SpaceX IPO, The Erdős Problem, Spotify CEO Joins | Alex Tabarrok, Bill Clerico, Alex Norström, Jordan Schneider, Christina Lee Storm, Erik Bernhardsson

(01:25) - SpaceX IPO (12:37) - Anthropic Revenue Surges (17:31) - OpenAI Solves the Erdős Problem (27:53) - Alex Tabarrok, a Canadian-American economist and professor at George Mason University, co-authors the Marginal Revolution blog and co-founded Marginal Revolution University. He discusses the Baumol effect, explaining how sectors with stagnant productivity, like education and healthcare, experience rising costs due to increasing wages in more productive industries. Tabarrok also explores the potential of AI to mitigate this effect by enhancing productivity in traditionally labor-intensive sectors. (01:02:22) - Bill Clerico, founder and managing partner of Convective Capital, discusses the firm's recent $85 million fundraise, doubling their previous fund, to invest in disaster resilience technologies. He highlights the increasing frequency and severity of disasters due to aging infrastructure and climate change, emphasizing the need for private market solutions. Clerico also shares insights into the fire technology market, noting the challenges and opportunities in selling to utilities, insurance companies, and government agencies, and underscores the importance of technological innovation in enhancing disaster preparedness and response. (01:15:12) - Alex Norström, Spotify's Co-Chief Executive Officer since January 2026, discusses the company's recent Investor Day, highlighting significant user growth and financial achievements over the past four years. He introduces four major future initiatives, including a new feature that reserves concert tickets for premium users, addressing challenges like ticket scarcity and scalping. Norström also emphasizes Spotify's advancements in AI, particularly in enhancing user experience and content personalization. (01:36:38) - Jordan Schneider is the creator of the ChinaTalk podcast and newsletter, focusing on China, technology, and U. S.-China relations. In this conversation, he discusses the recent U. S.-China summit, highlighting the stalemate in relations and China's leverage over the U. S. through rare earths. He also touches on the absence of key AI leaders at the summit and the implications for future technological collaboration. (02:02:17) - Christina Lee Storm, Head of Studio at Secret Level and co-founder of Playbook PLBK, discusses the evolving role of AI in film production, emphasizing its integration as a natural progression in storytelling rather than a disruptive force. She highlights the importance of embracing technology to enhance creativity and efficiency, while underscoring that compelling storytelling remains paramount. Storm also reflects on the potential for AI to democratize filmmaking, enabling independent creators to produce high-quality content, provided they maintain a strong focus on narrative depth. (02:14:28) - Erik Bernhardsson, co-founder and CEO of Modal Labs, discusses the company's recent Series C funding round, raising $355 million at a $4.65 billion post-money valuation led by General Catalyst and Redpoint Ventures. He highlights the rapid growth of their Sandboxes product, which has been doubling in usage every month for the past six months, enabling safe execution of language model-generated code. Bernhardsson also addresses the challenges of demand planning in the AI infrastructure space, emphasizing the need to secure GPUs months in advance to accommodate their 30-40% monthly growth rate. (02:25:14) - 𝕏 Timeline Reactions Follow TBPN: https://TBPN.com https://x.com/tbpn https://open.spotify.com/show/2L6WMqY3GUPCGBD0dX6p00?si=674252d53acf4231 https://podcasts.apple.com/us/podcast/technology-brothers/id1772360235 https://www.youtube.com/@TBPNLive

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

• 0:00John Coogan?

  You're watching TVPN. Today is Thursday, May 21st, 2026. We are live from the TVPN, the temple of technology, the fortress of finance, the capital of capital.

• 0:13John Coogan?

  We have a massive show. There's so much tech news. People said the technology industry, they were out of news. They weren't. There's plenty of tech news.

• 0:22Jordi Hays?

  They lied. They lied to you.

• 0:23John Coogan?

  All over the Wall Street Journal, AI companies are duking it out for prime placement in the Journal. SpaceX got top billing in the Journal with the IPO filing. SpaceX sets its IPO in motion. The SEC filing starts move to raise tens of billions of dollars in record debut. We've talked about this a lot on the show. Clock is officially ticking on SpaceX's huge stock offering. What are you laughing about?

• 0:50Jordi Hays?

  Ryan says, I knew Jordi would do this dude two days in a row. Did I not do two days in a row?

• 0:55John Coogan?

  Nope. Haven't done two days in a row in months. We can roll the tape. I mean, after reading the, that, that, that piece about us, I feel like some brand differentiation is actually to our benefit, since some people can't tell us apart. And so I, I've become a fan of the, the, the, the split in.

• 1:15Jordi Hays?

  Of casual Friday, Thursday?

• 1:17John Coogan?

  Yeah. Of just a, of a casual look over there, more button down, buttoned up, button left and right over here.

• 1:23Jordi Hays?

  Somebody's gotta be buttoned up.

• 1:24John Coogan?

  Someone's gotta do it. SpaceX on Wednesday revealed new details about how it's, it's a, about its financials and how chief executive officer Elon Musk will try to grow a sprawling enterprise dedicated to advancing cutting edge technologies in space and back on earth. The company disclosed the information in an investor prospectus. Um, public, uh, publication of the document sets SpaceX on course to potentially raise 80 billion or more for a stock sale as soon as next month. Uh, the rumored date is what? Ju- June, July?

• 1:56Jordi Hays?

  Was it June 12?

• 1:57John Coogan?

  June 12th? That's just 20 days away, basically.

• 2:02John Coogan?

  They're going to beat out Saudi Aramco that raised 26 billion when it went public in 2019. Musk has touted out of this world objectives for the company from deploying a huge number of artificial intelligence satellites in the future to colonizing Mars. Texas-based SpaceX has distinct businesses ranging from rocket launch to satellite operations to a nascent AI unit that its rivals, that is racing to catch up with rivals founded by Musk nearly a quarter century ago. Yeah, it's been a long time. SpaceX revolutionized the commercial space industry. The company has grown from a startup with a handful of employees that almost went out of business to one of the world's most valuable private

• 2:42John Coogan?

  companies with over 22,000 workers as of March 31st. It controls technologies that competitors and even nation states haven't been able to fully match. SpaceX reported its revenue last year at 18.67 billion and Dan Primack had a post saying that the business was smaller than he expected. He's going on CNBC today to talk about the IPO, has had a couple of interesting takes. People are going back and forth. Overall, the reception has been, the S1 is an extremely enjoyable read. Kevin Kwak says it's the most enjoyable S1 read in a long time. Reads so easy, like sci-fi or fiction and

• 3:19Jordi Hays?

