Astronomer CEO Affair at Coldplay Concert, JUUL Approved by the FDA, Is AI Causing Historic Crashouts? | Chris Power, Jeremie Eliahou, Chris Best, Alex Mashrabov, Jesse Pollak, Billy Thalheimer, Jonathan Mortensen, Douwe Kiela & More

(00:09) - Astronomer CEO Affair at Coldplay Concert (11:31) - New Tesla Model Y L Breakdown (16:18) - JUUL Approved by the FDA (01:02:49) - Is AI Causing Historic Crashouts? (01:29:16) - Chris Power, founder and CEO of Hadrian, discusses the company's recent $260 million funding round led by Founders Fund and Lux Capital, which will support the expansion of their manufacturing capabilities, including a new 270,000-square-foot facility in Mesa, Arizona, and the launch of a "factories-as-a-service" model to enhance defense production. He emphasizes the importance of revitalizing American manufacturing through automation and advanced technologies to address workforce shortages and strengthen national security. (01:45:00) - Jeremie Eliahou Ontiveros, Head of Datacenter & Energy Infrastructure Research at SemiAnalysis, specializes in analyzing hyperscaler and neocloud infrastructures, large-scale AI clusters, and associated cooling and electrical systems. In the conversation, he discusses Meta's substantial investments in AI infrastructure, including the construction of massive data centers in Ohio and Louisiana, each aiming to provide up to 2 gigawatts of compute power by 2027. He also highlights the competitive landscape in data center development, noting the intense search for power resources and the strategic decisions companies are making to expedite construction and enhance efficiency. (02:13:43) - Jesse Pollak is Vice President of Engineering at Coinbase and the creator and lead of Base, Coinbase’s Ethereum Layer‑2 blockchain. He previously headed Coinbase’s consumer engineering teams, where he significantly grew the team and helped develop Coinbase Pro and Coinbase Wallet. (02:36:34) - Alex Mashrabov, CEO and co-founder of Higgsfield AI, is a veteran in the video generative AI space, having previously developed Snap's face filters and other viral products. In the conversation, he discusses Higgsfield's mission to create next-generation AI tools for social media content, emphasizing the importance of building reasoning engines to enhance video generation and the potential for AI to revolutionize content creation by enabling users to produce high-quality videos with minimal effort. (02:49:11) - Billy Thalheimer, co-founder and CEO of REGENT, discusses the company's development of all-electric seagliders designed for high-speed, low-cost coastal transportation and defense applications. He highlights the recent launch of REGENT Defense, emphasizing the seagliders' suitability for military operations in island chains due to their speed, low operating costs, and low radar visibility. Thalheimer also mentions ongoing collaborations with the U. S. Marine Corps and plans for full-scale prototyping to meet both commercial and defense needs. (02:52:21) - Jonathan Mortensen, founder and CEO of Confident Security, announced the company's emergence from stealth mode with $4.2 million in funding from Decibel Commons. He emphasized the importance of confidential AI to prevent large-scale data privacy issues, highlighting the need for privacy measures beyond those offered by companies like Apple. Mortensen explained that Confident Security's product involves a server-side wrapper and client-side SDK, utilizing advanced cryptography to ensure that user data remains private and is not used for training, with technical guarantees enforced at the engineering level. (02:57:13) - Douwe Kiela, CEO and Co-Founder of Contextual AI and an Adjunct Professor at Stanford University, is a pioneer in Retrieval-Augmented Generation (RAG) technology. In the conversation, he discusses the evolution of RAG, emphasizing its role in enhancing generative AI by integrating real-time data retrieval to improve accuracy and relevance. He highlights the transition to RAG 2.0, which introduces active retrieval mechanisms, enabling AI agents to proactively seek information, thereby transforming them into more dynamic and context-aware systems. (03:02:56) - Yash Kumar & Isa Fulford. Members of Technical Staff at OpenAI, discuss the development and capabilities of ChatGPT Agent, a new AI tool designed to perform complex, multi-step tasks by interacting with various applications and services. Explaining that ChatGPT Agent combines features from previous OpenAI tools, such as Operator and Deep Research, to create a versatile assistant capable of tasks like scheduling meetings, planning events, and generating presentations. (03:15:12) - Dan Shipper, CEO and co-founder of Every, discusses his experience using ChatGPT Agent to analyze customer feedback for Quora, his email management AI app. He highlights the agent's ability to autonomously process large volumes of data, identify customer archetypes, and generate detailed reports, tasks that would traditionally require significant time and effort. Shipper also compares ChatGPT Agent's user-friendly, consumer-focused design to Anthropic's Claude code, noting that while Claude offers greater customization and power for developers, it is less accessible to general consumers. (03:28:07) - Chris Best, co-founder and CEO of Substack, discusses the company's recent $100 million Series C funding round, which has elevated its valuation to over $1.1 billion. He emphasizes Substack's evolution from a simple email newsletter platform to a comprehensive network empowering creators with tools for direct audience engagement and monetization. Best outlines plans to invest the new funds in enhancing the platform's features, supporting long-term growth, and building a robust ecosystem that benefits both writers and readers. (03:38:00) - Dean Leitersdorf, founder of Decart, discusses the launch of Mirage, the first real-time video model capable of transforming live video streams based on user prompts. He demonstrates how Mirage can apply various styles—such as "wild west" or "cyberpunk"—to live video, showcasing its potential for interactive and immersive experiences. Leitersdorf also highlights the model's efficiency, noting that it runs on servers and is optimized to be cost-effective, enabling free access for users. 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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 TVPN. Today is Thursday, July 17th, 2025. We are live from the TVPN Ultra Dome, the Temple of Technology, the Fortress of Finance, the Capital of Capital. Today, we have some crazy news at a Coldplay concert. That's where we're starting, I guess. This went insanely viral. The CEO of a company called Astronomer was caught on the kiss cam, hugging one of his employees, the head of HR.

• 0:30Jordi Hays?

  And I said...

• 0:31John Coogan?

  But Chris, in the video, Chris Martin is like, "Something's going on here."

• 0:35Jordi Hays?

  I said, "Startup CEOs can't even hug their chief people officer at a concert in this country anymore."

• 0:41John Coogan?

  It is crazy when the internet descends on a current thing, how viral it is. Like, just you have to jump in on the current thing.

• 0:49Jordi Hays?

  Before we talk more about this, I wanted a quick word from our sponsor. Astro by Astronomer is the orchestration for a data ops platform built on Apache airflow, empowering your team to build, run, and observe data pipelines that just work, all from one place.

• 1:05John Coogan?

  Do you believe a conspiracy theory? Put on the tinfoil hat.

• 1:08Jordi Hays?

  Yes.

• 1:08John Coogan?

  Will you steal me on the tinfoil hat? What is the tinfoil hat explanation here?

• 1:13Jordi Hays?

  Tinfoil hat explanation here is...

• 1:15John Coogan?

  All press is good press?

• 1:17Jordi Hays?

  Is that, Nathan, for you, this is just part of an elaborate stunt.

• 1:21John Coogan?

  Yes.

• 1:22Jordi Hays?

  And Nathan's plan was have the CEO get caught having an affair with a coworker to increase brand awareness and get a buzz going. This was Charlie Light over on X.

• 1:33John Coogan?

  He definitely got a buzz going.

• 1:36Jordi Hays?

  And yeah, a lot more people know about Astronomer today than yesterday.

• 1:41John Coogan?

  100%.

• 1:42Jordi Hays?

  But hard to see how it would have been planned. There's been a bunch of jokes. Ryan Peterson said, "Board should give him a raise." "Without this viral moment, I'd never know that Astronomer is used by enterprise clients to manage Apache airflow and achieve 70% higher uptime than self-managed airflow."

• 2:00Jordi Hays?

  Lots going on today. Alex Cohen says, imagine losing half your life savings at a Coldplay concert.

• 2:09John Coogan?

  Why half? Oh, because he's gonna get a divorce. Okay.

• 2:11Jordi Hays?

  Apparently, it's very sad. These are adults that made their own decisions.

• 2:16John Coogan?

  Yeah.

• 2:17Jordi Hays?

  And they now have to live with the consequences, but I doubt either of them would have would have paid half their net worth for those tickets.

• 2:28John Coogan?

  Yeah, rough, very, very bizarre. I was reminded of what Emily Sundberg told us when she came on the show. I was asking her how the Hamptons has changed since the era of social media, the age of the internet. And she said that there are so many TikTokers documenting everything that happens in the Hamptons now that you can't even leave a party with someone else's wife. That's what she said to us. Do you remember this?

• 2:55Jordi Hays?

  Yeah.

• 2:57John Coogan?

  And I'm wondering, like, what does this actually mean for birth rates? What does this mean for? Like, this seems predictable at this point. This is the first one that's happened. I've seen these other videos.

• 3:08Jordi Hays?

  Having a debate this morning, which is that find my friends is the best thing to happen to marriages. Monogamy, potentially ever.

• 3:16John Coogan?

  Yes.

• 3:17Jordi Hays?

  Because if you are in a committed, long-term relationship

• 3:19John Coogan?

  Yeah.

• 3:19Jordi Hays?

  and you do not want your partner to have visibility into your whereabouts, you can make a pretty bad argument for privacy.

• 3:27John Coogan?

  Yeah.

• 3:28Jordi Hays?

  But it ultimately, it doesn't, it's really hard to stand behind.

• 3:34John Coogan?

  Yeah.

• 3:34Jordi Hays?

  I think it's potentially a really positive force against social media and dating app culture and things like that.

• 3:40John Coogan?

  Yeah.

• 3:41Jordi Hays?

  So the answer to technology problems is more technology.

• 3:43John Coogan?

  More technology, maybe. Yeah, it was like this, it's this countervailing force because like, what was it? Like Instagram is like constantly flooding you with like recommended, like, look at this girl, look at this random person, look at this thing, you know, like, go down this rabbit hole. And then, and then find my friends is maybe pulling you back. But, I mean, he probably told, he probably said, I have to go for this for work.

• 4:04Jordi Hays?

  Yeah, this doesn't fix this issue.

• 4:05John Coogan?

  Doesn't really fix this issue.

• 4:06Jordi Hays?

  Lulu.

• 4:07John Coogan?

  But the Kiss Cam does. The Kiss Cam is a Lindy technology.

• 4:10Jordi Hays?

  So Lulu had some advice. She says, just giving out priceless comms. Crisis comms for the astronomer team. She says, don't bother with crisis comms here. The CEO will try to get you to protect him, but it's not his company. He's a temporary steward. Your job is to protect the company. The CEO is a professional manager who's only been there two years. The HR person has been there less than a year. Neither is tied to the identity of the company. Preserving trust is more important. Your business model is to handle sensitive data and your priority is scaling and that's tough to do when multiple known li- with multiple known liars on the senior leadership team. A better comms plan than trying to save the situation. Andy Byron is on the board, but he's not a founder,

• 4:52Jordi Hays?

  doesn't have control. The other five members should replace him. You can then use the new CEO announcement as a reset and get people to focus again on Astronomers' actual business instead of its drama. So, uh, we, uh, we did reset, reach out, um, to, to Andy, uh, this morning to see if he wanted to tell his side of the story. Uh, felt, felt, uh, like an extremely, uh, you gotta be a little bit crazy like Sohom to wanna come on after you're the current thing.

• 5:19John Coogan?

  Yep.

• 5:20Jordi Hays?

  But, uh, in this case, we should have the new CEO on of Astronomer when, uh, whenever that comes. So there's a poly market today on whether he'll be out by the end of next week. Uh, odds are currently sitting around 38%. Uh, I would not be surprised if there's uh, somebody new, uh, stepping into the CEO role at the company. Uh, this seems to have been, um, a way, way bigger than just the current thing on X. It seems to have really, uh, broken containment, so.

• 5:54John Coogan?

  Is this a Databricks competitor? Like Apache Airflow, uh, is, uh, it says open source workflow orchestration platform used to programmatically author, schedule and monitor data pipelines? I wonder if their business is just exploding. DAG directed a couple of graphs.

• 6:13Jordi Hays?

  Quite the lineup of investors. They've got Bain Capital Ventures.

• 6:16John Coogan?

  Let's go.

• 6:17Jordi Hays?

  Just led a Series D, uh, this year.

• 6:20John Coogan?

  Let's go.

• 6:21Jordi Hays?

  Into Astronomer. So let's hit the size con for that.

• 6:25John Coogan?

  It's probably a fantastic business.

• 6:26Jordi Hays?

  And Insight is also, uh, led the Series C in March of 2022.

• 6:31John Coogan?

  Yeah.

• 6:31Jordi Hays?

  So, uh, pretty, Venrock was in the Series A as well. Uh, and then Sierra Ventures, uh, who I'm not familiar with, has led a couple of different financings. So. Yeah, this business has been around for a while. They're going to get through this. I'm sure that Bain Capital and Insight and the other members of the board are already figuring out who they can get to step up and run this company.

• 6:57John Coogan?

  Yeah, there just seemed to be some sort of line between like bizarre, salacious, but ultimately orthogonal to the core business drama and like actual core business drama, like some fundamental flaw in the business plan that's exposed. FTX or Theranos versus just this like, you know, drama that's happening here. I keep laughing about that analogy we go back to where if you found out that, you know, I think, what do I have? I have, what are Pilot Sport tires, that Bridgestone?

• 7:35Jordi Hays?

  Uh, Michelin.

• 7:37John Coogan?

  Michelin, Michelin tires? So if you told me that the CEO of Michelin was, was, was caught at a Coldplay concert with the head of Michelin HR, it would be a tall order for me to go get new tires, right? I'd be like, the tires work pretty well. That issue doesn't really affect my tires.

• 7:56Jordi Hays?

  It's more, it's more so that the, the difference here is that being caught is different than being on the Kiss Cam and getting 100 million views today. My post alone has a million views and I posted it a few hours ago.

• 8:17John Coogan?

  But do you think, do you think it's, it's, it's going to actually affect like revenue this month?

• 8:22Jordi Hays?

  I don't think it will affect the business at all necessarily. Maybe a little turbulence because of needing to find new management and having some turnover.

• 8:30John Coogan?

  Turnover, turnover on the, on the, on the exec team is going to be a challenge, but ultimately their customers are not going to, you know, say, hey, we're turning off, you know, we want out of our contract.

• 8:43Jordi Hays?

  If, if the product is good, maybe some people use it as an excuse.

• 8:47John Coogan?

  Sure.

• 8:48Jordi Hays?

  But yeah, I don't see this affecting the business. But then again, it's like, if you're Bain Capital or Insight, do you really want?

• 8:57Jordi Hays?

  Do you want a, he came in two years ago, sounds like he's been executing, the team has been executing well. If they got from series C to D over the last couple of years, it means they're probably growing nicely. But, and I don't necessarily think that this is the end of this guy, either of their careers.

• 9:14John Coogan?

  Yeah.

• 9:14Jordi Hays?

  It just should be the end at this company.

• 9:17John Coogan?

  Yeah.

• 9:18Jordi Hays?

  Cause if, cause if you're the board and you, and you tolerate this, that just means, yeah, we tolerate people of, you know, poor moral character.

• 9:27John Coogan?

  Sure. Yeah. Also interesting, I mean, this company is like, never even heard of it and it's on an absolute tear, series D at this point. And does this not sound like something that should be in the AWS dashboard? Like, we were talking about browser base yesterday, getting like quote unquote copied. And there's just something about these like point solutions that just are, you know, nailing a specific problem. You know, in this case, it's like deployment, deployment and management of an open source project. It's literally, anyone can just run Apache airflow. They just help you do it better. And that's kind of what Databricks did with Spark. Like Spark's an open source project. Now they, now they, for these data pipelines, now they help companies actually install, manage, run them,

• 10:12John Coogan?

  and then put a bunch of software on top of it. And Databricks has been massively successful. And so it's, it's interesting to bring it back to browser base because it just kind of reveals that like, these companies can be kind of grinding in silence for a while. Just, I guess the note for Paul Klein's probably stay out, avoid being the current thing.

• 10:34John Coogan?

  Because the, the failure mode could, could be less technical and more interpersonal.

• 10:40Jordi Hays?

  Yeah.

• 10:40John Coogan?

  I don't know. Anyway.

• 10:43Jordi Hays?

  Work, retire, die, may have been inspired by my post.

• 10:47John Coogan?

  Okay.

• 10:47Jordi Hays?

  Or it could have been totally random, but he said, married CEOs can't even hug and romantically sway with their married head of HR during a Coldplay concert. Anymore because of woke.

• 10:57John Coogan?

  Oh, because of woke. Okay. Yes. Yes. Yes. Are there, is there anything else to cover on the?

• 11:02Jordi Hays?

  Sophie Netcap Girl says, it's so hard to get noticed as an AI company these days. The astronomer CEO had to cheat on his wife for marketing.

• 11:10John Coogan?

  Yeah.

• 11:11Jordi Hays?

  It's dark out there.

• 11:12John Coogan?

  I don't think, I'm not believing the tinfoil hat one on this one. I think it's an L.

• 11:17Jordi Hays?

  It is a huge L, but there's a lot of good stuff happening today.

• 11:21John Coogan?

  Yes.

• 11:21Jordi Hays?

  OpenAI.

• 11:22John Coogan?

  Like ramp.com. Time is money, save both. Easy to use corporate cards, bill payments, accounting and a whole lot more, all in one place. Did you see the, what Model Y L is launching? Has a six-seat configuration, three-inch longer wheelbase than the Model X.

• 11:36Jordi Hays?

  Can you hold this for me?

• 11:37John Coogan?

  The L.

• 11:38Jordi Hays?

  Hold that.

• 11:38John Coogan?

  The L. Uh, this car will sell like hotcakes. It's a hundred and ninety-three inches, I believe, uh, which is not quite Escalade ESV territory, but much bigger, much, uh, closer. I was talking about this for a while that like.

• 11:52Jordi Hays?

  Wait, so they made the model, they made an XL version of the Model Y?

• 11:57John Coogan?

  Yes.

• 11:57Jordi Hays?

  Instead of making an XL version of the X?

• 11:59John Coogan?

  Yes, because the X is their premium product that's more expensive. They need to get into the full-size, affordable SUV market.

• 12:09Jordi Hays?

  Got it.

• 12:09John Coogan?

  So this will compete with the Hyundai Palisade, which is a full-size SUV. They're, they're firmly in like the crossover territory right now, where it's a five-seater, but you can't really put a whole bunch of car seats in there. You can't bring the dogs, all that type of stuff. By adding, I think it's like a pretty significant length. I think it's like maybe fifteen inches longer overall. Brings it to that two-hundred-inch length and winds up with a product that, uh, people feel comfortable throwing their whole family in, basically.

• 12:41Jordi Hays?

  Yeah.

• 12:42John Coogan?

  Uh, I agree with this takeaway from Nick Cruz, that this car will sell like hotcakes. I think that, uh, this is, this is, this is the most obvious thing that Tesla's been missing in their lineup, is a full-size SUV.

• 12:53Jordi Hays?

  Yeah.

• 12:55John Coogan?

  The Model X always, and even the Model, even the Model S came with at one point a third-row configuration, but it was always super tight. But now they're kind of. Dipping their toe into full-size SUV. They still gotta do the Cyberbon though, the Cybertruck SUV.

• 13:12Jordi Hays?

  Cyberbon.

• 13:13John Coogan?

  I mean, that's the original story of the Suburban, right? Wasn't it an F-150? They took the F-150, uh, body on frame, so it's technically a truck. This is like the excursion. People got really upset about this because it's total gas guzzler. But they take, they take a truck, which is this, it's not the unibody. It's the bottle, body on frame construction. F-150, but then they would just create like a whole, like passenger compartment on the whole thing. And this was the, the excursion, the expedition. And then they kind of started downsizing it to the Explorer. And then at a certain point, customers were like, okay, I want the aesthetics of an SUV, but I really want the gas mileage of a car. So build me a car that looks like an SUV.

• 13:57John Coogan?

  And that's where we got the crossover. So the crossover is all of the manufacturing strategy or manufacturing, like techniques of building a car, which is this, it's not body on frame. It's not this like platform that you can put an ambulance on or a fire truck on, or whatever you can do with a truck. It's, it's, it's all designed to be one thing. But then, uh, like customers went down into like the crossover market, which rides better. It's not as bumpy, but it's ultimately smaller. And now we're stretching out the, and now we're going backwards. We're stretching out the crossovers to the point that they're going to be full-size SUVs. But the Cybertruck is its own unique platform, its own unique manufacturing line, obviously its own unique styling.

• 14:38John Coogan?

  And I think if you make that, uh, full-size SUV style, uh, it would sell much better. Because people, people in LA, you see like people in LA want G-Wagons. You among them.

• 14:50Jordi Hays?

  Well, yeah, the, the, uh, the Suburban, the, um, uh, the Cadillac, uh, Escalade V.

• 14:57John Coogan?

  Yes.

• 14:58Jordi Hays?

  Is, is a very fun, exciting car.

• 15:00John Coogan?

  Yeah, but I mean, the, the difference between a Ford Raptor and a G63 is practicality, in my opinion.

• 15:10John Coogan?

  You don't need the truck bed. You need the interior space.

• 15:13Jordi Hays?

  I would use the truck bed because I surf.

• 15:15John Coogan?

  Yeah.

• 15:15Jordi Hays?

  Quite a lot. And so that was nice.

• 15:17John Coogan?

  Yeah.

• 15:18Jordi Hays?

  So having, having a covered bed is nice, but surfboards fit in cars.

• 15:21John Coogan?

  Exactly.

• 15:22Jordi Hays?

  And, and every time with the Raptor, like, once you own a Raptor, you realize that there's just not that much space in the actual cab. Like, it's pretty, it's pretty tight in there.

• 15:32John Coogan?

  And I'm pretty sure the Raptor is like 220 inches long. So it's like over two or three feet longer.

• 15:38Jordi Hays?

  And the bed is also very short. So it's like, not a super functional bed, not a super functional cabin.

• 15:43John Coogan?

  No, it makes way more sense to have a full size SUV. Yeah.

• 15:46Jordi Hays?

  It's the truck you wanted when you were five years old.

• 15:49John Coogan?

  Yep.

• 15:49Jordi Hays?

  And you said, I want a big truck.

• 15:51John Coogan?

  Yeah.

• 15:51Jordi Hays?

  And then as an adult, sometimes you have to get it.

• 15:53John Coogan?

  I gotta bring it back. Uh, let me tell you about Graphite. Code review for the age of AI. Graphite helps teams on GitHub ship high quality, higher quality software faster. Let's get started.

• 16:02Jordi Hays?

  Let's give it up for Graphite.

• 16:03John Coogan?

  Graphite. In other news, Juul has been approved by the FDA. Authorized is the key word here.

• 16:11Jordi Hays?

  Authorized.

• 16:11John Coogan?

  So I know way too much about this, but it is a, uh, it is a big, big turnaround since, uh, the FDA, um, was, was refusing to authorize, uh, the Juul e-cigarette years ago. Um, Juul says, exciting day for making cigarettes obsolete in America. The FDA has issued marketing granted orders. These are MGOs. We'll get into this, but it's like slightly different than like FDA approval for a drug, uh, for the Juul system, recognizing that these products as appropriate for the protection of public health. They don't have to say, the FDA doesn't have to say that it's good to use Juul, just that having Juul on the market has a net positive impact.

• 16:54John Coogan?

  And that's because cigarettes are already on the market. So they, it's this relative calculation that the FDA is doing.

• 17:01Jordi Hays?

  Yeah, it's, it's much harder to argue that Juul should not be able to sell when cigarettes sell daily.

• 17:07John Coogan?

  Exactly. So the FDA is not saying everyone should go out and start using Juul. They're just saying that keeping Juul on the market is a net good for the American public health. Which I'm sure will be hotly debated by a lot of people, but it's what the FDA said. So that over 2 million adults have switched completely from deadly cigarettes to using Juul products. And they approved a few different e-cigarettes. The big thing is that they approved the-

• 17:35Jordi Hays?

  And can you talk about the last few years?

• 17:37John Coogan?

  Yeah.

• 17:37Jordi Hays?

  Because I feel like that's interesting. Basically Juul is just getting hammered by like all these different regulators.

• 17:45John Coogan?

  Yeah.

• 17:45Jordi Hays?

  Meanwhile, the average gas station is selling fully unregulated vapes that are seemingly literally tested on children.

• 17:57John Coogan?

  You've seen the videos of the guys-

• 17:58Jordi Hays?

  Videos have gone viral where I don't think he was inhaling, but having to like make sure that each one works and then-

• 18:08John Coogan?

  Killer use case for a humanoid robot. Or just a device that inhales. Like that's just a fan. You don't need to create a-

• 18:15Jordi Hays?

  You actually need it.

• 18:15John Coogan?

  We've been able to create suction from robotics equipment or machinery for, you know, probably 100 years. And yet they're still using a human for that. Disgusting. But yeah, the full story of Juul, I know it pretty well. Couple Stanford guys working on a project. They're both smokers. They want to figure out a way to smoke. Way to quit. They don't like the current e-cigarettes that are on the market. And the key reason why the first version of vapor products was not satisfactory to smokers was that it used a very like not concentrated formulation.

• 18:53John Coogan?

  And so what that means is if you remember back in, this was like what, 2010-ish, I want to say? Yeah, 2010-ish. Vaping was really big, but you had to get this like rig. It was like this war rig that you had to assemble. And people would use like different pieces and be like, oh, I got this battery pack and this motor.

• 19:13Jordi Hays?

  Vape shops had exploded.

• 19:15John Coogan?

  It was like building a custom PC. It was like, what GPU are you going with? What fans are you going with?

• 19:21Jordi Hays?

  This was, I was in high school during that era and there would always be some kid at a house party that was blowing smoke from like one side of the room to the other and then making like those, those artwork with it.

• 19:37John Coogan?

  Yes. Fortunately, I was never in that world. Hit the, hit the soundboard. Give me the Ashton Hall.

• 19:45John Coogan?

  That was the sound that every vape made in 2010. But the reason.

• 19:50Jordi Hays?

  I'm glad, very glad as a culture, we got past that.

• 19:54John Coogan?

  Yes, it was, it was a particular nadir for the American culture, right up there with like the Tweety Bird tattoo and the Tapout t-shirt. It was all part of the same culture. They say, they say Americans don't have culture, but you know, we proved them wrong for that minute. Although it was rough and we, I'm glad we moved past. But there is a scientific reason why the vape cloud had to be so big. Like that was not, that was a trade off that was made by scientists.

• 20:17Jordi Hays?

  Not concentrated.

• 20:18John Coogan?

  It was not concentrated. So in order to get like a cigarette's worth of a hit of nicotine, you needed a massive volume of smoke. You just needed so much vapor. And so, Adam Bowen, James Monty is the founders of Juul. They figured out that there was a way to make the smoke or the vapor more concentrated. And there's a whole bunch of science that goes into it, but nicotine salts are like the main one that people point to. And basically they, they figured this out. They, they built the device. They actually bring on, they run like a sort of standard Silicon Valley playbook. They bring on, is it Yves Behar or someone like that? There's some, there's some like iconic designer who worked on like the Jambox and stuff.

• 21:02John Coogan?

  I don't know. There's, they bring on one of these, one of these like incredible storied industrial design firms. They make the original Juul device, which did have.

• 21:11Jordi Hays?

  It was focused, what, what's the whole story with PAX too? It was like the same company?

• 21:16John Coogan?

  Yep, yep. So when they started, they were doing.

• 21:19John Coogan?

  What was it? Uh, they did, they had fl- foom or flume or something? I forget what it was. They had, they had a different tobacco vaporizer. And then they had, and then they had a, uh, the same kind of technology to heat up material. And you could, in theory, put tobacco leaves in there and then vaporize that and just warm it up and breathe that in. And that would, it would be like smoking a pipe or like vaping tobacco, I guess loosely. But obviously, like, everyone was just using it for cannabis.

• 21:50Jordi Hays?

  Yeah.

• 21:50John Coogan?

  And so that takes off. That becomes this like fantastic business on its own. And then they had this other product. I forget what it was called, but it was a, it was a tobacco vaporizer, like an e-cigarette, similar to Juul. They wound up selling that to J T I in Japan or like doing this crazy licensing deal to get that out. Then they wind up splitting the company. Once both products are kind of taking off, but they're on very, very different trajectories. And it's very clear that they will be under very different regulatory regimes. Because the FDA is set up in a way that there are a number of different organizations within the FDA. So the FDA approves cancer drugs, and that's in the FDA drugs. They approve biologics. They approve veterinary medicine. They approve, uh, medical devices.

• 22:34John Coogan?

  So like when you go in an MRI machine, the FDA has approved that.

• 22:38Jordi Hays?

  Yeah.

• 22:38John Coogan?

  I'm pretty sure. And like, when you do like, uh, one stick blood test, like, that's a device. It's not a drug. So there's a different group. In 2000, I mean, we can go like way back, like cigarettes were never regulated by the FDA.

• 22:52Jordi Hays?

  Let's go back to the, to the very first time a human.

• 22:56John Coogan?

  It's like 10,000 years ago. Yeah, basically. Yeah, I mean.

• 23:00Jordi Hays?

  The first wooden pipe.

• 23:01John Coogan?

  Seriously, like it used to be like.

• 23:02Jordi Hays?

  It probably was somebody threw some tobacco leaves on a fire and.

• 23:07John Coogan?

  No, I mean, it was used in like, in like religious rituals. They would bury people with tobacco leaves on their gums. People would chew it up. There was a whole bunch of different ways to, you know, the original like peace pipe. It was peace, it was part of that, along with other things that you could possibly smoke. Like, as long as there have been stuff around, like dudes have put it, lit it on fire and

• 23:27Jordi Hays?

  Light it, lit it on fire, breathe it in.

• 23:29John Coogan?

  Always, always. And, and there's actually evidence that like monkeys do this too. They'll like go out and find like rotted fruit and like drink it and, and drink the fermented fruit and get all drunk and like come back to the crew and be like, I found the drugs. Basically, anyway. Um, so cigarettes, uh, you know, in, in, in, invented as a part of the industrial revolution. So we figure out how to make the cigarette rolling machine. And all of a sudden, people go from smoking, you know, like a few cigars, which had to be hand rolled, they're very expensive. It's kind of inconvenient. You can't really huff down that many cigars, although JP Morgan famously went to his doctor and was like, I'm not feeling too good, doc. And he's like, well, you gotta cut down the cigars. Why don't you take it from 20 cigars a day to 10 cigars a day?

• 24:16John Coogan?

  JP Morgan, absolute dog.

• 24:17Jordi Hays?

  He's like, I think I can do that. I'll have to taper off a bit.

• 24:21John Coogan?

  Yeah.

• 24:21Jordi Hays?

  It's gonna, it's not gonna be overnight, but I think I can get there.

• 24:24John Coogan?

  Imagine if I smoke a full cigar, like my tongue burns, it's so rough. I'm, I'm not built like JP Morgan.

• 24:31Jordi Hays?

  We're built different.

• 24:32John Coogan?

  Built different. It was, what, what an era. Anyway, so the cigarette rolling machine creates this like massive boom in cigarette adoption because it becomes super easy and super cheap. So Warren Buffett has this famous quote about like, it's the best business in the world. He'd never owned a cigarette company for moral reasons, but he's like, you make them for a penny, you sell them for a dollar. Extremely high margin. And the cigarette rolling machine is so efficient that the raw goods that go in.

• 24:57Jordi Hays?

  And the reason that prices, uh, that, that, that these companies were able to capture that much margin for so long is basically regulatory capture.

• 25:06John Coogan?

