Laughlin?

  Well, let's, yeah, like, I I think, um, there's this like project or it's like AI twenty twenty seven or something. There's like this like. I think that that actually feels like a little bit more grounded and then like some of the like the really like, you know, AI dimerism, but I think the like. The recursive ability or like whatever like P doom, whatever you wanna talk about, but like the recursive ability to make your products better by continuing to invest is like, you know, it is a flywheel and that's definitely, I think, the anthropic bet that they're going really hard at. And so, you know, the thought processes is like, well, okay, if uh if we can get the AI agent to do a, you know, AI uh AI experiments, not just coding experiments, then like boom, we are off to the races.

• 2:17:49Doug O'Laughlin?

  And that really will be, I think, the, you know, the the the like where the curve bends back in on itself. Um TBD, right? Yet to be seen. I don't like, I don't exactly, like from the outside looking in, there isn't exactly any um any kind of special ability for me to say that it will or will not be that way. But I think so far from what I understand for the researchers, I don't think everyone's like doomed or bared up on um on some of the stuff. I definitely think ChatGPT five is a little disappointing, but maybe uh maybe OpenAI just isn't cooking like it used to, right? Like, I think um and I don't know if uh I I I I don't know if it's a at like, I don't know what actually happened at five, but like

• 2:18:31Doug O'Laughlin?

  I wanna like, we don't actually know what's the like the ratio or at all to reasoning to like.

• 2:18:37Jordi Hays?

  Just totally. Just remember, you know, you can debate on on the people that have left OpenAI in the last couple of months, like how how good they were, were they the best people, were they mercenaries? But any company that has been gearing up for a massive product launch, like or have gone through a massive product launch, imagine going through that again, but you lost like forty percent of of of some of your most elite team members. Like, that could be, that's like, should obviously have been a factor here. If it wasn't, then Zuck is cooked, because he just hired a bunch of people that just weren't that great. Someone's cooked. So I think that I I think that, yeah, that's worth asking the question, what would chat, what would GPT five have looked like if Ilya was still

• 2:19:21Jordi Hays?

  at the company? What would it have looked like if Mira was still at the company? What would it have looked like if the long tail of researchers that left were were still there? Or what would it look like if they just didn't have the distraction of the talent war? Yeah, yeah.

• 2:19:32Doug O'Laughlin?

  Yeah, I I think that's a valid question, because my understanding of like why Gemini two randomly was so good is like, Noam Shazer was back. That's it. Like, that's literally it, as far as I understand. Like, all of a sudden Gemini starts cooking again. It's like, yeah, because like the guy who invented half of everything is back. I'm not surprised that that's like a real dynamic. But yeah, we're gonna have to see. We're gonna have to see. I do think you're right. Vibes are interesting. I do think probably tracking that cohort, like, if you think about it, just like an incremental slosh, like, you know, that's either the biggest, best investment of all time or gonna be the worst investment of all time. And like, tracking that cohort and how that works out is gonna be like a really interesting, like, case study.

• 2:20:15Jordi Hays?

  Can you, um, can you give us an overview of what's happening in private credit headline this week? Obviously, that Meta had tapped Blueout and PIMCO for like a $30 billion.

• 2:20:28Jordi Hays?

  You know, you know, I don't know that the sort of pace at which they'll get access to that capital, but.

• 2:20:35John Coogan?

  Just give us private credit 101 and go as deep as you want.

• 2:20:37Jordi Hays?

  Yeah, 101, but also like, you know, the real kind of risks surrounding it, you know, over the next year or so.

• 2:20:47Doug O'Laughlin?

  Okay, so I do think at semi-analysis, I'm the finance guy, which is funny because I definitely don't know if I like, in the big scheme of finance, how much finance I have.

• 2:20:58Doug O'Laughlin?

  But, um, okay, private credit is like public credit, but there's no marks. Okay. One of the things that got really interested.

• 2:21:08Doug O'Laughlin?

  Okay, so one of the things that got really interested about that is like, private equity rules because you could suck at your job, but if you have no marks, like, you're, you're, you know, you don't have a bad, like, performance and your volatility, like, you know, kind of chills the F out. So on an allocator basis, they're stoked. Like, private.

• 2:21:28Jordi Hays?

  I mean, this is the beauty, this is the beauty of being, you know, in venture broadly is the market goes up and down and 90% of my net worth is absolutely stable. It's not stable in reality, but.

• 2:21:41John Coogan?

  Yeah.

• 2:21:43Doug O'Laughlin?

  Yeah, and I think that that's like a, like, almost like a feature.

• 2:21:46John Coogan?

  Totally.

• 2:21:47Doug O'Laughlin?

  It was a feature that was like a bug at the beginning, if it makes sense, because it's like, okay, there is no mark. And because of that, you can effectively, like, you know, the volatility in these assets are really low and you hold it to maturity. There's a lot of studies and papers that effectively like, you know, public equity levered up over five years when you don't sell is like very similar. Like, the returns actually start to approach each other. And some of the cohorts of private equity specifically have really started to implode a little bit and have a low money out of the investment. So anyways, that's private, that's private equity, which I'm like super familiar with, very like, very funded. Private credit is like a lot of the same, uh, same energy in terms of the mark. And effectively you own this piece of debt to maturity. So there is no, you know, you don't really take a mark on it.

• 2:22:31Doug O'Laughlin?

  Um, and, and so you could get like, at one point, specifically, everyone raised these capital vehicles that were like, we're going to get high single digit returns with very little volatility forever. And so everyone was like, dude, sign me the hell up. And so.

• 2:22:46Jordi Hays?

  Yeah, if you look at, if there, the, the number of billionaires that private credit has created in the last, like, two decades.

• 2:22:53John Coogan?

  It's like 50 in, in the Forbes article.

• 2:22:56Doug O'Laughlin?

  Wait, really?

• 2:22:57John Coogan?

  Oh, yeah. Yeah, I'll, I'll send it to you. Yeah, private credit, I mean, just in Aries, there's like four billionaires.

• 2:23:03Jordi Hays?

  Cause it's just if you're, if, if the best way to become a billionaire is AUM maxing. And this, and this, and private credit allows you to, like, AUM max better than.

• 2:23:13Doug O'Laughlin?

  Massively.

• 2:23:14Jordi Hays?

  Almost any of these other, other sectors, then it, uh, it's just.

• 2:23:19John Coogan?

  So the, uh, yeah, really quickly, Bloomberg highlighted 18, uh, folks, uh, who are now billionaires from private credit. Uh, starting with Aries, 13 billion net worth, going down to Blue Al, Craig Packer at 1 billion. And so 18 new billionaires have been minted from the private credit boom.

• 2:23:37Doug O'Laughlin?

  And yeah, I think from my perspective on the private credit boom is like, okay, it's definitely been a thing this entire time. But like in the last few years, like there is a hockey stick moment where, um, I want to say it's like late 2023 or something like that where. The pitch was like almost, you know, unbelievable, effectively.

• 2:23:56Jordi Hays?

  This is simply too good.

• 2:23:59Doug O'Laughlin?

  Yeah, yeah, it's like, it's like you can get equity market returns in the long run with with no mark to market risk. And you know volatility and in theory less risk. So you're like, dude, equity risk. Or no, no, lower than equity return with like relatively no risk on like, you know, it's like obviously spread of a treasury. You're like, bro, sign me the hell up. Like, I'm gonna slam that button until the button stops working. And so everyone raised these giant funds, like ginormous funds. And so now these private credit guys are like sitting on a bajillion dollars to be U M. And they're like, dude, how do I get this, get this to work? And so now private credit is finding its way into. You know, it's kind of like the private equity, they're gonna have to deploy.

• 2:24:39Doug O'Laughlin?

  And so for for people who are looking to deploy very large amounts of assets, I think data centers are gonna be really interesting. Because in theory, and this is like depends on on the whole stack, but like.

• 2:24:54Doug O'Laughlin?

  Data centers are more like real estate investing. So you have a very different return profile that often are baked into the deals. And I think it's, and it's very capital intense on a relative basis. So you can deploy a lot of capital, which is awesome. And so you do that, you get like these five year, 10 year investments with like pretty solid chances. Right now, at least in like the two, three years, you're super money, you're super money good. Like some of the early data center investments are like fucking awesome. And so you're just gonna, you're gonna slam that bed, dude, you're gonna fricking, you're gonna, you're gonna deploy.

• 2:25:26John Coogan?