  It's kind of the perfect, it's kind of the perfect post.

• 3:23John Coogan?

  Or just regular.

• 3:23Jordi Hays?

  Because if you're pro tech, you like space, you're excited about space, that could be a positive.

• 3:30John Coogan?

  Yes.

• 3:30Jordi Hays?

  But if you're, if you're a bear, you can say it reads almost like science fiction. Of course, the best TAM slide ever.

• 3:40John Coogan?

  Probably the best TAM slide ever. Sawyer Merritt has the screenshot here. SpaceX and IPO filing, "We believe we have identified the largest actionable total addressable market in human history. We estimate that our quantifiable TAM is 28.5 trillion dollars, consisting of 370 billion in space from space-enabled solutions, 1.6 trillion in connectivity across 870 billion in Starlink broadband and 740 billion in Starlink mobile, as well as additional opportunities in enterprise and government, 26.5 trillion in AI across 2.4 trillion in AI infrastructure, 760 billion in consumer subscriptions, 600 billion in digital advertising." That's massive.

• 4:27Jordi Hays?

  Well, is that for X?

• 4:28John Coogan?

  I don't know.

• 4:29Jordi Hays?

  The idea, so, so everything else is more believable. Everything else is more believable to me than X getting meaningful digital advertising penetration.

• 4:38John Coogan?

  Yeah, I guess, I guess the time, uh, the time matters here because, uh, a lot of these markets aren't, aren't, aren't this big currently, I think. I don't know. Um, but I guess over time, you know, if you think about the next 25 years, the next hundred years, uh, I don't know if these are inflation adjusted, but there's lots of things that could happen. Uh, for illustrative purposes of sizing our addressable market, SpaceX excluded China and Russia from global estimates. I feel like you might want to put in China and Russia over the next couple of decades. Who knows? Maybe we become best buds with both companies, with both countries, you know? Anything can happen.

• 5:14Jordi Hays?

  That would be great.

• 5:15John Coogan?

  Um, world peace might come and that's going to expand TAM. That's an economic incentive for world peace. I like to see it.

• 5:21Jordi Hays?

  There we go.

• 5:22John Coogan?

  There were some beautiful photos that were shared in the start of the S1.

• 5:25Jordi Hays?

  Lots of pictures.

• 5:26John Coogan?

  Lots of pictures to start, and then it gets very text dense, but, uh, the photos were, I, I, I liked them. I thought that they were unique. I hadn't seen them like that often and they felt like they were kept in the back pocket for a while and they, I don't know, they just like remind you of SpaceX. It's like a beautiful thing. Um, Dan Pramac says, incredible that Goldman beat out Morgan Stanley for the SpaceX IPO, left, uh, lead left, uh, given that Michael Grimes returned to Morgan Stanley in part for this deal. Of course, Morgan Stanley is on the deal, uh, but that is, uh, it is, uh, a, a, a big win for Goldman that, uh, DJ SpaceX is at the helm Goldman Sachs and Co. LLC lead left in the joint book writing managers, but, uh, everyone's getting a piece of the SpaceX IPO at this size. Uh, Will Bitsky says,

• 6:10John Coogan?

  shout out to the Goldman analyst that was originally sacrificed to win this lead left IPO. It must have been an incredible amount of work. It's not just the biggest IPO of all time. It's not just this incredibly complex structure with multiple businesses. It's also, you're reporting to Elon Musk. Elon Musk is your client and he's going to ask for things, probably more aggressively than anyone who's a CEO of a company that's going public. So, uh, lots of, lots of things, lots of winners from the SpaceX IPO. Luke Nosick is a huge one. He was at Founders Fund, co-founded Founders Fund with Peter Thiel. His next role will be leading, this is from a long time ago. He left to start GigaFund, which was billed at the time as a new investment firm that initially

• 6:54John Coogan?

  will be focused on raising capital for Elon Musk's SpaceX, a Founders Fund portfolio company where Nosec is a director. And so David Kwan says, "Today I learned Luke Nosec left FF to fund, to start a fund exclusively focused on investing in SpaceX." There are a few of those that we're hearing about these days. Of course, exclusive does not mean 100% of the capital went into SpaceX. It just means that they were very, very focused on that. GigaFund has a lot of different companies in the portfolio. Cover, we've had a bunch of founders on the show who have raised money from GigaFund. But SpaceX is where Luke is a director, deeply involved and has focused on participating in many, many rounds. And so conviction will do that to an MF, says Pocket Jack's Capital. Lots of big winners.

• 7:36John Coogan?

  Frank asks, "Codex for SpaceX fair value based on the S1 should be an interesting build up to the IPO." What was the result from Codex?

• 7:44Jordi Hays?

  Sid Lanzarum, 1.1 to 1.5 trillion.

• 7:47John Coogan?

  It's not bad. That's not bad. Bull case gets to 1.7 to 1.9 if investors assume Anthropic sticks. AI infrastructure margins are strong. Starship unlocks major new markets and public market scarcity drives demand. But 2 trillion means the market is effectively assigning something like 800 billion to 1 trillion to the AI orbital compute story on top of an already rich Starlink valuation. Possible is an IPO mania print, but that's not what I'd call for fair. So we'll see what happens. I mean, the big, the big news was the partnership with Anthropic where Anthropic is spending over a billion dollars a month, I think. It's ramping up.

• 8:24Jordi Hays?

  15 billion dollars.

• 8:25John Coogan?

  A year. And that's huge for SpaceX, given that they did 18 and a half or something last year. This is a huge jump up in, in, I mean, they have to be one of the biggest Neo clouds like overnight with this.

• 8:37Jordi Hays?

  Yeah, I was trying to find.

• 8:39John Coogan?

  Huge, huge.

• 8:40Jordi Hays?

  I was trying to find some of our conversations from last year where we were. You know, X, sorry, XAI and Grok was, was growing, but maybe not at the rate that, not close to the rate that would require that much infrastructure.

• 8:55John Coogan?

  Yeah, finding product market fit on the actual distribution side.

• 8:58Jordi Hays?

  Yeah.

• 8:59John Coogan?

  Obviously, we love X, but it's not the biggest platform.

• 9:02Jordi Hays?

  Yeah, it wasn't, it certainly, you know, shoot, shoot for the stars.

