Pod Insights a16z Podcast 16 Minutes on the News: Neuralink & Brain Interfaces, TikTok, FaceApp, iHeartRadio About this episode with @vijaypande @conniechan @jpm25 and @smc90
Introducing our new podcast, 16 Minutes, a short news podcast where we cover the top headlines of the week, the a16z podcast way -- why are these topics in the news; what's real, what's hype from our va...
Transcript Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:00 Sonal? Hi, everyone. Welcome to the A6 and Z Podcast. I'm Sonal. Sonal Choksi, our editor in chief, and I'm excited to share a new show from us today. 16 Minutes, a short news podcast where we cover recent headlines of the week the A6 and Z way. Why are they in the news? What's hype? What's real from our vantage point? And what are our experts' quick takes on the trends? Today's episode is a little over 16 minutes, covering TikTok with general partner for consumer Connie Chan, FaceApp with operating partner for security and former CISO at Box, Joel Delagarza, iHeart Radio's direct listing with operating partner Jamie McGurk. But we begin with A6 and Z bio general partner Vijay Pandey on the recent headlines around one of the companies cofounded by Elon Musk, Neuralink, and go over that news for the first half of this episode.
0:43 Sonal? Elon Musk this week announced advances in BCIs or brain-computer interfaces or neural interfaces. And it's something that people have been talking about forever. And while they did acknowledge it's a long road, and he even hinted, and this is where it gets a little crazy, but sci-fi cool, he even hinted at the option of merging with AI in the future.
0:59 Vijay Pande? Yeah.
0:59 Sonal? What's interesting is they announced a sewing machine, which is basically a robot that sews in delicate, flexible electrodes called a neural lace, which, by the way, is not a marketing term that Elon Musk invented. It's actually a term from the culture sci-fi series from Ian Banks, which was written from the late 80s to 2000s. The processor is an application-specific integrated circuit. And basically, it monitors brain activity, decodes it. And ideally, in the future, way future claim is that you could even potentially translate machines to not just read, but actually even write to the brain. But the paper they released, which you can download, it's called "An Integrated Brain-Machine Interface Platform with Thousands of Channels", was not peer-reviewed. It's a white paper. So I think we want to figure out, Vijay, like what's hype, what's real here,
1:40 Sonal? especially given the trend of brain-computer interfaces. Like, where are we really in this journey?
1:45 Vijay Pande? Well, you know, if you think about like what this technology can do, there's different styles. Like, so one style is to be non-invasive. That sounds appealing because you don't have to, like, literally go into your brain.
1:53 Sonal? Yeah.
1:54 Vijay Pande? But the reality is there's just very little information you can get out if you're non-invasive. Now of the invasive categories, there's one maybe slightly less invasive technique where actually they go through your femoral artery, which is the artery on your leg, near your femur, and it's a well-known path to go from there all the way into your brain.
2:08 Sonal? Yeah.
2:09 Vijay Pande? And they insert through the femoral artery, something that would go into your brain. So this is invasive, but you're not drilling holes in your head. But I don't know how reliable you can depend on where it's going to stay there. What Neuralink's doing is literally drilling multi-millimeter holes and then sewing wires directly into your brain.
2:27 Sonal? Like flexible electrodes?
2:28 Vijay Pande? Yeah, flexible electrodes. And so this has the greatest chance for bandwidth and getting real information out and in. It's almost like a direct connection. I think, you know, all of us have sort of a, ooh, the ouch kind of reaction to that. So they make analogy to Lasik, which if we were, let's say, 50 years ago and I told you that, hey, look, I'm going to have these lasers and they're going to fix my eyes, and by cutting them and reshaping the eyeball and the lens, I'm going to do that in the ball, I think everyone would think that's insane.
2:55 Sonal? That's actually a super interesting analogy. So Lasik, when it was new, it sounded very invasive, but now it's like cookie cutter.
3:00 Vijay Pande? Now, I mean, it's still, I don't know if everyone loves the idea of Lasik, but it's pretty standard, you know? And so it sounds like there's a huge adoption issue or concern, but really, I think the question is, what can it do?
3:10 Sonal? Okay. So where are we in the technology now for what it can do? And where do you, given your vantage point in the bio world, think BCIs or brain-computer interfaces are interesting?
3:19 Vijay Pande? Yeah, it's interesting to think about where you can start, because start with a population that really probably isn't dire or neat, you know, people that are paraplegic, quadriplegic. Their lives are obviously very limited compared to what they were at birth.