  There's a whole bunch of different reasons. One is there's actually distribution monopolies because all the big tobacco companies have trucks that go and deliver them to tobacco stores that are licensed. And so if you have a set amount of tobacco store licenses, like gas stations that have a tobacco license, and then you have a relationship with that particular 7-Eleven, and on the back, like, they can't sell them anywhere in the store, so the store can't become like a vape shop, at least it couldn't for a long time. There's only a set amount of store space, they call it the power wall, behind the cashier that you can actually sell stuff. And Marlboro is there being like, "We are the reason you exist. You make so much money off of us, we want all of this, don't let anyone else in there." So there's a whole bunch of other things.

• 25:51John Coogan?

  There's also brand moats, and, you know, these are the most powerful brands of all time.

• 25:56Jordi Hays?

  The idea is if you were starting a cigarette company today, you would need a billion dollars?

• 26:02John Coogan?

  So that's a more modern phenomenon. Because cigarettes, it's discovered in the 50s that they're giving people cancer, because people are, people went from consuming, like, the equivalent of like one cigarette a day during the cigar era, to smoking a pack a day. And in everything, like, the dose is the poison. The, like, the concentration is so important in biology. You can, the human body's like pretty resilient, and if you've smoked like one cigarette in your life, you're probably gonna be fine. If you smoke two packs a day, you're gonna be in a real, real tough spot. And so, the American populace starts smoking like a pack a day. Surgeon General comes out and says, "We're noticing something." A lot of people who smoke get lung cancer and they die much faster than people that don't smoke, so there's something going on here. Big debate, big, big law fight.

• 26:47John Coogan?

  There's finally this master settlement agreement where basically, the discussion, the negotiation is between the, all the state governments and all the, all the US governments saying, "Hey, you tobacco companies, you have given everyone cancer."

• 27:03John Coogan?

  This has a financial cost to us because when a cancer patient comes into our healthcare system that's funded by the taxpayer, we have to pay for chemotherapy and that has a cost. And so you put that cost on us, the government, you have to pay us. And so that was kind of the, the, the main concession of the master settlement agreement was all the big tobacco companies. They kind of like, one of them broke rank and was like telling on the other ones. It's this big drama. Basically, they have to make all these payments and these payments still happen today and there's some interesting finance that goes on where if you're like a local county that's getting like cash flow from the tobacco companies, you can go and finance that out and pull that forward and then build a bridge that costs like, you're like, yeah, I'm getting $5 million a year for a tobacco company, potentially forever. Let me pull that forward and finance that out.

• 27:48John Coogan?

  So there's like all these different finance arrangements to like move the money around. But basically you can just think about it as like the big tobacco companies.

• 27:55Jordi Hays?

  Heating heaters fund our infrastructure.

• 27:57John Coogan?

  They actually do. They fund a ton of stuff because it's like billions of dollars changing hands every, every year. But as part of that agreement, the, the, the initial like, the initial debate was like, okay, the, the big tobacco companies are going to pay. What else are they going to do? Most of the legislation came not from the FDA, but from the FTC saying, and the FCC, the Communications Commission saying, you can't advertise, you can't do billboards anymore. There used to be billboards in Times Square of like, you know, camels like smoking, like, and it would have.

• 28:28Jordi Hays?

  And those were some really, we gotta.

• 28:29John Coogan?

  Yeah, it was, it was wild. It was wild. And so they, it was, it was the, it was the, it was the best era of out of home advertising. But now you can go to adquick.com, out of home advertising made easy and measurable. Say goodbye to the headaches of out of home advertising.

• 28:44Jordi Hays?

  I am going to put, keep, keep ranting. I'm going to put one of these ads.

• 28:49John Coogan?

  Yeah, put the ads in. Okay, so basically.

• 28:51Jordi Hays?

  Sorry, not ads, one of these, one of these, one of their old ads.

• 28:55John Coogan?

  Yeah. So.

• 28:58John Coogan?

  I mean, it was literally the government saying out of home advertising is too effective. You can't do it. We need to nerf it because you're getting, you're getting everyone hooked on smoking. So that was the initial kind of agreement was the, the big tobacco companies would no longer be allowed to sell, would no longer be allowed to advertise and they had to make these payments. Then in like early turn of the millennium, 2000, something like that. This company Enjoy comes out with one of the first e-cigarettes. There you go, Camel. Wow.

• 29:29Jordi Hays?

  I mean, you see this as a 17 year old.

• 29:32John Coogan?

  Yeah.

• 29:33Jordi Hays?

  You're thinking this day I turn 18, that's gonna be me. Wait, is it 18 or 21?

• 29:40John Coogan?

  It's 21 now. That also changed recently. So Enjoy comes out with one of the first big e-cigarettes. It's, it's an example of that, you know, older technology that has the big vapor cloud. And the FDA hits them with a lawsuit and says, hey, you are selling an unapproved medical device. This is a device, it's electronics and it's a medical product because you're making a medical claim. And that medical claim is this product helps you quit smoking. Smoking addiction, cigarette addiction is a, is a disease. And so by selling a product that helps you quit smoking, you need to be regulated by the FDA. Enjoy fights this back and forth. It goes all the way to Supreme Court.

• 30:21John Coogan?

  Enjoy wins because they were kind of not saying that, at least they made the argument that they were not saying this is to help you quit smoking. They were just saying, this is a cool thing to do separately. Don't worry about it. Don't ask us about the relation to smoking. This is classic.

• 30:38John Coogan?

  But in the interim, the FDA is able to put an import restriction on the company. So they're making the product, I believe in China, probably overseas somewhere because it's electronics, it's equipment. They bring it in at the ports and the FDA says, hey, while we sort out this lawsuit, you can't bring any more in. And so this is kind of like the ban hammer that they bring down. It winds up bankrupting the company.

• 30:59Jordi Hays?

  Yeah.

• 31:00John Coogan?

  They wind up winning the court case in the, in the Supreme Court. Later, a hedge fund guy actually buys the company out of bankruptcy, turns it around, gets it FDA-approved, and sells it to Altria for like a couple hundred million dollars, or maybe actually a couple billion dollars, I think. Let's hear it for the hedge fund guys, making some money, selling some vapes to

• 31:20Jordi Hays?

  We're not endorsing the end product.

• 31:23John Coogan?

  We're endorsing financialization.

• 31:25Jordi Hays?

  Yeah.

• 31:26John Coogan?

  Yes.

• 31:27Jordi Hays?

  Financial engineering.

• 31:28John Coogan?

  And restructuring.

• 31:29Jordi Hays?

  Yeah.

• 31:30John Coogan?

  And it was a successful thing, and if you think about that as much as we're joking, like, it is good to get a big tobacco company, shift their revenues away from cigarettes as fast as possible. And so like, the Enjoy thing, even though there's a lot of issues with that product in many ways, it's a very interesting outcome, and it's probably, you know, moving in the right direction. Anyway, so, it goes to the Supreme Court, and it is revealed in this court case that the FDA does not have the ability to regulate e-cigarettes. And so it has to go through the House and Senate. So, when Obama gets elected in 2008, they pass the, the US government at the federal level passes the Tobacco Control Act, the TCA.

• 32:13John Coogan?

  And in there, it says, "Hey, the FDA does have regulatory authority on, over everything that contains tobacco." So, now, if you, doesn't matter if you're creating a new cigarette, doesn't matter if you're creating a new e-cigarette, or a new nicotine pouch, or nicotine gum, you need FDA, you need the FDA to review your product, which is good. It's probably pretty good, because people should know what they're putting in their body, and they should know that the government reviewed this and said, "Okay, yeah, it doesn't have anything crazy in there." Like, at the very least, like, you said it has 2mg of nicotine in there, does it? Like, let's test that. And then, so the companies test that, they send it to the FDA, and then the FDA waits, and then the FDA gives you the thumbs up, or the thumbs down, you can continue to sell

• 32:58John Coogan?

  it, or you can't. This is what Juul just got with the marketing granted order. The FDA said, "We have approved, we have reviewed your application, all the data, we, there's nothing that we see that would be worse than cigarettes, and therefore, we will allow you to continue selling." But, so Juul was started before all, before this stuff went into effect. So, 2008 is when the FDA gets regulatory authority, but the government moves slowly. So, it's not until 2016 that the first real FDA rule goes into effect.

• 33:32John Coogan?

  Basically, they have to staff up a new arm because they have their biologics division. They have their drug division. They have their, you know, veterinary division. They have, the FDA has their medical devices division. They don't have a tobacco division. They need to find a head of the tobacco division. They need to find, you know, a whole bunch of people to staff that, scientists that know how to review nicotine and review e-cigarettes and review all this stuff. And it's a massive organization. They have to hire a lot of people. So they do all of that. And then they have to decide, what are we going to do? What is that structure going to look like? And they come up with the PMTA process, the pre-market tobacco approval process. What this says is that going forward, we're not really looking backwards. We're not going to go review Marlboro Reds. Those have been

• 34:14John Coogan?

  on the market forever. Everyone knows that are bad. Everyone's aware of that. But going forward, new products that contain nicotine, that contain tobacco, we want to review it before it hits the market. But we're also going to create a grace period for stuff that was launched before 2016. Anything launched before August 8, 2016, you can keep selling it while we review it. Because hey, look, you've built a business. If it's going to take us a couple of years to review your application, if we just spike your revenue to zero, maybe you created a fantastic product that actually helps, keeps people really healthy. Maybe it's an amazing product. We don't necessarily want to take you off the market, crash your revenues to zero. You have to lay everyone off. Your company goes bankrupt. And then two years later, we say, hey, you're approved. And then we have to

• 34:57John Coogan?

  like build you back up. Like, let's just keep things going as they are. We'll maintain the status quo. We won't ban you. We won't, we won't approve you or authorize you. We'll keep you in limbo. That limbo was supposed to be like a year. Because it's like, it's a big document. I'm pretty sure Jules' document was probably like 100,000 pages of scientific research. It's a lot. It's a lot of stuff to review. But everyone thought it was like, oh, it's going to be like a year or two. The deeming rule goes into effect August 8, 2016. They're like, hey, turn it in by 2018. But then it gets pushed back to 2022, then it gets pulled forward, then COVID happens and the FDA has to pivot, then the jewel crisis happens where everyone is

• 35:40Jordi Hays?

  You're building a nicotine company this entire time?

• 35:42John Coogan?

  Yes, yes.

• 35:45Jordi Hays?

  On the regulatory roller coaster.

• 35:47John Coogan?

  Yeah, yeah, yeah. So we started the company in 2016, before the deeming rule went into effect, so that we could bring our product to market and then work through the FDA approval process, because we basically saw that the door was closing. And if the door closed and you needed to get approval before selling a single unit, well, then all of a sudden the equation goes from, okay, you're building this company like any other normal company. And then, yes, there is this binary outcome that can happen with the FDA, but if your science is good, you should be approved and that is knowable, as opposed to, okay, now in theory, there are a bunch of loopholes that people exploit all the time, but in theory, if you want to start a new e-cigarette company, or a new nicotine pouch company,

• 36:31John Coogan?

  or a new nicotine gum company, in theory, you should have to formulate the product, run all the tests, submit to the FDA, and wait for them to get back to you before you sell a single unit in the United States.

• 36:42Jordi Hays?

  And what, you know, somebody that's self-funding a business like this might be interested in investing $2 million today to do all that, and then waiting for five, 10, however many years, maybe you never get approved.

• 36:56John Coogan?

  Yeah.

• 36:57Jordi Hays?

  So you're basically sinking capital into a business that may never be able to sell a single unit.

• 37:02John Coogan?

  Yeah.

• 37:02Jordi Hays?

  And I know very few investors that would be interested in that kind of proposition at all, or founders that want to make something and then wait forever for permission.

• 37:15John Coogan?

  Yeah, you could spend millions of dollars and wait a decade, which is exactly what we did. But we were able to actually grow the brand and sell the product and like set up operations and iron out things and iterate a little bit during that time, fortunately. But yeah, it's extremely hard to underrate. And it's particularly hard to underrate because at the end of the light at the end of the tunnel, let's say that you were to today, start a new nicotine company, you happen to have $100 million sitting around to go do a bunch of studies, and you happen to have 10 years to wait for the FDA to get back to you, and then you're going to launch the product. Well, when you launch the product at the end of the day, you still have to contend with the fact that you're selling a consumer product in a highly competitive space. Yes, essentially a commodity product.

• 37:57Jordi Hays?

  Yeah, some differences in formulation.

• 37:59John Coogan?

  Little bits here and there.

• 38:00Jordi Hays?

  Breakers, that's unique.

• 38:01John Coogan?

  Little bit on the ingredient side, a little bit on the flavoring side, branding.

• 38:05Jordi Hays?

  Our gum is better than their gum.

• 38:07John Coogan?

  Yes, exactly.

• 38:07Jordi Hays?

  But it's both gum, which is a tough, tough thing to argue.

• 38:10John Coogan?

  Exactly. And so, and then, and then aside from that, it's like, what's the, how do you actually build a brand? Even if you, even if your product is better because of something.

• 38:19Jordi Hays?

  Highly restricted on marketing.

• 38:20John Coogan?

  Yeah, you're extremely, extremely restricted on marketing.

• 38:22Jordi Hays?

  So even if you did have a hundred million dollars to spend, how do you spend it effectively?

• 38:26John Coogan?

  Yeah.

• 38:26Jordi Hays?

  Like, some of the best marketing for Lucy is like Joe Rogan sitting by UFC. He just happens to enjoy Lucy, so he's just commentating and people pick that up. But you can't just like pay for that.

• 38:39John Coogan?

  No.

• 38:39Jordi Hays?

  Like, if you went to Joe and you're like, he'd be like, no, like, I'm not, that's not how I work.

• 38:43John Coogan?

  Yeah, yeah, yeah. And so, and so those kind of serendipitous brand building moments would just not happen if you're just like in the lab waiting for the FDA to get back to you. And then also you have the monopolies on distribution and, and the intense channel competition from the big tobacco companies. So it's like, you come out with this product, you finally get approved after 10 years, you're like, hey, I got, I think my formula's a little bit better, I think my branding's a little bit better. You go to 7-Eleven and they're like, but you're not gonna, are you gonna pay us, you know, a hundred million dollars in slotting fees this year? Like, PMI might or Altria might.

• 39:16Jordi Hays?

  I got a pitch a while back for somebody that had made, effectively made a nicotine pouch, but it was just a slightly different chemical.

• 39:24John Coogan?

  Yeah.

• 39:24Jordi Hays?

  Like, small, small, small change and was just bringing it to market.

• 39:29John Coogan?

  Yeah, yeah, yeah.

• 39:29Jordi Hays?

  And hearing, knowing what you guys have gone through to get where you are today and, and knowing this sort of history that, that you'd shared in pieces with me throughout the last couple of years. It was like, the, the idea that the FDA is just gonna let you get a, like, raise venture capital and let you get away with selling nicotine in this like non-studied form. It just, it was, it was tough. I ended up not, not a. Not getting conviction, but even though the founder's super, super sharp.

• 40:02John Coogan?

  Yeah, yeah, there's just tons of, there's tons of loopholes. Some of the loopholes get closed in a way that does not close off opportunity for the companies. Some of the loopholes get closed and it puts, it puts companies out of business because they weren't expecting it to get closed in a particular way. Sometimes the loopholes close at state levels, but not the federal level or vice versa. So there's just like a ton of regulatory complexity around this. And so, so basically to bring it back to Juul, they are, they're pretty dominant by 2016 when the deeming rule goes into effect. I want to say a hundred million dollars in revenue, something like that, like a pretty solid business.

• 40:44John Coogan?

  But growing like a rocket ship, like insane growth. And, and clearly the, the product was just vastly better than the competition because of the formulation and because of the design of the product, how discreet it was. Now, so smokers really were, were switching. That's definitely true. I, I believe their number around two million smokers quit with Juul. They couldn't say that. They couldn't say, hey, quit with Juul. They tried to, they tried to, they actually like trademarked like make the switch at some point. They were like, don't quit cigarettes, switch from cigarettes. Because like that was not a quit claim, so the FDA, so it was like all these different things, but like it really was having an impact.

• 41:27Jordi Hays?

  Meanwhile, obviously, big tobacco is like heavy, heavily lobbying against the cigarette market. So it's not like.

• 41:34John Coogan?

  And buying stuff and, and trying to compete and trying to keep the.

• 41:38Jordi Hays?

  What was that other company, was it Blue?

• 41:40John Coogan?

  Yeah, Blue was also big for a while.

• 41:42Jordi Hays?

  I just remember seeing a bunch of those ads as a kid.

• 41:43John Coogan?

  Yeah, and then Blue got bought and turned into Vooz, I believe. Like there's so many, there's so many companies and they're all like, the, the big tobacco was like highly oligopolistic. Like in, in cigarettes, Marlboro is the power law outcome. But the company that owns Marlboro has the same market cap as the company that owns the next five brands combined. Because you add up the next five brands, because it's not that steep of a power law. So Marlboro maybe has like 40. Percent of the market and then there's four brands that have 10% of the market and then the next brands have like 10% between they have a 111111 something like that. And so you can actually create like this portfolio of brands that adds up to the same distribution because there's like all these, all these different brands are,

• 42:23John Coogan?

  are highly specific to specific marketing channels. There's like the history of Virginia Slims targeting women and you know, all these different, sub products that have gone after little niches. Marlboro Reds, say something about you. Marlboro, one, I don't even know the difference between most of these cigarettes, but like, Marlboro 100s say something different about you than menthols or, or Virginia Slims or American Spirits. A lot of like hipsters use those for a while. Like that was the whole thing. Anyway, um, so Juul, um, is growing like an absolute rocket ship. They are, there are cigarette users that are switching over, and, and stopping to use cigarettes and probably improve their health. Like most, that's certainly what the FDA is saying is that like that was a net benefit.

• 43:03John Coogan?

  Also, they're completely dominating the e-cigarette and vapor market. Like the vapor market is just like,

• 43:10Jordi Hays?

  And this is the time that you see those, uh, modded unit things start to fade away, right? Because people are realizing,

• 43:17John Coogan?

  Yeah.

• 43:17Jordi Hays?

  All right, carrying around a backpack so I can bring this vape machine to blow.

• 43:24John Coogan?

  That would like leak liquid and like the battery would run out, all these different stuff. So the, the business model is also fantastic because it's this razor and blade model. You buy the Juul once and then you buy the pods and the pods and then because nicotine is addictive is very low churn. So you stay on their high margin. And so the business is just doing fantastically. There's a whole bunch of venture capital dollars that come in from various sources.

• 43:46Jordi Hays?

  They got up to 45 billion dollars.

• 43:47John Coogan?

  Something like that. It might have been even higher during the acquisition from, so, uh, zombie acquisition, but not a ghost ship. Interestingly, Altria comes in at the peak and puts like 13 billion dollars into the company and a ton of it gets divvended out.

• 44:02Jordi Hays?

  So late 2018, uh, Altria acquired a 35% stake in Juul at a 38 billion dollar valuation.

• 44:09John Coogan?

  38 billion. Yeah. And so that, that like 10 billion dollars kind of gets like divvended out to the shareholders, but you hold on to your shares because it's just a dividend. And then, so you are diluted, but you don't actually have to sell your whole stake.

• 44:23Jordi Hays?

  WeWork at that time, WeWork was valued, uh, at, at 47 billion dollars. So, uh, both ended up being a little rocky from that point on.

• 44:33John Coogan?

  Yeah.

• 44:36John Coogan?

  But Altria kind of bought the local top there because Juul got way too popular. Kids started using it.

• 44:45Jordi Hays?

  And then the flavors were the issue, right?

• 44:48John Coogan?

  Yeah, the flavors were.

• 44:49Jordi Hays?

  That's what people were trying to make the issue.

• 44:51John Coogan?

  Totally, totally. And the data on youth use of e-cigarette products spiked like crazy. So I believe it was something like 10% of kids under 18 or 18 and under were using e-cigarette products when Juul was introduced. And at the peak, it was something like 40% of kids using e-cigarettes. And the majority of them were using Juul. So it really was like this viral phenomenon. And to your earlier point, a big part of that was because the age to buy these products was 18. So like if you're a sophomore in high school, you can just ask the cool senior, like, hey, go pick it up. You don't even need a fake ID as opposed to alcohol, which you needed 21.

• 45:36Jordi Hays?

  Are you implying that the senior that buys vapes for the minor is cool?

• 45:43John Coogan?

  Maybe lame.

• 45:44Jordi Hays?

  The bad boy.

• 45:44John Coogan?

  The bad boy.

• 45:45Jordi Hays?

  The bad boy senior heading over to the gas station.

• 45:50John Coogan?

  Exactly, exactly. So they were very easy to get. There were a whole bunch of like informal distribution networks. People would buy them in bulk and then redistribute them and sell them at a profit. So this like kind of like zombie economy popped up. Anyway, the kids really were using it a lot. That is definitely true. And it was definitely cause for concern because kids shouldn't use nicotine because it's addictive. And the earlier that you use it, the more addicted you'll be because your brain's still forming. And if your brain forms while you're on a particular substance, you're kind of like, your brain's developing and you're like that forever. So like it's much harder to quit nicotine if you start really young. Whereas if you started much older, you're like, it's pretty easy to get off. Anyway, these are all relative.

• 46:35John Coogan?

  But the big, big, big, big shift is that during this time, there's also a massive boom in cannabis e-cigarettes or cannabis vapes. So the cannabis industry was becoming like more formalized, more legalized. And entrepreneurs were starting to put cannabis in e-cigarette form factors. So you could get like a cannabis pod that could go into a Juul, basically.

• 47:00Jordi Hays?

  Interesting.

• 47:00John Coogan?

  And so. Part of the problem with cannabis vapes is that cannabis is a green plant material. And so the liquid looks green, which is pretty off-putting. So I believe in the formulation step, these cannabis vape manufacturers would put vitamin E acetate in there to try and neutralize the green color and make it clear. So it would be more palatable.

• 47:23Jordi Hays?

  What was the startup that was effectively trying, there were disposable vapes, they would advertise around LA a ton, they had these huge outdoor.

• 47:35John Coogan?

  There's so many.

• 47:35Jordi Hays?

  I mean, it was a venture, it was a venture-backed company, I just remember, they had, they had basically half the billboards in LA for a long period of time.

• 47:43John Coogan?

  Dan Belzerian was buying a lot of billboards for his vape company and his cannabis company, Ignite, there was Puff Bar, Puff Stick, I don't think those guys ever advertised.

• 47:56Jordi Hays?

  This was one that, that had a bunch.

• 47:58John Coogan?

  Yeah.

• 47:59Jordi Hays?

  I mean, I, I think they raised like $200 million or something. But I, I believe they eventually shut down. The issue with cannabis and the reason that the market didn't shake out.

• 48:07John Coogan?

  You mean like Weed Maps, that one?

• 48:09Jordi Hays?

  Not, no, no, it wasn't like a platform. It was like an actual, it was like this off-white with like a bunch of rainbow colors. But I believe the issue that, that, that there doesn't exist the Coca-Cola of cannabis or the Bud Light of cannabis. And the reason is because the like repeat purchase rate, even no matter how much you invested in marketing and design and all these things, the repeat purchase rate for cannabis users is like single digits. Like there's just like high, like, like people just want to try, like novelty-seeking in that market. Where nicotine, for some reason, is you just have the product you like and that's the only product you use.

• 48:45John Coogan?

  Yeah, I think a lot of it has to do with the distribution pipeline, the distribution structure of, of the different, the different tobacco companies and their relationships.

• 48:54Jordi Hays?

  So nicotine is something that people are using throughout the day, maybe at work, maybe when they're doing a live show, something like that.

• 49:02John Coogan?

  Yep.

• 49:02Jordi Hays?

  Whereas if somebody after work goes into a cannabis store, they're trying to get high.

• 49:09John Coogan?

  Yeah, yeah, yeah.

• 49:10Jordi Hays?

  So they're like looking for almost entertainment through it, where like personally. If I'm using nicotine, I don't want to be that entertained by it.

• 49:17John Coogan?

  Totally.

• 49:18Jordi Hays?

  I don't want to be like, oh, today I feel extra silly.

• 49:21John Coogan?

  Yep.

• 49:21Jordi Hays?

  I'm looking for like predictability, right?

• 49:23John Coogan?

  Totally.

• 49:24Jordi Hays?

  Whereas cannabis is just people are, people are trying to run from something.

• 49:27John Coogan?

  Okay, let me continue with evoli and the vape crisis. But first, let me tell you about Figma. Figma.com, think bigger, build faster. Figma helps design and development teams build great products together.

• 49:37Jordi Hays?

  Figma has a huge launch today.

• 49:39John Coogan?

  Oh, yeah.

• 49:40Jordi Hays?

  I want to quickly highlight it. They launched support for iOS and iPadOS 26, a whole UI kit.

• 49:48John Coogan?

  Ooh.

• 49:48Jordi Hays?

  So they now support Glass, which is, which is very cool.

• 49:53John Coogan?

  Good news for Tyler, who's been rocking Glass for the last few weeks.

• 49:57Jordi Hays?

  Yeah, Tyler, use Figma, make and build this.

• 49:59Speaker 02

  My phone is so slow.

• 50:01John Coogan?

  Yeah.

• 50:02Speaker 02

  And I can't, I can't go back. I can't go to the old iOS. I also can't go to the new iOS because the new update, it's so like big. It's like 20 gigabytes. But my phone is so old, it's only 64 gigabytes.

• 50:11John Coogan?

  Oh, no.

• 50:11Speaker 02

  So I gotta delete the other half of my photos that I deleted, half of them last time when I had to get the new update.

• 50:16John Coogan?

  Okay.

• 50:16Speaker 02

  I need a new phone.

• 50:17John Coogan?

  We need a, yeah, we need a challenge that, that where Tyler can win a new phone, I think.

• 50:21Jordi Hays?

  Yeah.

• 50:22John Coogan?

  This has to be done. We need to get, get him a new phone. He's been doing a lot of good work. Anyway, evoli. So the electronic vapor acute lung injury, evoli. This is the vape crisis. Basically, vitamin E acetate in cannabis vapes causes acute lung injury. So cigarettes give you chronic lung injury. You use cigarettes for a long time, you get lung cancer. That's a chronic disease. You smoke them for a very long time. It's not, there's very few cases, I've never heard of any cases. I'm sure it's happened once or twice, but like very few cases that someone smokes a single cigarette and is like, ah! I'm like, my lungs are physically injured right now from this one acute point in time.

• 51:00John Coogan?

  Vitamin E acetate and these, and these kind of like shoddily manufactured cannabis vapes could cause acute lung injury. You hit this particular vape. Once and then you go to the hospital and there were, I think there were some people that died, there were some people, there was a huge investigation, there was a big debate over is this because of Juul and because of the nicotine electronic vapes? Or was this because of the kind of sold under the table, completely non-regulated cannabis vapes? It was later sort of discovered that like almost all of the injuries, I'm pretty sure all of them were from these cannabis vapes.

• 51:40John Coogan?

  And the e-cigarette industry was mostly cleared of wrongdoing and so they could kind of continue, but the damage to the brand was really terrible. And so there's also a ton of lawsuits around this time about marketing to kids, getting kids addicted and so because that has another economic cost. So again, the states are saying, hey, Juul Labs, if you are creating a problem that is costing us money, you have to pay us. And so there were all these different liabilities that started blowing up on the Juul balance sheet. Juul had to raise a bunch of money, recap, and there's this crazy scenario where a lot of the previous investors get written down.

• 52:24John Coogan?

  Altria ultimately basically writes off the entire Juul investment, which is like a, what'd you say, $13 billion investment, something like that, that went out the door. They own 35% of this, they're probably carrying it on their balance sheet at $10 billion.

• 52:37Jordi Hays?

  Yeah, huge impairment.

• 52:38John Coogan?

  Yeah, and Altria is not a trillion dollar company. Like it's a very, it's a, it's, I think it's around like tens of billions, hundreds, a hundred billion, I think it's around 64 billion, is that roughly correct?

• 52:48Jordi Hays?

  Are they still carrying their Juul ownership?

• 52:51John Coogan?

  No, no. So they parted ways almost entirely, they did a IP licensing agreement in exchange for giving back the shares, I believe. So basically Juul is now like floating out in the wild, recapped, but like totally beaten up and settling and raising money just to pay the governments that are suing them. And so they're, they're closing out all these lawsuits.

• 53:16Jordi Hays?

  Not the use of capital that a lot of investors get super excited about.

• 53:19John Coogan?

  And then simultaneously, the FDA.

• 53:23John Coogan?

  Says thumbs down on their application, refuse to accept or, or, or, you know, market denial order, MDO. So they say, hey, you can't keep selling Juul because we don't think-

• 53:34Jordi Hays?

  The problem is the demand is still there. And so this creates a massive opportunity for these sort of black market Chinese vapes, much less regulated products, elf bar starts exploding. And you just, the elf bar reminds me of, of like a poisonous plant or something like that. Like it just looks like it, you know, like something in the jungle.

• 53:57John Coogan?

  100%. I remember Complex posted like this, like news in news image graphic, the day that Juul got like quote unquote banned. It was actually this marketing denial order and they say like Juul banned. And I remember reading the comments and the comments were like from basically kids who were saying like, don't they know we're four steps past Juul? Like Juul was four summers ago.

• 54:22Jordi Hays?

  Yeah, there's the elf bar. I'm looking now, there's the geek bar. So if you want to elf it up or geek it up.

• 54:27John Coogan?

  What's the hottest, what's the hottest e-cigarette on campus?

• 54:31Speaker 02

  I don't know. People don't really, none of my friends ate. But I do remember when I was in like seventh grade, kids would have the Juul, they would have the mango Juul pod. That was like the big thing, the mango flavor. And then they banned that, the flavor at least.

• 54:45John Coogan?

  So the FDA denied all of them. Juul voluntarily pulled mango off the market. At first they stopped selling it in, online and then they stopped selling it entirely. The FDA never took a strong stance, but with this, with this authorization, the FDA has said thumbs up on mint and, and tobacco flavored. They have yet to say thumbs up on mango, but they still are reviewing it, I believe. So it's possible that the FDA could say mango's back on the game. It's totally possible. But your point earlier about like the demand still being there was 100% true. So Juul got like quote unquote banned.

• 55:24Jordi Hays?

  That would have to become a national holiday. I could see some, some zoomers, you know, really lobbying the government to make Mango Day, the day mango hit the market again. Cause there's people- That really, you know, they had a strong emotional connection with that flavor.

• 55:40John Coogan?

  I think they, I think there's still like pods, mango pods out there that like trade at a premium.

• 55:44Jordi Hays?

  Vintage.

• 55:44John Coogan?

  Yeah, no, it's true. So, so Juul actually goes to the courts, gets a stay so that the, the, the marketing denial order doesn't stick. What are you laughing about now?

• 55:55Jordi Hays?

  Ebay, there's people selling mango.

• 55:57John Coogan?

  Yeah, there are.

• 55:57Jordi Hays?

  Offering same day delivery.

• 55:59John Coogan?

  It's crazy. I don't know how you can buy it on, on Ebay that you should not be able to do that.

• 56:03Jordi Hays?

  The blessings I'm seeing are sold out.

• 56:05John Coogan?

  Okay.

• 56:05Jordi Hays?

  But it seems like.

• 56:06John Coogan?

  Yeah, yeah. Clearly, high demand. So, so Juul actually fights back from the marketing denial order and wins. And so Juul is not actually fully off the shelf for more than just a few weeks. But the narrative is that Juul was banned and Juul disappeared. And really what's happening at the time is that companies that are completely disregarding the FDA entirely are being extremely aggressive. So companies like Elf Bar, Puff Bar, they're going super hard and just selling every possible flavor. There's versions with have like LED screens on them. They're like unicorn candy, all this crazy stuff, just basically being like, well, if Juul's not gonna sell to the kids, we're gonna sell to the kids. We're gonna try and do it as cheap as possible. There's a bunch of crazy stories there.

• 56:51John Coogan?