  And so the. The plateau theory feels good here because the the the risk was that I build a, I build a frontier model capable. Data center that runs G P T four and then G P T five comes out and I can't run G P T five. And I'm completely useless. Every all the workloads move to G P T five. And and I have no business whatsoever. Instead, it feels like the workloads are like sticking around for a long time.

• 2:25:51Jordi Hays?

  And it's it's important, you you can have like a plateau and intelligence that is different than a plateau and usage.

• 2:25:57John Coogan?

  Exactly.

• 2:25:58Jordi Hays?

  If usage and and demand plateaus, that becomes a real problem if you just, if you just spent 10 billion dollars on.

• 2:26:06John Coogan?

  You know, super levered data center developer.

• 2:26:08Doug O'Laughlin?

  Yeah, I, I think, I think you're probably right in terms of the fact that if the pace of, if the pace of everything slows down in terms of progress, you can underwrite the return, you can underwrite everything a lot more chill.

• 2:26:20John Coogan?

  Yeah.

• 2:26:21Doug O'Laughlin?

  You know, you're not going to be like, dude, my, you know, the data set, you know, the chips might get used longer. So you can be like, ah, you know, they're four year lives and they're five year lives with high, high certainty. Um, you know, the algorithms aren't just going to like massively consume all this stuff and make like the crap you bought effectively like super cheapened very quickly. And then your investment is more money good.

• 2:26:41John Coogan?

  Yeah, it was like having, like having a Bitcoin FPGA farm or something, you got destroyed when everyone went basic, right? And, and that's the risk, but that's not the nature of the current frontier path. Like, like GPT four workloads or GPT four class workloads are sort of sticking around probably for a really long time. And in the future, even if we do develop the super intelligent model, it'll probably be calling less intelligent models. There'll be distilled models for specific tasks, specific models for tool usage and all these different agentic workflows, et cetera. So yeah, it, it feels like all this stuff is, is going to be sticking around and, and good news for the depreciation cycles.

• 2:27:21Doug O'Laughlin?

  I, I don't know if that's like, so I'm, I'm gonna like,

• 2:27:24John Coogan?

  Please.

• 2:27:25Doug O'Laughlin?

  I'm not going to endorse that view just because we're like speculatively one-shotting this in a day. So like, you know, we'll see. I gotta think about this.

• 2:27:32John Coogan?

  Yeah.

• 2:27:34Doug O'Laughlin?

  But I do think, I mean, I do think this is probably better for the longer tail if frontier model stuff slows down. I think if we're just talking about like, hey, truly everyone else, right? Like in the world where progress is exponential and there's only three companies doing it, effectively everyone else is a giant fucking loser, right? Everyone is just a giant fucking loser. There's no way they're going to have any kind of products. Everyone's just like totally cooked. Who cares? Why would you ever invest in NeoCloudX or, or you know, Behind the Curve Lab Y or, you know, whatever accelerator company Z, right? I think it probably is better for just the entire ecosystem if we're talking about, um, Just like the longer tail of capital. So that's really like, I think like the Neo

• 2:28:18Doug O'Laughlin?

  Clouds, the GPUs, the, you know, everyone that isn't named OpenAI, Google or Anthropic. So I do feel very strongly about that.

• 2:28:26John Coogan?

  Well, this has been fantastic. The chat is going wild. One hour guest, semi-analysis in my veins.

• 2:28:32Jordi Hays?

  This is our first ever one hour guest.

• 2:28:33John Coogan?

  No, Dylan Patel was also a one hour guest. Every time I get someone for semi-analysis, I'm like, stay on forever. Do the whole show with us. I really enjoy these chats. I really thank you for taking the time.

• 2:28:42Doug O'Laughlin?

  So just so you know, like I, we have a lot of like, I have like a lot of ability to make this happen or not. Dude, we have a lot of cracked people at semi-analysis.

• 2:28:48John Coogan?

  Please send them all over. I love these chats.

• 2:28:51Doug O'Laughlin?

  Wait, you talked to Jeremy, right?

• 2:28:53John Coogan?

  Yeah, yeah, yeah. He was fantastic.

• 2:28:55Doug O'Laughlin?

  I fucking love Jeremy. Okay. So like dude, we have, yeah. So like, that's like the benefit of semi-analysis is there's a lot of cracked people. We'll send them all over.

• 2:29:02John Coogan?

  Yeah, send them all over and, and I have a plan. So, um, uh, our plan is we've been, we've been teasing that, uh, you know, basically if you're, if you're a real VC, you're, you're on this like the super secret one million dollar a month semi-analysis plan. And if you're not on that plan, you're kind of just a tourist. And so we're gonna, we're gonna get every single VC in Silicon Valley on the one million dollar a month semi-analysis plan. That's our, that's our pitch. We're going to meme it into reality.

• 2:29:28Doug O'Laughlin?

  I'll take it. I'll take it.

• 2:29:29Jordi Hays?

  Yeah. For every billion dollars of AUM, you should be spending at least 15 million.

• 2:29:34John Coogan?

  I think so. I think so. Otherwise you're just a tourist. You don't really understand this stuff. But thank you so much for stopping by. We, we, yeah. If you're not, if you're listening to this and you're not subscribed to semi-analysis, what are you doing? What are you doing?

• 2:29:44Jordi Hays?

  Uh, thanks for joining Doug. This was fun.

• 2:29:46John Coogan?

  This was really fun. Let's do this more. We'll talk to you soon.

• 2:29:48Doug O'Laughlin?

  Yeah, we could talk, talk earnings honestly. That's, I'm, that's like probably where I'm best. So yeah.

• 2:29:52John Coogan?

  Amazing. Yeah.

• 2:29:53Doug O'Laughlin?

  So take care. All right.

• 2:29:54Jordi Hays?

  Amazing.

• 2:29:55John Coogan?

  We'll talk to you soon. Bye. Up next, we have Mitchell Green from Lead Edge Capital coming in the studio.

• 2:30:01Jordi Hays?

  Waiting room.

• 2:30:02John Coogan?

  In the restream waiting room.

• 2:30:03Jordi Hays?

  Let's bring him in.

• 2:30:04John Coogan?

  And while we're bringing him in, let me tell you about AdQuick, 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. Mitchell, are you there? How are you doing? Good to see you.

• 2:30:18Jordi Hays?

  How are you?

• 2:30:19John Coogan?

  I'm great.

• 2:30:20Jordi Hays?

  Great to see you.

• 2:30:21John Coogan?

  Happy Friday. Sorry to keep you waiting. Sorry I missed you when you were on the West Coast. We'll have to hang out in person soon. But how was your trip? How are you doing?

• 2:30:29Mitchell Green?

  Good, no complaints. How about yourself? How's life?

• 2:30:31John Coogan?

  We're doing great. Big week last week. We were in New York for the Figma IPO.

• 2:30:35Jordi Hays?

  We keep waiting for a slow, a slow week this summer.

• 2:30:38John Coogan?

  Yeah, it's been a lot.

• 2:30:39Jordi Hays?

  The news cycle.

• 2:30:39Mitchell Green?

  People always look, people always say it's like, you know, it's like, oh, it's really busy. I'm sorry, I'm waiting for it to slow, but it never actually slows.

• 2:30:47John Coogan?

  It never slows. Well, speaking of things that aren't slow. Speaking of things that aren't slow, I want to talk about fast cars. Everyone at OpenAI just received allegedly, the rumor is, a $1.5 million bonus for being on the team for more than two years. I want you to help me advise these OpenAI researchers. We want to, we, we, we told them, don't buy a house, buy a car. And so I pulled up some, I pulled up some options that you could pick up for 1.5 million dollars.

• 2:31:16Mitchell Green?

  I think that's what they really should do. Everybody, everybody should get some leverage.

• 2:31:21John Coogan?

  Leverage?

• 2:31:22Mitchell Green?

  Take, take the 1.5, buy an F40.

• 2:31:25John Coogan?

  Buy an F40. Okay, so we're skipping the SP3, we're skipping the Valkyrie, we're going straight to F40.

• 2:31:34John Coogan?

  That's great. I love that.

• 2:31:35Mitchell Green?

  By the way, there's at least somebody on that engineering team that will do it. Most of them will probably buy like Priuses, but there might be like one or two guys that'll do it.

• 2:31:43John Coogan?

  I mean, when the boss is driving a Koenigsegg, you know, you got to show up in something, at least a depreciated Veyron.

• 2:31:50Mitchell Green?

  The thing that's funny you said about Koenigsegg, he can drive it as long as it turns on and runs.

• 2:31:57John Coogan?

  Yeah, any advice for the Koenigsegg owners in the, in the audience, keeping that thing running?