3:30 Sonal? In terms of movement?
3:31 Vijay Pande? In terms of movement, and really just in terms of access to the rest of the world, you know, because their brains are just like ours, but they can't move their limbs. And it's just really tragic. An actual place to start would be, and I think where they're starting, is just in communication. And it's not just typing, but it's really being able to use a computer. And you think about, like, what that means, that's the difference between being in the modern world and being isolated from the modern world. That would be a huge game changer.
3:55 Sonal? And is it only for paraplegics and quadriplegics, or are there other, like, sort of neurological movement disorders where it could play?
4:00 Vijay Pande? I think in time, I think they'll, would you shift from cases where it's sort of an easy, it's so hard to avoid puns, like no-brainer, easy no-brainer kind of thing to where, okay, maybe it's less obvious, but become more accepted?
4:14 Sonal? Maybe, who knows, 20, 30, 100 years from now, we could get to the Lasik point. But let's talk about the timing. The company's been around for two years. Five years is roughly the FDA process for them to get to human trials with five patients, or so they claim. They said the road is long. So, given the evolution of BCI, I mean, it's a topic that's been around forever. Where do you see, not prediction, but where are we in the evolution of this entire journey?
4:36 Vijay Pande? It's clearly very early in this journey. What's interesting, though, is that we're actually talking about, even if it's just a trial, putting this in patients.
4:45 Sonal? Because right now, I think it's only in rats implanted.
4:47 Vijay Pande? And monkeys.
4:48 Sonal? And, oh, that's right, he claimed on stage, I think it surprised his president, who's like, "What, are we talking about this now? I didn't even realize this," which is so funny and so typical Musk.
4:55 Vijay Pande? Yeah. And so to be in humans, that's a pretty major jump.
4:58 Sonal? Is it? Because I was gonna say, don't people argue that our DNA is very similar to that of monkeys?
5:02 Vijay Pande? Oh, yeah, yeah, no, but I'm just thinking from a cultural point of view, not from a technology. Thing is that, actually, humans are probably easier than mice, because mice brains are really little. So, actually, ironically, I think that part would be easier. But the reality is now you're talking about people, and you don't want to mess around with people.
5:14 Sonal? Okay, so, assuming social acceptance is a separate issue altogether, technologically, and this is the heart of what you love, when science becomes engineering.
5:22 Vijay Pande? Yes.
5:23 Sonal? Where is the engineering reality of this?
5:25 Vijay Pande? Where the engineering comes in is that, I think, much like, you know, we see Moore's Law and other things on the computer side, once you can make this interface, then the advances on the computer side get to translate over. So, for instance, machine learning is a very, very natural way to take the signals out of our brain, and then use that to interpret what you mean and what's going on. And so, as machine learning gets better and better, and that's sitting on Moore's Law and other areas of compute, that'll just come along for the ride. The other one is that I suspect the sewing will get better and better, and that you'll have more and more electrodes in there and be able to sort of pinpoint other areas. And so, year after year after year, if it only gets, let's say, 20% better every year, you know, that's a dramatic change over 10 years.
6:03 Sonal? So, bottom line it for me, though, because getting that the social thing can happen, getting that engineering, it can be empowered by Moore's Law, still not sure where it feels a little nutty that there's literally electrodes floating around in our juicy, gooey brain. And that's pretty much like a mess, if you think about it, like, reality.
6:21 Vijay Pande? But, you know, people have artificial hearts.
6:23 Sonal? Oh, that's a good point.
6:24 Vijay Pande? People who have Parkinson's often have devices that are actually in their skulls that are put there to sort of mediate that. So there's actually a lot of precedent for this. I think in all those cases, the alternates are pretty dire.
6:36 Sonal? I mean, right now, they don't have, like, transmitters right now. They actually get them from their rats. I think they take it out via USB C sticks.
6:42 Vijay Pande? So in this case, you'd probably, for a while, I assume you'd be wire tethered. But again, for this population, it's better than they have and they're limited in mobility, unfortunately.
6:50 Sonal? Right. They already have wheelchairs and devices that they're tethered to already. Any final thoughts?
6:54 Vijay Pande? Yeah, you know, I think this is like a great example of something we talk about in the firm is sometimes really great ideas look like bad ideas. And what makes them great is that they're just so inherently controversial and it's so inherently paradigm shifting. And I don't know what could be more controversial and paradigm shifting than drilling holes in your head to access the internet or something like that. Now, also, bad ideas look like bad ideas. So time will tell, and there are many other players. And that's what partially makes this particularly exciting is that there's going to be, I think, in time, an ecosystem of alternatives.