• 9:06John Coogan?

  Yeah.

• 9:07Jordi Hays?

  And if you miss, you have a pretty great NeoCloud business, right? Anthropic has to pay way above traditional NeoCloud pricing for this compute. And so ends up being a great outcome for SpaceX.

• 9:24John Coogan?

  Yes. Well, Antonio Gracias is another investor who's absolutely printing off the SpaceX IPO. Antonio Gracias at Valor has 30 entities invested in SpaceX. In case you were wondering what truly going long looks like, he added some corrections, saying that some people were signing like, oh, he's the only investor. And he says, no, no, no, I have a lot of LPs. I do a whole bunch of different funds. Like this is not just his, his, his windfall, although of course he's going to be doing very, very well personally. But so many different Valor for Space Holdings LLC, Valor M336, like so many different investment vehicles, because Elon has raised money so many times, both for primary capital and

• 10:09John Coogan?

  for tender offers for employees who had worked at SpaceX for 15 years and needed to buy houses, needed some liquidity. Elon was very good about never doing a down round, growing the valuation very, very gradually over decades to get to this point. And Peter Haag says, just reading the SpaceX SEC document, one thing that sticks out is the capital spend on AI is 3X that on space. It's an AI company with some rockets, which is a wild, wild pivot at the la, it's the 11th hour. You know, this has been a rocket company for, for 20 years or 15 years, then an internet company with Starlink, but that was still so tied and so clear and so quick to get to

• 10:54John Coogan?

  like a logical link, like you needed the launch capacity to build Starlink. And so you have this new capability. Satellite internet is amazing and and it went from idea to launching the satellites to consumers actually using it when they're traveling camping off the grid, real and then showing up in in planes and all sorts of different applications. It became very, very relevant, very real, very quickly. And and and the the Colossus XAI, that felt like a different company because it was, it felt like a different initiative, but it has just become so, so, so big so quickly.

• 11:31Jordi Hays?

  Yeah. And looking back at the plays Elon and his investors have made around this over the last year, right? There was that felt like somewhat of a coordinated effort was it beginning of this year or late last year when suddenly everyone started talking about space data centers very suddenly. Remember Gavin Baker?

• 11:52John Coogan?

  Yeah.

• 11:53Jordi Hays?

  Started coming out, talking about it. That's around the time when they sort of floated the, I believe it was December of last year, started floating, floating the idea of like what the potential valuation would be, started building that AI narrative, started, you know, made a play for cursor, you know, partnered with Anthropic, even though, you know, only a few months ago, they were much more combative.

• 12:16John Coogan?

  Yeah.

• 12:17Jordi Hays?

  And so, yeah, he, you know, I think this is why Elon has been able to accumulate so much capital is like he is the pretty much the best in the world at like making, just making plays.

• 12:30John Coogan?

  Yeah, making plays.

• 12:31Jordi Hays?

  And doing whatever it takes.

• 12:32John Coogan?

  Yeah. So the most recent play unrelated to the news that made the front page of the Wall Street Journal, Anthropic revenue surge is set to post first profit, sales seen reaching 10.9 billion in second quarter, up 130% over pre- this quarter. Truly in in the title of the in the in the actual URL of the Wall Street Journal article, they call it mind, mind blowing growth about to propel Anthropic to its first profit. Absolutely fantastic execution. So Tom Brown, co-founder of Anthropic says, we're expanding our partnership with SpaceX and will be scaling up GB 200 capacity.

• 13:10John Coogan?

  On Colossus two throughout June, appreciate Elon Musk and the team helping us find find good homes for the clods. Is Claude plural? I thought it was all one Claude and the purpose of Anthropic was to build Claude. And Claude will eventually build Claude, but I guess you have multiple instances of the instances of Claude running on different servers on different GB two hundreds. Ray Wang over at semi analysis sort of shares a little bit more. Anthropic's Q two revenue is set to increase by over 200% will post an operating profit. The the AI will never be profitable. Group is in absolute shambles right now.

• 13:51John Coogan?

  There there have been a lot of folks who have been just doubting time and time again, will this ever make money? Will this ever make sense? And Dylan Patel sort of laid out on the Dorkesh Patel show. This idea that at a certain point, the the the the leading the leading models might actually be able to raise money because there there are raised prices because they're driving so much economic value. Semi analysis also put out a a table showing for particular workflows that would take them, you know, a thousand dollars of human time that they would have to hire more people for they were able to use AI and actually get an equivalent result for a 10th of the cost or a 100th of the cost or even, you know, a 30% savings sometimes.

• 14:35Jordi Hays?

  Lisa Algeeb says, can someone check on Gary February 23rd, 2026? He said, turns out Gen AI was a scam.

• 14:45John Coogan?

  I had to check the date on this because this seems like something he would have written in like 2024. And I would have been like, ah, OK, yeah, maybe the usages are a little limited. Maybe there is some sort of wall here, the data wall or, you know, maybe we won't be able to, you know, maybe we'll need new new paradigm, but to write this in 2026, when we're in like the fastest period of acceleration in terms of actual value from these models is pretty, pretty remarkable. I'm interested to see where he goes from this. Is he going to double down? Is he going to stick with this? It has been a couple of months since.

• 15:17Jordi Hays?

  I think I think there's, I think, I think the the entire crypto boom and NFTs in particular just broke a lot of people's brains.

• 15:28John Coogan?

  Yeah, and VR metaverse too.

• 15:30Jordi Hays?

  Metaverse.

• 15:30John Coogan?

  Another thing that was like over.

• 15:31Jordi Hays?

  Metaverse and.

• 15:33John Coogan?

  Under delivered.

• 15:34Jordi Hays?

  Metaverse, yeah, potentially even more.

• 15:36John Coogan?

  Yeah. Yeah, yeah, there was a lot of discussion about this will destroy Hollywood, this will destroy movies, like everyone.

• 15:42Jordi Hays?

  With the metaverse, there was never, there was never a moment where you could use a product and have a mind blowing experience.

• 15:50John Coogan?

  Well, without paying for it, like you had to.

• 15:51Jordi Hays?

  No, no, I'm just saying, I'm just saying like, period.

• 15:54John Coogan?

  No, no, no, the Apple Vision Pro demo, like there was a day, you called me and you were like, why is everyone losing their mind on the timeline over the Apple Vision Pro? Do I need to buy one of these? And I was like, eh, it's kind of like a preview. It's now like perfectly there. I like it, but it's.