• 2:32:02Jordi Hays?

  I like the.

• 2:32:02John Coogan?

  Yeah, I mean, he also has F1. Nothing wrong there, right?

• 2:32:06Jordi Hays?

  Okay, as much as I want to talk about this, I do, I do, we have limited time and I do want, uh, this week.

• 2:32:13Mitchell Green?

  By the way, you need to have Zach Brown and I on together sometime. I'll talk to investing, he can talk to cars.

• 2:32:17John Coogan?

  Okay, fantastic. We'll do that.

• 2:32:19Jordi Hays?

  So, reaction from the timeline this week is that it feels like model, frontier models are plateauing a little bit. And I think that's generally fine. There's still a lot of capabilities to unlock. But I get concerned for the VCs that have been deploying billions of dollars into the. Longer tail of companies that have been kind of like more, they don't have necessarily traction, they don't necessarily have truly top talent, and they were kind of moonshot-esque bets on this idea of superintelligence. And so anyways, I'm curious, how cooked is

• 2:33:00Jordi Hays?

  the venture industry and, and VCs broadly if, and, and, and the other factor here is like, within a bunch of subcategories, there's five or six heavily funded players going after the same opportunity, and that will create healthy competition, sometimes, sometimes unhealthy, and I'm sure there'll be some good outcomes. But, but how are you thinking about the current state of venture?

• 2:33:28Mitchell Green?

  Yeah, that's a great question. So I was just writing some notes. Um, we obviously have a bunch of questions in there. So AI saved the venture industry from a big awakening that was about to happen in 2022, and they just got like one more kick. What's, what's absolutely incredible is that none of these people, like remember, none of these people remembered what happened in 2021. Okay, maybe you can excuse some of them in 2021 because they didn't remember what happened in 99 and 2000, because like most of them, a lot of them weren't doing it back then, they weren't in the industry. But like, most people that are doing this today were in the industry in 2021. It is the exact same thing. You

• 2:34:11Mitchell Green?

  know, as you obviously know, we focus way more on like profitable businesses, like 70 plus percent of our companies are profitable, very, you know, like, some are in Silicon Valley, but we find, like, find companies in Ames, Iowa, and Nisswa, Minnesota. We're probably the only tech fund on the planet that has two investments in Sarasota, Florida. We, you know, ah, go figure.

• 2:34:32Jordi Hays?

  You guys dominate in Sarasota.

• 2:34:34Mitchell Green?

  Yeah, we dominate Sarasota.

• 2:34:35Jordi Hays?

  Yeah, but I, but I, but I felt that over the last year where.

• 2:34:37Mitchell Green?

  Let me continue. So 90% is, okay, before that.

• 2:34:44Mitchell Green?

  People always underestimate technological change in the long term and they always overestimate it in the near term. Think like the internet bubble, think mobile phones, think self-driving cars, like think PC revolution, like it always, they always do that. This, what we're seeing in AI is so reminiscent, uh, and what you're seeing in the markets right now is so reminiscent of ninety-nine and two thousand. Yes, by the way, some, the big hyperscalers have giant amounts of profits and like are printing money. These AI companies, a huge amount of them, you know, ninety plus, ninety to ninety-five percent of these AI application companies are going to zero. And by the way, it totally, you know, I'm saying that, I'm hearing that

• 2:35:26Mitchell Green?

  from some of the world's foremost, you know, early-stage venture capitalists that are telling me, not, at the end of the day, ninety to ninety-five percent of these things are going bust. And a lot of it is driven by upside-down unit economics. You know, like, it's funny, you see some of these AI companies that have, you know, I'm not gonna give names, that have only fifty to a hundred employees, but are like raising like five hundred million dollars. And like, you, you can't spend that much money. Obviously, it's because they have massive negative gross margins. And that money is flowing through the AI companies, which is flowing to the hyperscalers and flowing through to Nvidia. People, people ask us, like, what are our thoughts on the models? We've always thought, for right or wrong, that the models

• 2:36:09Mitchell Green?

  will commoditize and it will become a game of who's got the best infrastructure and the, and who can deliver the searches the cheapest. For the life of us, I can't figure out why Google, Amazon, Microsoft, don't, and, and Apple, which hasn't played yet, but I think they're, I go acquire, I think they should go acquire somebody. Um, and like, why don't they just win at the, in Facebook? Why don't they win at the end of the day? I mean, Nat Friedman is a total stud who's running AI. I mean, we've backed his first company, Zamarin, or his second company, Zamarin, total stud, like. Those these companies can spend six eighty to a hundred billion dollars a year on CapEx while having margins go up, still growing twenty two percent a year printing money.

• 2:36:54Mitchell Green?

  Like, I don't know how, at the end of the day, Anthropic and OpenAI and Perplexity can compete against this. I mean, I joke that Google should literally run searches on ChatGPT and bankrupt them. Like, I mean, the cost is the cost.

• 2:37:10Jordi Hays?

  Well, I mean, the news, the news that came out in the last twenty four hours is that Google is making Gemini free for students for the entirety of the next school year.

• 2:37:19John Coogan?

  So they will be subsidizing.

• 2:37:20Jordi Hays?

  And so they will be.

• 2:37:20Mitchell Green?

  They make it free. They should make it free for everybody. And by the way, you know, I read somewhere, like, the ca- the cost to serve the exact same search on, like, Gemini versus ChatGPT is some crazy percentage. It's like one tenth the price or one twentieth the price. And, by the way, that shouldn't be that shocking, given that over the last twenty years, Google has spent, you know, all their, a lot of their efforts on taking their infrastructure and, you know, making a fraction of a fraction of a penny more efficient.

• 2:37:51John Coogan?

  Yeah.

• 2:37:51Mitchell Green?

  Um, and I think this, I think this becomes an infrastructure play. Now, I do think, I think there's gonna be, like, insanely amazing A companies using AI that are built. I actually think a lot of incumbents are gonna win. Um, you know, ever since this device came out, there's only been four companies built that came out after this device that have been worth a hundred billion or more. It's like ByteDance and Pinduoduo, two companies in China. And ByteDance may be one of the best AI companies on the planet. That's just like the hidden giant out there. And then Airbnb and Uber. That's it. The incumbents are gonna win. Salesforce.

• 2:38:28Jordi Hays?

  Or OpenAI.

• 2:38:29Mitchell Green?

  Oh, yeah. Although, OpenAI is not the incumbent. Like, it's one of the new guys. I challenge the people that ask, why is OpenAI not like Excite, Lycos, or AltaVista? Like, I'm not saying it is, but like, I think it's hard to make a bet at a three hundred to five hundred billion dollar valuation that like. I think you either make a zero or a five X. I think it's a really binary and the in the unit economics on these companies is massively upside down. If it wasn't, you would see some of these companies go public. And I actually joke that people, you know, we might as well be in a bubble. In the internet bubble, nobody gave a damn that the unit economics were upside down. Take them public. Let's see if they can go.

• 2:39:10Jordi Hays?

  Yeah, I mean, I mean, to be honest.

• 2:39:10John Coogan?

  They weren't. They weren't. The the unit economics of Google were very, very good going into that IPO and they maintained a good unit economics.

• 2:39:17Jordi Hays?

  Well, I think our our general read was was, you know,

• 2:39:21John Coogan?

  journey of that company.

• 2:39:21Jordi Hays?

  model like intelligence is plateauing, but it's not necessarily bearish for OpenAI because it's a habit. They have a hundred million people in the US that are using the product every single week. And I think that number is going to go.

• 2:39:32Mitchell Green?

  But what you should adjust though is

• 2:39:36Mitchell Green?

  that's that's the upside. The downside is a hundred million people use it.

• 2:39:40John Coogan?

  Yep.

• 2:39:41Mitchell Green?

  But the downside is is that like they're investing here, you're going to get massive amounts of dilution because you have companies like Facebook and Microsoft and Amazon and Google that that now pay top engineers like they play in the NBA.

• 2:39:55John Coogan?

  Yeah.

• 2:39:55Mitchell Green?

  And can fund in these companies, you're going to skip massive amounts of stock-based comp. But I use ChatGPT all the time.

• 2:40:01John Coogan?

  Yeah, yeah.

• 2:40:02Mitchell Green?

  But um, I think people might.

• 2:40:04John Coogan?

  It has it has Google level adoption, but but the economics are not are nowhere near.

• 2:40:08Mitchell Green?