7:24 Sonal? By the way, DARPA tweeted, "They're the ones who pioneered the sewing machine technology with UCSF and funded it as part of their thing." So what Musk is doing is actually using that technology. But the funnier part is this paper. So I came out of academia. I'm an editor. I care a lot about bylines. I think it's crazy that the author said Elon Musk and Neuralink. He didn't list his authors. Like, do you think that's okay? You run a lab.
7:45 Vijay Pande? Yeah, I mean, I think, especially if you want to reach the academic audience, that's not the way to do it. I don't know if an average person cares about the individual authors in there, but if I were in the company, I'm sure I would love to sort of have my contributions.
7:57 Sonal? Yes, exactly. Well, maybe when they do a peer-reviewed paper, this is how I justified it to myself, they might then do that paper with the actual authors, whereas this was like a marketing white paper.
8:05 Vijay Pande? You could also choose to interpret it in a more positive way, which is that he wants to really acknowledge the whole company.
8:10 Sonal? Ah, it could be the other interpretation.
8:12 Vijay Pande? There's generous and non-generous interpretations of this.
8:14 Sonal? I like your glass half-full view of the world of UJ Pande. Thanks for joining.
8:17 Vijay Pande? Yeah, thank you.
8:18 Sonal? So the next item on our list, TikTok has actually been in the headlines plenty of times. It's the third-most installed app worldwide since Q1 of this year, behind WhatsApp and Facebook Messenger. It has 1.2 billion MAUs, monthly active users or something, in the last reading. So given that phenomenon is happening and it's been happening for a while, the news this week was about them having a huge influence at VidCon, which builds itself as the world's largest celebration of digital video and online creators. Basically, a huge ass conference for a video. It's sponsored by YouTube, but ironically was not dominated by YouTube. It was actually dominated by TikTok stars, according to Taylor Lorenz, a writer at The Atlantic. This is actually the first time that TikTok had such a huge presence at VidCon. But on top of it, the other recent news is that there's talk of banning it in India,
9:03 Sonal? which is its biggest overseas market. The question here, Connie, for you is, what is going on with TikTok? Tell us really quickly, what is TikTok? Frankly, the ability to do short 15-second videos is a very familiar model. Vine tried that, many people have tried that.
9:17 Speaker 02 It's a series of short video apps. But the difference between that and, say, like a YouTube is rather than search for anything, there's no search bar. The app completely dictates what you see by using AI algorithms.
9:28 Sonal? It's purely AI-driven. There's no preference selection, except by what you choose to watch.
9:34 Speaker 02 Yeah, I mean, if there's a TikToker that you really love, you can follow them. But when you initially start, that whole entire feed is dictated by the platform. So it chooses things that are high-quality or high-impact, and it surfaces that. And that's why it was such a big deal at VidCon, because you had all these people who had trouble becoming famous on YouTube, because YouTube's been around for so long right now. It was so much easier to become an influencer 10 years ago than it is today. But on TikTok, it's different, because you create one really hit piece. It can, through AI, be shown to a ton of people worldwide, because it'll trigger the algorithm to share it with a lot of people. And that's how you can gain followers really quickly. Whereas on YouTube, unless you're searched or unless a friend shares it, it's much harder to get surfaced.
10:18 Speaker 02 The article talked about how someone who tried to become famous on YouTube struggled for a really long time getting followers. But on TikTok was able to amass a following far greater in a much shorter period of time.
10:29 Sonal? So this particular segment is focused on our friend Taylor's piece in The Atlantic on this. She has an open-ended question at the end, though, which I think is worth answering, which is how are they going to make money?
10:39 Speaker 02 The answer to me is really obvious because TikTok is, you know, the English version of a Chinese app, same company, right? This is just the American-
10:47 Sonal? All by ByteDance.
10:47 Speaker 02 -English version, all by ByteDance. And then the Chinese one is called Douyin. And it has a bunch more features and monetization methods that you just don't see in the English version yet. And if you just imagine that stuff translating in America, which I think it perfectly can.
11:01 Sonal? Can it?
11:01 Speaker 02 Yeah, yeah. I mean, a lot of it is around e-commerce. A lot of it is around becoming a super app, actually, even, allowing people to find restaurants or even book hotels. You have leaderboards of top brands.
11:13 Sonal? Interesting.