• 16:07Jordi Hays?

  I don't even think I, I, I don't think you're remembering correctly because there was no moment where I wanted to buy one.

• 16:14John Coogan?

  No, no, no, you didn't want to, but you recognize that it was the current thing when the Apple Vision Pro launched for like that week, when everyone got them delivered and they tried them, there were a lot of people.

• 16:24Jordi Hays?

  They had vision pro psychosis.

• 16:26John Coogan?

  Vision pro psychosis. A lot of people had NFT psychosis, all sorts of psychosis. We'll see how the AI psychosis develops. It goes both ways.

• 16:34Jordi Hays?

  Yeah, but anyways, comparing it to, anyone can have.

• 16:38John Coogan?

  Yes.

• 16:39Jordi Hays?

  A pretty wild experience with AI.

• 16:41John Coogan?

  Yes.

• 16:42Jordi Hays?

  In, you know, on like a ton of different, a ton of different services.

• 16:48John Coogan?

  Yeah.

• 16:49Jordi Hays?

  You could never do that with metaverse.

• 16:51John Coogan?

  So, Lisan Al-Ghaib is contrasting Gary Marcus's Substack post with what's happened in the AI industry. Anthropic valuation up 173% since the start of the year, posting profits in Q2, according to the Wall Street Journal. OpenAI valuation up 67% since the start of the year and OpenAI general purpose model solves longstanding and well-known air dose, air dose problem. Is it air dish or air dose?

• 17:18Jordi Hays?

  I believe it's air dose.

• 17:19John Coogan?

  Air dose, air dose problem. The, the two dots over the O, get me on the pronunciation, without a scaffold. And so there was a lot of questions about what, what, you know, how hard is it to solve these problems? But fortunately, we have Tyler Cosgrove, who's going to take us through what actually happened with this solution to this math problem that people are very excited about. Noam Brown said, today we are sharing that a general purpose internal OpenAI. Model achieved a breakthrough on one of the best known combinatorial geometry problems. Less than one year ago, frontier AI models were at IMO gold level performance. I expect this pace of progress to continue.

• 17:59John Coogan?

  And Siddharth Ramesh, I don't know if he was joking about this bet, but he says, I have lost my $30,000 bet that AI would never solve the planar unit.

• 18:08Speaker 02

  Yes, I believe that was a joke.

• 18:10John Coogan?

  That's a joke.

• 18:10Speaker 02

  Yeah, I think if you.

• 18:11John Coogan?

  He jokes around a lot, but uh, um, no, but a lot of people were surprised and a lot of people were excited about this. So take us through what actually happened.

• 18:19Speaker 02

  Okay, yeah, so I can basically go through like a simple explanation of what the problem actually is.

• 18:23John Coogan?

  Okay.

• 18:23Speaker 02

  So, so just for some context, Paul Erdosch, kind of this legendary mathematician. Throughout 20th century, he basically proposes, I think the number is like a little over 1,200 different, like little problems. These are the Erdosch problems. People talk a lot about these as like goals for AI to solve. And you've heard like over time, there's been kind of like small iterative kind of solutions to a lot of these problems.

• 18:45John Coogan?

  Yeah, sort of like collaborative mathematician working alongside AI model.

• 18:49Speaker 02

  Sometimes.

• 18:49John Coogan?

  Or an easy one, just getting.

• 18:51Speaker 02

  There's like a main kind of like place where all of the solutions go. So sometimes people will find, like AI will like find a different paper that wasn't actually put on the website. And then they're like, oh, yeah, I solved it, but it's honestly true. But this is kind of the first time we've really seen kind of a big step change. Like this is actually a new solution. This is using like, you know, kind of novel.

• 19:12John Coogan?

  Doesn't exist in papers out there already.

• 19:14Speaker 02

  So, so this was problem number 90. So I can kind of read.

• 19:18John Coogan?

  Please.

• 19:19Speaker 02

  Read the question that I can explain what it means. So it's, does every set of N distinct points in the real plane contain at most N to the 1 plus O of 1 over log log N? Many pairs which are one apart. Okay. So like, what does that mean?

• 19:33John Coogan?

  Yeah.

• 19:34Speaker 02

  Basically, we have like the real plane, right? 2D and we have a bunch of points on it. What is basically the, how many like pairs of those will be basically one unit apart? And what's like the max number? Like, how do we basically organize those points such that we have the max number of them?

• 19:52John Coogan?

  Right? So. The grid.

• 19:54Speaker 02

  No, so you would think that, but I can basically explain why. So let's kind of like formalize this better. So we have U of N, right? And this is basically the largest number of unit distance pairs among N points in the plane. Okay, so basically, like, we're thinking about like, how do we solve this naively? It's like, okay, what if we just take all the points? We have N points, and we just put them in a line? Yep. And unit distance apart, right? So it looks something like this. Yep. Right, so for this example, we have four points, but it doesn't matter, it's just N. So 1, 2, 3, 4, how many pairs are there? There's three, right? Okay, yeah. So basically, this scales with N minus 1. Yeah. Right, so you could have a billion points, and there's 9999, whatever, N minus 1. Yeah. Okay, so now, if we put it in a grid, what happens, right?

• 20:37Speaker 02

  So if we have a square grid here, there's 9 points here, and then how many pairs are there? I believe there's 12. And basically, as this number scales up, it's still linear, so it's 2N. Okay. Basically, if you do a billion points, it's 2 billion pairs. 2 billion pairs. Yeah. Okay. So then, basically... The pair is specifically that line. The line represents the pair. Correct, yes, yes, because it's 1 unit distance, right? And you specifically don't... Diagonal doesn't count because it's not 1 unit length. Yeah, it's not a unit distance. Got it. So then, okay, what's the next thing we can do? The next kind of configuration is what's called the lattice construction. Okay. And so, if we can pull up a picture of it, it's this kind of crazy-looking grid that has all these super, like, intricate, you know, lines in between.

• 21:21Speaker 02

  You can see it on the, this is from the OpenAI blog. If we can pull it up here. Oh, I think I saw this. So this is what it looks like. Okay. So if you can like zoom in on any of these points, you see that, you know, it somehow, it looks like a grid, right? Yeah. But there's not just kind of pairs at the edges, right? There's like way more. Okay. So this scales at N to the 1 plus O, 1 over log log N, right? This is basically the best kind of example that we know works. Yes, but not a proof. So we know we can find this, but is this the upper bound? We don't know. So this is basically the lower bound. Okay. So then, the question is like...