  The economics are not there. And what's crazy is is like, people are like, well, you know, Lycos and like Excite and AltaVista um, didn't have that many users. I'm like, yeah, but the number of users on the internet went from like, you know, two hundred million to like five billion or something. So you like, you need to adjust for that too. Uh, but no, I mean, the consumer growth rate is insane. If you have insane in consumer growth, you should be able to attract world-class talent.

• 2:40:35John Coogan?

  Yeah.

• 2:40:35Mitchell Green?

  But if you hear about.

• 2:40:36Jordi Hays?

  Yeah, people don't, people don't, like, the the competitive dynamic, like, what what OpenAI as a company has been able to accomplish despite competition from all the hyperscalers, despite competition, you know, you know, the the talent wars, all these different things in competing in the most capex-intensive industry since the railroads or or.

• 2:41:00Mitchell Green?

  Might be more capital inventive.

• 2:41:02Jordi Hays?

  It's truly incredible and to do that as a company that still some people see as like a startup, you know, is.

• 2:41:11Mitchell Green?

  No, it's amazing. I think the other.

• 2:41:13Jordi Hays?

  What about?

• 2:41:14Mitchell Green?

  The other thing that's interesting is you hear the application companies all say, well, the costs are going to plummet for, you know, the cost for AI stuff. But the issue is if like, if the costs are going to plummet, that would be good for the application companies. But then like, doesn't if the cost plummet, isn't that bad for OpenAI? Or Anthropic? Because they're they're like revenues are now going to like.

• 2:41:38Jordi Hays?

  Well, Jevon's paradox, if the costs go down, people will just.

• 2:41:43John Coogan?

  I mean, right now, like, like OpenAI has tons of paying customers and people that use the products. So costs like, like they are both a victim of commoditization at the model layer and a beneficiary of commoditization at the model layer. And so like, yes, you should maybe discount their their model API business more, but then you give more value to their consumer business because it has higher margins, better even in economics. It starts looking more like Google and less like AWS, I guess.

• 2:42:10Jordi Hays?

  What about, what about legacy SaaS? People have been extremely bearish this week's in particular. It's been kind of.

• 2:42:17Mitchell Green?

  By the way, that's why you go invest in it.

• 2:42:19Jordi Hays?

  Yeah.

• 2:42:20Mitchell Green?

  By the way, and Steve Cohen has told me for years, like, if everybody's going one way, go the other way and you'll make a ton of money. Over the years, I mean, I think like the Chinese small cap internet, Chinese small cap index is up like 50% or something this year.

• 2:42:35Mitchell Green?

  The great thing is like, I don't have to make an investment in these AI, in these like model companies. By the way, I should have hit 30 billion. Like we should. We're wrong because we could have sold now, right?

• 2:42:45Mitchell Green?

  So I don't have to make an investment, but I do run an investment firm, so I need to invest in things. And look, we look at a lot of these AI application companies and they grow crazy fast, but we're not going to pay those valuations. And I'm not investing in businesses that have 50 to 60% gross dollar retention. Like screw nets, look at gross, like that's what really matters. And so what are we going to go do? Let's go find bootstrap software companies that are in, you know. College Station, Texas and Toronto, Canada and, you know, Sarasota, Florida. Companies like Pacemate that make cardiac monitoring software, companies like Gravity that make a budget planning software and companies like Alista Plan that make financial planning software. Again, these companies aren't going to change the world.

• 2:43:30Mitchell Green?

  But again, we can take them from 20 million of revenue to 60 million of revenue and there's a lot of homes inside strategics or private equity funds. And by the way, these are businesses that have like 95 plus percent gross dollar retention that have been bootstrap businesses that we're now using AI to make them more productive. Like they have 15 software engineers, now they can use AI to have 30 software engineers. And as long as those companies still sell to humans on the other end of the table, then A, you know, if, if, if companies, if AI companies are selling to other companies that use AI and they're talking to agents and we don't need people, like I think, you know, then that's possible, but I, then I think these, a lot of these companies are in trouble.

• 2:44:10Mitchell Green?

  But I, we think a huge amount of these like software companies that are out there that exist will actually use AI to create new products and become way more efficient and more productive. And like, I truly believe AI is going to be as big or more bigger of a productivity boom over the next 20 years that like than the internet was.

• 2:44:31John Coogan?

  Is that, is it, is it more of like a consolidating force or a decentralizing force? Is, or should we see more rollups going forward with a bunch of these?

• 2:44:38Mitchell Green?

  You could see more rollups. I think it also is like, we really like vertical application software. Like all those companies I mentioned were very verticalized.

• 2:44:45John Coogan?

  Yeah, yeah, yeah, yeah.

• 2:44:46Mitchell Green?

  They like, they're like own a system of record.

• 2:44:48John Coogan?

  Yeah.

• 2:44:49Mitchell Green?

  In, in like, they can just use AI to become, uh, like I know there's some very smart private equity guys, um, that are using AI to try to start to do rollups and stuff like that. Or like, I know that, I think the General Catalyst guys, the Thrive guys are, you know, are looking to buy insurance companies or.

• 2:45:05Jordi Hays?

  Yeah, I had, I had, I had a meeting, uh, or, or dinner with, with a few guys. I think it was Tuesday night that we're doing AI enabled rollups in like a couple of key industries and I won't say them because I don't want to give away their alpha. And then Wednesday I had a, had a meeting, uh, John and I had a meeting in the morning with somebody that was like, yeah, like, you know, at least one of the labs will hit escape velocity and we'll get a fast takeoff in the next two years and nothing is going to matter. And I was thinking to myself, like, even in that fast takeoff scenario, like it's just. It's impossible to to imagine.

• 2:45:38John Coogan?

  You're like, I'm still gonna be using.

• 2:45:39Jordi Hays?

  Couple of these category, you know, a a number of different categories where like people will just maintain control, right?

• 2:45:47John Coogan?

  Yep.

• 2:45:48Mitchell Green?

  As long as, so um.

• 2:45:51Mitchell Green?

  We have, as you guys know, our LP based, all these like world classics, X and entrepreneurs and people like that. And we talk to these people that have built giant software companies and one of them said, I was like, do I, we, do we need to be worried about all these companies going bust? It's like, well, as long as your software company sells to another human on the other side of the table. Like that human will need to like make an interaction and probably interacts with software. So you're okay. And he's like, well, unless you think like an AI agent is selling to another AI agent. Like if leaders doesn't have any employees and my AI agent is talking to yours, like your AI agent, then maybe we don't need people. But as long as people are involved in the equation, you're gonna need software companies.

• 2:46:28John Coogan?

  Yep, makes sense. Well, we are running behind. Uh, this is fantastic. We gotta have you back on the show.

• 2:46:33Mitchell Green?

  Anytime.

• 2:46:34John Coogan?

  Thank you so much for hopping.

• 2:46:35Jordi Hays?

  Yeah, I I let's.

• 2:46:36Mitchell Green?

  Come, we'll go for a drive.

• 2:46:38John Coogan?

  For sure.

• 2:46:38Jordi Hays?

  Come, uh, and and come back on. I I I wanna get a sense of how we should be thinking about IPOs in this back half of the year. Obviously, Figma was very exciting. There's more on the horizon and I wanna get a sense for how you're kind of.

• 2:46:52Mitchell Green?

  Happy to talk about it. Funny thing is, if you go back and look at the last, like, everybody said the IPO market was dead. It actually hadn't been dead.

• 2:46:58John Coogan?

  It wasn't dead.

• 2:46:59Mitchell Green?

  Investors, but you can go look, look at Reddit, look at all these things that went public over the last year.

• 2:47:03John Coogan?

  Did great.

• 2:47:05John Coogan?

  Yeah, the IPO window has secretly been open for.

• 2:47:07Mitchell Green?

  It's been open the whole time.

• 2:47:08John Coogan?

  It was open.

• 2:47:09Mitchell Green?

  Want to admit that they overpaid for the company, didn't want to take it public.

• 2:47:12John Coogan?

  Yeah, yeah, yeah.

• 2:47:13Mitchell Green?

  You have companies like, we're in this, we're very early investors in Grafana. Um, but you have companies like Stripe and a bunch of things that are awesome businesses.

• 2:47:21John Coogan?

  Yep.

• 2:47:21Mitchell Green?

  Interbrex, they just have so much capital on the balance sheet, they don't need to go public.

• 2:47:25John Coogan?

  They don't need to go public. And so, yeah, yeah, yeah, yeah. And so there's very different than the window being open versus the time is right for the best companies to actually go out. And they make that choice because, because it's nice, it's nice to be in the private markets.

• 2:47:37Mitchell Green?