11:14 Speaker 02 Basically commercials you can instantly buy, right? In the US, we've talked about when is this interactive TV, you know, world ever going to happen? I don't think it's going to happen on the TV. It's going to happen on the mobile. And short video is a great way to do it because short videos are, in essence, commercials you want to watch. They can become commercials you want to watch.
11:29 Sonal? That's such an interesting idea.
11:30 Speaker 02 It's fascinating to me because in China, you have a lot of these TikTok or Douyin short videos, and you can purchase directly there with like three taps. Right after the video loops twice, a little thing pops up, you can click in, you can buy it, and it gets delivered to you. I'm talking like buying physical things. Fruit is a huge category.
11:50 Sonal? What?
11:50 Speaker 02 I'm not kidding. Like fruit, random gadgets, like for the fruit, the grower who's growing oranges, he's showing you his orange farm, or he's squeezing the orange juice so you see how juicy it is. And then you can just buy a box of oranges.
12:04 Sonal? That's a thing. Oh, my God.
12:05 Speaker 02 It's a huge thing, actually.
12:06 Sonal? That's fantastic. The fruit meme is way better than the 10x engineer meme, I gotta say. Well, Connie, thank you for joining this segment. All right, so we're doing the next segment on FaceApp, which is an app that is in the headlines this week. First of all, what it does, it basically morphs your face. So if you're a woman, you can change your gender into a man, vice versa. It can show you how you age, like how you look when you're old. And of course, people are fricking sharing this because how interesting to share it. Now, I personally am too vain to share something like that, so I would not even share that. The reason it's in news is not because it's going viral, because that's not news. The news is that there are claims of Russia collecting facial recognition data based on this. And it's so concerning that a US senator wrote a letter to the FBI and FTC asking
12:48 Sonal? for investigation into its potential national security threat and its risk to the privacy of Americans, given the fears of election hacking. The privacy policy basically says you're allowed to have a perpetual, irrevocable, non-exclusive, royalty-free, worldwide, fully-paid, transferable, sub-licenciable access to your photo. But that's kind of what all apps already do. So what I really want to talk to you about, Joel, especially as a security expert, I want to get your take on, should people be worried, the people who downloaded this? Or is this just app business as usual?
13:16 Speaker 03 Well, I'm a strong believer in the fact that you should never waste a crisis, right? And so any opportunity we have to get privacy front of mind in people is really important because consumers just don't really appreciate or understand privacy. That said, I think that you actually really, risk is a really funny thing, and it varies from person to person. And so does the average teenager need to care about this? Probably not. If you are a Democratic or Republican politician that is in the public space, it's probably a bad idea that you give your access to your photos to anybody, right?
13:46 Sonal? Why? I don't understand the distinction there, to be honest.
13:48 Speaker 03 Well, there may be photos in there as a high-profile individual that may make you susceptible to things like blackmail. When you're a public official, when you're working in the national security space, when they say something is a threat to national security, they don't always mean that like they're going to get the launch codes and take our weapons. They often mean that you're going to get some kind of information that you can use as leverage over a public official. And if you look at most of the national security investigations that happen in this country, they're usually over someone trying to get negative information, or they're over some form of kind of information leakage, right?
14:21 Sonal? So that helps explain the national security side. I'm very patriotic, and of course, I'm worried about people hacking elections or other things. It did strike me as, you know, kind of xenophobic, actually, to just blandly accuse an entire country of anything that comes out of Russia and China and all these other countries is dangerous. Like, that just feels like a little bit of fear mongering.
14:37 Speaker 03 I think the important thing that we should be talking about, rather than saying that Russia, China, and these countries are evil, that's just kind of a ridiculous position to take, right? I think the real discussion we should be having is that every country conceives of privacy in a different way.
14:50 Sonal? What's the US's?
14:51 Speaker 03 Well, in the US, generally, we're in this weird place where Convenience, or features, or user experience, right, will always trump privacy and security. So if I can provide you with a widget that gives you 15 minutes of joy, there's some amount of private data that you'll let me extract from you. And so I think, you know, the fundamental problem here is that US consumers generally undervalue their private data. Whereas I would say, German, or European, or people that have very strong data protection cultures have a much higher price on their data.
15:21 Sonal? Right, but these apps are global. I was gonna say these apps, because it's like global apps. These apps are global, and so is their infrastructure. Like, in the case of FaceApp specifically, the servers are in the US, or so they claim in their response to the concerns. They also claim that, you know, images are deleted within 48 hours from the upload date. So I guess my question for you is, as a user in a practical way, how should someone who's not a politician with a high profile, how should someone really think about like whether they should trust these apps or not?