• 22:03Speaker 02

  We have the lower bound, which is that this is the best one we found. Yep. This is the most number of pairs. And then we've theorized that the high bound, upper bound, is scales with n to the 4 thirds. And then, so ESDOS, the original conjecture, that he thought that the upper bound is still going to be less than n to the 1 plus 0 of 1. So this means 0 of 1, it's like as it scales, as n scales to infinity, right? So 0 of 1 basically scales to 0, it goes to 0 as n goes to infinity. And then, basically, OpenAI figured out that this is not true.

• 22:42Speaker 02

  And that there actually are some, there are some n's for which this kind of max number of pairs is greater than the original ESDOS conjecture. So for infinitely many n, this is not for every single n, right? So it's not like 5 points or whatever, but there are infinitely many n's for which this is true. Okay. That it scales with, that it's greater than n plus, n to the 1 plus some constant. Interesting. Okay, so that was basically the big thing, right? This is like, you know. Huge if you're into math. Decades old problem, right? This is incredible thing. Terrence Tao is like, wow, this is incredible. But yeah, that's basically the overview of the problem. Okay.

• 23:26Speaker 02

  But yeah, it's very exciting because this is not like a math model. This is just an internal model. Sure. General, like reasoning. Yeah. You could say it's like generally intelligent. Yes, I think you could say that.

• 23:40Speaker 02

  And then, I think it's interesting because from like public perception, it seems like this didn't take like that many tokens. This was not like millions of dollars of inference time. Sure. It was like maybe something like Hundreds to thousands of dollars of interest compute.

• 23:57John Coogan?

  That's very interesting because we were talking about like Goren's conjecture about like novel ideas coming from just like brute forcing different connections between things. And this is more token efficient.

• 24:08Speaker 02

  Yeah, this is not just taking some solution to a different address problem and just like spamming it on all 1,200 of the problems and oh, one of them works. This is like a kind of a new novel idea. Like maybe this solution is the way that they found this, it's like super complex. You can read the proof. It's like 18 pages long.

• 24:24John Coogan?

  Wow.

• 24:24Speaker 02

  I don't really know what it means, but like there's a lot of mathematicians are saying, okay, this is actually could be useful to a lot of other problems.

• 24:30John Coogan?

  Huh.

• 24:31Speaker 02

  This is like a new way to do things.

• 24:33John Coogan?

  Interesting.

• 24:33Speaker 02

  I think it's very exciting. This is like maybe similar to like, you know, alpha fold moment or something where now this is like a real kind of step change in math capabilities.

• 24:43John Coogan?

  Do are people going to run out of problems? How many more problems do we have?

• 24:47Speaker 02

  I don't know the exact number. I think so. There's 1,200 in total of just address problems. I believe the number is around 500, 600 of ones that have been solved. But I mean, there's so many of these like famous open math problems. There's like the millennium prize, right? A million dollars if you win.

• 25:06John Coogan?

  How much did OpenAI win? If you get a million dollars for the millennium prize, how much do they get for cracking this?

• 25:11Speaker 02

  Yes. So all every single air of prize, if you solve a problem, there is a prize.

• 25:16John Coogan?

  Yes. And so I'm anchored at a million, so.

• 25:19Speaker 02

  Yes. So these are going to be slightly less. I think this one was around $500.

• 25:22John Coogan?

  100 smack arena.

• 25:24Speaker 02

  I believe there's 25 dollars, 100 dollars and 500 dollars. So this was kind of the big one. Yeah, non-dilutive financing.

• 25:31John Coogan?

  Yeah, non-dilutive.

• 25:32Speaker 02

  Yeah, yeah. So it could be a revenue pathway for OpenAI.

• 25:34John Coogan?

  I have to imagine that the inference bill for this was over 500 bucks.

• 25:39Speaker 02

  I think so, yeah.

• 25:40John Coogan?

  So the mathematician that just works with a coffee still.

• 25:44Speaker 02

  So obviously like, okay, what is this actually? In fact, does this, you know, bring us to novel science? Maybe not, but it does show that like, okay, these models are not just, you know, the average of all their training data. They can actually make novel ideas.

• 25:57John Coogan?

  That are outside of distribution, outside of the training data. It's not just knowledge retrieval.

• 26:01Speaker 02

  Yeah, I think this is very much contrary to, you know, kind of the Gary Marcus take. These are just, you know, parrots. These are just predicting the next token. These aren't actually intelligent.

• 26:10John Coogan?

  Yeah.

• 26:10Speaker 02

  Yeah, I think it's very exciting.

• 26:11John Coogan?

  Yeah, cool. Well, thanks for bringing.

• 26:13Speaker 02

  Why don't you hit the gong for the researchers? Yes.

• 26:17John Coogan?

  Boom.

• 26:21Jordi Hays?

  Thank you for breaking that down. As universities classes become live podcast settings, podcasts are becoming universities.

• 26:31John Coogan?

  This is where we're going. Well, let's take everyone through our lineup today because we have Alex Tabarrok from George Mason University and co-host of the Marginal Revolution podcast with good friend of the show Tyler Cowen coming on.

• 26:44Jordi Hays?

  Tabarokanator.

• 26:45John Coogan?

  A minute. Bill Clerico from Collective Capitals coming on. Alex Nordstrom.

• 26:49Jordi Hays?

  Convective.

• 26:50John Coogan?

  Convective Capital from Spotify, the co-CEO of Spotify is coming on. Then we have Jordan Schneider back from China Talk, going to probably spend a few minutes talking about the underwhelming summit in China and then move on to a bunch of other talks, a bunch of other topics. And then we have Christina Lee Storm from Secret Level joining at 1 p.m. Pacific. So the other news, rumors about OpenAI is being close, closing in on the IPO filing and that pushed out Nvidia's results, which is normally something I would expect on the front page, but there was too much AI news. Nvidia results skyrocket on rise of AI agents. We talked a little bit about it yesterday, but the big news is that they're

• 27:31John Coogan?

  doing an $80 billion share back, share buyback authorization and take him, take him was bullish. People were wondering where he would sit on Nvidia. He laid out a pretty convincing case. You can go listen to the interview. It aired yesterday on TVPN. But without further ado, we have Alex Tabarrok in the waiting room. Let's bring him in to the TVPN Ultra Dom. Alex, how are you doing? I think we don't have audio. Can we check your microphone? Make sure it's working. We're good. Okay. We are, it was something on our end. How are you doing? I'm still doing great. Fantastic.