  All right, all right. You mean, you mean it's not fun for most funds to not have to mark their books every day? Like, yeah.

• 2:47:42John Coogan?

  That's fun. SEC filings are not fun. The tender offers are fun. There's plenty of ways to stay private and have fun.

• 2:47:50Mitchell Green?

  And actually, what's amazing is, is like, we are finding opportunities, crazy. Where you can find opportunities, like you'd be like, how does a same size company in Sarasota, Florida get done at five times revenues? And a company in Silicon Valley. Oh, but it's growing faster. It gets done at 90 times revenue. It's like the world is becoming this like if you like, there is true value to be had, but just looking a little bit off the beaten path in our view. So.

• 2:48:17John Coogan?

  Yeah, yeah, for sure. Uh, anyway, thank you so much for taking the time. We will talk to you soon. Have a great day.

• 2:48:22Speaker 06

  Cheers, Mitchell.

• 2:48:23John Coogan?

  Have a good weekend.

• 2:48:23Speaker 06

  Have a great Friday.

• 2:48:24John Coogan?

  Bye. Uh, and next up, we'll bring in Ben from Orbital Operations. We gotta get the gong ready, I think.

• 2:48:30Speaker 06

  Get it ready.

• 2:48:31John Coogan?

  Ben, how you doing? Are you there? Sorry to keep you waiting.

• 2:48:34Speaker 06

  He's gone.

• 2:48:35John Coogan?

  But great to have you on the show. We got some folks in the chat. The IPO window has been open, but everyone hasn't given the group of new public companies credit. Everyone is treated as a one-off, like it's not indicative of collective market. Good point, Dan Ratliff. Anyway, welcome to the stream. Do we have Ben? How you doing?

• 2:48:54Speaker 06

  Yeah. Sorry to keep you waiting. Appreciate you having me on the show. Yeah, I was listening to the previous conversation. It was pretty interesting.

• 2:49:00John Coogan?

  Fantastic. Uh, thank you, uh, for hopping on. Would you mind introducing yourself, the company, and then what news you got for us?

• 2:49:08Speaker 06

  Yeah. So my name is Ben Schleuniger. I am the co-founder and CEO of Orbital Operations. And, uh, we just announced, uh, closing of our seed round. We raised, uh, 8.8 million.

• 2:49:22John Coogan?

  Congratulations.

• 2:49:23Speaker 06

  There we go. Thank you. Thank you.

• 2:49:25John Coogan?

  Who's in the deal? Who's making money off of this?

• 2:49:27Speaker 06

  So, uh, uh, initialized capital is leading our round. Uh, we've got, uh, big participation as well from, uh, Harpoon Ventures, uh, DTX Ventures, Rebel Fund, uh, Arakund is in as well, uh, and a lot of other angels that, uh, joined on board.

• 2:49:43John Coogan?

  Yeah.

• 2:49:44Speaker 06

  We went through Y Combinator earlier this year, so. Why 8.8? Was there?

• 2:49:48John Coogan?

  Good numerology. Chinese number of wealth.

• 2:49:52Speaker 06

  Uh, more, more of a, uh, more of a range we were trying to hit based on the, uh, technical miles going. Uh, Orbital Operations is developing a high thrust space vehicle. It'll be stationed down in orbit for satellite defense. So our, uh, you know, we've got some, some hard tech development to go through and really prove out our technologies.

• 2:50:09John Coogan?

  So satellite defense, I have a satellite up in, I have the Hubble telescope. I don't want someone to shoot down the Hubble telescope. I pay you to loiter around and blow up any missiles that are coming at it? Like what? How are we actually defending?

• 2:50:23Speaker 06

  Yeah. Yeah. So it's interesting. We have a ton of critical, and I bet by we, I mean the United States, has a ton of critical infrastructure out in, you know. Both low Earth orbit, but even higher out like medium Earth orbit, geosynchronous orbit. You could think like GPS, naval communications, uh, nuclear command and control. They all sit at these higher orbits. It's actually really, really challenging for like missiles or anything to get out there. Even rockets designed to go out there.

• 2:50:48John Coogan?

  Yeah.

• 2:50:49Speaker 06

  But there are adversaries placing satellites that have capability and it's been demonstrated already to be able to grab other satellites and pull them out of orbit. Or, you know, be able to fry a solar panel or jam communications, whatever it is. Uh, and we currently don't have a response for this. We don't have anything stationed out in these higher orbits. Um, and so that's what we're really looking to, to build is a vehicle that has enough thrust, fast enough response time and enough extended range to be able to go and intercept these things. Hopefully not blow anything up. Space defense is a little weird. You don't want to create shrapnel, right? The last thing you want to do is make a shrapnel. Yep, exactly.

• 2:51:26John Coogan?

  So yeah, wha- wha- walk through, if you don't want to create a shrapnel, you don't just want to run into this. I'm, I'm trying to comp it to Andro. You know, you have the anvil, it's just like it's a stone that rocks that runs into the drone. Then there's, uh, you know, remote takeover, the microwave, different radiation, different, uh, different energy sources. Yeah, Geordie, we've had a company on a, on the show that just is a gun on a truck. It just shoots down the, creates a lot of shrapnel when it shoots down the drones. Uh, but there's, uh, you know, I've seen like eagles come and pick up drones. Um, walk me through the different, uh, tools in the tool chest for taking out a satellite killer.

• 2:52:00Speaker 06

  Yeah, yeah. So, I mean, unfortunately one is to just like ram into it, right? That is like, and that is, that is kind of the worst case last resort. You make a bunch of shrapnel here on Earth, shrapnel falls to the ground.

• 2:52:11John Coogan?

  Yep.

• 2:52:12Speaker 06

  Easy, but up there it keeps, it stays there, runs into other satellites, creates a problem.

• 2:52:16John Coogan?

  Yep.

• 2:52:16Speaker 06

  Uh, the next is kind of what you were mentioning, you know, direct energy type of stuff. This would be high powered microwave. This would be, uh, frying a solar panel or, or a laser into the cameras and sensors, trying to basically degrade the satellite, right? Um, the other option is to do what, what we would call an RPO or remote proximity operation and actually go up next to it and grab it, right? This is a more challenging operation to do, not something always kind of considered on the defense side, but, and more on the logistics side of things, but it is something that you could do as well. Um, so those are.

• 2:52:49Jordi Hays?

  Grab it, grab it, take it out into deep space.

• 2:52:51Speaker 06

  Yep, just, just fly it into, we would always go, just fly it into the sun.

• 2:52:56John Coogan?

  I'm sure that'll be easy.

• 2:52:57Jordi Hays?

  Well, I guess my immediate question is, um. I mean, it feels like incredibly important work and also how do you kind of like prove out your team's kind of like capabilities? There's not exactly like a test range that you can take. You know, we'll have Defense Tech founders out here where they can just go out and do a demo for the Army or the Navy or whatever.

• 2:53:20John Coogan?

  Gotta go to the moon.

• 2:53:21Jordi Hays?

  And in this case, you know, how do you, how do you kind of test out different DCs at the product level to prove capabilities when you're not in a, when, when we're not in an active, you know, conflict?

• 2:53:33Speaker 06

  Yeah, yeah. I mean, it's similar. You know, my background is all rocket engine development, right? So a lot of it does start on the ground. Yeah, well, we'll go rocket engineer, rocket scientist. You know, it's, it's, it's, it's too flattering. I can't, I can't take it.

• 2:53:48John Coogan?

  We need rocket researchers. We gotta get these salaries up. Rocket researchers.

• 2:53:52Jordi Hays?

  No, he's gotta hire a bunch of them.

• 2:53:54John Coogan?

  Member of rocket staff.

• 2:53:55Jordi Hays?

  We don't want a talent war here.

• 2:53:56John Coogan?

  Member of rocket staff in the bio. Anyway.

• 2:53:59Speaker 06

  But yeah, you, you develop it on the ground. You're, you're hot firing your rocket engineer on the ground. You're developing the tank. You're going into thermal vacuum chambers and testing all of that. And one of the great things about like this day and age is it is actually getting cheaper and cheaper to get into orbit and start demonstrating these things. You know, ride shares, maybe you do a subscale version of what you're going to do, which is what we're planning on doing for our orbital demo. And you, you do a ride share and, you know, it is cheaper and it is faster than it's ever been. So it is, it is not quite as easy as just going out to a live fire range. But at the same time, you know, proving out your core piece of tech, like it is getting easier to go to low earth orbit and test it there.

• 2:54:39John Coogan?