15:50 Speaker 03 I mean, there's the no-brainer kind of answer to that question, which is that if you have stuff you don't want other people to see, don't give them access to. Apps that let them get access to that information, right? And so generally, I think, you know, be conscious and cognizant of the fact that these apps are taking information. They may be taking information that you're not fully aware of. You know, the way that these companies present their terms of service is really designed so that they get people to kind of buy in and accept that transfer.
16:14 Sonal? Quite frankly, I don't know any beauty who really friggin' reads them. I just hit accept. I've never read a policy.
16:20 Speaker 03 I must shamefully admit that I am one of those people that does. I'm also gonna be home alone on Friday, but the fact of the matter is that this language and this legalese is just done to confuse consumers. And so exercise some level of practical caution. Understand that like access to your private information is actually really important. And as we move into this new world and you look at these new apps, these are essentially becoming massive data collection efforts.
16:43 Sonal? And just wait till we add Neuralink and BCI is into this whole equation. Well, thank you for joining, Joel. So let's do the last segment of the news on direct listings. Our next A6000 expert is Jamie McGurk, who runs our corporate development function and is a former investment banker. We recently put out a post all about direct listings, which explains what they are, how they work, and especially given this new trend of companies like Spotify and Slack having done them. So the news here, though, is that iHeartRadio, which, this shocked me, because- First of all, I'm into podcasting and they're an audio company and they've been around for a while. And they just announced a direct listing and that shocked the hell out of me. So like, that's the news. Like, what's going on?
17:23 Speaker 04 No news, actually.
17:25 Sonal? Okay, you're telling me we shouldn't bother recording this episode now?
17:28 Speaker 04 So I guess what people don't realize is this product has been around for a long time. There were two primary use cases previously for doing a direct listing. One was companies emerging from bankruptcy and the other was companies being spun off of larger companies.
17:40 Sonal? Ah, interesting.
17:41 Speaker 04 And so iHeartRadio falls into the former category, emerging from bankruptcy. So the direct listing product has been, you know, more or less repurposed by Spotify and Slack in recent history as an alternative to the IPO. They don't suffer the dilution of a traditional IPO and there's no lockup period. So, you know, traditionally you would have 180-day lockup period in a traditional IPO and that goes away. So there's a strong momentum for a new way of going public.
18:08 Sonal? I mean, basically, the point of direct listing is that the company's not raising capital.
18:11 Speaker 04 They're not raising capital and they're not doing so at an artificially low valuation that exacerbates the dilution that they would otherwise get from fundraising.
18:18 Sonal? Right, but just in the big picture, why this matters? Why do you think it's going to be such a big trend in terms of the importance of it?
18:24 Speaker 04 In our blog post, we talked about several different features of the direct listing and why we think that it'll be more popular. You know, I think the short soundbite is that, you know, there's a lot of things broken about the legacy IPO process. Who really benefits? Is it in the company's best interest to raise capital or to go public in this way?
18:41 Sonal? Yeah, by the way, a lot of those are structural things that are due to lack of technology and transparent information and just time and old policies.
18:47 Speaker 04 Doing things the way that things have always been done. So it's more of an inertia argument as to maybe why the legacy IPO has persisted as long as it has. You know, it works at raising capital and it works as entering the public markets. It just so happens there is a better way. That's the trend that we see. That's what you and I wrote about.
19:03 Sonal? So to bring it back to iHeartRadio then, why this is different? Spotify and Slack versus the iHeartRadios of the world?
19:09 Speaker 04 So I think iHeartRadio got a lot of attention because it fell in, you know, close time proximity to Slack. It also has a business model that is very similar to Spotify. I think they drafted off the PR headlines of those two about a direct listing, but the emerging from bankruptcy use case is a well-worn path. It just so happens that they had similarities to two of the recent more, you know, the newer use case of direct listing.
19:30 Sonal? Thank you, Jamie, for that. And just to be clear to everyone listening, Please note that the content here is for informational purposes only, should not be taken as legal, business, tax, or investment advice, or be used to evaluate any investment or security, including the ones that we mentioned. It's not directed at any investors or potential investors in any A6 and Z fund. And honestly, any investments or portfolio companies mentioned, referred to, or described in this episode are not representative of all A6 and Z investments. And so there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results. You can find a full list of investments at a6andz.com/investments and more details on our disclosures at a6andz.com/disclosed. And thank you, everyone, for joining our news segment today.
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