• 28:09Jordi Hays?

  Perfect.

• 28:10John Coogan?

  Fantastic.

• 28:11Jordi Hays?

  Perfect. It's great to have you on the show.

• 28:12John Coogan?

  It's been far too long. I'm a huge fan. I've read marginal revolution since I studied economics back in 2010 and huge fan of the marginal revolution podcast. I very much enjoyed your debate with Tyler Cowen all about the cost disease or Baumol effect. And I think we should start there and then I, we can go all over the place in, in AI and labor and the, the economy broadly. But do you want to start with an introduction on the Baumol effect? Maybe why it captured your interest and some of the work that you've done around it?

• 28:49Speaker 03

  Sure. I mean, probably a lot of people have seen this famous chart where you have a bunch of things going up in price and a bunch of things going down in price. Yeah. And the question is, is why? I mean, the things that are going up in price, I think we all know is like, you know, healthcare, education, right? Yep. And then things are going down in price, often manufactured goods like automobiles, quality adjusted, or televisions, computers, things like that. And, and the question is like, why? Why do we see these big differences? And what Bommel pointed to was that there's a problem with service industries, you know, like education. You know, think about what I do, which is teaching students.

• 29:32Speaker 03

  And you think about what Pythagoras did. Like Pythagoras, he's got, you know, ten or twelve students around him and he, you know, he puts a triangle, you know, in, in the sand and, you know, draws some, draws some math there. It's more or less what, what I do, right? I mean, thousand, fifty years later, I maybe I'm using chalk, or maybe I'm using PowerPoint. But basically, you know, it's me and a few students. And productivity really has not gone up at all in that, in the education industry. So because of that, prices have to go up. Because you take an industry where productivity is flat, and you might say, okay, well, prices are gonna be flat.

• 30:16Speaker 03

  But no, no, because all the other industries are improving in productivity. And the education industry, they have to attract labor from those industries which are getting better, right? So they still have to pay me as much as I would earn, you know, in another industry. Uh, but my productivity hasn't gone up, you know? Yeah. So that means prices have to go up. Yeah. So that's the basic Bommel effect, is that... Industries, especially services where productivity is not going up, prices have to go up.

• 30:52John Coogan?

  Yeah, we have the, we have the chart here and I imagine that there are a few logical pushbacks. One is, is regulation. Everyone will say that the, the number of licenses to practice medicine is restricted. It's a taxicab medallion system. It's a regulatory capture situation. Does that not play into this chart as much as people think? Is that to be disregarded? Or is overregulation still something worth contending with if you want to avoid runaway inflation in, or, or just disproportionate inflation in important services that people have demand for, but are maybe paying through the nose for and not happy about?

• 31:36Speaker 03

  Right. Yeah, look, look, I'm a free market guy, you know, I'm anti-regulation, anti-bureaucracy, all that kind of stuff. But you have to understand with these trends, we're talking about increases in prices which have happened over a hundred years.

• 31:54John Coogan?

  Sure, yeah.

• 31:55Speaker 03

  And, you know, medical care, people were complaining about medical care going up in price in like 1920, 1930, since before, you know, Medicaid, Medicare, before a lot of government involvement. Education has been going up in price. So I think it's deeper than just regulation. And let me give you just one other example is think about car repair, okay? You know, or cobblers. When was the last time you took your shoes to a cobbler?

• 32:28John Coogan?

  Yeah.

• 32:29Speaker 03

  You know, my mother will say, oh, the new generation, they just don't care about repairing things, you know? And I'd say, no, no, mom, I love you. But, uh, look, it's that the cost of repair has just gone up so much compared to just the cost of buying a new pair of shoes.

• 32:47John Coogan?

  Yeah. How would you like, yeah, how would you like to, you know, spend $70 to fix your $60 pair of shoes?

• 32:54Speaker 03

  Exactly, exactly. So, you know, I had a, my car had some, I bashed it in the, in the parking lot, you know? And it was like, not, not a serious, uh, uh, you know, just a surface injury, but it was like a third the price of the car, the value of the car just to repair the side. And that's pretty typical.

• 33:17John Coogan?

  Yeah. So, I mean, a lot of people in the AI world are saying that AI will do to services what technology has done previously to manufacture, to goods, to manufactured products. Does that mean that the Baumol effect goes away? Is it more pronounced in the industries that are AI resistant and you see some sort of runaway inflation in the things that can't be automated? Because when I think about teaching a college course, I do, I do see the, the sort of maybe linear scaling that you're discussing, but we have microphones now, we have amphitheaters, you can teach more students, there's online resources, there's

• 34:00John Coogan?

  ways to delegate and manage teams of homework reviewers and, and this like sort of disaggregate the work. And so you would imagine that technology would be a lever on services in some ways, but I'm wondering how you think it will change in the age of AI?

• 34:17Speaker 03

  Yeah. So the big question is robots, right? If you can replace labor with capital, then a lot of the Baumol effect goes away, which would be great. I mean, that would be great. Basically, you know, anything that improves productivity is good, but I think people also get a little bit too upset about the Baumol effect because really, why, another way of putting it is why are services getting more expensive? It's because manufactured goods are getting cheaper, right? It's because what we have to pay for the services in terms

• 35:00Speaker 03

  of giving up other goods has gone up in price. But still,

• 35:06Speaker 03

  We're richer than ever before, which is why people keep buying more education and more healthcare, right? So that's another reason why I don't buy entirely the regulation story.

• 35:19John Coogan?

  Yeah.

• 35:20Speaker 03

  Because if it was sort of regulation and the price of healthcare was going up, people would buy less of it.

• 35:25John Coogan?

  Yeah.

• 35:26Speaker 03

  But actually, they're buying more of it.

• 35:28John Coogan?

  Yeah.

• 35:28Speaker 03

  So it's the fact that, you know, our productivity is going up, we can afford more of it. That's really why the price of medical care is going up. It's because the price of computers and other things is going down.

• 35:41John Coogan?

  Yeah. How are you processing the latest and greatest in behavioral economics around maybe this concept of the vibe session, this idea that, yes, we are richer than we have been in history and yet, I mean, right now, consumer confidence is very low. There seems to be a lot of dissatisfaction with the progress that the economy is making. How much of that is grounded in real economic data versus psychological factors?