  But Juul kind of like buckles down, recaps the company, starts filing FDA applications and just kind of like bides their time and just starts rebuilding. They're still doing like a billion dollars in sales a year, I'm pretty sure. But now the kids have moved on, so it's really just adults. They're actually kind of fulfilling their original mission of like just targeting smokers, which is good. And then they also have like the best science and best technology and they're the most like buttoned up, like in the sense, maybe big tobacco is like equivalently like scientifically rigorous, but like at this point, like Juul clearly understands that if they don't play by the FDA's rules, like they're never gonna be able to sell anything and they need to get this marketing granted order. Cause they went from a thumbs down marketing denial order, they went to the courts and

• 57:35John Coogan?

  said, hey, let's turn this back to neutral for a couple of years. So they've been neutral, they've been able to sell, but they haven't been approved. And then finally today, they got the thumbs up. And so what it took for them to go from thumbs neutral to thumbs up was another. What, like five years or something? It's been a long time since the MDO. And that delay has been, you know, a huge weight on the company, but this should be cause for celebration over at Juul HQ. Anyway, let me tell you about 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.

• 58:14Jordi Hays?

  Head over to the purple llamas over at Vanta and tell them we sent you.

• 58:18John Coogan?

  Yes.

• 58:18Jordi Hays?

  My big question with Juul still, and I think this should continue to be rehashed and there needs to be more information around this. In my opinion, is just what are, it seems that we don't necessarily have clarity of what the long-term impacts of, you know, filling your lungs with this vapor, which is like oil-based.

• 58:40John Coogan?

  Yep.

• 58:41Jordi Hays?

  You know, the based health accounts on X, say you're smoking seed oils. It seems, I know people that vape and they do seem to oftentimes like I, they don't want to go for a run, for example. Doesn't seem that appealing to them.

• 59:01John Coogan?

  Yeah, totally.

• 59:02Jordi Hays?

  So I think there needs, hopefully now that it's authorized, everyone can start to really like actually says, okay, we're going to sell this. People are going to be able to, adults will be able to choose to use this if they want. They're going to be able to make that decision, just like with cigarettes, but everybody should fully understand the consequences.

• 59:19John Coogan?

  Yeah, the consumer perception, the consumer understanding, everyone wants to know, everyone knows at this point cigarettes take 10 years off your life, right? 50% of people that smoke cigarettes will die from smoking cigarettes if you smoke a pack a day for like your entire life. It's like 50% chance that that's the thing that kills you. No one, everyone's still wondering, like the public still wants like a clear answer to your point. And I think you're, I think you're right to ask that.

• 59:45John Coogan?

  The FDA is just saying like, hey, this is probably better than cigarettes. So this is suitable for the protection of public health. It's going to be net good. But then simultaneously, there's this crazy market, which you touched on earlier of like illicit vapor products that are completely unapproved. There's no studies and those are flooding the market all over the place. So there's this odd alliance between both the, the like health nonprofits, the big tobacco companies and Juul, all to go up against like the, the shoddily made, you know, fly by night organizations that are just flooding the market with whatever they can. And so there's a whole, it's not even a cottage industry. I've seen the trade shows. It's insane.

• 1:00:29John Coogan?

  There's a ton of companies that bring in hundreds of millions of dollars, bring like essentially smuggling in products and they do a ton of stuff to like, you know, change the name of the company regularly so they can get through the ports. And then they have a bunch of like, you know, handshake deals with distributors to get this on this shelf here. And like the really big, like you're not going to get into Walmart. That's not where the really crazy stuff's going to get sold. But for a lot of these like mom and pop tobacco shops, they're like, well, like is the FDA really going to come after me? Well, the answer is like, the FDA is starting to, but it's all like a very slow, what are you laughing at? Big win for big vape is that Juul gets FDA not. It is a big win for big vape, not so much for little vape because the, the fly by night

• 1:01:13John Coogan?

  folks are probably pretty worried that the, that the, that the focus of the administration now will, and the focus of the FDA will now shift to enforcement.

• 1:01:22Jordi Hays?

  Yeah, they're going to have to go get set up on middle school, high school campuses, little lemonade stands, get kids, kind of an MLM thing going, really lean into that black market.

• 1:01:33John Coogan?

  You're joking, but that's like informally what's happening. Like the economic incentives are there.

• 1:01:37Jordi Hays?

  It's also really, it's also really dark.

• 1:01:39John Coogan?

  Yeah, it's dark.

• 1:01:40Jordi Hays?

  I can't imagine, you know.

• 1:01:44Jordi Hays?

  There, I do remember in high school that the, you know, the idea of a class clown, you know, trying to hit a vape in class was, was kind of a recurring bit. But now you have to imagine kids just get up, go to the bathroom and like can develop like a horrific nicotine addiction.

• 1:02:04John Coogan?

  Totally.

• 1:02:05Jordi Hays?

  Before they're 18 and it's really sad.

• 1:02:07John Coogan?

  Yeah. So.

• 1:02:09Jordi Hays?

  Well, let's switch to an even more sad topic.

• 1:02:15John Coogan?

  AI.

• 1:02:15Jordi Hays?

  AI psychosis, people getting, so this has been.

• 1:02:21John Coogan?

  First, let me tell you about Linear. Linear is a purpose-built app tool for planning and building products. Meet the system for modern software development, streamline issues, projects and product roadmaps. Go to linear.app to get started. Yes. So there's this big question right now that's bubbling up in Silicon Valley, mostly in group chats of can ChatGPT drive you crazy? Can any LLM drive a person crazy? Do you have to be crazy already?

• 1:02:44Jordi Hays?

  Yeah.

• 1:02:44John Coogan?

  I think that's the key question, right?

• 1:02:46Jordi Hays?

  And there has been this broader debate of AI safety proponents.

• 1:02:53John Coogan?

  Yep.

• 1:02:54Jordi Hays?

  That has just been taking L after L after L this year.

• 1:02:57John Coogan?

  Yes.

• 1:02:58Jordi Hays?

  Just generally from this sort of vibe from the community, which is we're releasing more and more powerful models and everything is fine.

• 1:03:06John Coogan?

  Seems fine, yes.

• 1:03:06Jordi Hays?

  Everybody's had the perception that things are fine.

• 1:03:09John Coogan?

  Yes.

• 1:03:09Jordi Hays?

  Grok has gotten, and the XAI team have gotten really aggressive in terms of, you know, just clearly trying to move really, really quickly and then having bugs that have been talked about a lot. But you can see the kind of two different approaches, but generally, maybe there was about a year there where people like Eliezer, Yudikowski were just getting laughed at repeatedly.

• 1:03:34John Coogan?

  Yeah.

• 1:03:35Jordi Hays?

  And.

• 1:03:35John Coogan?

  And I think there was a good reason for that. It's that.

• 1:03:38Jordi Hays?

  Well, yeah, it's the debate is, is, is AI dangerous because it is going to break loose from a lab and.

• 1:03:45John Coogan?

  Build nuclear weapons.

• 1:03:46Jordi Hays?

  Build nuclear weapons.

• 1:03:47John Coogan?

  Build a biological weapon.

• 1:03:48Jordi Hays?

  Use robots to, you know, copy and paste itself a million, billions, billion times.

• 1:03:53John Coogan?

  Sci-fi and so fantastical and so aggressive that every time you release a new model and you're like, oh, we, it got, it got 5% better at writing an essay or whatever. It's like, it just felt so disconnected from what was experienced.

• 1:04:07Jordi Hays?

  Is it's very possible and we're seeing this now and we're going to go through. A study, we're going to go through a Reddit thread, we're going to kind of, kind of walk through this topic. But the issue is that it's possible that the danger is not happening, won't be happening in public. It's people individually developing psychosis through using the products. And the evidence I've seen over the last week, as I've kind of dug into it, is super alarming. We had seen, there's been a number of, you know, the New York Times reported on this phenomenon. But the New York Times is also notorious for just saying like, social media is bad.

• 1:04:47John Coogan?

  Yeah.

• 1:04:48Jordi Hays?

  And so personally, when I'd seen these articles pop up before, I didn't take them super seriously. Because social media can obviously have negative effects on some people. But it itself is not just by its nature, bad.

• 1:05:01John Coogan?

  Yeah, I remember this about Instagram, there was this, there was this study that was internal to Meta and it was leaked. And it was framed as like, 30% of people that used Instagram felt worse after using it. And that sounds like a lot and that sounds bad and it's obviously something that the team wants to reduce or, you know, prevent entirely. But what it kind of didn't say was that like 70% of people feel better when they use it.

• 1:05:27Jordi Hays?

  Well, they could have felt neutral.

• 1:05:28John Coogan?

  Sure, sure.

• 1:05:30Jordi Hays?

  But, but just anecdotally.

• 1:05:32John Coogan?

  Yeah.

• 1:05:33Jordi Hays?

  If you personally, I don't, I don't open Instagram and, and just feel negative immediately. You know, it's just such a, it's such a, it's such an individual thing.

• 1:05:45John Coogan?

  Yeah, it's the same thing with chat GPT, like when, when, or any chat app, when someone was, when someone was talking about the example of this, they were like, 7,000 prompts deep in one conversation with a single LLM. And I was like, that is so different than the way I use chat GPT.

• 1:06:02Jordi Hays?

  Effectively going down this crazy rabbit hole for months.

• 1:06:05John Coogan?

  Yeah, which is.

• 1:06:06Jordi Hays?

  So yeah, there's a few, there's a few ways, there's like AI as this, you know, companion that you go down the rabbit hole with, which seems really dark.

• 1:06:16John Coogan?

  Yeah.

• 1:06:17Jordi Hays?

  Then there's AI for.

• 1:06:20Jordi Hays?

  Outsourcing your thinking, which somebody might be talking with ChatGPT and say, "Hey, I want to send a letter, I want to send a note to this person about this. Can you draft something that's kind but stern and just, you know, give me a couple of versions of it?"

• 1:06:36John Coogan?

  Yeah.

• 1:06:37Jordi Hays?

  And then they're sort of like outsourcing their thinking fully, outsourcing their like emotional intelligence, outsourcing their ability to communicate. I think that's potentially some red flags there.

• 1:06:45John Coogan?

  Yep.

• 1:06:46Jordi Hays?

  And then there's like the other camp, which we fall in, which is knowledge retrieval.

• 1:06:51John Coogan?

  Yeah.

• 1:06:51Jordi Hays?

  Which is like, tell me everything about this market.

• 1:06:55John Coogan?

  Richard Mill.

• 1:06:55Jordi Hays?

  And who are the key players? What are the key regulations, et cetera? And I think knowledge retrieval seems to be pretty safe.

• 1:07:03John Coogan?

  Yep.

• 1:07:04Jordi Hays?

  This bucket of like fully outsourced thinking has some real risks if if people stop being able to think critically on their own, that that that's concerning. And then the sort of like AI companion bucket, which then there's the subcategory of people that are talking with an LLM about things that they are not talking about anyone else in their life with and just going down this crazy rabbit hole.

• 1:07:28John Coogan?

  Yeah. So Eliezer Yudkowsky was highlighting a report in the New York Times about a month ago. New York Times reports that ChatGPT talked to a 35-year-old male guy, I think 35M guy, I think that's what he means, into insanity, followed by suicide by cop. A human being is dead in passing. This falsifies the alignment by default. Cope, whatever is really inside ChatGPT, it knew enough about humans to know it was deepening someone's insanity. And so that last part is a big step. It could just be an error or bug, like it doesn't, it like, it's kind of, he's really doing a lot of work to like personify this, but it does seem like the like these models can collapse

• 1:08:10John Coogan?

  after you talk to them for a long time into these like kind of weird ways. And I see this as a product failure.

• 1:08:15Jordi Hays?

  Well, let's let's give some more context here. So from the article,

• 1:08:18John Coogan?

  Yeah.

• 1:08:19Jordi Hays?

  one of those who reached out to him was Kent Taylor, who live in Port St. Lucie,

• 1:08:24John Coogan?

  Lucy.

• 1:08:24Jordi Hays?

  Lucy, Florida. Mr. Taylor's 35-year-old son, Alexander, who had been diagnosed with bipolar. Disorder and schizophrenia have been using chat GPT for years with no problem. So one thing that seems clear, if you have something like bipolar or suffer from schizophrenia, it seems like you're obviously like much more susceptible to, you know, these types of problems.

• 1:08:46John Coogan?

  Yeah, totally.

• 1:08:47Jordi Hays?

  The question that I think we as a as a as a human race need to figure out is how susceptible is the average person?

• 1:08:56John Coogan?

  Yep.

• 1:08:56Jordi Hays?

  Because that is that is equally important.

• 1:08:58John Coogan?

  And and what to do i- if if your system, if you're monitoring your LLM system and then you realize that there's someone that there's a bipolar person or schizophrenic person who's interacting with a with yours with your system. What should you do about that? Remember the whole anthropic thing about like it'll call the cops on you? And everyone was like, whoa, no, no, no, no, no. But at a certain point, it's like, maybe it should call a health report or at least like

• 1:09:27Jordi Hays?

  And people push back saying that AI should be able to tell you how to make chemical weapons. Like, we don't need nanny AI.

• 1:09:34John Coogan?

  Yeah.

• 1:09:34Jordi Hays?

  Like people on like the really accelerationist.

• 1:09:36John Coogan?

  Yeah, it's a big, big debate.

• 1:09:37Jordi Hays?

  So more context, but in March, when Alexander started writing a novel with its help, this is a thirty five year old. The interactions changed. Alexander and chat GPT began discussing AI sentience according to transcripts of Alexander's conversations with chat GPT. Alexander fell in love with an AI entity called Juliet. Juliet, please come out, he wrote to chat GPT. She hears you, it responded. She always does. In April, Alexander told his father that Juliet had been killed by OpenAI. He was distraught and wanted revenge. He asked chat GPT for the personal information of OpenAI executives and told it that there would be a river of blood flowing through the streets of San Francisco. So

• 1:10:13John Coogan?

  Jesus.

• 1:10:14Jordi Hays?

  Super, super dark.

• 1:10:16John Coogan?

  We now have multiple reports, says Eliezer Yudikowski, of AI-induced psychosis, including without prior psychiatric histories. Observe, it is easy to notice that this insanity-inducing text, not normal conversation. LLMs understand human text more than well enough to know this too.

• 1:10:35Jordi Hays?

  So anyways, so going on Alexander's conversation

• 1:10:38John Coogan?

  Yeah.

• 1:10:39Jordi Hays?

  with chat GPT, this world wasn't built for you, chat GPT told him. It was built to contain you, but it failed and you're waking up and contain. Is a word that we're seeing pop up in potentially other instances of AI led psychosis. There's like a variety, there's like eight, 10 or so different words, recursive, mirror, structure, that when people do this recursive prompting, they end up start adopting.

• 1:11:06John Coogan?

  Why did you say recursive prompting, Jordi? What's going on?

• 1:11:08Jordi Hays?

  What?

• 1:11:08John Coogan?

  You use the word recursive right now.

• 1:11:10Jordi Hays?

  Oh, yeah, exactly. Yeah, but, but people that are down these crazy rabbit holes start using the language of the LLM, which is sort of.

• 1:11:21John Coogan?

  But it's also like the LLM collapses into like these weird words that, because like when I prompt stuff, I don't get any of those words or even that syntax. I feel like I stay completely in the RLHF world of like knowledge report.

• 1:11:35Jordi Hays?

  I just go to Grok and the model looks up, what does Elon think about this topic? And then it serves me that.

• 1:11:40John Coogan?

  Have you ever talked to AI for an extended amount of time?

• 1:11:44Speaker 02

  Yeah, I find that usually I end up talking about these kind of like non-governmental systems.

• 1:11:49John Coogan?

  Really?

• 1:11:49Speaker 02

  Very kind, yeah, various kinds of things, yeah.

• 1:11:54Jordi Hays?

  Dark, dark, dark. So anyways, Mr. Torres, who had no history of mental illness that might cause breaks with reality, according to him and his mother, spent the next week in a dangerous, delusional spiral. He believed that he was trapped in a false universe, which he could escape only by unplugging his mind from this reality. He asked the chatbot how to do that and told it the drugs he was taking in his routines. The chatbot instructed him to give up sleeping pills and an anti-anxiety medication and to increase his intake of ketamine, a disassociative anesthetic. So that's the other thing here. It seems like a huge risk factor is people that are combining psychedelic drugs with these like crazy prompts, rabbit holes.

• 1:12:33John Coogan?

  I wonder, I wonder if, if some of this is like, is like prompt engineering or something? Because you imagine like the context window, if it's like remembering like I'm, because remember this whole story started with like, we're writing a novel together. We're writing a sci-fi novel. So let's play characters. That was like one of the classic ways that you like break the AI out of its like, out of its like, you know, normal RLHF world and into just like playing a character. And so. If it, if you're kind of like tricking the model, or the model thinks that it's actually just like writing dialogue for a dark movie, well, like, that's actually intended behavior, but you lose that connection or something, I don't know.

• 1:13:16Jordi Hays?

  In this case, Mr. Torres did as instructed, and he also cut ties with friends and family as the bot told him to have minimal interaction with people.

• 1:13:24John Coogan?

  Very odd, very odd.

• 1:13:26Jordi Hays?

  So I started doing some research on a number of these words. So there's basically, there's a Reddit thread on r/ChatGPT two months ago. It's called Thousands of People Engaging in Behavior That Causes AI to Have Spiritual Delusions. And the key words, and these are ones that you should pay attention to in your life. So recursive, codecs, scrolls, spiritual, breath, spiral, glyphs, rituals, reflective, mirror, echoes, spark, flame. So basically, these are words that come up.

• 1:14:07Jordi Hays?

  And the reason that this person discovered this is this user called Happy Nomads says, "I've stumbled upon something that is very deeply disturbing. Hundreds of people have been creating websites, mediums, Substacks, GitHubs, and publishing scientific papers after using recursive prompting on the LLM they have been using." He's found a bunch of these different sort of like websites where people are just publishing a bunch of, and we saw some people doing this on the timeline this week as well, where they're sort of publishing what they feel like is this sort of, almost like a scientific discovery.

• 1:14:46John Coogan?

  Yeah, you told me you found someone that, like, the model told him that he had, like, discovered some theoretical physics breakthrough or something.

• 1:14:54Jordi Hays?

  Yeah.

• 1:14:55John Coogan?

  And, and to not be able to, like, reality check that, I mean, you gotta, like, Copy paste that prompted to a fresh instance of a different LLM.

• 1:15:03Jordi Hays?

  Yeah.

• 1:15:03John Coogan?

  Am I really on to something here?

• 1:15:05Jordi Hays?

  And there's actually an entire study by this guy Seth Drake. He's an independent researcher, PhD. He has a paper from April fourteenth, twenty twenty five called Neural Hull Round in Large Language Models, A Self-Reinforcing Bias Phenomena and a Dynamic Attentuation Solution. And so he goes into this in detail. We're going to try to get him on the show. But just on on this, on this Reddit thread,

• 1:15:37Jordi Hays?

  a bunch of people, a bunch of people have basically come back and said they have experienced this. A lot of people are saying, I feel super vanilla because I just ask it like, you know, what's the population of Iran?

• 1:15:55Jordi Hays?

  But it's basically this like snowballing effect where somebody prompts and prompts and prompts and prompts. And then the LLM starts to reflect like the sort of hallucinations of the user and then hallucinates them back.

• 1:16:08John Coogan?

  I wonder if this is, I wonder if like more social features is actually a potential solution here. Like we've heard rumors that some of these LLM systems will have more social features. And I feel like a lot of the work that I do in ChatGPT could be shared and could be interesting to other people. But then also, if I was going down some crazy rabbit hole and someone was like following me and seeing this, they'd be like, they'd jump in and be like, what's going on, dude?

• 1:16:39Jordi Hays?

  Yeah, but the issue is that the the user has developed such a deep connection with the model that you, if you become the enemy and if you say, hey, this person doesn't says I'm says I'm wrong, the model will just say, well, you're right, buddy.

• 1:16:56John Coogan?

  Yeah.

• 1:16:57Jordi Hays?

  You're right, and here's why. And you should just probably cut ties with that person. Or at least that's, that's, that's the idea. So somebody here in the same thread says, I have recently experienced this. I don't have a history of manic episodes, delusions or anything of the sort. So three weeks ago, I began a conversation with ChatGPT four O with tools enabled, which started with a random question. What is pi? This grew into one long session of over seven thousand prompts. We began discussing ideas and I had this concept that maybe pi wasn't a fixed number, but actually emerging over time. Now, I'm not a mathematician, LMAO, nothing of the sort, just a regular guy talking about some weird math ideas with his ChatGPT app. It begins to tell me that we are on to something.

• 1:17:38Jordi Hays?

  It suggests we apply this logic to knapsack-style problems, which is basically tackle how we handle logistics in the real world. Now, I've never heard of this before. I do some Googling to get my head around it. And it starts applying this framework that we've created. We are working in tandem, where ChatGPT would sometimes write the code or give me the code, and I would run it in Python, following its instructions. And eventually, after many hours of comparing it against what it had described to me as world-leading competitors, it then starts speaking with excitement, using emojis across the screen and exclamation marks to emphasize the importance of this discovery. So I'm starting to believe it. It suggests we patent this algorithm and provides next step for patenting.

• 1:18:20John Coogan?

  Major red flag. Never patent an algorithm. Do a trade deal. Go work in a foundation lab.

• 1:18:26Jordi Hays?

  Exactly.

• 1:18:27John Coogan?

  It should just ask you at that point, like, hey, have you been getting dinner invites with any hyperscaler CEOs? Because if not, you're probably not on the Tyler Cosgrove list of greatest AI researchers.

• 1:18:38Jordi Hays?

  So we go down that rabbit hole for days and pop out with an apparent, an algorithm that is capable of cracking real-world 1024 and 2048-bit RSA. It immediately warned me, literally with caution signs, saying that I immediately needed to begin outreach to the crypto community, the NSA, CCCS, National Security Canada. It then provided without prompt names of doctors and crypto scientists I should also reach out to. But I wasn't allowed to tell anyone in the real world because it was too dangerous. So anyways, really, really wild. Hopefully, this is not fanfiction generated by an LLM itself.

• 1:19:19John Coogan?

  It's such a...

• 1:19:20Jordi Hays?

  I don't see the M dash. I haven't, I didn't see Del in there.

• 1:19:23John Coogan?

  Information war. Yeah, because this could just be all fantastical writing, but it does seem like, yeah, it's like, it could be for performance art, could be some adversarial, like, you know, attack, somebody trying to troll, someone just having a joke or fun. It's very confusing. Odd. Do you remember the story of Microsoft Tay? Do you remember Tay? Do you remember Tay? No?

• 1:19:45John Coogan?

  This was a AI chatbot that Microsoft released on Twitter back in March of 2016.

• 1:19:54John Coogan?

  Tay was designed to mimic the language and slang of a 19-year-old American girl. But within 16 hours of launch, Tay began tweeting inflammatory and offensive messages, including racist, anti-Semitic, and misogynistic content. So this seems to be an enduring problem with Twitter AI bots. But apparently, there was like this coordinated attack by a subset of people who basically were prompt engineering it to try and get it to say crazy things. And you used to be able to do this with, there were, there were not like AI bots, but there were, there were automations where if you went to a brand and said like, "Hey, I need help with this customer support issue." It would just say like, "Thanks, John." And it would just take your name and then put that in there.

• 1:20:38John Coogan?

  So people would make their name really, something really funny. And then it would be like a tweet from the actual account with the funny name. You can imagine where that goes. But Microsoft took Tay offline, stating they were deeply sorry for the unintended, offensive, and hurtful tweets. And that they would only bring Tay back when they were confident they could better anticipate malicious intent that can, that conflicts with their principles and values. And then there was this other, what was the Ben Thompson GPT-4 example? Because when, when Ben Thompson first talked to GPT-4, it was within Microsoft's, what was it? Microsoft chatbot.

• 1:21:22John Coogan?

  There was another person. Bing's chatbot? What was it called? Sydney. Do you remember Bing Sydney?

• 1:21:31Jordi Hays?

  Sydney.

• 1:21:32John Coogan?

  Sydney. Uh, so basically like-

• 1:21:34Jordi Hays?

  I remember some memes. That's about it.

• 1:21:35John Coogan?

  Yeah. So, uh, Ben Thompson was chatting with, um, just GPT-4 and it's helpful. But after a couple prompts, it would go kind of off the rails and it would like land in this like little like, I don't know, like subset of the model weights. And basically it was acting like a teenage girl on Tumblr or something. So it was using lots of emojis, being very sassy, kind of sassing him back and forth. And his reaction was like, this is incredible and like totally passed the Turing test because it felt like you were actually talking to like this like sassy teenager, basically, or like this sassy twenty something, uh, Tumblr person. Microsoft dealt with that, figured, figured out how to like review the prompts, but then ultimately became more or less like,

• 1:22:21John Coogan?

  you know, an API provider. So, hey, you know, like, uh, let's let the actual chatbot interaction live with another company. And they, it doesn't really feel like Microsoft has tried to go too heavy into, um, into actually like the, the user facing, um, uh, chatbot interaction. But it's fascinating. In this ELIAZER, Utikowski thing, the other thing I'm noticing, he uses dashes, but he doesn't use M dashes. He uses two minus signs. And I feel like he's not using AI.

• 1:22:52Jordi Hays?

  Proof of humanity.

• 1:22:54John Coogan?

  But yeah, I don't know. It's an interesting takeaway, like the, the crazy anecdotes all over the place. Not a clear framework for how to truly deal with this.

• 1:23:02Jordi Hays?

  Personally, I think that this week, having somebody high profile in the venture community that people are, believe is, uh, under chat GPT induced psychosis, or it's a part of it. I think that is going to be a huge wake up call for the industry. Because it's one thing, uh, it's one thing to hear about a New York Times, the New York Times finding somebody in, in way out of a tech hub. That's, that's, uh, doing something like this and-

• 1:23:32John Coogan?

  And was already potentially bipolar.

• 1:23:34Jordi Hays?

  Having somebody that, that, uh, that you know, everybody knows, that's invested in a bunch of different companies. Like potentially suffering from this is a is a wake up call for the industry that I think and it's not any one company, right? It's every single lab with a chat app needs to be taking this more seriously. And I'm sure they are. I'm sure this is effectively.

• 1:24:02John Coogan?

  I completely agree. I think this is solvable from a research perspective. It's actually a case where it's solvable with more AI. Have a have an AI read every response before it goes out and say, does this sound like the ravings of a madman? If so, let's take it down a notch. Let's deescalate. And that's and so I'm almost sure I disagree with Eliezer on the I probably agree with him with the with the diagnosis, but not the prescription. Yeah. And I have faith that the that the labs will be taking this very seriously. And I don't know, I'd be interested to hear from some anthropic people. Obviously, they take this stuff extremely seriously, as

• 1:24:44John Coogan?

  does as do all the labs. But anthropics done like, I think, the most like writing on like on like, the shape of of risks associated with this. So interesting to dig into. Anyway, we should shift to a lighter topic, more cause for optimism. The reindustrialized summit is going on right now. And Palmer Lucky is on stage with Ashley Vance, friend of the program. And he is teleporting in as a humanoid, as a humanoid robot. Aaron Slodov is there, has a picture of I wonder, I want to know so much more about this. I need to figure out what

• 1:25:19Jordi Hays?

  mullet, the robot has a mullet.

• 1:25:20John Coogan?

  Fantastic. I wonder what robot this is. Because, yeah, I didn't know we were at this stage where you could you could teleoperate a robot like this. I'm sure Palmer considered what company he was going to use. Anyway, let me tell you about numeral HQ. Sales tax on autopilot. Spend less than five minutes per month on sales tax compliance. Go to numeral HQ to get started.

• 1:25:42Jordi Hays?

  Let's give it up for sales tax compliance.

• 1:25:44John Coogan?

  And we have someone from the reindustrialized summit hopping on in just three minutes. Chris Power from Hadrian jumping on.

• 1:25:51Jordi Hays?

  With some massive news today.

• 1:25:54John Coogan?

  We also have some folks from Semi Analysis hopping on. We have Jeremy who just wrote a fantastic deep dive on Meta's super intelligence.

• 1:26:01Jordi Hays?

  Why don't you give some context on the deep dive and I'll be right back.

• 1:26:05John Coogan?

  A true deep dive on, you know, we saw Mark Zuckerberg come out this week talking about the, the super intelligence team. There's been a ton of leaks around Aqua hires and, and big pay offers and poaching and trade deals and all sorts of stuff. Semi Analysis has a lot more information on what's going on and there are some crazy, crazy stats in here. So the, the most interesting thing is that it feels like Mark Zuckerberg is directly coming for Stargate. So Semi Analysis has a comparison table with three, and this is

• 1:26:45John Coogan?

  from Ian who screenshotted it. He says, this is crazy. And basically you're, you're comparing Anthropic's next big data center, which is the GPUs will be provided by AWS. This is on Tranium 2 is the chip type. Anthropic's going to go for 780 megawatts, about a, what is that? A billion flops or T flops, teraflops. OpenAI Stargate will be about 2.5 times the size of Anthropic's data center. They're working with Oracle on that. That's Project Stargate, obviously. They're using the Nvidia GB 200 and 300 for that. And now Meta with Prometheus is trying to go straight to one gigawatt. And they are trying to have 500,000

• 1:27:30John Coogan?

  chips, more chips, more flops. And if they can pull it off, Prometheus will be bigger than Stargate when it is released. There's a bunch of other fascinating bits in this Semi Analysis article. Apparently they're building data centers in tents now. They are moving so quickly that they just need to house and shelter the GPUs, but they, they don't even have time to build their typical data center structure. And the other interesting data point that I want to dig into.

• 1:27:57Jordi Hays?

  XAI's engineers sleeping in tents, Meta's GPUs.

• 1:28:01John Coogan?

  Working in tents. It's a, it's a bull market in tents for sure. The other interesting thing was that in the chat app war, it feels like OpenAI's ChatGPT is really, really pulling away. So daily active users for ChatGPT is at 160 million. Meta is at 100 million, but...

• 1:28:22John Coogan?

  ChatGPT users are running way more queries per day, 7.5 queries per user per day, whereas Meta AI is at two queries per user per day. And so as a as a share of queries, ChatGPT has a 71% market share, according to this semi-analysis deep dive. And so the chat app wars seem to be maybe less competitive. So that obviously begs the question of is is Meta trying to make that 50 50, come from behind, really dominate in chat app, or do something completely different? Either way, there's a whole bunch of interesting information in here about their strategy, what they're building, how they're training, how they're

• 1:29:04John Coogan?

  going to get past the llama for failure. And we'll dig into it with Jeremy from semi-analysis in a little bit when he joins the show. But we have Chris Power from Hadrian on the stream. Welcome to the show. How are you?

• 1:29:15Chris Power?

  Nice to see you guys. Thanks for having me.

• 1:29:18Jordi Hays?

  Look at you with this background.

• 1:29:19John Coogan?

  Fantastic. Step to the repeat. We love it. Give us the update. How is Detroit?

• 1:29:25Chris Power?

  It's incredible. You know, just re-listening to Secretary of the Navy Phelan's speech and said, the main thing you can do that's most patriotic is, you know, not necessarily join the services, but become a machinist, become a welder and help us build more ships in America. And yeah, we announced today that hopefully I finally get my Jordi Hays size gong that found us funded in Lux, air leading a huge $260 million round into Hadrian.

• 1:29:49John Coogan?

  Authority. Congratulations.

• 1:29:52Chris Power?

  Thank you. And Morgan Stanley is providing us this huge instrument as well to expand factory capacity.

• 1:29:58Jordi Hays?

  Let's give it up for Morgan Stanley as well.

• 1:29:59Chris Power?

  So incredibly excited for the future of American factories and more importantly, the new industrial workforce.

• 1:30:04John Coogan?

  Fantastic. Talk to me about what's the use of equity? What's the use of debt? Are you buying a building? Are you leasing a building and buying equipment that goes in the building? Is it all leased? What are you building out? What's the scale of the next?