  We're, we're running behind today. So last question from my side. Is, is cost to launch actually still dropping on some sort of exponential scale? Or are we in a plateau? Are we waiting on Starship to get through testing? Like, are, are we actually reaping the benefits of cheaper and cheaper launch costs? Or are we kind of in like a, a, a local plateau?

• 2:55:04Speaker 06

  Interesting. Yeah, I mean, I think we've been maybe in a little local plateau for the last couple of years, but I mean SpaceX has been dominating the market, right? I think there are other launchers that are coming to market that'll help drive competition down. And then you have Starship and Stoke bringing reusable second stages. That will be another step down. That actually doesn't make it cheaper getting out to the higher orbits. It makes it cheaper getting to lower orbit. But those higher orbits, you know, the reusable rockets and getting out to those higher orbits, they're not good at doing that necessarily.

• 2:55:34John Coogan?

  And that's where an impulse space comes in. Tom Mueller's company that is a booster that takes you from Leo to

• 2:55:40Speaker 06

  Yeah, kick stage.

• 2:55:41John Coogan?

  Kick stage. Got it. Very cool. Jordan, do you have anything else? Because we're sorry to cut this short, but we are today on a Friday, but thank you so much for jumping on. This is really

• 2:55:50Speaker 06

  Yeah, I came to the gong, so I appreciate it.

• 2:55:52John Coogan?

  We hit the gong again for you. Let's go.

• 2:55:55Speaker 06

  Yeah, appreciate it.

• 2:55:56Jordi Hays?

  There we go.

• 2:55:57Speaker 06

  I gotta get one for the office.

• 2:55:58John Coogan?

  You need one. Well, good luck. Come back on when you put something in space. We'll ring the gong again.

• 2:56:04Speaker 06

  Sounds great. Thank you so much.

• 2:56:06John Coogan?

  Bye. And up next, we have Merrill from Graphite coming in. You know Graphite. We do. We read ads about Graphite every single day.

• 2:56:14Jordi Hays?

  I used Graphite while building my last startup.

• 2:56:18John Coogan?

  While he's joining, let's tell you about a different ad sponsor. Bezel. Go to getbezel.com. Your Bezel Concierge is available now to source you any watch on the planet. Seriously, any watch. Get a hitter. AGI is delayed. Superintelligence. Whether, when it gets here, if it's five years, if it's 10 years, it's going to want to look on your wrist and know that you mean business.

• 2:56:40Jordi Hays?

  That's right.

• 2:56:41John Coogan?

  So go to Bezel.

• 2:56:42Jordi Hays?

  Well, without further ado, let's bring in Merrill. First time on the show.

• 2:56:45John Coogan?

  Merrill, how you doing?

• 2:56:46Merrill Lutsky?

  Doing well. Thanks for having me, guys.

• 2:56:49John Coogan?

  Good to catch up with you. It's been a week. I saw you in New York City. Had a lot of fun chatting. Give us the update and give us the the actual impact of GPT-5, the news that happened yesterday. I want to I want to kind of noodle through that. And the impact, what it means for your business.

• 2:57:07Merrill Lutsky?

  So GPT-5 obviously was a huge, huge announcement, made a lot of waves. Our team immediately got to work on testing it. And I think we're noticing a few, you know, a few things that are improved about it and a few downsides that come along with it as well. On the improvements side, I think it's a lot better at deep thinking. It's good at one-shotting apps. It's also the biggest surprise for us is it's meaningfully cheaper on inference than a lot of the previous models. On the downsides, though, I think, you know, there's a lot of buzz around it being this, this massive step function. And, you know, for us, what we've seen practically in reviewing code is that it's an incremental improvement, but it's not this massive step function. It is very much like still in the realm of many of the other state of the art models.

• 2:57:51Merrill Lutsky?

  The other piece there that a lot of folks have commented on is latency. I'm sure the OpenAI team is working on, on improving this. But one thing that we've noticed in, in updating our code review product.

• 2:58:03John Coogan?

  Yeah, I, I want to talk about like.

• 2:58:06Jordi Hays?

  Latency versus using just like the previous generation of models that are now being deprecated?

• 2:58:13Merrill Lutsky?

  Yeah, the previous generation of OpenAI models, Anthropic and others.

• 2:58:17John Coogan?

  Yeah, I want to talk about mixture of models. We, we, we were in the mixture of experts era with GPT-4. And then Grok is doing more mixture of different models together. And I'm wondering, like, code review is pretty high stakes. It's pretty high value. It's a very economic, like, like, I don't know, like, the average salary or hourly rate of someone who's capable of doing code review as a human is really, really high. And so is there a world where I actually want to run, like, within Graphite, code review on every single model? And then have you design a, a, a rubric or a scoring system that compares Claude to GPT-5, to Grok,

• 2:59:00John Coogan?

  to all the different models and kind of lets them war it out and sits at a higher level of abstraction? Obviously, that's more expensive on the inference cost side, but is it cost prohibitive compared to a human reviewer? That might be a couple hundred dollars an hour.

• 2:59:14Merrill Lutsky?

  Yeah, it's a great question. I think today it's certainly cost prohibitive to run every single model. What we do, though, and what's worked really well for us is we, much like a human reviewer, we break down the task of code review and we're looking for different, you know, different set of things at different times. So we'll look for bugs, security vulnerabilities, efficiency gains that we can make, code-based style guide inconsistencies with the rest of the code base. We also let customers define, like, every team kind of has their own protocols and their own guidelines around how code should look. And we've let them define custom rules. Many teams are really heavily leveraging this now. And for each of those

• 2:59:56Merrill Lutsky?

  tasks, you know, those can be their own tasks in the review process. We also then, once we generate a lot of comments, we'll have like simple things that we're looking for, like, you know, little rules that even these can be things that we've learned over time. Like, if it's kind of left to their own devices, the models like to say things like, "We should update this line of code," or something, and developers find that really annoying. So you probably don't need the highest power model to say, you know, "We should," like, "Don't add comments that start with 'we.'" But over, that is how we've kind of composed the logic and composed the, you know, the voting system that we use to determine, is this actually a comment that's going to add value, or is it just going to be noisy,

• 3:00:38Merrill Lutsky?

  like many, you know, the challenge of many AI products, and especially AI code reviewers out there.

• 3:00:43John Coogan?

  Yeah. How do you think about decomposition? We've heard this trend of like, the smartest frontier models might be training smaller models. We've talked to a couple, like, almost like micro foundation model companies where they're, they're training, you know, it's just a great model for filtering for profanity, and it runs and it was trained on like, video game graphics cards. And I could imagine, in the world of like, tool use, there becomes a future where there's a bunch of small models that are being kind of orchestrated by the more expensive model. How do you see the kind of the, the, the surface area of what you're building kind of fork out?

• 3:01:21Merrill Lutsky?

  Yeah, I think that there's, especially as we, as we think about the, the scope of code review, it is, it's, it is kind of this first collaborative moment in the developer lifecycle. It's, it's historically, we've seen, we've seen code generation be fragmented. Every developer having their own IDE and terminal setup. Even today, we see this with a lot of our customers that are using, you know, some engineers are using Claude code. Some prefer Cursor, you know, everyone's trying the new Cursor CLI now. Like, there's so much heterogeneity on the code generation side, but that's always been fragmented. But code review has always been unified. And it has to be because, you know, everyone is working together. It is that first collaborative moment in the developer process.

• 3:02:02Merrill Lutsky?

  And it is, and then it connects to all these other pieces around, you know, CI, merging, deployments, everything that, that comes downstream of that, of the moment you create that PR to get it out to production. And each of those, I think, represents the different tasks to be done to move those along. So you could think about having, you know, having one, you know, having one model or, you know, or one agent that's really good at resolving merge conflicts and another that's really good at looking at CI failures and figuring out what the, you know, what the problem was and being able to just fix that in the background without you having to do anything. And we see that, I, I think that the impact of that will mostly be one of reducing costs over time and just letting you, you know, run a smaller model and, you know, not have to use this like

• 3:02:47Merrill Lutsky?

  super powered laser on, on even a little task that something smaller could do.

• 3:02:52Jordi Hays?

  What is, what is market share look like from your view upstream of, of graphite? Like, what, what are, so, so yesterday, we had a bunch of people on that, that had gotten early access to GPT-5. And everybody's heavily conflicted because a lot of them are doing code, code generation in, in some way or another. It's hard to really suss out like, okay, what is actually dominating other than just picking up what, you know, people are saying on, on the timeline as, as actual users? But what are you guys seeing?

• 3:03:24Merrill Lutsky?