• 36:09Speaker 03

  I'm amazed at the amount of psychological factors. It's something I've changed my mind on, how big the psychological factors can be.

• 36:18John Coogan?

  Yeah.

• 36:19Speaker 03

  I mean, if you just look around the world today, no other country has done as well from globalization as the United States. I mean, it was us which kept open the sea lanes.

• 36:32John Coogan?

  Yeah.

• 36:33Speaker 03

  And globalized the world to our benefit. And we're the richest country in the history of the world, the richest at any point in our history, and yet somehow we're upset about free trade and globalization. And again, no other country has done as well at assimilating immigrants and doing well with immigrants than the United States. And yet, we're upset about immigrants?

• 37:00John Coogan?

  Yeah.

• 37:00Speaker 03

  So I think it's very disappointing. I hope we get over the bad vibes because... The US is a lot to be proud of.

• 37:09John Coogan?

  Yeah.

• 37:09Speaker 03

  And a lot to be, feel good about.

• 37:13John Coogan?

  Yeah. Is, is one of those psychological factors, you know, the average American's perception of debt to GDP? We seem to anchor debt, like nominal values of debt to GDP, which is a sort of an income stream. And we get very irritated or anxious when debt sort of touches GDP and relative values. How are you thinking about the level of indebtedness that is appropriate for a modern economy to sustain itself?

• 37:49Speaker 03

  I'm not happy about the debt.

• 37:52Speaker 03

  You know, we still don't know. The US has a big choice. Do they want higher taxes or do they want less spending? And the US voter just keeps saying, how about neither?

• 38:09Speaker 03

  Sorry, this is not working, right? You know, I do cake and eat it too. No, you cannot do that. So the American public has just not decided which way it wants.

• 38:21John Coogan?

  Yeah.

• 38:21Speaker 03

  But that is what is driving the malaise? I don't know. I'm not, I'm not sure. See, I don't know whether, I don't know whether it's cell phones. I don't know whether it's Instagram, you know. But it does seem that there is an anger, a grievance culture in the United States. At first, you know, I thought it was just on the left, right? You know, when we had, everyone's complaining, oh, African Americans are treated so poorly. The women are treated so poorly. The poor are treated so poorly, you know. And then with Trump, we've just changed our set of grievances, you know.

• 39:02Speaker 03

  And so now, oh, it's, it's, it's the foreigners who are ripping us off. You know, crime is terrible, and of course it's not. You know, all of these things, we've just changed our set of grievances without actually focusing on.

• 39:20Jordi Hays?

  Is that, yeah, is that not, how much does?

• 39:25Jordi Hays?

  The fact that, you know, so many people are downwardly mobile. I mean, I was born in the 90s and I remember as a, as a, probably an early teenager, hearing like, you know, statistically, this is the first generation where you're more likely to do less well economically than, than your parents did. And I feel like part of the challenge with that is that America's culture is so progress oriented, right? Like, the American dream is just centered around doing, doing, doing more, doing better. You know, if your, if your father was a, was a cobbler, like, you own a shoe store, that, that kind of thing. And, and so now, when you have, you know, still this, like, massive wealth, and, and as you said, you know, the

• 40:10Jordi Hays?

  richest country in history, there's this constant comparison to, to the past. And I think frustration from that, which is making, like, you know, huge swaths of the country frustrated. And you wanna, you wanna blame it, you wanna blame it on, on, like you said, foreigners, or, or free trade, et cetera. But, but it's just like this sort of latent frustration.

• 40:40Speaker 03

  Yeah, there's definitely frustration. I agree with that. Compared to the past, we are doing better. There's no question of that. Now, to be sure, there are some key areas, like housing, right? Housing is much more expensive, you know, than it should be. You know, that's a, that's a zoning problem. That's a choice people have been making, I think a bad choice. I think we should, ought to do something about it. But even with housing, you know, houses are so much better today. They're larger, kids have their own rooms, you know. Parking. Yeah, in 1960. Parking structures.

• 41:22Speaker 03

  Yeah, a, a large fraction of the housing stock in 1960 didn't have indoor toilet, didn't have indoor plumbing, right? That was still pretty common, not to have indoor plumbing. So, so I don't think it's compared, I think, if people are...

• 41:41Speaker 03

  Saying that we are worse off in the past, I think that's incorrect. Maybe what's going on is that inequality has gone up somewhat, not as much as people often think, but it has gone up somewhat. And of course, we have more access to seeing inequality. It's Instagram and stuff like that, which is sort of a fake.

• 42:07Speaker 03

  The Lamborghini might be rented.

• 42:11John Coogan?

  No, I completely agree.

• 42:14Jordi Hays?

  Yeah, the other, the other, uh, the other factor is that the forms of entertainment that are constantly being chosen today, like doom scrolling, right? When you maybe had the hippie generation, it was like, hey, we don't have jobs. Let's go to Yosemite and just live there, right? And like what that, what that would do to your sense of well being versus like, I don't have a job. I'm going to sit on my phone all day long. Yeah. Or, or, you know, last week.

• 42:42John Coogan?

  Nobody really hitchhikes across America when they're in between gigs anymore. What happened?

• 42:47Jordi Hays?

  Yeah. Yeah, but like just, just, I don't have anything going on. I don't have opportunity. I'm going to go outside and touch grass. It's like going to have a wildly different impact on your psyche.

• 42:57John Coogan?

  I know a super successful corporate lawyer today that like was in the middle of a career transition, spent a year like surfing in Southern, in South America. And like, that is unheard of by today's standards. Like, that just doesn't happen. Sorry, did you?

• 43:09Jordi Hays?

  Yeah, no.

• 43:10John Coogan?

  Uh, yeah. Uh, yeah, I have also been thinking about like, if there was a, if there was, if there was an alien that showed up and had a quadrillion dollars, like if you include that alien in the genie coefficient, it skyrockets it. But the existence of that alien doesn't affect your perception until you're made aware of the, the diamond spaceship that, that the alien comes to town with and starts flexing on you on Instagram. But the mere existence doesn't change your, your economic well being or anything real. Uh, but it does change your psychology once you see them flexing on you. Um, I'm, I'm interested in the housing thing though. I want to go back to Baumol effect. Because housing seems to potentially fall in the middle.

• 43:52John Coogan?

  Like, there's manufactured goods that go into building a house. There are also services that go into a house. Like, how do we apply the thinking of the Baumol effect and what you've learned to what would happen to housing? Like, is there a, is there a second step? Everyone, when they talk about housing, will say, "Let's fix the zoning rules. Let's make it easier to build." But is that enough?