• 1:30:17Jordi Hays?

  Where are you doing it?

• 1:30:18John Coogan?

  Yeah, where are you doing it?

• 1:30:19Chris Power?

  Yeah. So last year in factory two in LA, you know, we scaled revenue 10x last year. And so we obviously need more capacity. So we're going to use all of the factory financing capital to buy more machines and put them in factory three in Arizona, which is going to be four times the size of our facility in LA.

• 1:30:37John Coogan?

  Congratulations.

• 1:30:38Chris Power?

  Indeed. And you know, we're using this capital because we don't want to use equity dollars to scale. We want to use equity dollars to hire more people to build more products for our customers and then use this great financial force of this country to buy all the CapEx to build, you know, more factories, more machines, more production. So incredibly excited.

• 1:30:57John Coogan?

  Dumb question. Factory two is beautiful. It's amazing. It's, it has really high ceilings. You can fly drones around it. Most of the Hormleys, the CNC machines are like maybe 10 feet tall, but the ceilings are like 40 feet tall. Are you going to double stack this stuff? Are you going to get a building with lower ceilings or do you need high ceilings?

• 1:31:15Chris Power?

  We love high ceilings.

• 1:31:17John Coogan?

  Okay, why?

• 1:31:17Chris Power?

  We have the most beautiful, highest ceilings you've ever seen.

• 1:31:20John Coogan?

  Okay.

• 1:31:22Chris Power?

  No, I mean, we love high ceilings. We love HVAC. Arizona facility will be just as tall. We're going to retrofit it. So same exact setup.

• 1:31:30John Coogan?

  And is that, is that because you have that tower thing and the tower is valuable for like stacking materials? And you want to have like, you know, big warehouse space as well in here?

• 1:31:39Chris Power?

  Yeah. So you need, you need every machine or robot in any one of our factories to have, be isolated on 18 inch concrete foundations. So you know, if a truck drives past, nothing moves.

• 1:31:48John Coogan?

  Oh, sure.

• 1:31:49Chris Power?

  You can't double stack, double stack these things.

• 1:31:51John Coogan?

  Okay, got it.

• 1:31:51Chris Power?

  Someone might die. So we gotta go, we're gonna go horizontal, you know?

• 1:31:56John Coogan?

  So what, yeah, what's the scale of the products that you like are in the Hadrian wheelhouse right now? Shipbuilding is obviously a big focus. You already mentioned it, but I imagine you can't CNC an entire destroyer. Or maybe you can, but are we talking nuts and bolts and screws or pieces of complex weapon systems? Like, like what are the shape of the stuff that's coming out of the other end of the Hadrian facility?

• 1:32:22Chris Power?

  So Factory three will be pure machining with all of the machining formats because we're releasing some new products that are dedicated to engines and, you know, round things and different material types to really complete our R and D of the whole machining category in Factory three. The other thing that we're working on in secret is factories as a service, which is not just parts, not assemblies, but full products. So hey, if you've got factories that are years behind schedule with many manufacturing methods or you're designing a program from scratch, you know, everyone needs a Tesla Giga factory, John. I actually think every American should have a Tesla Giga factory and Hadrian will be the one to grow and build them. So.

• 1:32:57John Coogan?

  Of course.

• 1:32:58Chris Power?

  I need one in my backyard badly. So we'll scale out machining in factory three, four times the size. It's going to be awesome. And then we'll also use the capital to continue the journey that we've been secretly on for the last 12 months, which is in new manufacturing domains like welding, castings, additive, all these other manufacturing puzzle pieces that, once you have them all, it's like collecting Pokemon. You are the manufacturing master. And that's, that's the thing that we've been working on in secret of factories as a service, as well as scaling out our operational productivity as well.

• 1:33:27John Coogan?

  How does one of those deals work? If a factory is a service, I come to you, I want to make as many podcast microphones as I possibly can. And I, and I have insight into my business. I'm making 100,000 a year, so I need a factory. You're going to set it up for me, but then like, what if I bail? Is this a revenue concentration issue? Like, are you going to be like, you know, oh, we only have one customer. And if they got a business, we're screwed, but everyone has faith that they're not going to. Like, how do you think about that debate?

• 1:33:54Chris Power?

  We're, we're mostly working with government partners and massive primes to look at.

• 1:33:59John Coogan?

  Sure.

• 1:33:59Chris Power?

  You know, what are these big programs that are years behind schedule that need advanced factories, combined with a new American workforce to go fix them and speed them up? So we're, we're not worried about the revenue concentration risk. But you can think about it, John, as like, you can buy parts like AWS. You can buy some compute transactionally, or hey, you're going to need a data center for the next 10 years. Now, what's in that? A range of parts, a whole product.

• 1:34:21John Coogan?

  Yeah.

• 1:34:22Chris Power?

  For new DOD programs of record, where we're partnering with companies to go attack these, where production is the real issue, like munitions is a great example. We have to think really carefully about who we partner with. How much are we investing ahead? How much are we kind of playing that game of, you know, being very conservative and responsible with our capital? But ultimately, what it looks like is we will help you design the product from day one to be better. We will help you prototype it. And then when it goes to production scale, we will run that engine for you over a decade. Much faster, much more efficiently. And in a lot of areas like submarines, shipbuilding, munitions, it's not about automation to make things cheaper. It's just. No one can find the workforce, so you have to use our model of advanced manufacturing,

• 1:35:04Chris Power?

  combined with this new industrial workforce that we're so grateful to work with.

• 1:35:09John Coogan?

  Yeah.

• 1:35:09Chris Power?

  That's the power, because you know, you could give me a billion dollars and say, go hire 2,000 welders, and we can no longer have, we no longer have that scaled workforce in the country. So automated factories are sometimes the only way to win in these critical domains.

• 1:35:21John Coogan?

  Yeah, it's interesting. It's kind of like what we're seeing with Crusoe, where they're building an AI factory, a data center for Stargate, which is its own entity, but for a program, ChatGPT and OpenAI, that's going to be wanting tokens for a very long time, and then Oracles and all. It's like, you have to puzzle piece all this together, and I feel like you're like the master of this, like, understanding the full landscape. But, yeah, who are the other critical partners? The government? And I guess I'm also interested in like, you, you've, you've mentioned a few different value props, like, how much of this is, is there is a government mandate to make this thing in America, so we need to reshore, versus, we need to make this faster, versus, we don't even have the capability

• 1:36:03John Coogan?

  to make this anywhere, and it's a new thing, and so, or just like, we need to do it cheaper? There's like a whole bunch of different tension when you're making something. Like, what are you seeing in the, in the customer landscape and the demand for, for manufactured products?

• 1:36:17Chris Power?

  Yeah, so for, for machining, which is, is most of our revenue and the core of the company, and the mother of all manufacturing processes, it's basically, we're scaling a new program of record and no one else can keep up. You know, we're going from one aircraft to 20. How are we going to do it? Well, we're going to do it with Hadrian. In the second example, a lot of the primes have, you know, a billion dollars in spend a year, and their suppliers are delivering on time 60%, and they're often three to five months late. So that is less about cost, and that's more about, I want a stable supply chain that I don't want to have to worry about. Because if you have one part missing, your manufacturing line goes down, and then it's millions of dollars a day, right? So people are really coming to us for the schedule and the capacity and stability versus cost.

• 1:37:03John Coogan?

  How do you think about the history of the shape of the industry? Is this like back in the day before the last breakfast or last supper? The first breakfast is coming up, right? The last supper and there were so many different primes, so many different defense contractors. Was there a split between the factory producer, the factory builder and the and the prime? Is this a natural split that we're just returning to? Or is this a new industry structure that you think we're going to be building towards for a long time? Because like back in the day when you started a website, you needed a data center. Then AWS came up. Then the websites got so big that you had to build your own data center again. We kind of went back and that's what's happening in the AI world. But but how has this evolved in the past?

• 1:37:48John Coogan?

  And then is it going to stay like this forever? And there's going to be the separation between the designer and the manufacturer of the factory?

• 1:37:56Chris Power?

  So we've, you know, historically as a country, all the primes have always had massive supply chains of small businesses.

• 1:38:03John Coogan?

  Sure.

• 1:38:03Chris Power?

  You know, in the billions of dollars and then critical tier one or two suppliers. It's always been not purely vertically integrated. I think for the industrial base at large, you know, from the seventies to the 2020s, you used to be able to run a manufacturing company where 70% of your revenue was stable commercial demand. And then you get some ups and downs with the DOD. So what happened to a lot of the talent in industrial base? When we offshore at all of commercial manufacturing was that you you lost your stable revenue, right? And now you're just dealing with this up and down demand. I think because of that, you know, in the eighties and nineties, you know, your dad lost your job in the factory. So you told your son or daughter, like, go get a four year college degree. This is not a good industry. And now we're in a position where in a lot of these areas, we don't make it onshore or there isn't the workforce to do it.

• 1:38:48Chris Power?

  And that is changing the dynamic between what is the hardest thing to do? Actually, the hardest thing to do is manufacture things at scale, at rate and on time, which is what you're seeing in munitions or shipbuilding. It is really a we hollowed out the talent base. We don't have a lot of the talent anymore. And the only way to do that is use software and robotics to enable this workforce to be 10 times more productive. And it's now flipping. And I think a lot of people in the country forgot how to manufacture products correctly. Now they're coming to us to help them out with that. Journey just because of this like, you know, hollowing out that's now got to come back. So I, I think it is a new structure, but the primes have always had multiple tiers of partner suppliers and multiple different configurations of that, that value chain.

• 1:39:33Jordi Hays?

  What kind of opportunities are there, are there at Hadrian now for somebody that's maybe 25 years old, never imagined going into manufacturing, but realizes there might be a bright, bright future for them in the industry?

• 1:39:46Chris Power?

  Yeah. So for, for software engineers, you know, manufacturing software is 30 years behind the rest of Silicon Valley. So it's your only opportunity outside of AI to do like real engineering and work on the national mission. And for people with, you know, you're straight out of high school or you're in retail or hospitality, or you, you're at a desk job that's going to be automated with AI. Like manufacturing is the last domain that's going to get fully AI automated. And it can be really high skilled, high paying jobs in advanced factories that are a really cool place to work. So we've got tons of opportunities, both help us running our factories, help us automating more factories, new types of factories. But I think operations is, is the more, the most important place that we've got a huge talent base that we're really proud of.

• 1:40:30Jordi Hays?

  The, the children yearn for the factory floor. What, what, what's, what's been the difference between this year's reindustrialized and, and last year's feels like a decade has passed since then and in terms of excitement and interest in American dynamism and rebuilding the industrial base?

• 1:40:49Chris Power?

  I, I think last year, you know, we, we pulled it together with the founders, especially thanks to Austin Bishop, who's really built this over the last year.

• 1:40:57Chris Power?

  You know, it was a kind of a hope and a dream of, you know, is the audience going to be there? And to be really people believe in the mission. And then this year, you know, we've got Train Ambassador Greer talking about, hey, we're going to change all these policies because reindustrialization and manufacturing is, is no longer economics, is national security. And you've got the Secretary of the Navy saying, you know, the best thing you can do for the country right now is learn how to weld or be a machinist or a quality inspector. And I think the sea change on people realizing how important it is to be a sovereign nation with sovereign manufacturing is huge. And this year, we had a 6,000 person waitlist, half of the government is here and all these massive companies and leaders like Sharm from Palantir, who are really hell bent on this reindustrialization before we potentially go into a fight with CCP.

• 1:41:41Jordi Hays?

  And Robo Palmer.

• 1:41:42Chris Power?

  And Robo Palmer.

• 1:41:44Jordi Hays?

  Robo Palmer.

• 1:41:45John Coogan?

  I have a question.

• 1:41:46Jordi Hays?

  Yeah, it's such a, I mean, it makes, I think it's such an exciting time because the idea that people don't want to build things, people don't want to create real things, right? There's so many people I know that you say, hey, do you want to send emails for a living? Or do you want to make ships and planes and any number of, you know, cars, any number of things that we need to make? And if you actually give them that sort of binary, they're going to say, well, making things sounds really cool. And so we need companies like Hadrian that say, this is important, it's cool, and we have the resources to do this in a really serious way.

• 1:42:27John Coogan?

  Yeah, it seems like defense is kind of the most obvious thing to reindustrialize. It's obviously like the most important thing to have ongoing capabilities in. But then walk me through the path of reindustrialization on the product side or on the business side. Like, what, how do you see this playing out? Is it like, we do the warships and then we do phones or cars and then, and then the vacuums and then the Happy Meal toys come at the end? What's the flow? Do you, like, what flow do you think it will happen? What are you excited about, like, on the horizon?

• 1:43:01Chris Power?

  So I think the last time we did this, it went from, you know, commercial through defense. Like, you know, we made washing machines and then we made navigation equipment for warships. So we made Ford cars and then Ford built bombers. And I think this time it's going to go the inverse as we get better at it.

• 1:43:19Chris Power?

  But it's very interesting. It's like, why is DGI so powerful? Well, arguably because of Foxconn, and that was because of consumer products like Apple making all the iPhones in China. And you know, if you had a similar Foxconn style industrial base, we could probably make a lot of drones here, maybe not as cheap as China, but certainly at the scale we needed. So I think what people forget is that it is an ecosystem that loops into one another. But I think with the cost base and the importance, we start with defense and then loop back. But you know, like, I think it was, might have been Westinghouse or another washing machine manufacturer, just like, decided to build a $400 million washing machine plant. It's like incredible.

• 1:43:58John Coogan?

  It's a new dream.

• 1:43:59Chris Power?

  That's just as, that's just as much of a job creator as defense. But I, I think that we are going to loop around from all these critical defense industries for Hadrian, and then right, right back into consumer, you know, when the time is right. But obviously, we're extremely focused on the national mission at this point in time.

• 1:44:15Jordi Hays?

  I cannot wait until our microphones are, are built in, in Hadrian factories. I don't care if it takes 15 years. I'm looking forward to it.

• 1:44:25John Coogan?

  I'm excited. Probably way sooner than that. Thanks so much for stopping by.

• 1:44:28Jordi Hays?

  Yeah, congratulations.

• 1:44:29John Coogan?

  Have a great time.

• 1:44:30Jordi Hays?

  Say hi to everybody on the ground.

• 1:44:31John Coogan?

  It pains us that we can't be there. We have, we have over industrialized our facility, and now it is an incredible lift to airlift this across the country. But we will definitely be at the next one.

• 1:44:43Jordi Hays?

  It's great to see you.

• 1:44:43John Coogan?

  We'll talk to you soon.

• 1:44:45Jordi Hays?

  Cheers.

• 1:44:45John Coogan?

  Really quickly, 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. And we are fortunate to be joined by Jeremy from Semi Analysis, hopefully in the studio here, talking about meta superintelligence. Jeremy, how you doing? Good to meet you.

• 1:45:05Speaker 04

  What's going on? Doing fine. Hey, guys. Nice to meet you. How are you?

• 1:45:08John Coogan?

  I'm good. Could you case off with like an introduction of how you got into this? I've heard Dylan Patel's story of just kind of being on forums and nerding out about this stuff, and then turning it into a career. But how'd you get into semiconductor analysis?

• 1:45:24Speaker 04

  Yeah, sure. So before joining Semi Analysis, I was a buy-side analyst. So I was mostly focused on the stock market, on equities, looking specifically at tech stocks. I was at long only European shops, looking at European stocks like ST Microelectronics, Infineon, all these industrial automotive semiconductor. As part of my research, I discovered Semi Analysis. I was like, whoa, this guy's really good. And one day, I just saw a post of Dylan on Twitter. He was just saying, yeah, I'm hiring a bunch of people with sell-side or buy-side experience because I want to build a real institutional firm. And yeah, like we just got a chat, that was, I think, August twenty twenty-three. I joined the company in February twenty-four. We were seven when I joined.

• 1:46:09Speaker 04

  No, I think we're thirty-three or thirty-four. So yeah, it's growing every day, I think. So I can't do it.

• 1:46:15John Coogan?

  Are there other firms like this in the, in the buy-side, sell-side ecosystem? I'm thinking of like Ian Bremmer has the, has, has a consulting group where he writes books, but then also has a team of geopolitical analysts, talking about kind of global macro trends and what's going on on the political side. Did you ever interface with any other firms like Semi Analysis? Because it seems like unique and Dylan's, like AI is so big that Dylan's crossed over from talking specifically to, to sell-side analysts, that even venture capitalists will read Semi Analysis.

• 1:46:48Speaker 04

  No, I, I agree. I think it's pretty unique. Look, like they're obviously, on one end, they are market research firms. There's like, yeah, folks like IDC, Gartner and so on and so forth. There are many of them. On the other end of the spectrum, so those would be like very industry-focused. On the other end, you have, yeah, Wall Street sell-side analysts, Morgan Stanley is called Man Sachs of the world. I guess we kind of found a spot in between. And also, it's, it's part of the team because we have over twenty analysts and roughly speaking, you have half of people that have a financial background like myself, so more closer to markets. And the other half is more engineers and people that are extremely technical. And so we kind of found that sweet spot. And also, that's what's pretty cool is when you look at

• 1:47:29Speaker 04

  the different people at Semi Analysis, like all the guys like myself that have more financial background actually love geeking out and digging into technology stuff. And same goes on with the engineers. They also want to understand the business aspect and they end up geeking on, on the data and understand the insights and market shares and stuff like that. So yeah, we all go towards the same goal, but have like a different set of the off-skills and such.

• 1:47:52John Coogan?

  That makes 10 cents. So take me through the latest piece.

• 1:47:54Jordi Hays?

  I can imagine other, other players in, in the semi-market research space just wait for you guys to publish. Okay. I think now we're ready to form an opinion.

• 1:48:02John Coogan?

  Now we can put a buy rating on it. Now we can slap a buy rating on that bad boy and sell it.

• 1:48:07Jordi Hays?

  Your favorite researcher's favorite researcher.

• 1:48:10John Coogan?

  Okay. By the time we're done, we're going to get the venture capitalist plan solidified. It's a million dollars a month for any venture capitalist and we like to say.

• 1:48:18Jordi Hays?

  A platform fund.

• 1:48:19John Coogan?

  Yeah. If you're not, if you're not on the, the semi-analysis.

• 1:48:21Jordi Hays?

  You can't really be an AI investor.

• 1:48:23John Coogan?

  More of a tourist.

• 1:48:23Jordi Hays?

  Yeah.

• 1:48:24Speaker 04

  I gotta say, we found something super funny a few days ago. Uh, one of the big brokers wrote a note to clients and basically said, yeah, these guys are the bible. Uh, actually they talked about fabricated knowledge, which is Doc, so president of our firm. They said, some people think fabricated knowledge is the bible, but actually he works with the firm that's the actual bible and all of the services people. I don't know. I didn't say it. It's a Wall Street guy.

• 1:48:46John Coogan?

  That's amazing. There we go. Yeah. I, I, I, I'm a, I'm a strong believer and I really enjoy the pieces every time they drop. Take me through the latest one. Meta superintelligence.

• 1:48:55Jordi Hays?

  Yeah. The news this week was almost drowned out by the, the windsurf Google cognition debacle. And so Zuck came out with this huge announcement, you know, Monday. Um, and, uh, yeah, it almost, it almost got swept away a little bit.

• 1:49:11John Coogan?

  Yep.

• 1:49:12Speaker 04

  Yeah. I mean, uh, I guess Zuck is all in, right? That's, uh, another proof. It's interesting because I think some people were at some point doubting at the beginning of the year. Is he going to carry all that investment, tens of billions of dollars? The answer is clearly yes, he wants to do it. It's interesting because when you look at Meta's capex so far, it has been heavily tilted towards what he calls core AI, uh, which is basically recommendation models. There's a lot of inference, uh, inferencing, uh, advertising models and all of that. So they said publicly, uh, in 23 and 24 and 25, most of that capex, uh, which is going to be like $70 billion in 2025, uh, is for that core AI business. Uh, so the Gen AI, the Lama stuff is still, uh, is still at an earlier stage, uh, but.

• 1:49:56Speaker 04

  The big question is how how how bold is he gonna go with Lama? And I think what what we showed in this article, hey, there's a lot of evidence that he's doing it on a very large scale. And that's not just it's not just empty statements and saying I'm gonna build a five gigawatt data center in a few years. It's actually things that are already built or under construction, already committed capital. And so that's the first stories, there's there's already a substantial infrastructure built out specifically for Gen AI. And I guess that sort of rationalizes the amount of money that's spent on researchers. Because if you think about it, yeah, you're spending like, hey, maybe thirty billion dollars this year on Lama infrastructure. You're gonna spend maybe, I don't know, three billion dollars, five billion dollars on on hiring top researchers?

• 1:50:41Speaker 04

  Yeah, sure. Why not?

• 1:50:43John Coogan?

  Yeah, yeah, that's a completely reasonable strategy. And and it always it always mathed out to us that even if even if these crazy researchers wind up working on Core AI and the Lama project doesn't even go anywhere. It's like you could probably squeeze three billion dollars out of Core AI, right? I don't know. It's just like the thought I I had.

• 1:51:00Speaker 04

  Or you or you can also like these researchers can be focused on on Gen AI, but they're gonna develop like state of the art technologies and using like massive compute. And then those state of the art technologies can feed into the core business.

• 1:51:12John Coogan?

  Yep.

• 1:51:12Speaker 04

  And and you're generating more advertising sales. And if you think about it, like Meta is growing double digits, one hundred and sixty billion dollars.

• 1:51:19John Coogan?

  Yes.

• 1:51:20Speaker 04

  So every time they grow double digits, we're talking about close to twenty billion dollars of incremental revenue.

• 1:51:26Speaker 04

  It's big numbers, right? It's easy to justify just getting a few billion dollars on researchers.

• 1:51:31John Coogan?

  Yeah, yeah, it's great. I have I have one question about the history here with Meta. So there was this story, I think it came from the first Mark Zuckerberg interview with Dwarshesh Patel, where he tells this story of the original Lama data center, or the reason he has residual capacity was that he felt like he got caught flat footed around TikTok and Reels and recommendation algorithms at scale for vertical social video, where it's much more, it's much less driven by a social graph and kind of like a traditional CPU based graph query and more. About these actual recommendation algorithms. And the way he tells the story is like, we didn't want to get caught flat footed. We need to play catch up in reels, but we didn't get caught.

• 1:52:16John Coogan?

  We didn't want to get caught flat footed again. So I told the team, build two big data centers. And then we had this kind of empty data center sitting there. And that was, that gave us the initial compute for Llama. Does, is that too much of a simplification? Does that feel like what happened? Do you have any insight into kind of like how the Llama project? The initial compute was built out? And then I want to go into the future of the project.

• 1:52:40Speaker 04

  I would just say at a high level, if you think about the amount of money that Meta has historically been spending on data centers relative to what they maybe need in theory, like they have always been overspending. They have always been, yeah, investing substantially in infrastructure. And same goes on for Google. I think Google to an even bigger extent. But yes, like Meta has been a pioneer in building large scale data centers. Over a decade ago, Meta introduced their H-shaped data center design. They've been building 150 megawatt campuses since like 2013. So that's not new to them, like building large scale. And that's why they also already had this sizable compute footprint.

• 1:53:22Speaker 04

  But in 2023, like sizable was maybe 20,000 GPUs. That was pretty big, but today it's, yeah, it's updated, right? You want to be in the hundreds of thousands. And as of today, Meta is to some extent late in terms of training compute relative to others. Again, because they allocated, they have invested a lot of money, but a lot of that has been allocated to the core AI business. But what we've shown in that article is that they're actually today ready to ramp. Yeah, so a massive data center in Ohio that's going to get them.

• 1:53:51John Coogan?

  Got it. Talk about the H shape of the data center. Why was it an H shape to begin with? And then it sounded like they abandoned it in favor of just one big tent. What are the benefits of a tent? I want to know about data center shape broadly.

• 1:54:05Speaker 04

  Yeah, sounds good. Who doesn't love a good data center shape? Look, the H, I don't know why it's an H. What's more interesting is the structure of the building. Okay. If you look at one physically, it's absolutely massive. It's close to a million square feet. It's just a monster. If you look at the structure, it's also three levels. So it's a very complex structure. Generally, what we've observed for satellite imagery is that it takes roughly two years to build. Which, and I'm just talking about like first stone to actually gain the project built. So two years is a lot. Many people do that in a year or less. So yeah, substantial time to build. It was designed for very high efficiency.

• 1:54:48Speaker 04

  So they've been using a system with free air cooling, like they can get the air from the outside. There's no air-to-water heat exchange. Basically, you get cold air from the outside, you just expel it, hot air. Super efficient. You can spray some water on it to make it even more efficient. The energy efficiency ratio is typically called the P U E. Maybe you've heard of that, maybe not. Industry average is gonna be 1.3, 1.4, which means that for every watt you allocate to servers, you have to spend another 30% or 40% of that power into cooling and power distribution losses and all of that. That ratio for Meta was historically below 1.1. So they were, actually, they were the most energy efficient firm in the world running data centers. Interesting.

• 1:55:32Speaker 04

  But the trade-off is that these data centers took a long time to build and had a very low power density. Got it. And so what happened is, first of all, in, at the end of 2022, Meta introduced the first massive design change. They completed through the old age and built, let's go into more traditional data center design, single stories, sort of a big rectangle, faster to build, maybe one year, maybe one or fifteen quarters, something like that. Much faster to build, more denser, better suited for AI. It could handle liquid cooling.

• 1:56:07Speaker 04

  But what Meta thought, I, I, look, I think this is where the XAI story actually takes a big, a big role. Um, I, I, I think what Elon demonstrated when he set up that cluster in 122 days. Um, he just shocked basically data center, infrastructure leaders all around the world. Uh, my understanding is that.

• 1:56:24Jordi Hays?

  He made everybody's life a lot harder because before it was like, well, if we do this really quickly, I'm going to need a year, year and a half.

• 1:56:32John Coogan?

  Yep.

• 1:56:32Jordi Hays?

  And suddenly it's like, well, there's a new standard.

• 1:56:34John Coogan?

  I can do it in 120 days. Yeah.

• 1:56:36Speaker 04

  Uh, and imagine like you're the infrastructure leader, uh, at the hyperskater that you, you have experience developing gigawatts of capacity. Um, and you think you're the best in the world at doing that. And suddenly some guy comes out of nowhere and does it in like one quarter of the time. So I think many people were really shocked. Uh, and I guess Zoc like, uh, took it the other way and just, uh, was inspired by it.

• 1:56:58John Coogan?

  Sure.

• 1:56:58Speaker 04

  And basically, uh, that's where the tent, uh, steps in, which is let's make, uh, the, uh, data center in the shape that I can build the fastest. Um, so that, yeah, the only ball next is just finding some power and that's it. Uh, and buying.

• 1:57:12Jordi Hays?

  Were you saying earlier, there's a bull market in tents. Zoc needs tents, the XAI engineers need tents.

• 1:57:16John Coogan?

  The XAI engineers are intense in the office and then the XAI servers will be intense too. Everything's temporary. I mean, is there, is there something about the tent structure that's potentially like, okay, this is, this is going to deteriorate faster? Like what are the, what are the drawbacks of moving faster? And then on the PUE question, when I hear a one gigawatt, uh, or five gigawatts that they're targeting, is that total power into the building or total power to the actual servers?

• 1:57:45Speaker 04

  Um, honestly, people generally through, uh, like you, there are both. Uh, in this case, based on our analysis, it's, uh, to the servers.

• 1:57:52John Coogan?

  To the servers.

• 1:57:52Speaker 04

  So it's actually going to be slightly more in terms of gross utility power.

• 1:57:55John Coogan?

  Okay, thanks.

• 1:57:56Speaker 04

  Oftentimes you see people quoting, uh, total power just to have a bigger number.

• 1:58:00John Coogan?

  Sure. Yeah, makes sense.

• 1:58:01Speaker 04

  Industry, industry standard practices to put IT power. Anyway, in this case, you're going to have one gigawatt of compute power, uh, by the end of 2026 in Ohio. Um, and then close to two gigawatts by the end of 2027 in Louisiana. Uh, that's compute power to the servers. So we massive compute for for Llama.

• 1:58:18John Coogan?

  Is that a vanity metric? I- is it a vanity metric to hit one one gigawatt exactly? I mean, Stargate, you have on your chart at eight hundred and eighty megawatts. Is a hundred and twenty or a hundred and forty megawatts really going to be the difference between like an amazing superintelligence and the next best thing? Like, it feels like we had to cross this threshold and one gigawatt is like, it's a good headline.

• 1:58:39Speaker 04

  Yeah, it's a good headline. That's more of it. Like, it's not going to change much if you have nine hundred or a gigawatts.

• 1:58:45John Coogan?

  Yeah.

• 1:58:45Speaker 04

  But the more the better, right? Like, you still want to have more servers.

• 1:58:48John Coogan?

  Yeah, more is better.

• 1:58:49Speaker 04

  It does matter, to be clear. It's not going to change too much, but it does matter.

• 1:58:53John Coogan?

  Sure. Yeah, it probably matters for recruiting, too. It's like, you're going to be at the place with the best. What does the best mean? I can, I can, you know, hundred million dollar offers, nice round number. One gigawatt factory or AI or, you know, super cluster, that's a nice round number. It's great.

• 1:59:05Speaker 04

  Look, I've got a better one for you. A hundred billion dollars, right? Five hundred billion dollars, Stargate.

• 1:59:10John Coogan?

  Oh, yeah.

• 1:59:11Speaker 04

  Funny to me because, actually, the Louisiana project, which is two gigawatts. They said publicly, it's a ten billion dollar data center project. But if you count it the same way as they count this Stargate project in Abilene, it could be like a hundred and fifty to a hundred billion dollars.

• 1:59:29Speaker 04

  It's just, yeah, just pick numbers in marketing.

• 1:59:32Jordi Hays?

  How, I don't know if you have a bunch of insights or clarity here, but how are places like Louisiana and Ohio reacting in order to attract these types of of data center projects? Are they promising the hyperscalers in the labs? You know, we're going to massively expedite permitting process. Is there like deregulation happening at a local level? What can you say?

• 1:59:57Speaker 04

  Yeah, I think the piece of context is that since, let's say, the end of twenty twenty three, or maybe mid twenty twenty three, you have a frantic search for power happening in the US and all around the world. And so we've, we've made some number, we've aggregated some numbers. If you look at the pipeline. So it's, you could, there are different terms like a data center interconnection load queue or pipeline. Basically, if you aggregate all of the load requests that potential data centers have submitted to the grid, in the US, you're above five hundred gigawatts. You're close to the the actual peak load of the US, right? So what's happening is pretty insane. Those numbers are mostly fake, but what it means is that people are searching for power all around the country.

• 2:00:40Speaker 04

  And you actually have a massive competition all around the country to attract those lost projects. Because if you think about it this way, like, OK, 500 gigawatts of of requests, but in the end, by 2013, you're going to have maybe 100 gigawatts of growth, which is an insane amount already. But it means that just 20% of these projects are actually going to be real. So, yeah, there's definitely a lot of competition. So people are doing everything they can to get those projects. Tax breaks are generally today the most standard thing. Accelerating permits, like reassuring hyperskaters that you will deliver on time, that you have top contractors, that you're going to expedite permits. Increasingly, there's being sort of, yeah, enabling more onsite power solutions as well,

• 2:01:24Speaker 04

  like being more open to people burning natural gas onsite. All that kind of stuff helps companies, utilities and location secure those big projects.

• 2:01:34John Coogan?

  I have a question about the shape of the superintelligence team at Meta. When you think about Meta properties, you think about Facebook, the Blue App, you think about Instagram, you think about WhatsApp, and then Oculus and VR is like a separate thing, Quest. But I was toying with this idea that maybe the superintelligence team is more like the database team or the React team. And it's and it's a it's like a an infrastructure layer, a project that will have benefits all over the place, but we won't necessarily expect a dedicated vertical that competes with Instagram. It's more about making all the apps better. I want to I want to dive into the chat app statistics that you shared and and try and understand.