  Yeah, we're seeing, we're seeing a pretty big shift in the past, even over the past three months. I think we've seen this shift from primarily orgs using like using Cursor and moving more over to Cursor to Claude Code, I think has really started to dominate the conversation for companies of all, of all scales for the past few months. And now we're seeing, just in the past day or so, we've heard a lot more interest in the Cursor CLI. I think that Claude really proved out that prompt first modality working, working really well. And we've seen this sort of shift from the code first modality of tools like Copilot and then Cursor and Windsurf

• 3:04:05Merrill Lutsky?

  to now like prompt first with Claude Code, Cursor CLI. And then I think the next, the next big shift is like staying prompt first, but moving from local to like remotely deployed agents. And we're already seeing, you know, we've seen Cursor build something there, cognition, CoGen, many others that play in that space. So I don't think that we've seen a massive, I don't think we've really seen a massive shift in the past 24 hours, though it's still, it's still, I think the good news for everyone is that it's still a pretty close race. And competition is really, I think, necessary in this world. I think if we ended up in a place where there was one model provider that was so much better at cogeneration than, than another one, then, you know,

• 3:04:49Merrill Lutsky?

  there wouldn't be as much pressure to innovate. They'd have a ton of pricing power. It really wouldn't, and it wouldn't reflect that, that historical model of like cogeneration being kind of up to developer preference.

• 3:05:00John Coogan?

  What, how is AI changing developer communication around pull requests? Like, the canonical example is like, you know, you write a summary, you write like a headline. But I imagine that it's probably pretty easy. Like, one of the things the models are great at is just, just condensing down information. I'm not a particular fan of them expanding information oftentimes, but, but, but if there's, if there's a really big pull request, you can kind of show varying levels of summaries. And I find myself doing this even in the consumer realm where I will say, okay, I want a deep research report. On something, some, some, the history of a business, but then give me a one line summary. Give me, you know, five bullet points, then give me, you know, a New York Times article length, a couple hundred words.

• 3:05:44John Coogan?

  And then give me the full 30 page PDF and because I want to be able to consume it like a fifth grader. Like a college student in, in these successive levels of, of depth. Is any of that happening in the pull request world and the developer code review world?

• 3:06:01Merrill Lutsky?

  Absolutely. I think one of the most used AI features and one of the first things that we launched in the graphite platform was the ability to like write the PR description for, for you. And it's something his developers kind of famously like

• 3:06:16John Coogan?

  Fixed.

• 3:06:16Merrill Lutsky?

  Like hey, writing, writing along this like description. Yeah, yeah. Like just do this, do this for me. But AI is amazing at, at understanding a change, summarizing it. Now we're actually, I think this is also where, you know, where we'll see code review going is it's, it's moving from this world where you're just scrolling through, you know, scrolling through the diffs and everything is just in alphabetical order and you have to kind of guide your own way through it to. I think now AI is incredible at, at understanding the change. Like we, we were actually working on, uh, working on a new feature. I'm launching pretty soon in graphite where you'll be able to just ask graphite, go, hey, what are the important parts of this change?

• 3:06:56Merrill Lutsky?

  Like walk me through the, the key pieces of code that changed here. Uh, what should I be looking at? What is high risk? And, uh, it making it a lot more, I think, even in AI code review right now, uh, I think we're still, we're still in like the copilot V1 moment of, of AI code review where we're just adding comments on GitHub. But, um, the future I think is much more of a one that's, that's interactive and, uh, is, is guiding you through the code change in real time. And helping you, helping you to both review it and also to like make updates and coordinate the various agents that are working on, on that change in real time.

• 3:07:30John Coogan?

  That's great. Jordy, anything else?

• 3:07:33Jordi Hays?

  I think we're, yeah, I'm, I'm curious. I mean, the main thing is, uh,

• 3:07:39Jordi Hays?

  I guess, like, going into this year, everyone said this is the year for agents. And I was, and it felt like, yesterday with Greg or Mark, I said, this was the year more of deep research, but then they said, maybe it's not. Also coding agents. Coding agents have been the other thing. Where, what do you expect out of the coding agent market in the next, like, before the end of the year?

• 3:08:05Merrill Lutsky?

  Good question. I think that the biggest thing is that we're just, we're just moving through, like, slowly moving, moving around that, that grid. If you have, like, the, the way I think about the market is, is you have one axis of where does the code live? On the one hand, historically, it's all lived locally. Now we're seeing a shift to, to some of this living remotely and having these background agents that you access primarily through prompting. And then on the other axis, you have, like, is the interaction modality code-first, or is it prompt-first? The code-first ones being, you started with Copilot, you had Cursor, Windsurf. Now we're seeing the prompt-first, and the prompt-first modalities

• 3:08:45Merrill Lutsky?

  in Claude Code, the Cursor CLI, Warp and others. And I think we're starting to see, we've seen that shift from like, the local code-first to the local prompt-first tools now. And now I think what I'm curious to see for the rest of the year is how quickly we then go from local prompt-first to remote prompt-first, using like, cognition, code-gen, Cursor background agents, and those others. And I do, I think our, our bet and what we're seeing is, is that that is very much the future. It requires, it likely requires another step function improvement in the models for that to be, you know, for that to truly be the, you know, the primary modality of software development. But I think that's, that will be the shift that we'll start to see for the rest of the years, you know, that migration

• 3:09:30Merrill Lutsky?

  from, you know, from local to remote prompt-first modes.

• 3:09:34Jordi Hays?

  Makes a lot of sense. Well, thank you for joining.

• 3:09:36John Coogan?

  Thank you so much. Have a great Friday. Have a great weekend. We will talk to you soon.

• 3:09:41Jordi Hays?

  I'm sure it'll be a busy weekend for the whole Graphite team.

• 3:09:43John Coogan?

  For sure.

• 3:09:43Jordi Hays?

  Getting, making sure that GPT-5 is rolling out smoothly.

• 3:09:48John Coogan?

  Fantastic. We'll talk to you soon. Have a good one.

• 3:09:50Jordi Hays?

  Cheers. Thanks for having me, guys. Later.

• 3:09:52John Coogan?

  We have to talk about the actual biggest news in artificial intelligence. We missed this. Everyone's been focused on GPT-5. The biggest news in artificial intelligence is that the billionaire AI co-founder Lucy Guo pays nearly $30 million for an LA spec house.

• 3:10:10John Coogan?

  Lucy Guo founded, co-founded Scale, now runs Passas, got a discount on a Hollywood Hills home. Tech entrepreneur Lucy Guo, 30, has been called the world's youngest self-made woman billionaire. Now she's putting some of her earnings into real estate. She paid $29.5 million for a newly constructed mansion in LA's Hollywood Hills. According to people familiar with the transaction, the price is a significant discount. They originally were pricing this house at $43 million. It's a 13,500 square foot house with five bedrooms on 1.2 acres. And this is, I mean, everything about this house looks great. The photos are fantastic. The one mistake, Lucy Guo couldn't be reached for comment. Why are you no commenting this article?

• 3:10:53John Coogan?

  You gotta, you gotta tell your whole story.

• 3:10:56Jordi Hays?

  All I can say is you can sign up at passes.com.

• 3:10:58John Coogan?

  Exactly. There was, there was a great, there was a great opportunity to, to upsell, to do all sorts of stuff. But there was a, I, this, this house has everything, a sunken, a sunken fire pit, a pool, jacuzzi. It has everything. It looks fantastic. LA's high-end real estate market has been hobbled over the past year by the LA fires. Outward migration and lower, to lower taxes and broader economic uncertainty. Most of the recent high-end sales have closed at significant discounts. So there's really no reason to buy a 30, there's no reason not to buy a 30.

• 3:11:32Jordi Hays?

  Friend of mine in Malibu says that the, there's a barbell in the market right now where things are hot under, under like five, like single-family homes and then really hot on the high end in like 50-plus range.

• 3:11:46John Coogan?

  Well, speaking of 50-plus. Ex-Google CEO Eric Schmidt has purchased LA's Spelling Manor for $110 million. Finally. Finally. This is a very, this is a very fun article. Amidst a challenged luxury market, the property sold for less than its 2019 sales price. He got a steal. Steal. This was built, the Spelling Manor, if you're not familiar with this, this is an iconic, legendary house. If we can pull up the image, look at this thing. It is insanely large, multiple wings. It has an entire room. It looks like a B-21 raider from above. It's amazing. It's amazing. It has, it has an entire, famously has an entire room for just wrapping presents. Right. Because when you're, when you're at this level.

• 3:12:31John Coogan?