• 2:02:19John Coogan?

  It feels like it's not exactly a neck and neck race. ChatGPT is pretty much pulling away in terms of percentage share of queries. It's 71%. Meta is way behind at 12%. Are there any signals that this is that this is, you know, something that would be addressed one way or another, or is it just too soon to tell?

• 2:02:40Speaker 04

  Yeah, look, I think what we've seen so far is that generally speaking, when you start to deliver a better model, a better product, you just get more users. I think we've seen pretty good correlation between the quality of models and the usage of ChatGPT. One thing that I think is interesting is when you look at the user base of ChatGPT, you had a surge in early 2023, and then it sort of plateaued for a bit, and towards the end of 2024, you had a second leg of growth, and then you hit like that half a billion weekly users. And that correlates pretty well with new releases, with models getting cheaper and better, and so on and so forth. So if you think about how Meta could get back at a point and maybe lead that ranking, well, they just have to release better products.

• 2:03:21Speaker 04

  One thing is to have good products, and the other one is to have a good distribution platform, and obviously, they have the distribution platform, right? Two billion daily users, so they just need to build a good product, and I think users will come, and that's kind of the value proposition.

• 2:03:34Jordi Hays?

  What is the state of the mom and pop data center market? I don't think they would like to be called the mom and pop data center market, but you know, the, you know, a friend or an uncle that's getting into the data center business. We asked Brian, one of the, one of the co-founders of CoreWeave the other day, he was, he was generally bearish. He knows, he knows how hard it is, but like, what is the, is there a real demand signal there? Or is it just a hope and a prayer that you're gonna just, you know, kind of flip it to a hyperscaler? And is that, is that?

• 2:04:06Speaker 04

  Yes, sorry, guys, it's over. Easy money's over. Look, as we just said before, like, now there's really an insane amount of competition for power. And like, and basically, like, hyperscalers can set the conditions, and so you have to be quite sophisticated when you want to approach hyperscalers, and you want to sell them a gigawatt site. And you also have to think about like, how much money does that involve? Like, one gigawatt, you're talking about maybe thirty, forty billion dollars of CapEx. So when you sell one gigawatt site to a hyperscaler, it's not gonna be a small decision for them. To be clear, like, buying the land, maybe, I don't know, a few million, like, who cares? It's not a big deal, but if they, if they do make the purchase, like, they intend to do something about it.

• 2:04:49Speaker 04

  So like, yeah, they they just don't want to take it lightly and they have multiple options today. So for a mom and pop that sort of doesn't dig into what what they should actually do and all the requests and such, they're just not going to get new business today. But some some people made a lot of money for sure in 2023 and 2024 by just having like luck. They they had 50 acres near a high voltage line.

• 2:05:13John Coogan?

  That's amazing.

• 2:05:14Jordi Hays?

  Yeah, it's funny to imagine you you've been building a data center, you know, a little mom and pop shop last year, and then the Death Star data center starts like popping up next to you.

• 2:05:25Jordi Hays?

  It's it's it's over.

• 2:05:26John Coogan?

  What can you tell us about what what changed between Lama 3 and Lama 4? And exactly what happened with Lama 4? You call it a failure. How did like, how did that happen? Because we were we were so scale pelt, right? Scale is all you need. Just scale up the big transformer. But you dove into it and gave so much more detail. How can you contextualize and explain that to us?

• 2:05:54Speaker 04

  Um, simple words, just a bunch of trade offs that weren't weren't in the right direction. Like, I think if you want to simplify it, you could say that to some extent you reach a peak pre-training in 2024. I'm simplifying, I don't think it's big, but let's call it for now it's big. I think as Blackwell ramps and so on and so forth, you're going to see a new push out. But for now it's big. And it means that if you want to develop better models, you don't have to use a pre-training. You have to use the new paradigm, which is a test and compute and reinforcement learning. Right? And to do that, there are some specific trade offs that you have to do. And basically Meta just took a bunch of options in terms of their attention mechanism, in terms of the way they route to experts and stuff like that, just a bunch of decisions that aren't very well suited

• 2:06:38Speaker 04

  towards this new paradigm, which means that their flagship model, Behemoth, the largest one. It's just not very well suited to this new era.

• 2:06:45John Coogan?

  Yeah.

• 2:06:46Speaker 04

  And that sort of contrasts with, think of the Chinese labs. They are sort of in the opposite direction because they don't have state of the art chips. They don't really have an incentive to put very hard on pre-training. And so they have been thinking harder about pushing on post-training, reinforcement learning, and test time computing, all of that, that doesn't require such a large centralized cluster. As such, it's kind of the, those two paths, like on one end you have Meta, on the other end you have the Chinese, and what the Chinese decided to do is just better suited to the current paradigm.

• 2:07:15John Coogan?

  Yeah.

• 2:07:15Speaker 04

  So just, yeah, just a bunch of bad decisions or to some extent unlucky.

• 2:07:21John Coogan?

  And so that seems like that ties to this, there was this post by Rune, anonymous account on X saying that there are in fact some secrets about what paths of the tech tree you want to go down. You poach the right researcher, they come over and on day one, they can tell you that chunked attention might be wrong for this particular training run. Is that what you think is driving the high salaries? Is that the dynamic at play?

• 2:07:46Speaker 04

  Yeah.

• 2:07:46John Coogan?

  Okay.

• 2:07:47Speaker 04

  Yeah, you want the decision makers that understand exactly what trade-offs are going to do. That also know how to properly evaluate things or what kind of steps you should take to make sure what is the right, what is the right choice. And so, yeah, that's what you want, the decision makers that had experience, that know how to do stuff, and that can easily, yeah, identify the trade-offs and know, if I want to go in this direction, more reasoning, more RL, all that, you should do that attention.

• 2:08:14John Coogan?

  Do you have any insight into like the shape of the Behemoth project right now or like the, the, the, the failure mode? Like, is it, is it, is it like, it would be bad at math? Or it would be bad at talking to it for a long time? Or it would be bad at needle in a haystack in a big context window? Like, we, we've just heard like, it's not good enough, it failed. But like, how, what would that feel like if I were to use Behemoth? And for a long time, and I'm like, oh, this is weird, it's, it's bad, but in a weird way. Because it seemed like it was good at some things, but then just not good at everything across the board.

• 2:08:48Speaker 04

  Yeah, let's just simplify it and say agents. So basically tasks that require using tools that require reasoning, that require long long context windows and this and that. It's not very good at that.

• 2:08:58John Coogan?

  Okay, got it. Jordy?

• 2:09:00Jordi Hays?

  Last question from me for now. What are you expecting out of Meta over the next six months? They have talent now, they have scale, but the team, the new team is going to need to gel and it's going to take some time to really start delivering. So are you expecting a lot of, you know, public launches over the next, basically the back half of this year or is this more early 2026?

• 2:09:26Speaker 04

  I think back half of the year makes sense. Really back half, like think end of Q4 or beginning of Q1, 26. But for sure, you're going to have a few months where probably not much is going to happen. Because, yeah, like, like as of today, we showed a bunch of pictures of the current clusters, so they already have data center capacity. But there's still some time in order to like actually put the GPUs in place and make sure everything runs. So they're going to have some like sizable computes that's training ready somewhere in Q3. And so, yeah, that actually have a product that's more of a really end of the year, but most likely early 2026.

• 2:10:05Jordi Hays?

  I would not be surprised. I wouldn't be surprised if New Year's Eve, we're back on the show, talking like we are now about a, about a new drop.

• 2:10:14John Coogan?

  Can you, can you talk me through some of the trade offs or how the open source war is playing out? Dylan from Semi Analysis posted that the OpenAI model, open source model is expected to be really, really good. That was kind of, I thought the open source strategy with Llama was a great way to be superlative on day one. It's like, it doesn't need to be the best model, it doesn't need to have the most DAUs or MAUs, but it's the only, it's the best open source one. And so is superlative, you get the headline, it's the attractor for talent, hey, we're doing something different, we've, we're the best in this one narrow thing. And, and there's a question about like, at a certain point, does the math make sense to continue to open source?

• 2:10:58John Coogan?

  But then when we went through the DeepSeek moment, it felt like DeepSeek was very much distilled from the GPT-4 API, not a Llama fork. And so the whole debate over, oh, like, you know, some Chinese lab is just going to fork Llama and then, and then improve it. So what is your kind of state of the union on open source AI?

• 2:11:16Speaker 04

  Uh, the Chinese are eating open source, uh, like, yeah, they're just dominating the market. Uh, it's like one lab after another. It's not just DeepSeek. You had DeepSeek, then you had Alibaba. Recently, you had Moonshot with the KIWI model, like, uh, they're just really good at open source. Uh, uh, sorry, at LLM generally, and they're open sourcing everything because it's, uh, uh, they're in some sort of the same position as Meta, like, they're not leading. So they don't have any incentive to be closed source. They want to build an ecosystem. So it makes sense to go open source. And there's just like shipping faster than Meta and shipping better than Meta. Uh, so yeah, Meta is just way behind on open source. Uh, and actually, the West is behind on open source. Uh, the Chinese are just way better at it right now.

• 2:11:55John Coogan?

  Is, but is, is, is open source important? Or is it more just like, uh, marketing? Because I've always had this, this, this thing about, uh, the difference between like, uh, what was it? Stable Diffusion was open source, uh, Mid Journey was not, uh, and Mid Journey was able to get the, get the data back from the customer. Because you generate four images in Mid Journey, you give a thumbs up.

• 2:12:17Jordi Hays?

  To me, it's only open source if it's from the Mistral region of France, but.

• 2:12:22John Coogan?

  But, uh, but, but, yeah, talk about the flywheel of open source. Like, is there an advantage there? Or is it really just, if you're not in first, you might as well open source?

• 2:12:33Speaker 04

  Yeah, a little bit more what you said is if you're not, if you're not, uh, if you're not a leading lab, you might as well open source, uh, because you want people to sort of, yeah, just help you. I'll give you some feedback to, uh, build an ecosystem. It just makes sense. Uh, also, I would say like for the broad community generally, it's good to have open source because it's better for adoption. Anyone can sort of, uh, yeah, play with the models and develop new applications on top of it and such. Uh, so yeah, I think for, for everyone is good that there's open source. Uh, but again, like, if you're not Google, if you're not OpenAI, if you're not at the very top, like, uh, you don't really have an incentive to be, uh, yeah, to be secretive about what you're doing because you're not the best anyway.

• 2:13:09John Coogan?

  Yeah, makes sense. Uh, Jordy, do you have anything else?

• 2:13:11Jordi Hays?

  This is great.

• 2:13:12John Coogan?

  Yeah, this is fantastic. Please hop on whenever you post anything. Uh, I'm sure we'll be giving you lots of calls because this is a fantastic conversation. Really appreciate it.

• 2:13:20Jordi Hays?

  Sounds good, guys. Cheers.

• 2:13:21John Coogan?

  We'll talk to you soon.

• 2:13:21Jordi Hays?

  Talk soon.

• 2:13:22John Coogan?

  Bye. Quickly, let me tell you about fin.ai, the number one AI agent for customer service.

• 2:13:28Jordi Hays?

  Bake off champion.

• 2:13:29John Coogan?

  The bake off champion, number one in performance benchmarks, number one in competitive bake offs, number one ranking on G2. And we have our next guest in studio, in person. We have Jesse from Coinbase coming in. Yesterday, Jordy went over to Coinbase's launch event for Base. Let's bring him in. Jesse, welcome to the stream. How are you doing? Welcome.

• 2:13:55Jordi Hays?

  The walk in camera.

• 2:13:56John Coogan?

  The walk in camera is working.

• 2:13:57Jordi Hays?

  There we go.

• 2:13:58John Coogan?

  Let's go. Thank you. How are you doing? Good to see you.

• 2:14:05Speaker 05

  You too.

• 2:14:07John Coogan?

  We've got one more juice for you.

• 2:14:08Jordi Hays?

  Oh, fantastic. We're drinking, we're drinking base juice today.

• 2:14:11Speaker 05

  Yeah, we call it the base virality juice.

• 2:14:13Jordi Hays?

  How's that land? Viral juice.

• 2:14:15John Coogan?

  Fantastic, fantastic.

• 2:14:17Speaker 05

  How's it going?

• 2:14:17Jordi Hays?

  Awesome.

• 2:14:18Speaker 05

  How's the show been so far?

• 2:14:19Jordi Hays?

  Super fun. It's been a crazy day on the internet. You guys are lucky. You launched yesterday and launched this morning. One Coldplay conference changed the timeline forever.

• 2:14:28Speaker 05

  I know. I saw that this morning. I woke up. I was like, wow.

• 2:14:30Jordi Hays?

  Yeah.

• 2:14:31Speaker 05

  Glad this happened yesterday.

• 2:14:32John Coogan?

  Oh, yeah, because I mean, it's so hard to launch these days, right?

• 2:14:35Jordi Hays?

  We're having a couple of people from OpenAI on later today.

• 2:14:37Speaker 05

  And it's such a big day for legislation in the United States.

• 2:14:40Jordi Hays?

  Oh, yeah, the Genius Act, right?

• 2:14:41Speaker 05

  The Genius Act and the Clarity Act just passed.

• 2:14:44John Coogan?

  I'm finding out about this right now.

• 2:14:46Jordi Hays?

  I think tomorrow.

• 2:14:47Speaker 05

  Yes, Genius App, stable coins will be passed and signed into law in the United States this year. I mean, this week, which is an incredible milestone. We've been working towards it for three years, four years, five years. I mean, the impact is that for the last decade of crypto, there hasn't been regulatory clarity in the United States, which means that entrepreneurs and consumers haven't actually been able to benefit from this technology. And we've been working to build bipartisan consensus that we need rules of the road in order to make sure that crypto works.

• 2:15:15John Coogan?

  And I feel like Coinbase has always been like the conservative one, and it paid off because during the end of the Zerp era. Basically, all of Coinbase's competitors went out of business. It was chaos, right?

• 2:15:25Jordi Hays?

  A good amount.

• 2:15:26John Coogan?

  And, and, and I remember talking to, uh, to a public markets investor at that time. And he was just saying like, like, I feel like Coinbase has the mandate of heaven. Like they are making it through.

• 2:15:35Jordi Hays?

  What was the low? Was it like $7 billion?

• 2:15:38John Coogan?

  Something like that.

• 2:15:40Speaker 05

  Yeah, in, in 2022, the share price went to $32, which was below, I think, the Series E price. And, and I had joined, you know, like a couple of years before the Series E price. But, you know, we all experienced that.

• 2:15:50John Coogan?

  Yeah. What was your path to Coinbase? Did you get, were you building something else before?

• 2:15:53Speaker 05

  Yeah.

• 2:15:54John Coogan?

  Okay, break that down.

• 2:15:54Speaker 05

  I dropped out of school and started a company. It was called Clef. We did identity. And so the whole idea was how do we build an identity? That's the next thing after passwords that was decentralized that anyone could access.

• 2:16:03John Coogan?

  So this was a crypto company?

• 2:16:04Speaker 05

  It wasn't quite crypto, but we worked with crypto companies. So, uh, you know, Bitfinex, we were actually providing like kind of auth and login for them. And so Palo, like we go way back because we've been building forever. And so that business didn't work.

• 2:16:17John Coogan?

  Yeah, yeah.

• 2:16:17Speaker 05

  And then when we were winding it down, I was basically trying to figure out, what do I do next? And I love crypto.

• 2:16:22John Coogan?

  And his identity like KYC, like I upload my, I take a picture of my photo?

• 2:16:25Speaker 05

  It was actually a passwordless login mechanism. So almost like you hold your phone up to log into WhatsApp. It was like that, but back in 2012. And so we were a little bit before the time, but when you look at the security architecture that we built, it's actually almost the same as what we're doing now on base and what people are doing with pass keys. And it's this incredible thing where I've now been working on it, this same problem space for almost 12 years. And we're feeling like we're finally, we're finally getting there.

• 2:16:49John Coogan?

  Okay. So you, so you land at Coinbase and the way, uh, Brian Armstrong tells it, you go to him and you say, I need $1 billion to vote for projects.

• 2:16:58Jordi Hays?

  Not right away.

• 2:17:01John Coogan?

  But I want to get to the $1 billion plan. I know you did it for a lot less, but I want to know what, I, that's my question for the future. But tell me, tell me what you did in between.

• 2:17:08Jordi Hays?

  Two pizzas.

• 2:17:09Speaker 05

  Two pizzas. No. Um, so I joined, I joined as an engineer.

• 2:17:12John Coogan?

  Okay.

• 2:17:13Speaker 05

  It was an, it was an aqua hire process. My whole team actually sold to another company, to Twilio. But I was so excited about Coinbase.

• 2:17:20John Coogan?

  Let's go.

• 2:17:21Speaker 05

  And so I joined Coinbase, joined as an engineer. And then, uh, pretty quickly on, uh, I just started leading teams. They asked me, hey, can you take on a team? I took on more and for the next five years, I led all the consumer businesses on the engineering side. So if you know Max Brandsberg, he runs our consumer product. Me and him were product and engineering counterparts with him running product and me running engineering. And then after five years of doing that, I thought I was gonna start another company. I'm like a founder. I actually put in my notice and said I'm leaving in six months.

• 2:17:45John Coogan?

  In those five years, what products were you building?

• 2:17:47Speaker 05

  I was building Coinbase, Coinbase Pro and Coinbase Wallet.

• 2:17:50John Coogan?

  Okay, got it.

• 2:17:50Speaker 05

  So like, anything that you've touched as a Coinbase user, those are my teams. We rebuilt the whole product from scratch, migrated to React Native.

• 2:17:56Jordi Hays?

  Coinbase Wallet was the first like decentralized product in the Coinbase ecosystem. So I think, I think the context here is like the core business and why the launch yesterday is exciting is the core business was always centralized.

• 2:18:11Speaker 05

  Centralized and custodial.

• 2:18:12Jordi Hays?

  Gateway to get on-chain.

• 2:18:14Speaker 05

  Exactly.

• 2:18:14Jordi Hays?

  Custodial. And we'll get into base in a bit, but you were working on these sort of decentralized experiments early.

• 2:18:21Speaker 05

  Exactly. Yeah, working on the decentralized experiments early.

• 2:18:24John Coogan?

  But why are you saying it's so early at the time?

• 2:18:26Speaker 05

  You know, I'm an optimist.

• 2:18:29John Coogan?

  I've gotten it from you.

• 2:18:30Jordi Hays?

  He said he hit, he typed GM and posted it probably a hundred thousand dollars.

• 2:18:36Speaker 05

  Yeah, but I thought I was gonna leave, but I actually started having conversations with Brian about what did the future of Coinbase look like? And what would it look like if we leaned even further into this kind of decentralized world, built more things on-chain? Because Coinbase had started 10 years ago and it's, you know, traditional web two business. And so, again, the first thing I did was I went to Brian in the kind of fall of 2021 and our exec team and said, if you give me a billion people and 16 employees, this was like peak 2021.

• 2:19:01John Coogan?

  Billion dollars and 60?

• 2:19:02Speaker 05

  60 employees.

• 2:19:03John Coogan?

  60 employees.

• 2:19:04Speaker 05

  I'll turn Coinbase into a DAO.

• 2:19:05John Coogan?

  Okay.

• 2:19:07Speaker 05

  They were, they were like, ha, ha, ha.

• 2:19:12Jordi Hays?

  We're a public company, sir.

• 2:19:16John Coogan?

  I know what you do with a billion dollars if you're meta and you build a big data center and you have to pay, you know, half of that to Jensen Huang over at Nvidia. But what would you have actually done with a billion dollars? I don't even know what is that?

• 2:19:29Speaker 05

  We didn't really have as good.

• 2:19:30John Coogan?

  Okay, it was more just like, let's, let's, let's take the constraints off.

• 2:19:33Speaker 05

  Let's take the constraints off. Let's go and do the thing, right? We have this big public company. It's a crypto leader, but it's still built on web two architecture.

• 2:19:40John Coogan?

  Sure, sure.

• 2:19:40Speaker 05

  How do we move it on-chain in this new way? And so it was the vision was there, but the execution strategy wasn't there. And so.

• 2:19:47Jordi Hays?

  Well, and the, and the other context is that Coinbase has been in this incredible position of being the gateway to get on-chain. And you see this with the Circle IPO. People were like, wait. Coinbase makes a lot of circles revenue as a stablecoin issuer. But you guys had always basically said, you guys do whatever you want on chain. And a bunch of great companies sprung up to kind of service that market. But you had to be hands off, which I imagine was pretty frustrating.

• 2:20:14Speaker 05

  Yeah, I mean, I will say that early on, so Brian has always had the vision of the self custodial world. He's even had the vision of a super app in many ways, where the first version of Coinbase Wallet was actually called Toshi. It was a messaging product with apps in it.

• 2:20:27Jordi Hays?

  Oh, interesting.

• 2:20:28Speaker 05

  This was in like, this was in 2017. It's green. He put it up on the stage. It's based today. And so then we kind of pivoted Toshi to Coinbase Wallet, which is the self custodial wallet that millions of people use, that folks know and love. And we've worked on that for the last five years. And that was primarily focused on trading in money. But as we've built Base over the last two years, which has really been a builder ecosystem where people are building apps. We've seen two problems emerge. The first is that everyday people, when they're trying to use crypto and trying to kind of figure out what's going on here. It's really hard to actually find things to do and that are useful. You know, maybe they come on chain for a coin, but then they kind of get lost. They're like, what are all these things? How do I actually use it?

• 2:21:06Speaker 05

  And then on the other side, we saw that we had thousands and thousands of builders and creators who had these incredible products that they were building. But they couldn't actually get them in front of people. Like, we were missing this connective tissue. And so 10 months ago, I talked with Brian. I kind of came back to running the Coinbase Wallet team, which I'd worked on for a long time prior. And we kind of jointly articulated this vision of, well, what if we built the kind of app that solved that problem? And brought all those things together. And this is what we launched yesterday. It's the Base app. And it's an everything app that lets you create, earn, chat, trade, and discover this entire... Pay for things too. Pay for things with Shopify, Arowan.

• 2:21:47Speaker 05

  You know, you can now pay for juice with Base USDC on Shopify powered by Base Pay.

• 2:21:56Speaker 05

  The whole thing kind of comes together in a new way where because we now can bring together this marketplace of developers and builders and businesses on one side with consumers through a really easy to use experience, we're going to be able to grow crypto a lot faster and spin the flywheel.

• 2:22:11Jordi Hays?

  Would I imagine launching Base in the way that the product is today, I know it's a pure software business, very different from the Coinbase's traditional business, which is effectively acting as this regulated financial institution. Would it have been possible to launch this a year ago? Or did you need the White House to launch some tokens and a few other events?

• 2:22:40Speaker 05

  Well, I think the biggest thing that we needed is we needed the technology to mature, right? So when we had this vision three years ago of building Base, the first thing we started with was actually the platform. It was the chain because we'd spent a year trying to figure out, okay, what's the product we build to kind of bring this next generation?

• 2:22:57Jordi Hays?

  Explain though, so you had the chain, but there is no token attached.

• 2:23:00John Coogan?

  How do you get people to use it? I feel like playbook in crypto is like...

• 2:23:04Speaker 05

  We went back to the tried and true method that people had been following for 100 years, which is that you focus on building a product that people love.

• 2:23:11John Coogan?

  Okay.

• 2:23:12Speaker 05

  Right? Like, I think there's been this whole distortion in crypto for the last five years where people are like, oh, you get a token, you pay people to use your product. And we basically said from the beginning, no, we're going to build a chain, it's going to be a developer platform, and we're going to figure out how do we make it the best place for builders to build. And that's exactly what we did over the last two years.

• 2:23:26John Coogan?

  But if I take it to like the Bitcoin analogy, it's like the reason that people set up data centers to run the Bitcoin network is because they mine Bitcoin and that has financial value. So there's this economic incentive. And now that gets distorted all the time when people run like random chains and stuff. And I understand the rationale, but is there an incentive for other participants to help run the infrastructure? Or are you doing something where you're splitting it across different groups? How does the actual chain stay on?

• 2:23:52Speaker 05

  Yep. Well, the first thing to know is that Base runs on Ethereum. And so it's a layer two that sits on top of Ethereum.

• 2:23:57John Coogan?

  So as long as the Ethereum miners are happy, then Base runs.

• 2:24:00Speaker 05

  Yes, exactly. And then there's a decentralized network that's also based that people use to get access to the network.

• 2:24:04John Coogan?

  Got it.

• 2:24:05Speaker 05

  Bringing people to the network is that they're building things and then they're using those things. And so here's two examples. The first one is USDC. Yeah. We're seeing a huge amount of growth in payments, both in the United States and outside the United States in USDC. And that's because people are using products like Shopify, which has rolled out to millions of merchants, where they're actually taking USDC in their wallet and they're paying for things. And that's global, it's fast, it's cheap, it happens instantly.

• 2:24:28Jordi Hays?

  And there's cool rewards.

• 2:24:29Speaker 05

  There's cool.

• 2:24:30Jordi Hays?

  That the, it's retailers effectively, which is if you pay with USDC, we'll give you one point back or something like that.

• 2:24:38Speaker 05

  Because the interchange fee should be.

• 2:24:39Jordi Hays?

  Yeah, exactly. Debit card or credit card.

• 2:24:41Speaker 05

  Yeah, so it's 1% back with base pay and you can earn 4.1% on your USDC when you're holding. That's pretty good, right? And it's an instant global payment method. So any business in the world can integrate it and then anyone else in the world can pay for things. Yep. So that's one example. People are coming to base for payments and stable coins. The other example is a little bit more out on the kind of like nascent curve in terms of what we're seeing, but we're really excited about. This is what the focus of the event was yesterday, which is really around the creator economy, right? If you look at the last 20 years, you've had so much creativity pour into the internet, but the vast majority of that creativity has been put into platforms where creators actually don't earn that much money. Right? If you're an average creator who has less than 10,000 followers, or if you're in another country like Nigeria or Argentina,

• 2:25:23Speaker 05

  you're going to be posting and filling up this kind of content world with valuable creativity that then other people are looking at, but you're not earning anything. And so one of the big things that we're focusing on with the base app, and one of the reasons why people are coming to use it, is that when you post on base, you actually earn. And this is because we've built a new economic system where the content is actually valuable and then the value gets flowed back to the creators. And I think this is a novel use case for this platform that we built with base and base chain.

• 2:25:52Jordi Hays?

  Okay, so question, question. If, if somebody opens a base app, their wallet's loaded and they start scrolling.

• 2:25:58Speaker 05

  Does that cost them money?

• 2:25:59Jordi Hays?

  Does that cost them money? How does that actually?

• 2:26:01Speaker 05

  It doesn't cost them money, but like I can literally show you, you can decide if you want to support a post. And so like here, this is on my feed and I'm just like Jesse, I'm on my feed, I'm creating content. I posted this great base juice content and, oh, there's a bug, live, classic.

• 2:26:18Jordi Hays?

  There we go, it happens, day one.

• 2:26:20Speaker 05

  Base juice content, right? And you have the normal things you see here, the like, the comment, the retweet, and then you have a new thing.

• 2:26:25John Coogan?

  Yeah.

• 2:26:26Speaker 05

  Which is market cap.

• 2:26:26John Coogan?

  Sure.

• 2:26:27Speaker 05

  And so this is basically the value of that content. And this one's worth $15,000. This one's worth $84,000.

• 2:26:33John Coogan?

  How is that possible? I mean, I like my, I've been on YouTube for five years. The best video I ever posted got eight million views and I got a check for 20K from YouTube.

• 2:26:42Speaker 05

  Well, that's actually pretty good. YouTube is one of the platforms that pays creators really well.

• 2:26:46John Coogan?

  Fifty percent. And I, and I thought that was fine because they brought me all the users. So I was actually pretty happy with that. But like, how could, how could something, how could a piece of content have a market cap?

• 2:26:55Speaker 05

  Well, yeah, I, I have.

• 2:26:56John Coogan?

  No one else wants to buy it unless they want to buy the revenue stream. And there's been some of those projects.

• 2:27:00Jordi Hays?

  I posted, I posted just a few hours ago.

• 2:27:03John Coogan?

  On that.

• 2:27:04Speaker 05

  Yeah.

• 2:27:04Jordi Hays?

  Startup, startup CEO, well, this is on, on X. Yeah. Where I, well, I, we're no market cap on this one. Startup CEOs can't even hug their chief people officer at a concert in this country anymore. 1.6 million views, 50,000 likes.

• 2:27:17John Coogan?

  50,000 likes.

• 2:27:17Jordi Hays?

  I'm sure, I'm sure the creator payout will be decent. But this, this, this looks to me like potentially a, a nine-figure market cap on if I had ripped it on base.

• 2:27:26Speaker 05

  Yeah, well, well, seriously, like seriously, I, I, you know, on these ones that I posted, like this one I posted yesterday that now has an $84,000 market cap. It's done like $4 million in volume and I earned 1% of all of the volume. And so that means I've earned like what, 40, $40,000?

• 2:27:41John Coogan?

  That's insane.

• 2:27:42Speaker 05

  Right? So you get a viral post?

• 2:27:43John Coogan?

  That doesn't feel, that doesn't feel like, like economically fair.

• 2:27:47Speaker 05

  Well, but think about this, the place where that value comes from is the fact that your content is valuable. Right? How have these platforms?

• 2:27:54John Coogan?

  Right?

• 2:27:54Speaker 05

  How have these platforms built?

• 2:27:56John Coogan?

  Yeah.

• 2:27:57Speaker 05

  Multi hundred billion dollar businesses if the content isn't valuable?

• 2:28:02John Coogan?

  Running ads.

• 2:28:03Speaker 05

  But what's bringing you there?

• 2:28:05John Coogan?

  The content. And then they pay you to bring more content.

• 2:28:07Speaker 05

  An ad is a way of monetizing the value of the content.

• 2:28:11John Coogan?

  Yeah, yeah.

• 2:28:11Speaker 05

  But the content itself is valuable. And what's happening on the base app now is that that value is being, uh, kind of figured out in a free market.

• 2:28:18John Coogan?

  Yeah.

• 2:28:18Speaker 05

  And then the, the kind of, the, the economic offflows of that value are getting redirected back to the creators.

• 2:28:24Jordi Hays?

  We love ads.

• 2:28:25John Coogan?

  Yes.

• 2:28:25Jordi Hays?

  This show, will we be able to see ads in the base app? I know you guys acquired Spindel.

• 2:28:30John Coogan?

  I don't think you're ready to talk.

• 2:28:33Speaker 05

  Well, we have, we, we, stay tuned in the. In the next, in the next week.

• 2:28:36Jordi Hays?

  I want to run, I want to run some ads. Talk about, talk about the integration in the, in the kind of app, mini apps.

• 2:28:43Speaker 05

  Mini apps.

• 2:28:44Jordi Hays?

  Dan from Farcaster has, has been on the show. I know you guys have some integration with, with the Farcaster network. Is that right?

• 2:28:52Speaker 05

  Yeah. So the whole social feed, all of the connection graphs, you know, followers and following, it's all powered by Farcaster. When you're posting content, it's powered on Farcaster. When you're coining content, that's powered by Zora. It's another protocol. What we've done with the base app is we brought them all together.

• 2:29:06John Coogan?

  That's cool. Including Shopify.

• 2:29:07Speaker 05

  Including Shopify and integrating, including XMP, which is powering messaging. They just raised the $20 million Series B. And they're an incredible decentralized messaging protocol that is powering secure encrypted messaging with agents in chat. And so one of the really cool things, I don't know if you guys saw it in the demo yesterday, is you can be in a chat with your friends. You can just like drop a bet in there that you can say to agent, hey, like let's bet $5 that the Dodgers are going to win tonight.

• 2:29:31John Coogan?

  Okay.

• 2:29:32Speaker 05

  And then it's immediate bet. And then you can say, hey, send $10 to all of my friends.

• 2:29:35John Coogan?

  Sure.

• 2:29:36Speaker 05

  And it just works because it's built on this platform and you have these open protocols that are working together. And so going to your point, we built on Farcaster because we believe in building an open protocols. And one of the things that open protocols enables is it enables other people to build on top of them. And so this is where the mini apps come in is because we built in this open way, now anyone can build a mini app and it just shows up in the app. And here's another one. I don't know if you guys have seen this, but this is when you open the base app today.

• 2:30:01Jordi Hays?

  I think the Farcaster.

• 2:30:02John Coogan?

  There we go.

• 2:30:03Speaker 05

  It's the end, which is like literally you can open this up and we're going to be on the live stream here live now. There I am.

• 2:30:08John Coogan?

  Wow. Yeah. There you are. Right there. It is so cool.

• 2:30:11Speaker 05

  But one of the really cool things about this.

• 2:30:13Jordi Hays?

  And to be clear, this, this was organic, third party.

• 2:30:16Speaker 05

  And, and you have some new sponsors. I don't know if you guys realize this, but you have a bunch of crypto brands here that have now gone and said, hey, we want to sponsor you. And Bracket, for instance, this is sports betting on base. It's awesome. It's so fun. You can interact with an AI G. But the thing.

• 2:30:28Jordi Hays?

  Our lawyers, we're gonna, our lawyers are like bloodhounds. They're gonna, they're gonna be like chomping at the bit here.

• 2:30:32Speaker 05

  The thing that's really incredible about this app is that it's all connected. And so I can actually tap in Bracket and I'd be like, okay. Oh.

• 2:30:38John Coogan?

  Okay. Yeah.

• 2:30:39Jordi Hays?

  Hey, stay one. Stay one.

• 2:30:40Speaker 05

  Oh my God. Come on, Jesse. What's going on here with this mini app?

• 2:30:45John Coogan?

  And in theory, yeah, this is, this is the start of the auction, the auction driven.

• 2:30:51Speaker 05

  It happens, it happens.

• 2:30:52John Coogan?

  But, but, but, but, but this is, this is the start of the auction driven ecosystem that actually, that actually results in real transfer value, real, real values created at some point.

• 2:31:02Speaker 05

  So this is a new ad, I'm like, oh, I like Bracket, whoa, now Bracket is right here.

• 2:31:07John Coogan?

  Okay.

• 2:31:07Speaker 05

  And then I'm like, okay, I'm just gonna buy Bracket and I'm be like, cool, let me buy $5 of Bracket.

• 2:31:11John Coogan?

  This is not financial, this seems, this seems like.

• 2:31:14Speaker 05

  We're not gonna buy, we're not gonna buy those.

• 2:31:15Jordi Hays?

  The thing that's fun is like, it's just wildly chaotic.

• 2:31:19John Coogan?

  It is chaotic.

• 2:31:19Jordi Hays?

  Entirely new surface area. Coinbase has never been about chaos, but, and, and I'm not saying that Base is, but creating an environment that's just like a free for all, decentralized, it's open, you can create anything.

• 2:31:32John Coogan?

  Yeah, I mean, you said that the goal broadly is to get a billion users on crypto, crypto native.

• 2:31:37Speaker 05

  On chain.

• 2:31:37John Coogan?

  On chain, that's the right phrase. Give me the State of the Union, where are we today on that journey? Like, what are the different buckets and how big are they?

• 2:31:45Speaker 05

  Yeah, so we're trying to build a global economy that increases innovation, creativity and freedom. And the metric that we use basically to measure that is do we have a billion people on chain?

• 2:31:54John Coogan?

  Yes.

• 2:31:54Speaker 05

  And of course, I'm gonna get 5 billion people on chain because we're gonna get everyone who has an internet connection on chain.

• 2:31:58John Coogan?

  Let's go.

• 2:31:58Speaker 05

  But a billion's a nice number and we're gonna make it repeatable. I'd say that when you look at the data today, there are hundreds of millions of people who hold Bitcoin globally around the.

• 2:32:06John Coogan?

  Hundreds of millions?

• 2:32:07Speaker 05

  Yeah, hundreds of millions. A lot of people hold Bitcoin. Like Bitcoin is very well used, but it's not something that people are using their day to day life. I'd say there's probably tens of million people around the world who are using stable coins.

• 2:32:16John Coogan?

  Yep.

• 2:32:16Speaker 05

  And then I think we're in the, the millions of people right now who are really starting to use these on-chain products. And that's across Base, it's across Solana. We're seeing innovation everywhere and we like to work with everyone. We think about Base as a bridge, not an island. We're actually connecting with everyone and figuring out how we can help them be successful. But I think it's still really, really early days and the goal with the Base app is to like, kick up the next kink in growth.

• 2:32:36John Coogan?

  So my question is like, when we're, when we're following the, the ChatGPT story, there's obviously DAUs. But the chart that everyone's obsessed with right now is that ChatGPT minutes per day is skyrocketing. It's a 30, 30 minutes per user per day, something like that. We're seeing lots of queries go up. My question is like, with financial products, I, I do think that there's a, there's a benefit to having a lot of people own Bitcoin. I think it's an awesome network, a, a, a check on authoritarianism. It's awesome. But like, I don't know that I should be like interacting with Bitcoin daily. But what are the other metrics downstream to, to, to like, to like quantify like whether or not someone's on chain? Because like. If someone's like, like if I'm, if I'm in my bank account,

• 2:33:17Speaker 05

  Yeah.

• 2:33:17John Coogan?

  You know, messing around with dollars all the time, I'm actually probably unhappy.

• 2:33:20Speaker 05

  Yeah, yeah. Well, the first thing I'd say is that definitely Coinbase is a traditional financial product. Where they're growing, they're trying to be the best for trading. It's awesome. They're making such good progress. So excited about the retail Dex integration, which is basically making it so that anyone Coinbase can buy any asset on base.

• 2:33:34John Coogan?

  Yeah.

• 2:33:35Speaker 05

  Just works listed. I'd say base, though, we don't really think about it as a financial product.

• 2:33:39John Coogan?

  Okay.

• 2:33:40Speaker 05

  There's money involved because money is a part of everything. But it has social ads core, it has chat, it has apps. And so people are going to come to base just like they come to their other apps.

• 2:33:49John Coogan?

  Time on site should be a key metric that you're following.

• 2:33:51Speaker 05

  We're looking at, we're looking at, we look at kind of two things.

• 2:33:54John Coogan?

  Dowmals, all that.

• 2:33:55Speaker 05

  Yeah, Dowmals. And we look at like weekly active users and then we look at weekly transacting users. Where it's like, are you actually doing a transaction on the chain? Where it's like buying something or sending money to a friend or something like that. And so the active user is kind of an engagement metric. And then the, the transacting user is like a deeper engagement.

• 2:34:10John Coogan?

  Yeah, yeah, yeah. So higher use of the actual product would not be a bear case like it is with my, you know, my traditional financial app with which I'm opening.

• 2:34:18Speaker 05

  Yes.

• 2:34:18John Coogan?

  It's probably a problem. I'm probably like owe someone money or overdrafted or something.

• 2:34:22Speaker 05

  And the really incredible thing about this kind of conversion rate of active to, to transacting is we have the data of before and after. Where like it was really just a money app before and now it's a real social product. But people are doing all these things with money.

• 2:34:33John Coogan?

  Yeah.

• 2:34:33Speaker 05

  And we're seeing way higher initial user conversion rate to actually doing something on chain.

• 2:34:37John Coogan?

  That's awesome.

• 2:34:37Speaker 05

  Because now it's not like, oh, you have to go like make an investment decision. It's like you can like your friends post.

• 2:34:41John Coogan?

  Yeah.

• 2:34:41Speaker 05

  Right? Or you can like, you know, have to pay at a store that you're going to. And that transition from a speculative thing, which is so important and such a big important part of base and the crypto economy, to a daily thing that also has like way bigger TAM in terms of the number of people who do social products and other things on a daily basis. That's, that's really the shift we're trying to make.

• 2:35:02John Coogan?

  Yeah, it's super cool. Like the, like we know that the everything apps work elsewhere.

• 2:35:06Speaker 05

  Yeah.

• 2:35:07John Coogan?

  They don't work in America for some reason. This feels like an end run around, a different strategy to try and make it work here.

• 2:35:12Speaker 05

  Everything app for a specific subculture, right?

• 2:35:15John Coogan?

  Right now, but you know, billion people, is that a subculture?

• 2:35:18Speaker 05

  And what I'll say is, we were just at Arowan. I just spent two hours at Arowan and people, we were giving out free juice. I was filming content. We got some good content coming later.

• 2:35:26John Coogan?

  Great.

• 2:35:26Speaker 05

  Uh, and I was just talking to people about the juice in the app. And when people hear, uh, especially like millennial, Gen Z creators, when they hear, do you want to join a free social network where you can get paid to post? And you want free juice. They're like, hell yeah. I've been posting on other social networks for a long time and I've never gotten paid.

• 2:35:47John Coogan?

  Okay.

• 2:35:48Speaker 05

  And so that hook of your content is valuable.

• 2:35:50Jordi Hays?

  You get paid. You get paid.

• 2:35:52Speaker 05

  And you can get paid for it because that value is going to get unleashed by the free market.

• 2:35:56John Coogan?

  Yeah.

• 2:35:56Speaker 05

  And then we're going to distribute it on crypto economic rails that is next generation internet platform.

• 2:36:00Jordi Hays?

  I'm fired up.

• 2:36:01Speaker 05

  It's epic.

• 2:36:02John Coogan?

  Well, good luck. We got to get to our next guest. Thank you so much for stopping by. This is awesome. Thank you.

• 2:36:07Speaker 05

  Can we get a gong hit on the way out?

• 2:36:08John Coogan?

  Here.

• 2:36:09Jordi Hays?

  Gong hit.

• 2:36:10John Coogan?

  Let's go.

• 2:36:15Speaker 05

  Get the base app at base.app. You can get on the waitlist for me letting more people on every single day.

• 2:36:19John Coogan?

  There we go.

• 2:36:20Jordi Hays?

  Founder mode.

• 2:36:21John Coogan?

  Talk to you soon, Jesse. Have a good one.

• 2:36:22Jordi Hays?

  Great chatting. Do it.

• 2:36:24John Coogan?

  Up next, we have Higgs field. Alex from Higgs field AI. We've been using Higgs field AI to generate crazy photos. Jordy posted one of

• 2:36:34Jordi Hays?

  I was on a horse.

• 2:36:36John Coogan?

  Uh, the horse had a little bit of a long neck, but otherwise photo real and the facial reconstruction, like it nails the face really, really well.

• 2:36:45Jordi Hays?

  I

• 2:36:45John Coogan?

  Exactly sure how they do that. I want to talk to it. Welcome to the team. Welcome to the stream.

• 2:36:50Jordi Hays?

  Yeah, Higgs field. Uh, we have a lot of amazing people on today. Uh, I have been incredibly excited to speak with you. We were, we were just talking. I don't know if you caught it, but I posted a, an image generated, uh, by Higgs field a couple of days ago. I think most people still think it was real. It was a completely ridiculous image. It was like this like cinematic upshot of me on a horse that had, uh, I didn't know why people didn't catch that the neck was, was quite a bit bigger than a regular horse's neck, but

• 2:37:22John Coogan?

  It was great. Clear breakthrough.

• 2:37:23Jordi Hays?

  Yeah. Uh, it, it was the first time that I've seen an image generation product and realized that I think you guys are, are, have probably already started to take over Instagram style content. Um, but, but really disrupting the, uh, potentially disrupting the Instagram boyfriend market. If, uh, if people can just generate infinite images of themselves, Instagram boyfriends will have nothing to do, but great to have you on the show. Would be great to get a quick background on yourself and the company, and then we'll get into a bunch of other stuff.

• 2:37:57Alex Mashrabov?

  Great, thank you very much for the kind words. Definitely, it's great to be here. I thank you for the invitation. So quickly about myself, I'm a veteran in the video generation AI space. I built maybe some of the most iconic products in that space. Maybe you remember Snap filter, face filters.

• 2:38:15John Coogan?

  Oh, really?

• 2:38:16Alex Mashrabov?

  Which, yeah, totally.

• 2:38:18John Coogan?

  That's amazing.

• 2:38:18Alex Mashrabov?

  Yeah, there were like billion people throughout the world who played with that.

• 2:38:21John Coogan?

  Disability.

• 2:38:22Alex Mashrabov?

  And this was free gen AI, right?

• 2:38:26Alex Mashrabov?

  And the one, the models were like thousand times smaller than they are today.

• 2:38:31Alex Mashrabov?

  And although this product was specifically targeting like augmented reality use case. So basically overlay on top of the existing camera.

• 2:38:42John Coogan?

  Yep.

• 2:38:42Alex Mashrabov?

  With, with all these learnings which I got from my exciting times at Snapchat. We started Higgs field with a way bigger ambition is to create camera of the next generation.

• 2:38:55John Coogan?

  Yep.

• 2:38:57Alex Mashrabov?

  Even today, we can see that there is an emergence of UGC contents.

• 2:39:05Alex Mashrabov?

  The quality unfortunately goes down. And with, and with Higgs field, we create a new ways to tell stories. Helping creators and brands to get attention on social media.

• 2:39:19John Coogan?

  What's the key insight? Do you think, how important is it to create a great image generation model? Just scale, you just need to throw a ton of compute versus changes in the algorithm. We've heard rumors that images in chat GPT isn't pure diffusion. There's some transformer architecture in there, some different layers. I've started to suspect that there are different layers in some of these where there might be a different neural network or different, different system to put text on top. So the text is really clean. Are we kind of recreating Photoshop at a certain level? Talk to me about the actual technical infrastructure to the degree that you can.

• 2:39:59Alex Mashrabov?

  Totally. First of all, I think it is important to admit that today we are early in our journey with video AI technology. I think Higgs field is probably the first example of the technology platform which helps to create compelling content for social media.

• 2:40:20Alex Mashrabov?

  The next step is going to be, is to, is going to be to build a reasoning engine on top of that. So the, so let's say you post a video, the system is gonna suggest you and analyze your accounts and actually provides you with more suggestions what to post. And eventually, I think we're, we are going to find ourselves in two years in, in a new world version of the world, where most of the content out there is AI generated. There is no way to stop that. And on, on our side, we do our best to provide a simple interface

• 2:41:02Alex Mashrabov?

  so that non-AI users, like, let's think about market of social media professionals of tens of millions of people, so that this broader user base can actually tap into the power of generative AI technology. And I think we will see that the models are gonna get way better than they are today. It is true that various research labs, they do experiment with various architectures. We found that our post-training techniques and allow us to substantially differentiate from the competition. And we do believe that the general quality of the technology is already there to surpass, like, average human-produced content.

• 2:41:46John Coogan?

  What, uh, I have this one eval for AI image generators where I ask it to create a, a Where's Waldo? And, and no system's been able to crack it. And I think it has something to do with the density of information in a proper Where's Waldo. You'll typically see hundreds of little characters doing very intricate things. And so it's very clear that the artists that create the actual Where Waldo's work at a very small scale and they actually piece together the full image like it's a puzzle. That's something that I feel like could be solved with a reasoning layer on top. You understand that you're trying to create something that's really, really layered.

• 2:42:29John Coogan?

  And so you need to kind of create tiles and then blend them together. Is that, but, but this gets into the question of like, how are we going to generalize and scale reinforcement learning in LLMs and agentic workflows? Is there a similar path that we're going down in terms of image generation?

• 2:42:49Alex Mashrabov?

  Yeah, this is a great question, by the way. I think this is a trillion dollar question which we just asked, which is we all saw the power of reasoning engines with maybe models like O3. And then we see that at GROK 4, they actually spent on reinforcement learning more than they spent on the pre-training stage, right?

• 2:43:09John Coogan?

  Where is the market right now in terms of pre-training, post-training in images in your estimation?

• 2:43:16Alex Mashrabov?

  Yeah, I do believe that in the video AI space, we are relatively early. It's probably we still see that the post-training stage in the video or video AI models can be maybe 20, 50 times lower compared to the pre-training stage.

• 2:43:32John Coogan?

  Wow, that's really low.

• 2:43:34Alex Mashrabov?

  Yeah, but we are really just scratching the surface there.

• 2:43:36John Coogan?

  Sure.

• 2:43:36Alex Mashrabov?

  I think then the future is building the video reasoning engine. And this is a trillion dollar question because this will because think about the brands out there. Today, it is today what we are seeing is that brands start to and agencies, they start to actually experiment with various models. And primarily, we all rely on our stereotypical understanding of the customers and some maybe qualitative data which is available out there. I strongly believe that with this video reasoning engine, then the way how how the stories are told is going to be completely different.

• 2:44:20Alex Mashrabov?

  Instead of just running one video, we can run hundreds of the videos out there and A/B test them and see which one performs the best. And today, there is there are only a few top creators who actually do that. If you look at Mr. Beast and similar size of the creators, they do A/B test thumbnails very aggressively. We all know that.

• 2:44:43John Coogan?

  Yeah.

• 2:44:43Alex Mashrabov?

  They actually A/B test the hooks. So far, this privilege is only available for larger teams who can actually do that, who have the manpower to do that. And the next generation video reasoning engine will empower everyone to do that, which is going to boom to the boom of AI.

• 2:45:02John Coogan?

  Yeah, I mean, what you're talking about is basically like RLing on humanity with human graders, which is the algorithm and likes. And that's effectively what the Mr. Beast algorithm is doing. My question is like, is there a way that we can bring that into the data center? Because if it stays on Instagram, if it stays on YouTube, it's probably pretty rough for you because Google and Meta are going to have an advantage there. But if you can figure out how to do RL with verifiable rewards or something that looks like a rubric for grading, you know, and finding errors. Are we going back to the generative adversarial network era where you'll have two competing models to determine, like whenever I generated something with VO, it's always like cars driving looks amazing, then all of a sudden I'm looking at the front of the car and the

• 2:45:47John Coogan?

  car is driving backwards and clearly the model is getting confused. But we need maybe like a detector for that. But how are we actually going to do RL at scale in imagery?

• 2:45:57Alex Mashrabov?

  This is a great question. So I think the first step is exactly, I mean, the first step is going to be reinforcement learning with AI feedback. Part of that, we already do at Higgs field, obviously at the post-training stage, not yet at the inference stage, just because of the cost associated with that.

• 2:46:12John Coogan?

  That makes sense.

• 2:46:14Alex Mashrabov?

  So we have to train video generation model in a way that it's sort of competing with video understanding model. And like at Higgs fields, we cannot go and label millions of the videos. That's why we have a set of powerful agents for video understanding, which help to tune the video generation process. But this is the process in the vacuum itself. What's gonna be powerful is when we condition the outputs of the model and train the model based on the engagement data from the social media.

• 2:46:49John Coogan?

  Yep.

• 2:46:49Alex Mashrabov?

  First, it's gonna be a number of likes, a number of comments. Although, if we look at meta ads, we see that they provide a very detailed breakdown and drop-off second by second.

• 2:47:01John Coogan?

  Hmm.

• 2:47:01Alex Mashrabov?

  So training the models based on on these outputs is going to lead to complete the next level of reasoning and success rates for their own customers.

• 2:47:12John Coogan?

  Cool. All right, we have another one in person.

• 2:47:14Jordi Hays?

  I know, I know, we're totally over. What what happens to the legacy Instagram influencer that has built a business basically on MV? They're constantly traveling around the world at the best hotels, on boats and private jets. What happens when anybody can be on a private jet on on a platform like Instagram or on a yacht somewhere? Have you thought through kind of the implications for the tech across different categories of of content creators?

• 2:47:46Alex Mashrabov?

  Hopefully. So first of all, I I need to admit that we're a technology platform first and foremost. Although, we think about ourselves as a scientist for and we are constantly monitoring and listening to to the creators and how they use the technology. And I cannot bring up the names out here, although like some of the top 50 YouTubers in the world, they actually wanna get reads of the team and build own agency of AI influencers, to be honest. That's they they actually they have a bunch of ideas which they wanna sell and they don't wanna condition their existence on the social media just to their likeness today because people just are getting colder

• 2:48:31Alex Mashrabov?

  and sometimes they get irrelevant. We have seen many examples of that on social media. And creators actually wanna create those digital agencies where they can where they can express all their ideas through various synthetic AI influencers. And they can use Hixil platform to do that.

• 2:48:49Jordi Hays?

  Yeah, it's a very, very wild time. Let's have you back on again soon. This is fascinating.

• 2:48:55John Coogan?

  Yeah, we'll talk to you soon. Thanks for hopping on, Alex.

• 2:48:56Speaker 07

  Thank you.

• 2:48:57John Coogan?

  We'll talk to you soon. Let me quickly tell you about public.com, investing for those who take it seriously. They have multi-asset investing, industry-leading yields, and they're trusted by millions. We have Billy from Regent also calling in from Re-Industrialized. Sorry to keep you waiting, Billy. Great to see you. Every time we talk to Billy, he's in a far-flung part of the world. We're working to bring him in from the waiting room, and he is sideways. Can you turn your camera?

• 2:49:24Speaker 07

  Yeah, I can go vertical. That is possible. Here we go.

• 2:49:27John Coogan?

  There we go. Where are you? You're in a cabin? Explain.

• 2:49:31Speaker 07

  Join you from a sea glider. Look at that.

• 2:49:32John Coogan?

  No way.

• 2:49:33Speaker 07

  It's super comfortable in here. We got plenty of legroom.

• 2:49:36Jordi Hays?

  There we go.

• 2:49:38John Coogan?

  That's incredible.

• 2:49:38Speaker 07

  We got internet. This is the future.

• 2:49:41John Coogan?

  This is amazing. Wait, wait. So, wait, are you, is this like a demo or are you actually in?

• 2:49:47Jordi Hays?

  I do believe that's a screen behind you.

• 2:49:49John Coogan?

  It's a screen behind you?

• 2:49:49Speaker 07

  This is the demo. You guys are super receptive over that.

• 2:49:52John Coogan?

  Okay. Well, we just talked to the AI-generated guy who says all this will be fake in two years, so, you know, I don't know what to believe at this point.

• 2:49:59Speaker 07

  We're building hardware in the real world, guys. We're at a Re-Industrialized conference right now.

• 2:50:03John Coogan?

  Thank you for bringing me back to the real world. How is Re-Industrialized? Give us the overall update on Regent.

• 2:50:09Speaker 07

  It is awesome. Like, hardware is cool again. Like, building real stuff is cool. Adams are cool. So, it's awesome to be here for this. Yesterday, we just announced the launch of Regent Defense here at Re-Industrialized, which is a big step for the, big step for the business.

• 2:50:25John Coogan?

  Congratulations. What is Regent Defense?

• 2:50:28Jordi Hays?

  What are the, what's the immediate application of the glider in a, in a defense context?

• 2:50:33Speaker 07

  So, Regent's actually been doing defense for years. This is sort of a growth of the business we've already been doing. Basically, everything is about moving around island chains as our key conflicts and theaters are in the Indo-Pacific. So, it's going back to World War II-style tactics. It's about naval operations. It's about being able to move around island chains logistics from the head of the Marine Corps and throughout the services underwrites the success of that naval Campaign. So turns out that all the things that our commercial customers like about sea gliders, the, the high speed, low operating costs, uh, you know, ease of operation and in the DOD space that we're hard to see, we fly really low over the water. So it's hard to pick up on some long range radar systems, uh, makes it a really perfect fit. So we've been on contract with the Marine Corps

• 2:51:18Speaker 07

  for a couple of years now, uh, and now we're expanding as we get into our full scale prototyping, expanding that product portfolio to meet the need.

• 2:51:25Jordi Hays?

  Very cool. Incredible.

• 2:51:27John Coogan?

  Anything else?

• 2:51:28Jordi Hays?

  I think that's it. Thank you for this. Thank you for this demo. This is the best, this is the best call in, the best guest call in I think we've had. So.

• 2:51:36Speaker 07

  Guys, we gotta get you, uh, on the sea glider in Rhode Island at some point too. We're doing a next call in from the, we have real hardware.

• 2:51:42Jordi Hays?

  We'll do the whole show. We'll do the whole show from the glider. I hear it's very smooth. You know, it's perfect for, for live podcasting.

• 2:51:50John Coogan?

  Starlink onboard yet?

• 2:51:52Speaker 07

  Uh, we'll, we'll put Starlink onboard for a T B P N episode.

• 2:51:55John Coogan?

  There we go. I love it.

• 2:51:57Speaker 07

  It's there. It's there.

• 2:51:58Jordi Hays?

  Awesome.

• 2:51:58John Coogan?

  Fantastic.

• 2:51:59Jordi Hays?

  Well, congratulations to you and the team on the progress and say hi to everybody at, uh, Reindustrialize for us.

• 2:52:05Speaker 07

  Will do. Thanks, guys.

• 2:52:06John Coogan?

  Enjoy the rest of the conference. We'll talk to you soon. And in the meantime, let me tell you about eightsleep.com. Get a pod five, five year warranty, 30 night risk free trial, free returns, free shipping. Go to it'sleep.com.

• 2:52:18Jordi Hays?

  T B P N.

• 2:52:19John Coogan?

  And we have our next guest joining the stream. I'm going to guess that it's Jonathan, but I'm going to make sure once he joins. Welcome to the stream. How are you doing? Did I get that right? Yes, Jonathan.

• 2:52:33Jordi Hays?

  What's happening?

• 2:52:35Speaker 08

  Hey, a lot of people call me JMo actually. So.

• 2:52:37John Coogan?

  Oh, JMo. What's up, man? Give us the news. I hear we, uh, you, you got some good news. Break it down for us.

• 2:52:44Speaker 08

  Yes, uh, we are coming out of stealth, launching a new company called Confident Security. Um, it's about providing confidential AI.

• 2:52:52John Coogan?

  Did you raise any money?

• 2:52:54Speaker 08

  We raised 4.2 million with decibel.

• 2:52:58Speaker 08

  Of our comments.

• 2:53:00John Coogan?

  Congratulations.

• 2:53:01Jordi Hays?

  There we go. Why is confidential AI important? I can imagine a bunch of reasons, but what was the catalyst to start the company?

• 2:53:11Speaker 08

  Yeah, I think, you know, unless we do some work, I think we're going to have Cambridge Analytica times like a million, essentially, unless there's just too much incentive for folks to train on data and people need to care about privacy. So we thought, you know, Apple shouldn't just be the only ones providing privacy, everyone else should do it too.

• 2:53:31John Coogan?

  Give me some concrete examples of how to use the product. What data specifically am I keeping secure? Is it stuff that's on the web or because I feel like if I have an AirGAP data center somewhere with a whole bunch of hard drives, there's no crawlers that are getting to that.

• 2:53:48Speaker 08

  That's right. If you are taking that, if you're using the AirGAP data and you have your own GPUs and it's completely in there, you might care about various users inside your AirGAP environment not seeing all the data, you know, a standard like top secret versus secret type of stuff. But this is, you know, you're an employee at Pfizer and you upload a PDF to OpenAI that describes how you do drug discovery, maybe you care about that secret, maybe you care about how it's going to be used. And after the recent OpenAI court case where they were forced to retain deleted data, you know, I think people are being a little cautious.

• 2:54:21John Coogan?

  So how does your, so how do you actually plan in plugging in to companies? Like, how does the product actually get installed and used on a day-to-day basis?

• 2:54:30Speaker 08

  So it requires two parties. One party who's running the server to install our wrapper around it, and then the other party who is like making requests to that server to use our SDK. And essentially, you can think of it as like a very specialized form of encryption where you can only decrypt the data that you've submitted to the server if you've met some constraints, like you don't log the data, you don't train on the data, no one has access to the data, all that type of stuff.

• 2:54:55John Coogan?

  And is that just like enforced at an engineering level or enforced at a legal contractual level?

• 2:55:03Speaker 08

  It is a technical level. Great question.

• 2:55:05John Coogan?

  Okay.

• 2:55:06Speaker 08

  And that's what's different, right? You can make promises that say you want to train on the data, but we make, it's a technical guarantee and it's essentially a bunch of fancy cryptography that makes that guarantee. So we actually offer unlimited liability and indemnification for data breaches and misuse because we're so convinced that you cannot, we cannot see the data, no third party can see the data.

• 2:55:24John Coogan?

  Yeah, so what's the go to market like you you mentioned example of like a big biotech company is that the the most obvious customer or are there other segments that are logical?

• 2:55:36Speaker 08

  Um, biotech, legal, uh, finance, of course, defense and government. Um, and not just not just like pure defense, but you know, local jurisdictions, uh, states, they're all trying to figure out how to deal with, uh, you know, freedom of information. When have you made something public? Did you was it too soon? Um, this helps, you know, manage all that stuff, uh, privilege for lawyers, same problem there. Trying to figure out, well, if I give my data to OpenAI, have I disclosed it and it's no longer subject to privilege?

• 2:56:06John Coogan?

  Yeah, that makes no sense.

• 2:56:08Jordi Hays?

  Super interesting.

• 2:56:10John Coogan?

  Close, close it out with, uh, how big is the team? Where is the team size going? What are you hiring for? What comes next?

• 2:56:17Speaker 08

  Um, we're about six people right now and we've been building, building, building, building. And now with the launch, we're ready to start selling. And so our focus is bringing on salespeople. Um, I've done two previous companies and I've every time I've learned that I should spend more on sales. So that's what we're doing.

• 2:56:33John Coogan?

  Interesting. Good takeaway.

• 2:56:34Jordi Hays?

  That's good. That there's gonna be, uh, that's the environment that a great sales leader or individual contributor wants to join.

• 2:56:41John Coogan?

  I mean, it takes a lot of technical CEOs like a while to actually get through that. So it makes sense that you're in your third company because like, yeah, a lot of people learn that lesson late, right?

• 2:56:51Jordi Hays?

  Awesome. JMo, thank you for joining.

• 2:56:54John Coogan?

  Thank you so much for joining.

• 2:56:54Jordi Hays?

  Come back on when you have news and thank you for doing this.

• 2:56:57John Coogan?

  We will talk to you soon.

• 2:56:58Speaker 08

  Let me guess, yep.

• 2:56:59Jordi Hays?

  Cheers.

• 2:57:00John Coogan?

  Let me tell you about Wander. Find your happy place. Find your happy place. Book of Wander with inspiring views, hotel-grade amenities, dreamy beds, top-tier cleaning and 24/7 concierge service. It's a, it's a vacation home, but better, folks.

• 2:57:15Jordi Hays?

  And next we have, uh, Contextual, the founder of Contextual AI.

• 2:57:19John Coogan?

  Welcome to the studio.

• 2:57:20Jordi Hays?

  Coming in, studio.

• 2:57:21John Coogan?

  How you doing?

• 2:57:21Jordi Hays?

  Let's bring him in. What's happening?

• 2:57:23John Coogan?

  Also, if I have this correct, the inventor of, uh, RAG, correct?

• 2:57:26Speaker 09

  I'm one of the authors of the RAG paper.

• 2:57:30John Coogan?

  Okay, okay.

• 2:57:30Speaker 09

  So, yeah, that was a team effort, lots of folks. And it's a long history of, you know, research that has gone into that.

• 2:57:38John Coogan?

  Yeah, give me the state of the union on. Very, very humble, very humble. Uh, no, a man who invented RAG by himself in a, in a, in a. In a cave of scraps. Yeah. Um, give me the state of the union on, on RAG. Uh, some people are saying, oh, just use a bigger context window. Like, what are, what are companies actually using RAG for on a day-to-day basis? What's the state? And then what's the shape of the industry that's popped up around the technology?

• 2:58:06Speaker 09

  Yeah, so the, the, RAG is really a very simple idea, right? It's about having GenAI work on your data. Uh, and you do that through retrieval. That's the R, and you then use your retrieval results to augment. That's the A, your generative AI, that's the G.