  I remember this one. Yeah, when you're at this tier, you don't just like. You gotta be wrapping. Yeah, you need a whole room for wrapping presents because. It's a full-time job. You will be wrapping lots of presents because you'll be giving out lots of presents. It's a 56,500 square foot property, 14 bedrooms on five acres, and this is in Los Angeles. This was built by Aaron Spelling, who was a TV producer in the 90s, very, very famous. The French chateau style property is slightly larger than the White House. It has a bowling alley, a wine cellar, and a beauty salon with massage and tanning rooms. So if you need to get a tan on, you go to the tanning room. What about the movie theater though, John? I don't know what the movie theater status is. What's the over-under on the amount of movie theaters? Well, the property will remain a single-family home.

• 3:13:13John Coogan?

  The Schmitz philanthropists, who have homes around the world, purchased it primarily to host meetings and events for LA nonprofits and cultural institutions. They're not even, they're not even living in it full-time. It was sold for a discount. It was listed for $137.5 million after several years on the market and multiple price cuts. I mean, it's such a big iconic house, the buyer pool is probably pretty small. It was last sold in 2019 for about $120 million, when the seller was British heiress Petra Ecclestone. Ecclestone famously hired a team of roughly 500 workers to complete a massive renovation of the property. And now, just six years later, the Schmitz are planning a significant remodel of the house to simplify the floor plan.

• 3:13:56John Coogan?

  So this place, this thing is just getting more complex, and then they're putting it in a present wrapping room, they're tearing out a present wrapping room, everyone is remodeling this property.

• 3:14:07John Coogan?

  And they're no longer going by spelling manner. You know, the guy who built it, he put his name on it. They're pulling it off and they're calling it nine, uh, four, uh, five, nine, four, five, nine, four. A restaurant, a reference to its address on Mapleton Drive.

• 3:14:22Jordi Hays?

  Very nice. Well, I have a post to cap off the week. It is in the timeline from Lulu Maservi.

• 3:14:31John Coogan?

  Okay.

• 3:14:32Jordi Hays?

  So we've been, uh, I guess briefly mentioning, uh, over the last few weeks that it feels like we've maybe reached a local top on, uh, on startup launch videos. A lot of them are starting to look the same.

• 3:14:46John Coogan?

  Yep.

• 3:14:46Jordi Hays?

  They're sort of the default now. It's very hard to stand out.

• 3:14:49John Coogan?

  Yep.

• 3:14:51Jordi Hays?

  People, I think, are starting to glaze, uh, over them.

• 3:14:54John Coogan?

  Yep.

• 3:14:54Jordi Hays?

  A little bit, uh, but Lulu has potentially a new meta. So let's pull this up. She says, who's going to be the first startup to do this format as a launch video? And it's the, uh,

• 3:15:03John Coogan?

  I see, see.

• 3:15:08Jordi Hays?

  And I would go out and bet that it's Cluley.

• 3:15:13John Coogan?

  Of course.

• 3:15:13Jordi Hays?

  I bet they're already working on it.

• 3:15:14John Coogan?

  They're probably working on it. There's not a format they've met that they don't like.

• 3:15:18Jordi Hays?

  The challenge is some startup might, might.

• 3:15:21John Coogan?

  There we go. This is so much choreography. I'm guessing the people in the, in the back are just kind of dancing up and down. They're not really doing choreography.

• 3:15:29Jordi Hays?

  Yeah. So the challenge is if you're launching your startup Monday.

• 3:15:32John Coogan?

  Yep.

• 3:15:33Jordi Hays?

  You could be spending all weekend doing this, getting it ready. And then Roy Lee and the team will launch it like Sunday in the middle of the day.

• 3:15:39John Coogan?

  Probably.

• 3:15:40Jordi Hays?

  So good luck out there if you're trying to launch.

• 3:15:43John Coogan?

  You know, speaking of, speaking of Cluley, uh, obviously they still have to do so much on the product side to really, you know, nail it, get retention, all this other stuff. But in terms of just the cheating as a key word, I think that there's something that's going to be very, very sticky there. Julia Steinberg has been on the show is posting a picture of a billboard says, hi, my name is Roy. I got kicked out of school for cheating. Buy my cheating tool, Cluley.com. And I just feel like it's such a simple encapsulation of the value prop, just in one word that grabs your attention. I was thinking it's kind of like Red Bull gives you wings. It's not, Red Bull doesn't actually give you wings. It's just.

• 3:16:22Jordi Hays?

  Speak for yourself, John.

• 3:16:23John Coogan?

  Yeah, you've grown wings. You've grown literal wings, you know, but it sticks in your mind. It grabs you. And I feel like the, even though the Cluley stunts are kind of getting like less, it's less shocking because it's like, oh, okay, we kind of come to expect that Cluley is going to do a sorority dancing video, for example. But just, just the cheating as a, as a keyword, if they can own that in the broad consciousness, I think it's going to continue to pay dividends and grab people's attention and just be something that they can run with for a long time. Because like, even though the Cluley stuff went super viral, everyone in tech talked about it. Everyone in tech was arguing

• 3:17:05John Coogan?

  about it for a long time. There's still hundreds of millions of Americans that have never heard of Cluley, or maybe they saw it once and forgot about it. And just, and I think that that is going to be like a keyword marketing campaign that just like keeps, keeps sticking in people's mind. And, and it will.

• 3:17:22Jordi Hays?

  Yeah, they saturated it back in the timeline and they have to figure out how to go mainstream.

• 3:17:27John Coogan?

  But like, it's, it's, it's such a distillation. It's such a compression of a meme, of an idea of like, oh, I would like to like cheat on that, you know, report that I've been working on at work. And actually, my boss doesn't care if I cheat. They don't care if I use it. They care about the result. And so, but it grabs your attention. And so like, I could see it, I could see it running in a Super Bowl ad and actually driving conversions and downloads. Now, the product has to be really great. It has to be better than ChatGPT. That's an extremely tall order. They're going up against Gemini, which will help you cheat, quote unquote. I'm using cheat in the just AI assistant language, not actually literally cheat. But, and they're going up against free models and cutting edge models and all sorts of different things. And we'll see how sticky that new, their UI implementation

• 3:18:11John Coogan?

  is where it's screen scrapes and, and records your calls. But in general, I think just as a marketing technique.

• 3:18:19John Coogan?

  Like, I don't think we've seen the end of cheating as a buzzword that clearly will be reaping the benefit of. Totally. Anyway, anything else in the timeline? Tyler, is the timeline in turmoil? Is the timeline quiet? I'm not ready for the weekend.

• 3:18:32Speaker 03

  There's one thing. So, some small updates for GPT-5 from Sam Altman. He says they're doubling rate limits for plus users.

• 3:18:40John Coogan?

  Can you do the Sam Altman voice? What is this? They're doubling. We're doubling rate limits.

• 3:18:46Speaker 03

  We're gonna let plus users continue to use Foro.

• 3:18:49John Coogan?

  There we go. That's good. That's how I imagine. Oh, okay.

• 3:18:51Speaker 03

  They're bringing Foro back.

• 3:18:52John Coogan?

  Interesting.

• 3:18:53Speaker 03

  And the auto switcher was broken yesterday.

• 3:18:56John Coogan?

  Oh, interesting.

• 3:18:57Speaker 03

  So he says it will seem smarter today.

• 3:18:59John Coogan?

  Yeah.

• 3:19:00Speaker 03

  The result, it was out of commission for a chunk of the day and it will.

• 3:19:03John Coogan?

  It's kind of hilarious that they had like, you know, a pretty big launch and there's like two bugs, like one with the chart clearly got misrendered for the live stream was fine on the blog post. And everyone's like, chart crimes. And then the model switcher's broken and people are like, this is, it doesn't work at all.

• 3:19:18Speaker 03

  But I'm thinking, I think we're back.

• 3:19:21John Coogan?

  You think we're back?

• 3:19:21Speaker 03

  I think we're back. AJ is back, baby.

• 3:19:24John Coogan?

  We heard it. We've heard it. You heard it here first. We are back. Accelerate your timelines. You now have two days to escape the permanent underclass. So have a great weekend, everyone. Get to work. Full days. Two full days. I will be, you know, I think, I think most people, it's summer. You should escape the permanent underclass this weekend by hitting the pool, hit the beach, have some fun out there. Get a ramp floaty. Get a ramp floaty and spend a weekend on it. Enjoy. Have a great weekend, everyone. We will see you Monday. We love you. Leave us five stars on Apple Podcasts and Spotify and thank you for watching. See you later. Goodbye.