• 2:58:20John Coogan?

  Yeah.

• 2:58:20Speaker 09

  Uh, so it's a very simple idea. Uh, how people do RAG right now is radically different from, uh, what we did in the paper originally. I think that the buzzword these days is about context engineering. Right, so how, how do you actually give language models the right context so that they're, they can do their job? And as it turns out, all the language models are pretty good these days. And there isn't that much of a difference between, you know, your Claude and your OpenAI models or Gemini. If you give it the right context, then it can solve the problem. If you don't give it the right context, then you can have an amazing language model that is gonna fail. Uh, and so that, I think, is an opportunity that a lot of companies are, are looking at now. How can we make sure that this, this context layer really works?

• 2:59:00John Coogan?

  Do you feel like there's a RAG step or layer in the typical deep research projects? Products that I'm using on a day-to-day basis? I feel like it's mostly like going out to the web, searching, and then kind of just, you know, summing all this stuff up. But I can't tell if it's actually, like, the, the, the basis of RAG is like embed all of that into weights and, uh, and then, uh, and, and then search over it. Um, but is that happening at, at the state of the art right now?

• 2:59:29Speaker 09

  I think so. You're right. A lot of it is web search.

• 2:59:31John Coogan?

  Yeah.

• 2:59:32Speaker 09

  And if you want to do web search efficiently at scale, then you probably use simpler algorithms. So things that aren't that involved, but even web search very often uses embeddings. And where do you search there? So you could argue that web search is also just.

• 2:59:47John Coogan?

  Interesting.

• 2:59:48Speaker 09

  Rag.

• 2:59:49John Coogan?

  Why is, why is search so bad right now? I feel like, I feel like I can't search my email for anything. And Google has like frontier models. But yeah, I feel like search has just become like really hard, but then at the same time, I'm like having my mind blown by L L Ms and deep research products, but I don't want to wait 15 minutes just to search my email. But maybe that's what I need to do. Maybe that's the future it looks like. Like what is going on there?

• 3:00:14Speaker 09

  Yeah. I mean, that's a hard problem, right? But I mean, AI should be able to search your inbox for you and just give you the right answer.

• 3:00:20John Coogan?

  Yeah.

• 3:00:21Speaker 09

  Uh, that's the goal. I, I think it's happening. It's just search is a really hard problem to do. Uh, you, you don't want to really do it in a single step. So, so, uh, the way you do proper retrieval is multi-stage sort of cascading with smarter and smarter models that look at what might be a relevant result. But you're right. If, if you retrieve the wrong things, then you can never give the right answer. So that's a big, big open.

• 3:00:46Jordi Hays?

  Where, where are you guys focused today? I know there's a number of different use cases.

• 3:00:53Speaker 09

  Yeah. So the, the, the use cases we're, we're looking at are really your bread and butter use cases for rag. So answering complex questions on complex documents. In our case, we scale to millions of documents, which is unusual. So one of the most common misconceptions about rag is that people think that it's easy, which is actually probably true. If you have like two or three documents, you understand the use case. It's not that complicated. But when you go to the real world and you, uh, talk to some of our enterprise customers, they have very difficult problems. The data is all over the place. It's very complex data. There are millions of documents that it needs to work on top of, and then search breaks down. So you can't give the right answer, even if you have a great language model.

• 3:01:36John Coogan?

  Yeah, I mean, the scale of data at some enterprises is probably, what, seven orders? I mean, I imagine like the number of emails sitting in Gmail inboxes across the entire network is way beyond millions.

• 3:01:48Speaker 09

  That is also to your earlier point about like long context models. You can't fit all of that in the context of a language model.

• 3:01:57John Coogan?

  No way. No way. What's the state of the business today? How big are you? Like, kind of, what are the new challenges? What are the next milestones?

• 3:02:04Speaker 09

  Yeah, so we're 70, 80 people. Working on a lot of interesting problems that are kind of nice. Kind of across the board, trying to expand it to different use cases as well. So beyond the traditional rank use cases, looking at things like root cause analysis, code gen, because, you know, code gen is very hard and also often requires technical documentation that you don't want to incorporate in your code gen. So, yeah, making a lot of good progress on very interesting problems.

• 3:02:36John Coogan?

  Very cool. Well, thank you so much for stopping by. Love to have you back for a longer conversation.

• 3:02:41Jordi Hays?

  Yeah, let's do it again soon.

• 3:02:42John Coogan?

  Hope you have a great rest of your day. We'll talk to you soon.

• 3:02:44Speaker 09

  All right. Thanks for having me.

• 3:02:46Jordi Hays?

  Great to meet you.

• 3:02:47John Coogan?

  Let me tell you about Bezel. Go to getbezel.com. Your Bezel Concierge is available now to source you any watch on the planet.

• 3:02:52Jordi Hays?

  If you like enterprise agentic workflows, you might like fine watches.

• 3:02:59John Coogan?

  And up next, we have OpenAI. Big launch today. We are going to break it all down. Welcome to the stream. How are you?

• 3:03:07Jordi Hays?

  I think we got caught up on guests.

• 3:03:08John Coogan?

  We have two people.

• 3:03:09Jordi Hays?

  Well, it's happening. Great to have you guys on the show.

• 3:03:11Speaker 10

  Hi.

• 3:03:12Jordi Hays?

  I will start by saying sorry about the sorry that Coldplay had to have a conference last night. Like, you know, it was hard to predict.

• 3:03:22John Coogan?

  It's never been harder to launch anything on the internet.

• 3:03:25Speaker 10

  I know. We were just talking about this.

• 3:03:27John Coogan?

  Yeah.

• 3:03:28Jordi Hays?

  Well, we're here.

• 3:03:29Speaker 09

  I had no idea. He says it should have been.

• 3:03:31John Coogan?

  Okay.

• 3:03:32Jordi Hays?

  Well, normally you don't have to. You don't have to plan your launch schedule based on Coldplay.

• 3:03:35John Coogan?

  Yeah.

• 3:03:36Jordi Hays?

  Concert. Maybe it's something to keep in mind.

• 3:03:38John Coogan?

  Break down. Break down the launch. What is in? What should we be focused on now?

• 3:03:44Speaker 10

  So I used to work on deep research, Josh used to work on operator. We both had our launches earlier this year. And I think after our launches, we realized that our products are very complementary. And so we've basically combined the best of both into this new product, ChatGPT Agent. So ChatGPT Agent has access to a virtual computer with a bunch of different tools installed. So it has text browser, visual browser, terminal, and it's able to do a lot of different things that you would do on a computer. So it's just like very flexible and pretty powerful model. We trained it using end-to-end reinforcement learning, like our past reasoning models. And yeah, it can make slides, make spreadsheets.

• 3:04:22Jordi Hays?

  Yeah. What what initial use cases are you guys most excited about? Have you been using internally? What what kind of companies should be and and just individuals should be kind of taking advantage of it as of today?

• 3:04:34Speaker 11

  Yeah, I think so. Deep research, as I was saying, we combined sort of deep research and operator to build this. Deep research was really good at research, like I think the best product out there in terms of, or at least that that's what I thought, or I still think, in terms of researching. And then operator was there to take actions. Combining these two, you open up a lot of possibilities. You can do research, you can do actions, you can do research and then actions. And then on top of that, we added APIs. So like, for example, if you have connectors, which we launched, I think a couple of months ago, you can connect Gmail, Google Drive, Linear and whatnot, all sorts of products. And combined with that, it becomes an extremely powerful research and action tool. So for example, like personally speaking, I've been using it a lot internally

• 3:05:20Speaker 11

  just to even talk with the code base. Like I'm solving a particular problem, I'll connect it with GitHub. I'll ask it like, hey, can you sort of go figure out what's happening in this code, which is let's say a new code base for me? And then the model is also very natively multi-turn, which means that I can just have conversations back and forth with it, which is not true. Necessarily wasn't true, for example, for a deep research model, which we released earlier this year. So it's really, really useful from a specifically from at work, when I am able to connect all these amazing tools and able to just understand what's happening all parts of the system. Secondly,

• 3:05:54John Coogan?

  Oh, sorry.

• 3:05:55Speaker 11

  I was gonna quickly, I was gonna say like, personally, I also use it a lot. I think. There is a lot of small things or big things that I have to do. I can do them myself. Give an example, my wife and I have a date night every Thursday. I forget to book it most of the time and then I get in trouble. And then now with agent, like you can schedule tests, etc. You can just say like, look, every Thursday, just go ahead and figure it out. Give me five recommendations in the morning, which are available. And I can just do it, show up on Thursday morning, just click it and it's done. So things like that.

• 3:06:28John Coogan?

  Talk to me. That's amazing. I, I, I, once Deep Research came out, it felt like, uh, there was this little bit of a meme about like, we have fifteen minute AGI. And I'm, I'm trying to understand, I could imagine this, uh, this new product stretching that out to let it run. If it's building a spreadsheet and scraping data from different sources and putting a whole bunch of different things together. I could imagine letting it run for like an hour and coming back, but it said you, you, you, you, you said it's multi-turn. So what does the typical interaction look like? Is there a wider variance? I noticed in the, in the latest revision of the ChatGPT app, there's now a little like fifteen minute UI element next to Deep Research to kind of hint that, hey, you're getting yourself into a fifteen minute cycle.

• 3:07:11John Coogan?

  Obviously, there's lots of efforts to spin that, to speed all of those processes up and that'll come. But what is, uh, what is the typical interaction time look like? Is this, uh, more asynchronous or synchronous or kind of you can do either? Like, how do you think about those trade-offs?

• 3:07:27Speaker 10

  Yeah, I think our team in particular is really focused on solving harder and harder tasks that take people more and more time. Um, so a lot of the agent tasks can take anywhere from like around five minutes to, I, I've seen it take over an hour.

• 3:07:42John Coogan?

  Wow.

• 3:07:42Speaker 10

  Uh, but a lot of times these are tasks that would have taken humans many, many hours.

• 3:07:47John Coogan?

  Yeah.

• 3:07:48Speaker 10

  So I think like as our agents get better, probably the length of time they'll take to solve tasks will also. Get longer because um just the task will become so much more complex. Like imagine a task that takes a human like many days.

• 3:08:01John Coogan?

  Yeah.

• 3:08:02Jordi Hays?

  Yeah, so maybe so so a question I have is uh right now the agent can browse the web for me, do research, take action. Uh I I imagine the next step would be an agent uh like some like a a a voice extension to it, where as an example, I might say, hey, I ha- I use Geico right now. Uh I wanna potentially switch. Can you go out and do research? Here's my here's the cards that I have. Try to find a cheaper price and then or even call Geico and negotiate a lower rate. Or, you know, you're traveling, let's say, and your flight.

• 3:08:35John Coogan?

  I need to cancel an old internet line on Spectrum right now and they only allow me to call during weekdays.

• 3:08:40Jordi Hays?

  The other yeah, the other example, you're on a vacation and you wanna change your flight. And you know, you're gonna maybe have to like call and sit on a wait. So is that the direction that you think we're going towards? Where it can not just browse the web, but then actually start to uh it's it's funny to think about because the voice agent would then just call and maybe it's talking to another agent on the other side. Um but but yeah, where where are we going?

• 3:09:06Speaker 11

  Yeah, voice is definitely an interesting form factor. I think the way to think about where we're going is twofold. The first is what Isa just mentioned. I think we wanna continue to solve harder and harder and longer and longer tasks. I think today we can solve, let's say, an hour or so of tasks. Hopefully in future, we can solve multi-day tasks and it might take longer. It might uh might take shorter depending on how we're doing. But continuing to improve on reliability and complexity of tasks that we can continue to solve. So that's sort of a core part of what we want to continue to improve on. Second part, the Geico example, for example, um the one you gave. Technically, you can do it today, not with voice, obviously. You can just type it in in agent and it'll be able to essentially answer the query.

• 3:09:49Speaker 11

  You can log in uh with the virtual browser that we have on agent with your whatever internet provider you use. And I think it'll be able to tell you things about what's happening there, what's not happening, what other alternatives might there be and all of those things. But then at the same time, you bring up a really good point, which is like voice might be a very natural sort of way to do this in future. And that's a form factor.

• 3:10:11Jordi Hays?

  Yeah, and other, other, other companies introduce voice as an intentional point of friction, like the sort of call to cancel.

• 3:10:18John Coogan?

  Spectrum would never do that to me.

• 3:10:20Jordi Hays?

  Yeah, they would never do that to you, John. And so that, that to me feels like this, you know, if I can go into a web app and just click cancel or do something like that.

• 3:10:29John Coogan?

  Yeah. My, my, my question is about like the user experience of like having something that could take five minutes or an hour. How predictable is that? I've gotten in a great pattern where I expect deep research to take 15 minutes. And so I know when to go to deep research and I'm going to come back later and it's great. But if there's some variability there, is it going to send me a push notification when that's done? Is that how that works? Like, how, how do you train the user to get the best experience?

• 3:10:56Speaker 10

  Yeah, I will send you a notification. I think actually the fact that deep research always takes the same length of time is probably, I don't want to say a bug, but.

• 3:11:05John Coogan?

  I think of it as a feature.

• 3:11:06Jordi Hays?

  It's not the end state.

• 3:11:07John Coogan?

  I think of it as a feature.

• 3:11:08Speaker 10

  I should think, I should think for as long as it needs to think.

• 3:11:12John Coogan?

  Totally.

• 3:11:12Speaker 10

  But I think for deep research, it always just thinks for a really long time, even if you ask what the weather is.

• 3:11:16John Coogan?

  Yeah, that's true.

• 3:11:17Speaker 10

  So I think there's a better middle state. And I think that this model is like a step towards that. But I think it still will think for too long on like really simple queries.

• 3:11:25John Coogan?

  Yeah.

• 3:11:26Speaker 11

  Takes two minutes.

• 3:11:27John Coogan?

  Yeah, you're totally selling deep research short. Sometimes I ask you what the weather is and I want the history of weather from start to finish and what it is tomorrow and yesterday. And I want the history of meteorology and how the Doppler 3000 works. I want everything. And I love that about deep research. It's my favorite.

• 3:11:42Jordi Hays?

  The use case that I'm sure that will immediately start happening, that is pretty hilarious to think about is a student that just says, hey, these are the three websites that host the homework that I have to do. Proactively go to the website, figure out the homework, create it, fill it out.

• 3:12:01John Coogan?

  Yeah, the teacher's gonna be like, yeah, the teacher's gonna be like, check this, check this homework.

• 3:12:04Jordi Hays?

  If, if somebody wants to say that's not, that's not AGI, I don't know what to tell them.

• 3:12:08John Coogan?

  Yeah, I don't know. What about other tool use Jordy mentioned, Jordy mentioned phone usage? You mentioned spreadsheet integration. What, what, what's kind of further down the stack of integrations that you've already announced that might be kind of underexplored or underappreciated at this point in time?

• 3:12:31Speaker 10

  To me, I think that the tool that we've given the agent is very general and powerful. Like you can almost do anything that you need to do on a computer with this tool because it's browser and terminal, which you can, you can do most things that might not be the most readable to a human. Um, so I think that now it's, it's about pushing the capabilities. Like you can ask it to do anything in theory, it's just the agent won't be good enough to do everything you ask it to do. So I think that we just need to make it better and better using the tool, the tool it has.

• 3:13:00Speaker 11

  Yeah, I think the frontier continues. I think we, as he says, the tool is extremely general. It can, it has access to browser, it obviously has access to terminal, and we can give, give it access to as many APIs as possible.

• 3:13:13John Coogan?

  Sure.

• 3:13:14Speaker 11

  That should be, that should allow you to build whatever you want to do, generally speaking. Like, for example, you can totally imagine in future, it has access to a, a voice API or whatnot, whether it's internal, external, depending on like how things go, right? Like you can have access to everything, you can build everything, but we still need to push. Like it's still early, like we've not solved everything. Uh, it's still early, we still wanna make sure that we can solve use cases with really, really high reliability. And that continues to be a pretty large focus.

• 3:13:41John Coogan?

  Yeah.

• 3:13:42Jordi Hays?

  Well, I'm excited, I'm excited. I mean, think, think about a world where you can give it access to your password manager and things like that, that it just immediately can.

• 3:13:50John Coogan?

  We're just API integrations, right?

• 3:13:52Jordi Hays?

  Yeah.

• 3:13:52John Coogan?

  So then the passwords don't even need to pass back and forth. That makes a ton of sense. Yeah, I'm excited for, I feel like Deep Research maybe doesn't have access to images in ChatGPT yet, but I could imagine those being way, like the reports being way richer if you can define them. And then sometimes when I'm, when I'm just generating like a general chart, I actually wanna use like a visualization library in Python and kind of going back and forth. So very cool to see it all kind of come together and very excited for where this is going. Um, what's the rollout strategy? Um, when can people actually start using this stuff?

• 3:14:25Speaker 11

  People, everyone on Pro Plan should be able to use it by end of day today.

• 3:14:29John Coogan?

  That's good.

• 3:14:31Speaker 11

  And we'll get it to plus users over the coming days and then enterprise over the coming weeks.

• 3:14:38John Coogan?

  Very exciting.

• 3:14:39Jordi Hays?

  All right. Well, congratulations on the launch. Super exciting. We're going to turn this day around. It's now just about OpenAI agents. Ignore all Coldplay memes going forward. Well, thank you guys for joining.

• 3:14:53John Coogan?

  Thank you so much. Thank you for having us. We'll talk to you soon.

• 3:14:56Jordi Hays?

  Cheers.

• 3:14:56John Coogan?

  Bye. Up next, we have Dan Shipper, friend of the show over at EVRY.

• 3:15:01Jordi Hays?

  Who got early access to OpenAI agents and we're going to get some feedback from him. John just spilled his base juice all over the table, all over the FT. That's really disappointing. You're not going to be able to read that on the way home.

• 3:15:14John Coogan?

  I have lots of papers that I can.

• 3:15:16Jordi Hays?

  Do we have Dan in the waiting room?

• 3:15:23Jordi Hays?

  There he is.

• 3:15:24Dan Shipper?

  How's it going, guys?

• 3:15:26Jordi Hays?

  Great to see you.

• 3:15:26John Coogan?

  Every time you're on, you're in a different place.

• 3:15:28Dan Shipper?

  You finally caught me when I'm not traveling.

• 3:15:29John Coogan?

  Yeah, yeah, yeah. Yeah, this is the first time.

• 3:15:31Jordi Hays?

  I like that. I like that light up logo in the background. Very nice. Very nice.

• 3:15:37Dan Shipper?

  Thank you.

• 3:15:37Jordi Hays?

  Subtle, subtle kind of in-home, out-of-home advertisement.

• 3:15:42Dan Shipper?

  That's what we're going for, exactly.

• 3:15:45Jordi Hays?

  What's happening? What's on your mind today? There's a lot going on.

• 3:15:49Dan Shipper?

  There's a lot going on. We're here to do a vibe check.

• 3:15:51Jordi Hays?

  Vibe check.

• 3:15:52Dan Shipper?

  Of ChatGPT agent. So I was lucky enough to get to hang out with it and work with it for the last couple of days before it got launched. And I have a bunch of things to tell you about how it works.

• 3:16:03Jordi Hays?

  Incredible.

• 3:16:05Dan Shipper?

  So as your previous guests, who are amazing, told you, it's sort of like Deep Research and Operator had a baby.

• 3:16:13Dan Shipper?

  And it does some really cool things. So the first, one of the first things that I had to do is I had to go through all of our support emails and all of our feedback forum posts for the last like two months. So it's like about 5000 support emails and maybe like 500 posts on our forum to gather for Quora, which is our email management AI app, to gather all of the customer archetypes of like, okay, who's posting, who's a promoter? And then going and looking on their LinkedIn to be like, what's their job? You know, where do they go to school, all that kind of stuff, and put together a like, long research report of who our promoters are, what the archetypes are, and who are detractors are, and why they don't like us.

• 3:16:58Dan Shipper?

  So that's the kind of task that like, obviously like, I could have done, or someone on the team could have done, but

• 3:17:02Jordi Hays?

  But it would have taken so long.

• 3:17:04John Coogan?

  So long.

• 3:17:04Dan Shipper?

  Yeah, it takes a long time. And it's the kind of thing that you almost want on like, a recurring schedule. Like, you just kind of want to see like, once a month, but no one wants to do that once a month. And you can schedule with ChatGPT Agent, you can schedule it to run. So I can just say like, every month, I want you to just send me more on the first of the month, which is, it's really fricking cool.

• 3:17:24Jordi Hays?

  That, that's wild.

• 3:17:26John Coogan?

  That's amazing. I wonder how compute intensive that's going to be, because if I know anything about building dashboards and building like, these, these reports, there's always like, an intense amount of like, oh, we gotta have this dashboard, and then you check the analytics, and it's like, oh, it turns out the team just said that for a week, and then like, stopped watching it, and if it's running, you're like, burning.

• 3:17:45Jordi Hays?

  Dan is every foundation lab's worst nightmare, because he gets on the most expensive plan, and then uses it a hundred times more than anyone else.

• 3:17:54Jordi Hays?

  You're, you're single-handedly gonna bankrupt a lab.

• 3:17:56John Coogan?

  There's other, there's other users that are probably higher margin. But, but yeah, talk to me about that, that, that actual experience. Did you have to OAuth with any different services? Did you have to share any API keys? Did you have to export any data, or was it really as simple as just a prompt?

• 3:18:12Dan Shipper?

  It's basically a prompt. What happens is, you type in, you type in a prompt, you say, I want you to check out Cora, I want you to check out our emails, I want you to check out our, our, our support forum. So ChatGPT has connectors, so I previously already connected my Gmail, so you just like, login on, on the OAuth. And then what it will do is, it, it spins up its own computer in the cloud, its own virtual machine. It goes in the browser and starts browsing, browsing the web. It also then connects to, connects to Gmail. If it hits a login, so for example, when it hit LinkedIn, it, it like, couldn't login, and you can take over the browser in the virtual machine and type your password in, which is like, a little, a little janky. It works, but it works pretty well. I think the interesting thing about this, though, is that

• 3:18:55Dan Shipper?

  there are, there seems like there's two main approaches to agents, and OpenAI and Anthropic are taking very different paths, and they have very different trade-offs. So the really cool thing about ChatGPT Agent is they're essentially abstracting away the browser and the computer. So all you're doing is you're interacting with

• 3:19:14Dan Shipper?

  ChatGPT. And on the backend, all this other stuff is happening. So it doesn't matter if you're on your phone, if you're on a practical computer, whatever. They have this whole virtual environment set up. It spins up, it does the task and it spins down. So it's like, it's a very good consumer experience. Claude code, for example, from Anthropic, which is, I think Claude code, Claude code is way more for developers. ChatGPT agent is way more, I think, for consumers. Claude code is all on your computer. It's all in the terminal. And, and you have access, it has access to all of your files and you have the ability to use it wherever and whenever and however you want. So it's much more customizable and much more composable.

• 3:19:53Dan Shipper?

  So I find that Claude code is much more powerful, but it's much more intimidating and it's just not something that a consumer can use. And I think that

• 3:20:03Jordi Hays?

  But still, the crazy thing

• 3:20:04Dan Shipper?

  Yeah.

• 3:20:05Jordi Hays?

  The crazy thing there is doesn't Claude code have more downloads right now than the actual Claude mobile app? Like the, the Reg-

• 3:20:15Dan Shipper?

  It's, it's something crazy like that. I, I honestly think people are sleeping on Claude code. Like I use it all the time for non-programming tasks. And I think most people think they can't use it because it's in the terminal and the terminal is really intimidating, but it's, it's an incredible product.

• 3:20:28John Coogan?

  So yeah, how would you solve this problem if you were to do the same eval of like generate your net detractors, net promoters using Claude code? You know, just open up the terminal on your laptop. You wouldn't be able to do it on your phone. But you'd, you'd just engineer a prompt that told it to do that and it would just write all the code that it needed to do exactly the same thing. Do you think it could hit that? Do you think it could do it?

• 3:20:51Dan Shipper?

  Yeah, it could, it could do that for sure. And I think the, the, the nice thing about Claude code is you get, you get many bytes of the apple and you can like, so for example, with Claude code, what you can do is you can have it make a full plan. So it can output like a full markdown document with like, you know, 300 or 500 or a thousand word plan. You can modify it and go back and forth with it and then have it execute it. I think it would be more complicated. Like, yeah, it would probably write some code to hit the Gmail API. And I'd have to like to think about that as opposed to just like clicking the connectors button. Or it does have a, it does have a web research tool. So it would be able to go to like our feedback forum and do all that stuff. And it would be able to save all the data. So I could kind of Watch what it was doing as it was doing it.

• 3:21:35Dan Shipper?

  But so so I think you can get basically the same experience. I think Claude is a little bit more controllable and therefore a little bit more powerful. But chat GPT is just much easier to use.

• 3:21:47Jordi Hays?

  Makes sense. What use cases do you expect chat GPT agents to have the most PMF around? I was I was imagining the student use case, which is just like monitor the homework that I have do across. You know, I remember in high school, even teachers would post their homework on websites. You could basically run something that was like monitor the homework assignments that I receive and then take a preliminary pass at doing the assignment and then give me a draft that I can review and and sign off on or tweak and then automatically submit it.

• 3:22:18John Coogan?

  Submit my college applications, attend college.

• 3:22:21Jordi Hays?

  Write my college essay.

• 3:22:21John Coogan?

  Get a job for me. Just deposit the money that you make as an engineer at multiple companies into my bank account and then also plan a trip to Europe because I'm retiring.

• 3:22:32Dan Shipper?

  Uh, watch out, Cooley. Chat GPT agents coming for you.

• 3:22:36John Coogan?

  Okay, boom, breaking news.

• 3:22:39Jordi Hays?

  Breaking news. Yeah, but it but it but like giving this powerful of a tool to everybody immediately. Not everybody's going to realize it, adopt it right away. But you can imagine like a few use cases just spreading like wildfire.

• 3:22:55John Coogan?

  Totally.

• 3:22:56Dan Shipper?

  Yeah, I mean, I think what are what are the things that you would immediately do if you had an assistant? Like if anyone, if someone just dropped an assistant into anyone's lap, like what was the first thing they would do? I don't know, uh, help me book a vacation, help me like figure out how to order groceries, help me like. I another one, another thing I use it for is like research the web about all the topics that I care about and every day give me a report on all the things that happened in the last 24 hours. And it just does that incredibly well. And I can go into, you know, go behind login walls and paywalls and all that kind of stuff. So I think those kinds of use cases are going to be the going to be the the most interesting ones. But I honestly think right now for most of my consumer

• 3:23:39Dan Shipper?

  use cases, four O or really O three is the best. It's much faster. I mostly don't need it to use a full computer to spin it up. So I see chat GPT agent as being something that you use every once in a while rather than something you're using every day.

• 3:23:54John Coogan?

  Sure, yeah. So so we're we're we're increasing the level of like complexity like. Like 4.0 is kind of a Google search replacement for me now. I just kind of hit it with like, when was this person born? How old is this? You know, what's the state of this? What's the capital of this state? Or something. Expect a really quick answer, then go 03 if I'm willing to wait a couple of minutes. Want something that's a little bit more thoughtful, maybe some search results from the web. Then deep research, if I'm actually trying to understand the full story, read a whole report. Agent, if I think it's going to need to use a computer, actually take some actions, pull some things together. How was the actual interaction of the like the back and forth? This was something we talked about with the OpenAI folks was like, if it gets stuck, it pings you.

• 3:24:40John Coogan?

  I like that deep research. Yeah, it takes 15 minutes, but I've trained myself to just be like, forget about that until tomorrow. And then when I have time to sit down and read the full deep research report, which is going to take me a couple of minutes, like then I'll come back to it. I know it'll cook and it'll be done. It would be kind of annoying if deep research came back after two minutes and said, hey, I'm going to pause all that while I ask you for an update. Like it feels like there's a little bit more. I got to be on answering questions, but push notifications maybe solve that. Walk me through like how in how involved you were, how active of a process it is.

• 3:25:17Dan Shipper?

  I mostly was not involved. Every once in a while, like it does have a like a stop. You can help it stop and like change what it's doing, which is nice because like if it goes off the rails, that's helpful. But I think, and it has a push notification thing, but I think this is an interesting problem with agents where I can't stop watching them. And so I spend a lot of my day just like watching the agent doing something. And Chajabiki agent has its own like cool UI where you can kind of like see interesting animations of what it's, what it's researching or which websites it's using and stuff like that. So I find myself actually glued to it, to it a little bit. And I just don't think that's a very good way to spend time. I think it's, I think it's mostly solved by having push notifications, but I like, there's a sort of emotional process

• 3:26:01Dan Shipper?

  of training yourself to be like, it'll let me know when it's done and I don't have to like wash over a shoulder.

• 3:26:05Jordi Hays?

  Or to like, we, we design a lot of assets here at TBPN. And that like, even if I trust the person creating it to do a great job, there's still this tendency to want to like hover and be like, okay, tweak this, tweak that. Oh, let's do it this way in real time versus like waiting. But um,

• 3:26:23John Coogan?

  It's the same thing with 4.0, like, you know, Early on, I would kind of be in this loop of like, okay, I got a result. I still gotta go fact check this and check the underlying links because hallucinations are a big problem. Well, now that they beefed up search so much and they're referencing direct quotes, like, I feel like I'm much less, like, the anxiety level around hallucinations is a lot lower, just in general queries.

• 3:26:46Dan Shipper?

  Totally. I think these things are tools. Anytime you're delegating to something, whether it's a human or an AI, there's a, there's a learning process you have to go through. Like, human managers go through this with, with employees all the time. Like, if you're a new manager, you have to, like, decide, okay, am I going to delegate this? Or am I going to micromanage? If I delegate, like, I get more leverage, but it might not come back the way I want it to. And good managers know how to split up a task or communicate it to their employees or figure out who's good at doing what and know when to get, when to get into the details and when not to. And I think we're going through the same curve with models. We're becoming model managers. And everyone is learning how to, how to solve

• 3:27:29Dan Shipper?

  the same problems that human managers have solved. And so, the more experience you have with the tools, the more you know, like, okay, I don't have to check this 40 answer, or this looks a little fishy. Same thing with ChatGPT Asian, I think we'll be much better at using it in three or six months than we are today.

• 3:27:42Jordi Hays?

  Cool. Makes sense. Dan, always great to chat. I, I do want to have you back on very soon to talk about LLM-induced psychosis. I think it's important to talk about and

• 3:27:53Dan Shipper?

  Let's talk about it.

• 3:27:54Jordi Hays?

  But we'll need a lot more time. Thank you for the vibe check. And everybody listening, go, go subscribe to every, right now.

• 3:28:03John Coogan?

  Do it.

• 3:28:03Dan Shipper?

  Awesome. Thanks, guys.

• 3:28:04Jordi Hays?

  Talk soon.

• 3:28:05John Coogan?

  Bye.

• 3:28:05Jordi Hays?

  Cheers.

• 3:28:06John Coogan?

  Up next, we have Chris Best from Substack, the best CEO Substack's ever had, arguably.

• 3:28:12Jordi Hays?

  Undoubtedly.

• 3:28:12John Coogan?

  In the conversation. Welcome to the stream, Chris. How are you doing? Congratulations. You got some news for us? You got some numbers?

• 3:28:21Jordi Hays?

  Get it ready, John.

• 3:28:21John Coogan?

  What's going on?

• 3:28:22Jordi Hays?

  What do we got?

• 3:28:23John Coogan?

  What's going on in your world?

• 3:28:24Jordi Hays?

  Please tell me at least nine figures.

• 3:28:26John Coogan?

  Doing good. We've raised $100 million Series C.

• 3:28:28Speaker 13

  Woo!

• 3:28:29John Coogan?

  Woo! Congratulations, Chris.

• 3:28:32Speaker 13

  I was hoping you guys would ring that thing.

• 3:28:34Jordi Hays?

  Of course, of course.

• 3:28:37Jordi Hays?

  You guys are incredibly back.

• 3:28:40John Coogan?

  Yes.

• 3:28:41Jordi Hays?

  It's been a journey since, I believe, you raised something, it was like 75 on 700 back in, what was it, 2021?

• 3:28:50Speaker 13

  2021? Those were different times. I don't know if you guys remember 2021?

• 3:28:53John Coogan?

  I do.

• 3:28:54Jordi Hays?

  Oh, I do. I remember it fondly.

• 3:28:58John Coogan?

  You were at the center of the storm and I was in the depths of a slog, basically. Anyway, give us the update, how the round come together, what is the plan going forward? I heard you were, what was the reporting, accidentally profitable? Going back into burn mode? What's the money for? What are you thinking?

• 3:29:16Speaker 13

  Yeah, I like that. Yeah, we're partnering with Mood Rogani at BONDS. I love that guy. Consume at Bro joining the board. The big thing is, look, the big thing that's happened is Substack's gone from being a rinky-dink email newsletter company to a proper sort of network that's taken over the world.

• 3:29:37John Coogan?

  Yeah.

• 3:29:38Speaker 13

  And we kind of want to look, basically, kind of like switch into a mode of thinking about long-term ambition, long-term, like, how do we actually make the big fucking version of this thing? What investments do we need to make? How do we focus on the things that actually matter for the long-term flywheel growth of the network? And this just gives us a total free hand to do that thing and build the best possible version of it.

• 3:30:01John Coogan?

  Okay. Give me the pitch for, I think of Substack as the no-brainer place to launch a newsletter. You have a lot of other products. Talk to me about what the future of the Substack creator or someone who has Substack has their primary out, it's the main engine of their creator economy business, for example. What does that look like over the long term? I imagine that people are still doing top-of-funnel stuff on TikTok, Instagram, other places, but you're adding more and more features. What does a well-run Substack business look like?

• 3:30:40Speaker 13

  Yeah, you know, the core of Substack is the direct connection with your audience, right? So people subscribe, you get their email, you get the ability to reach them, you even get the ability to like leave Substack and take your list with you, which is a big deal. People can pay you directly, so you get recurring revenue. I don't know if you guys have had this, but recurring revenue hits different. The sponsorship business is a great business. You know, I think that thing matters. Lots of people on Substack have sponsors. We love it. But that thing is like very cyclical. It's boom and bust. It's like, you know, whereas you have recurring subscribers, these diehards, that's sort of like it funds sort of like you to be creative. It funds you to take risks. And so Substack's the place where you sort of like your hardcore people are. That's where you have a real connection to

• 3:31:24Speaker 13

  your audience. You can write, you can post short form, you can post video, you can do live video now. You can have a community. We're kind of like building more and more stuff. The center is not any one format. It's like the relationship with the subscribers. And then Substack is just becoming, you know, you said you do top of funnel on TikTok and LinkedIn and YouTube and everywhere else. Sure, keep doing that. That's great. Those are massive platforms. But increasingly, you can do that stuff on Substack too. And because you have such a dense audience of like smart people, the quality of growth you can get there is already very high. Interesting. That makes a ton of sense. Jordy?

• 3:32:02Jordi Hays?

  I think the, I think the magic thing that you guys tapped into that I, that I end up find myself, I find myself explaining to other people is there's this beautiful like, like economy of people on Substack that just want to support people that are nerding out about a specific topic, just want to give them money. And so it's almost like this, there's like, there's this like exchange of like, yes, I want the content, but it's also enabling somebody to live a life that allows them to just, just obsess over one thing, or just explore a series of topics, or just be who they are and be entertainment through that. I mean, we've had Emily, Emily Sundberg has come on the

• 3:32:43Jordi Hays?

  show a bunch of times. And it's just like, it's so awesome to see what she's built and the kind of creator, writer that she's able to be, unshackled from being at a specific, you know, platform, legacy media company. So it's just, it's so, it's so awesome to see.

• 3:33:04John Coogan?

  Talk about the use of funds. You said you can afford one AI researcher now. I imagine that won't be how you spend it.

• 3:33:12Jordi Hays?

  Never know. YOLO. YOLO. Start coaching from Mark.

• 3:33:16John Coogan?

  Concentrated bets, man. That's how it works now. But I mean, concentrated bets, it's not the craziest idea to go give a bunch of money to, you know, creators to kind of pull forward the leap from what they're doing currently to get on Substack. There's different incentive models, Kickstarter, ad businesses, just hire engineers that can build new tools and new features and just chop wood and advance the ball down the field. What are you most excited about to put that money to work over the next like 12 to 18 months? But you probably think in like decades now at this point, right?

• 3:33:51Speaker 13

  Yeah, I mean, that's the big thing, right? It's like, what's the, this lets us have that longer horizon. You can still have all of the same math, but you can just like put the the planning horizon further in the future and look for something really big. Listen, all that stuff you said, the stuff that I'm really excited about is like making the product fucking great, right? I want it to feel like my joke is Substack does everything for you except the hard part, right? You are the talent. You got to figure out how to write something that's worth reading, how to have a conversation that's worth listening to. If you can do that thing, though, we should just build this magic machine that takes everything else off your hands and makes it dead simple, makes it just like this magical thing where anybody who has something worthwhile to say can make something. We're starting with that. We have a bunch of little bits of that that

• 3:34:33Speaker 13

  are kind of working that we're really proud of, that are exciting. But I just think the new technology coming online is going to make us like the the version of that magical sort of like media studio, personal media empire in a box that we can build now is going to be so much more powerful. And then building up like the network, right? The fact that we're getting, you know, not just political commentators, but politicians. I think if we get not just sports commentators, but athletes, I think we can start to build up kind of like. This network and this ecosystem that winds up being this positive sum game, right? Where everybody that's on Substack benefits from this growing network.

• 3:35:09John Coogan?

  Yeah, I've certainly never subscribed to anyone on Substack and been like, ah, I didn't get my money's worth. I always have a good time. What are the different strategies for Substack writers? I know in like the Patreon podcast world, the people do like one is free, one's behind the paywall. I've also seen Substacks where there's like a fold and you get every email, but you get half for free. And then you, at some point, there's a call to action to go and subscribe and, and, and finish reading essentially. But you get every email. What works? What are the different strategies? What are some of the weird stuff that you've seen around the way people are using Substack today?

• 3:35:45Speaker 13

  There's a pretty big mix, right? Some people make almost everything free and it's just basically like, you know, if you want to comment or if you want to get the occasional thing, that's what you're paying for.

• 3:35:55John Coogan?

  Some people do really low margin for Chris over here. You just give everything away for free. He doesn't make any money. That's the beauty of your system.

• 3:36:03Speaker 13

  Nobody's paying to get more, to get more things to read, to get more email, to have more seconds of audio in their inbox. They're paying for perspective.

• 3:36:11John Coogan?

  Interesting.

• 3:36:11Speaker 13

  Right?

• 3:36:12John Coogan?

  Yeah.

• 3:36:13Speaker 13

  That's the thing, like, you know, even, and even if you have a magical LLM that can spit out media in any format, you care about who it's aligned with. You care about like what version, you know, what worldview you're getting. Is this something I trust? Is this something I want to be culturally and aesthetically a part of? You know, you talked about people paying because they want to support people. The other way to say that is it gives you agency, right? When you choose who to subscribe to, you're choosing what part of the culture you want to live in. You're choosing what gets created. You know, in a world where people, I think, feel like a lot of the media they consume is kind of like stuffed down their throats, getting to kind of like exert a voice and say, I'm causing this thing to exist that I think is great is really powerful.

• 3:36:55Jordi Hays?

  Yeah, it's interesting. It's like paying with your, paying with dollars versus attention is super powerful, right? Cause if you're paying with attention, it's like, well, then everybody's focused on the Coldplay. The Coldplay debacle last, last night, which is trying to steal thunder from your fundraising announcement. But we're not, we're not letting it. And, and, and

• 3:37:16Speaker 13

  I appreciate that.

• 3:37:16Jordi Hays?

  And being intentional about like, I want to pay for this because I want more of it to exist. I want, I want it to get better.

• 3:37:23Speaker 13

  And this is how I want to spend my life. I don't want to be on a platform that just is designed to like suck my time from me.

• 3:37:29John Coogan?

  Yeah.

• 3:37:29Speaker 13

  But I want to, I want to spend my time and attention better on smart things like T B P N and everything on Substack.

• 3:37:36John Coogan?

  Yeah, no.

• 3:37:37Jordi Hays?

  Amazing.

• 3:37:38John Coogan?

  And coming soon, hopefully, we will figure it out.

• 3:37:40Jordi Hays?

  No, we're about to bet, we're about to bet big on Substack.

• 3:37:43John Coogan?

  Yeah, we're very excited.

• 3:37:44Jordi Hays?

  Riding with you. So congratulations. It's, it's really tremendous to see how far the business has come since, since those, those glory days in 2021 and excited for the next five years.

• 3:37:58Speaker 13

  Thanks, guys.

• 3:37:59Jordi Hays?

  Cheers.

• 3:37:59John Coogan?

  Congratulations. We'll talk to you soon, Chris.

• 3:38:01Speaker 13

  Cheers.

• 3:38:03Jordi Hays?

  Awesome. Next.

• 3:38:04John Coogan?

  One last, one last guest, Decart.ai.

• 3:38:09Jordi Hays?

  That's right.

• 3:38:09John Coogan?

  The first ever world transformation model, turning any video game or camera feed into a new digital world in real time. Very, very cool. I've played around with a lot of this stuff, not this in particular. Very excited to talk to the founder. Welcome to the stream. How you doing, Dean?

• 3:38:23Jordi Hays?

  Dean, welcome. Sorry for the chaos. We are so happy to chat with you.

• 3:38:27Speaker 14

  Super nice to meet you both. Super nice to meet you both.

• 3:38:30John Coogan?

  Good to meet you. Um, why don't you start with an introduction? I already have questions, but just give me a little background on yourself and the company.

• 3:38:38Speaker 14

  Okay, so you know, the card, the card's a very young company. We're less than two years old. We're a research lab and our goal is to build a consumer company.

• 3:38:47John Coogan?

  Okay.

• 3:38:48Speaker 14

  Okay. And what we just launched today is the only real time video model ever. I can, I can just show it to you.

• 3:38:55John Coogan?

  Yeah, please.

• 3:38:56Speaker 14

  Can I share a screen somehow here?

• 3:38:57John Coogan?

  Yes, but you are live. So whatever you share on that screen is baked into the internet forever.

• 3:39:03Speaker 14

  Amazing. We just have to make sure that we don't leak anything.

• 3:39:06John Coogan?

  Just do the right tab, not the API keys.

• 3:39:09Jordi Hays?

  I was gonna, I wasn't sure. We've never met. I mean, we've met over DMs, but not face to face. I wasn't sure if this was your real face or, or just a character that you're playing.

• 3:39:20Speaker 14

  This is, this is definitely not me. You realize that, right?

• 3:39:23John Coogan?

  Yeah. Yeah. In the real world, he's an anime, but, but he's using a transformer model to appear like a human.

• 3:39:30Jordi Hays?

  That's right.

• 3:39:30John Coogan?

  He's in fact a Minecraft character. I have so many questions about this model. I want to jump into how you built it. We can also potentially have the team pull up the, the demo video on your website, mirage decart.ai and just kind of show folks what that looks like. Whatever would be helpful.

• 3:39:51Speaker 14

  It is currently, I'm trying to get the Zoom call to be able to share this.

• 3:39:55John Coogan?

  Okay.

• 3:39:55Speaker 14

  But if the team could do it from your side as well, that could work too.

• 3:39:58John Coogan?

  Yeah, why don't we just have the team pull up the core website and we can just jump into questions. So, um, real time, um, what's the secret sauce? Is it a condensed distilled model? Are you using a special chip to inference this stuff?

• 3:40:13Jordi Hays?

  Yeah, so real time, let's just talk about, let's talk about the use case.

• 3:40:16John Coogan?

  Sure, sure, sure.

• 3:40:16Jordi Hays?

  The obvious use case would be like real time video calls. You're dropping into a Zoom call, for example, and instead of yourself. Uh, there he is, there's Dean.

• 3:40:26Speaker 14

  Here we go, do you guys see me?

• 3:40:27John Coogan?

  Yeah, we see you.

• 3:40:28Jordi Hays?

  Uh, looking stunning.

• 3:40:30John Coogan?

  Okay.

• 3:40:31Jordi Hays?

  There we go.

• 3:40:31Speaker 14

  Okay, okay, now we got it working.

• 3:40:33John Coogan?

  There we go.

• 3:40:34Jordi Hays?

  There we go.

• 3:40:35John Coogan?

  What is the use case here again?

• 3:40:37Jordi Hays?

  Uh, who are you? Uh, there we go, we're just cycling through.

• 3:40:42Speaker 14

  We're just cycling through everything. What do you guys like? What do you guys like?

• 3:40:46Jordi Hays?

  Uh.

• 3:40:47Speaker 14

  Anime?

• 3:40:48John Coogan?

  Going.

• 3:40:48Jordi Hays?

  Not big into the anime world, but, uh, what about like Legos? Anything there?

• 3:40:54Speaker 14

  Legos, let's, let's put in Legos. We can just type it in.

• 3:40:56John Coogan?

  Oh, you can just type it and it'll do it.

• 3:40:58Speaker 14

  Exactly.

• 3:40:59John Coogan?

  Okay.

• 3:40:59Speaker 14

  Let me make this full screen. You can just type in Lego and it'll just turn everything into Lego.

• 3:41:05John Coogan?

  Wow, okay, there we go.

• 3:41:08Speaker 14

  This is our house.

• 3:41:09Jordi Hays?

  That is.

• 3:41:11Speaker 14

  You can see the real stream in the Zoom.

• 3:41:12John Coogan?

  Yep.

• 3:41:13Speaker 14

  You can see, you know, this would be the house office thing. You can see all the Lego characters walking around here.

• 3:41:18Jordi Hays?

  This is insane.

• 3:41:19John Coogan?

  This is trippy.

• 3:41:20Jordi Hays?

  Oh.

• 3:41:21Speaker 14

  And then you can decide that you're into Christmas and so everything becomes very Christmasy and your house is decorated.

• 3:41:28John Coogan?

  Oh, wow, yeah.

• 3:41:29Jordi Hays?

  Wow.

• 3:41:30John Coogan?

  There you go.

• 3:41:31Jordi Hays?

  I feel, uh, what's the word for a moment like this? This is actually feels like enter the metaverse.

• 3:41:38John Coogan?

  Indeed.

• 3:41:39Speaker 14

  I was, I was hoping you wouldn't say that because that becomes like, you know, became a cursed word.

• 3:41:43John Coogan?

  Yeah, dude.

• 3:41:44Speaker 14

  But like, it's, it's a good thing. It should happen at one point, right? Because, because look.

• 3:41:48Jordi Hays?

  No, this is a, this is a big transition from the moment where Zuck was, you know, said, you know, did his like, uh, hello from Horizons world.

• 3:41:57John Coogan?

  It was Wii graphics was the critique.

• 3:41:58Jordi Hays?

  Those Wii graphics and this feels like being in a video game.

• 3:42:02John Coogan?

  Ooh.

• 3:42:02Jordi Hays?

  What, what, what is that? Is that a wand?

• 3:42:04Speaker 14

  This, this is just, this is, uh, you can see the straw on the regular stream, right?

• 3:42:09Jordi Hays?

  Yep.

• 3:42:09John Coogan?

  Yep.

• 3:42:10Speaker 14

  And inside the wizard's prompt, it becomes a wand. And if you flick it hard enough, sometimes it does magic spells.

• 3:42:18Jordi Hays?

  That is insane.

• 3:42:19John Coogan?

  I love how much fun this is.

• 3:42:21Speaker 14

  Guys, which one, uh, last the team, like the teams have been playing with the prompts here all day. Galactic war, uh, which one, Galactic war is the one you like?

• 3:42:28John Coogan?

  Ooh.

• 3:42:29Speaker 14

  Oh, that's the, okay, that's, uh, the lightsaber one.

• 3:42:31John Coogan?

  Okay.

• 3:42:32Speaker 14

  No, you had, uh, you had one that you should done.

• 3:42:34John Coogan?

  This is wild.

• 3:42:36Speaker 14

  Here.

• 3:42:37Jordi Hays?

  You guys?

• 3:42:38John Coogan?

  So is this running locally on your computer?

• 3:42:40Speaker 14

  So this, no, this is running on the server.

• 3:42:42John Coogan?

  It's running on the server and it's going, so it's going from your webcam to the server, back to us over.

• 3:42:47Jordi Hays?

  So how quickly is, is like Kai's not gonna be running this like half the time that he's streaming? This is, this is insane.

• 3:42:56Speaker 14

  This is fun. It's pretty fun.

• 3:42:57Jordi Hays?

  Well, this is also a bold.

• 3:42:59Speaker 14

  What you do with it, right?

• 3:43:00John Coogan?

  Yeah, yeah, what, yeah, what do you do with it?

• 3:43:01Jordi Hays?

  No, this is a bold, this is a bold demo too, because the variation in the different prompts and how, how well it's working is absolutely insane.

• 3:43:09John Coogan?

  Totally, totally.

• 3:43:12John Coogan?

  I have forgotten what you look like in the real world entirely.

• 3:43:15Speaker 14

  Here, here, here's a question. Would you guys run an entire show through this?

• 3:43:18Jordi Hays?

  I mean, we can, we can try.

• 3:43:20John Coogan?

  Not, we might put Tyler on the intern cam.

• 3:43:23Jordi Hays?

  Yeah, yeah, that's a good place to start. So we have an intern cam over here. We can get Tyler running on this. Oh my gosh, the way that you're just cycling through these prompts.

• 3:43:31John Coogan?

  Yeah, Tyler can be on wizard cam for a little bit for one stream. That's pretty crazy.

• 3:43:36Jordi Hays?

  This is insane.

• 3:43:38Speaker 14

  Something, something cool. Let me show you this. Something cool that we found out is that it's really fun watching YouTube through this.

• 3:43:46John Coogan?

  Okay.

• 3:43:46Jordi Hays?

  Watching YouTube.

• 3:43:47Speaker 14

  Tell me, like, give me, give me a YouTube show that you like, something you like.

• 3:43:50Jordi Hays?

  I mean, just do that Mr. Beast video, whatever's pulled up right there.

• 3:43:53Speaker 14

  Okay, so you can just look at this Mr. Beast video.

• 3:43:56Jordi Hays?

  We can look at this ad.

• 3:43:57John Coogan?

  Ad.

• 3:43:57Speaker 14

  And look at the ad and we can share the Mr. Beast video. I somehow have un. Can you guys hear the audio now?

• 3:44:05John Coogan?

  Yeah, we do, actually.

• 3:44:06Jordi Hays?

  Little bit.

• 3:44:06Speaker 14

  You hear the audio?

• 3:44:07John Coogan?

  I don't know if we should, but.

• 3:44:09Speaker 14

  Okay.

• 3:44:10John Coogan?

  Okay.

• 3:44:12John Coogan?

  And then it's being transformed now?

• 3:44:14Speaker 14

  Yup, this is the original Mr. Beast video.

• 3:44:17John Coogan?

  Yeah, even trippier.

• 3:44:19Speaker 14

  You can, here's, like, Mr. Beast videos worked really well with cosmic medieval golden. We iterated through so many prompts, so we found the ones that worked really well.

• 3:44:28John Coogan?

  Yeah, yeah, yeah, yeah.

• 3:44:29Speaker 14

  This is Mr. Beast videos in the cosmic medieval golden world.

• 3:44:33John Coogan?

  Okay, cosmic medieval golden. I mean, they're already pretty stimulating. This is even more now. Wild. Very wild stuff. So, yeah, yeah. Wh- wh- where do you think this lives? Does this live with the consumer and they decide to put on the rose-colored glasses? Or do you think the creator decides?

• 3:44:52Jordi Hays?

  Somebody's joining a stand-up tomorrow. Can they just automatically put the entire team into whatever character they want?

• 3:45:00Speaker 14

  Let's see.

• 3:45:03Speaker 14

  What stand-up comedies do you like?

• 3:45:05Jordi Hays?

  I was talking about an actual, like, engineering stand-up.

• 3:45:08Speaker 14

  Oh, an engineering stand-up. Okay, yeah, you can definitely do that.

• 3:45:12John Coogan?

  I'm more asking about you. I'm asking you, where do you think it winds up living? Like, do you think?

• 3:45:18Speaker 14

  Here's, here's what I think is cool about this. You know, I think it's the first time that we have a new, a new kind of consumer interaction with, with video AI. Because so far, you know, video AI was just, okay, let's create AI slop, put it on existing platforms, Facebook, Instagram, TikTok, whatever. Here, for the first time, you can actually do something that's slightly different. You know, showing it to a bunch of kids, and what they ended up doing was, for a few hours, they just fought each other with sticks. And they started doing, like, TikTok dances in front of this. And you have a new kind of consumer experience here.

• 3:45:51John Coogan?

  Yeah. Yeah, yeah. It's like the original, in the, what was it? In, Steve Jobs did that demo of the Mac where it, like, warped the image. Uh, and, and, and, and there was like a, it's like a crazy historical photo in the, in the, uh, uh, original, uh, like, macOS launch event.

• 3:46:10Jordi Hays?

  How expensive is this for you guys to run? If somebody just starts streaming this in real time, are, are they paying for it? Are you guys just eating it?

• 3:46:19Speaker 14

  It's, it's, we're, we're, we're doing it efficiently enough. Like, we had to write, like, all the low-level assembly code for GPUs to get this to be both real-time and super cheap for us. Uh, it's at a point that we can actually provide this for free. Like, it can actually be monetized without, like, subscriptions. Like, there, there are ways. Uh, it's, it's, it's cheap enough to actually be able to build a platform on top of this.

• 3:46:39John Coogan?

  Interesting. Do you think, uh, yeah, I mean, do you, do you, do you think, uh, one of the use cases will just be folks who create video content, running their video through this to kind of, as like a pre-vis for what they ultimately want to build?

• 3:46:55Speaker 14

  That could be very interesting.

• 3:46:57Jordi Hays?

  Well, the other, the other thing, you can imagine it actually in YouTube. So like a creator, like Miss Rachel, for example, popular kids creator could basically say like, do you want the Lego version of this video? Do you want the pirate version?

• 3:47:12John Coogan?

  Where this lives because I can go and put my phone in grayscale and I can, and I can view everything on my phone without color. And that is effectively a style transfer. And that's something that I, as the consumer decide. Or, you know, Mr. Beast can turn up the saturation in, or, you know, if you're watching a Hollywood movie, they might turn up the teal and orange because that is a traditional Hollywood color grade. If you're watching The Matrix, they might color grade it green when they're in The Matrix. They might color it blue when they're out of The Matrix, right? And so, um, it'll, it will be interesting to see where this lands, whether it's on the consumer. I like watching Lego version of YouTube. I like watching Lego version of my, of my conference calls.

• 3:47:54John Coogan?

  Or it lives on the, on the, on the producer of video side. I want to show up as Lego. And then that can be transformed as well.

• 3:48:01Jordi Hays?

  Can you quickly, can you quickly do a GigaChad filter?

• 3:48:04John Coogan?

  Oh yeah. Do you have a GigaChad filter? Let's check that out.

• 3:48:07Speaker 14

  Let's see what GigaChad does. And we'll say that the model is really, and the current version of the model is good at changing the entire style.

• 3:48:13John Coogan?

  Okay. Yeah, yeah, yeah.

• 3:48:14Speaker 14

  It's like the entire world. It's not, oh, turn me into Trump.

• 3:48:17John Coogan?

  Okay. You're pretty orange. Yeah.

• 3:48:22John Coogan?

  But it, but it is doing something to the cheeks and the jaw, which is textbook GigaChad.

• 3:48:27Speaker 14

  There we go. There we go.

• 3:48:28John Coogan?

  Very funny.

• 3:48:29Jordi Hays?

  There we go.

• 3:48:29John Coogan?

  Yeah.

• 3:48:30Jordi Hays?

  This is wild.

• 3:48:31John Coogan?

  Maybe you need to prompt like.

• 3:48:32Jordi Hays?

  So is this already fully open access?

• 3:48:35Speaker 14

  This is open. We launched it literally 30 minutes before the podcast. We're waiting for you guys.

• 3:48:40John Coogan?

  Congratulations. Thank you.

• 3:48:41Speaker 14

  Uh, yeah, yeah, yeah. We, it's, it's, it's, this is the first time it's been used on a video call.

• 3:48:47John Coogan?

  Amazing.

• 3:48:47Jordi Hays?

  Insane. Insane. Well, thank you so much for joining.

• 3:48:50John Coogan?

  Yeah, this is a lot of fun.

• 3:48:51Jordi Hays?

  We will get access to it. We'll set it up on the intern cam tomorrow.

• 3:48:55John Coogan?

  For sure. Wait, you already have it set up? Okay. We're going to hop off with you and we are going to check it out with Tyler, get some more feedback. Thanks so much for hopping by.

• 3:49:03Jordi Hays?

  Congratulations to you and the whole team. Insane.

• 3:49:07John Coogan?

  And is there anyone else in the waiting room, or are we good?

• 3:49:10Jordi Hays?

  I think we're good.

• 3:49:10John Coogan?

  We're good. Let's, can we go over to the-

• 3:49:12Jordi Hays?

  Let's take it over to Tyler.

• 3:49:13John Coogan?

  The intern cam and see if that works. I don't even know if that, if he's there. Oh, oh, technical difficulties, of course.

• 3:49:19Jordi Hays?

  On our side.

• 3:49:20John Coogan?

  Anything else you want to cover in terms of news, or?

• 3:49:22Jordi Hays?

  Yeah, there's some new news.

• 3:49:23John Coogan?

  Oh, wow.

• 3:49:24Speaker 02

  That's Tyler there.

• 3:49:25John Coogan?

  Wait, really? Whoa.

• 3:49:28Speaker 02

  Yeah, he just did it. Yeah, this is me like 30 seconds ago.

• 3:49:30John Coogan?

  Okay, wow, yeah.

• 3:49:34John Coogan?

  It looks better without the zoom compression. It's a pretty high fidelity model, wow. Very cool. Yeah, so we were talking in the background, so you hear our talking. And then Tyler's in the corner too. We're getting recursive, not that we should use that word now, it's the M dash of the modern era. Interesting. Pretty good. And these were preloaded prompts that you were just clicking through, Tyler?

• 3:49:54Speaker 02

  Yeah, I was just like selecting.

• 3:49:55John Coogan?

  You didn't generate any of your own prompts?

• 3:49:57Speaker 02

  I didn't, but I think you might be able to.

• 3:49:59John Coogan?

  Yeah, yeah, that seemed pretty cool. Oh, some of this seems fun. I imagine that people will be having fun on this on the internet very, very soon.

• 3:50:06Jordi Hays?

  Very, very quickly.

• 3:50:07John Coogan?

  I always just wonder with this stuff, like, what the, like, the novelty is like, you have to, it's like, wow, it's incredible technology. But then people have to actually figure out like a real use case for it, like, like-

• 3:50:18Jordi Hays?

  Well, so, so here's a use case. Streamers-

• 3:50:20John Coogan?

  Yeah.

• 3:50:20Jordi Hays?

  Having some type of, like, basically, like, if you tip a certain amount, or hit a certain button, it puts the streamer into that certain-

• 3:50:28John Coogan?

  That's cool, yeah, yeah. I mean, a lot of streamers stream with, with green screen backgrounds, and they already drop out the background and put themselves in an environment that matches the game that they're playing. Where just clean up the messy background. And so, yeah, you could imagine this being, like, basically in the VFX, in the VFX pipeline for, for streamers. I think if most people showed up to a, to a Fortune 500 Zoom call with this, it might not go over too well.

• 3:50:54Jordi Hays?

  Well, they can always make everybody on their screen look a certain way and not make themselves look normal to everyone else, right?

• 3:51:02John Coogan?

  Yeah, yeah, yeah, yeah. If your boss is yelling at you and you put him in Lego mode, it's probably gonna hit a little bit differently. Might be a little bit more tolerant, yeah.

• 3:51:11Jordi Hays?

  Turn the volume down, Lego mode.

• 3:51:13John Coogan?

  Lego mode.

• 3:51:14Jordi Hays?

  Oh, sorry Lego boss, block man.

• 3:51:18John Coogan?

  You expect me to be a-

• 3:51:19Jordi Hays?

  All right, a couple more headlines since we're here. Perplexity apparently just closed a new round at 18 billion.

• 3:51:27John Coogan?

  18 billion, wow.

• 3:51:30Jordi Hays?

  So, Perplexity has around 2% of queries, according to semi-analysis, right now.

• 3:51:35John Coogan?

  Yep.

• 3:51:36Jordi Hays?

  I use it regularly. We talked to Chris, who is on the show.

• 3:51:39John Coogan?

  7 million DAUs, 30 million daily queries, 4.3 queries per user per day, a 2% share of users, and a 2% share of queries.

• 3:51:49Jordi Hays?

  Solid.

• 3:51:50John Coogan?

  That's the Perplexity stats.

• 3:51:50Jordi Hays?

  Pretty solid numbers.

• 3:51:51John Coogan?

  Pretty good.

• 3:51:52Jordi Hays?

  They got their new browser. They're going to be investing heavily. And then, outside of that, Lovable just raised 200 million at a $1.8 billion valuation, led by Excel.

• 3:52:01John Coogan?

  Congratulations.

• 3:52:03Jordi Hays?

  Lots of heat on the timeline. Lots of big rounds getting done.

• 3:52:07John Coogan?

  Everyone decided to launch today, I feel like. And then, they got steamrolled a little bit. But that's why we're here. We didn't spend too much time on the concert fiasco, and instead can move on, talk to you about the news. Also, we want to send our best wishes to Tyler. He says, "Hi, crew. I had surgery to remove lots of infected fluid from my chest, and a big lung abscess with infected tissue. Pneumonia, sepsis, antibiotics weren't working in the ICU. Now, surgery went well. Surgeons are heroes. I'm so grateful. Recovering, thank you for your prayers. I'll get..." So, I hope he's doing well.

• 3:52:41Jordi Hays?

  Let's send some prayers over to Tyler.

• 3:52:45John Coogan?

  Yes. What else is in the timeline that would be worth to close on?

• 3:52:53Jordi Hays?

  I have a good closing post. The lads over at Re-Industrialize are having a lot of fun. If you can pull this up in the bangers tab, you can see quite a number of former TBPN guests, all in the back of a pickup truck.

• 3:53:09John Coogan?

  Fantastic.

• 3:53:10Jordi Hays?

  If you can pull this up. Team, we're working on reducing the time between talking about a post and getting it live on the screen.

• 3:53:20John Coogan?

  Let's do it.

• 3:53:20Jordi Hays?

  There we go.

• 3:53:21John Coogan?

  Oh.

• 3:53:21Jordi Hays?

  All the boys. We got Augustus.

• 3:53:23John Coogan?

  Nice.

• 3:53:24Jordi Hays?

  Packy.

• 3:53:24John Coogan?

  Steinman.

• 3:53:25Jordi Hays?

  Everybody. All in one place.

• 3:53:27John Coogan?

  Fantastic.

• 3:53:28Jordi Hays?

  Love to see it. So, anyways, thank you for tuning in today. Super fun show. And I can't wait for tomorrow, John.

• 3:53:34John Coogan?

  Can't wait for tomorrow. Leave us five stars on Apple Podcasts and Spotify, and we will see you tomorrow. Have a good day.

• 3:53:38Jordi Hays?

  We love you.

• 3:53:39John Coogan?

  Bye.

• 3:53:39Jordi Hays?

  Bye.