• 44:16Speaker 03

  Yeah, I mean, look, with housing, it's not the construction of housing. It's just gotten so much more, you know, expensive. It's almost, almost 100% the land.

• 44:27John Coogan?

  Okay.

• 44:28Speaker 03

  The cost of the land.

• 44:28John Coogan?

  Yeah.

• 44:29Speaker 03

  So, and you look, I mean, you just go to, you know, San Francisco, San Jose, which ought to be, right, some glorious metropolis, you know, of the future with, you know, sky-high buildings and people traveling around and, you know, fantastic.

• 44:51John Coogan?

  Yeah, it should look like a Chinese city where there's LED walls and, yeah, we have that on Salesforce Tower, but outside of that, there aren't these massive skyscrapers. And it just, it just doesn't happen.

• 45:01Speaker 03

  Exactly. It's a land of strip malls.

• 45:04John Coogan?

  Yeah.

• 45:04Speaker 03

  You know, Lick and Gally is a land of strip malls.

• 45:07John Coogan?

  It really is.

• 45:07Speaker 03

  And, and strip malls are just extremely, extremely expensive. They're just lying on, you know, very valuable land and there are people that are allowed to build.

• 45:17John Coogan?

  Yeah.

• 45:18Speaker 03

  So, I'm hopeful of something like California Forever, you know, where they're trying to get permission to, you know, start a new city. I'm hopeful for things of that nature. But none of this, this is all policy. This is, all of this is under our control.

• 45:35John Coogan?

  Yeah.

• 45:36Speaker 03

  In some sense, this is not, like, we haven't been hit by, you know, a tornado and we're all poor and have no housing. It's because we've said, "No, you cannot build."

• 45:48John Coogan?

  Yeah, I've been thinking about the the the push into cities, which which makes so much sense in the sense that the economic opportunity is in the cities. And so we've seen, you know, successful college graduates leave their hometowns, go to San Francisco, Los Angeles, New York, Miami, Austin, these these mega hubs that have been very expensive if they aren't building. But I was I was really optimistic that between remote work, self-driving cars, like faster highways, like we would get just an extension because I think if you look through history, the 45-minute commute is sort of a sweet spot with before the horse and carriage, people would live a couple miles because that's what they could walk in 45 minutes. We got the horse carriage. Once we went to 60 miles

• 46:32John Coogan?

  an hour, it became, okay, you live, you know, 30 miles away from your from your workplace. But I was hoping that we would get another leg up on that. Maybe it's coming, but we certainly haven't seen it yet. Have you been surprised by any of the the fallout or or lack thereof of the COVID era, the shift to remote work, any any changes, technology or otherwise, in just the the housing and labor markets?

• 46:58Speaker 03

  Yeah, I agree with you. I've been a little bit surprised that we haven't seen another city really take off. We used to build new cities, right? You know, like, and, you know, Chicago, you know, not that long ago was a city of 50,000 people.

• 47:16John Coogan?

  Yeah.

• 47:17Speaker 03

  And Trump briefly talked about freedom cities for a while, which I thought was a good idea, but it's sort of gone away.

• 47:26John Coogan?

  Okay.

• 47:27Speaker 03

  It does tell you that there's something very strong about these so-called agglomeration, the technical term in economics, agglomeration effects, that, like, people just get more productive when they are near other productive people.

• 47:44John Coogan?

  Yeah.

• 47:46Speaker 03

  Really need this big push to try and get this into the new city. I mean Miami briefly, you know, seemed to be jumping ahead, but that that trend seemed to have gone away.

• 47:57John Coogan?

  Yeah.

• 47:57Speaker 03

  Las Vegas, you know, tried it with Zappos, but that,

• 48:02John Coogan?

  Yeah.

• 48:02Speaker 03

  you know, modestly only took off modestly. And I am somewhat surprised that we can't plant our flag and say the new city is going to be here and have a lot of companies all agree to move in at once.

• 48:16John Coogan?

  Yeah, yeah, I've heard it referred to as like the rainforest theory that why San Francisco is so resilient because you have so many different participants and the VCs can go to Miami, but they're just a phone call away while so many other key pieces of the economy are still chugging along. And so San Francisco clearly made it through a trough and is on a major, major upswing. Jordy?

• 48:38Jordi Hays?

  What, what data are you most obsessed with following to try to understand the current moment? We see, we see AI in the GDP data primarily through CapEx right now, but what kind of productivity data are you looking at? You know, we've been very excited about, you know, what, what, what we've seen from Stripe. They have this incorporation product and they're seeing companies, you know, more companies formed, growing revenue faster. That's very exciting, but it's also like a certain type of person finds themselves incorporating, you know, their business with, with Stripe and is not perfectly a reflection of, of the economy more broadly. So what are you looking at to try to understand the

• 49:23Jordi Hays?

  impact and, and, and try to ignore maybe the headlines from CEOs that say, oh, well, we, we, we laid off this 20% of people because of AI, because, you know, as we know, oftentimes it's marketing.

• 49:40Speaker 03

  Yeah, it's very interesting. There's a lot of theories, you know, about is this going to be a job apocalypse or something like that. Not much data. And of course, all of the data we have so far is that AI is increasing the number of jobs, not decreasing the number of jobs. What I'm most excited about and most interested in seeing is the effect of AI on medical care. So, you know, we just saw yesterday that AI had, you just had it on your, on your show, you know, had proved a new mathematical theorem or counter, counterproof.

• 50:20Speaker 03

  So AI is making these inroads into the highest levels of mathematics. If we could do that for drug discovery, you know, if we could have, you know, a 5% reduction in cancer mortality, that would be worth trillions. You know, that would be worth trillions. So the opportunities there for AI to make tremendous leaps in human welfare by improving medical care, healthcare, I think are really exciting and well within the realm of possibility.

• 51:05Speaker 03

  You know, one new drug like solving an air dose problem, that would be incredible.

• 51:11John Coogan?

  And, and what does that mean in the labor market? I'm just, I'm thinking back to, like, there was a time when there was sort of only one track for doctors. He was just like a generic doctor. Now there's much more specialization. There's a dermatologist, a podiatrist, all sorts of different doctors. Is this like, there's a, there's a fracturing and further employment creation from the administration distribution advisory around new treatments as it rolls out? Because you could imagine, okay, there's a new drug, that's great, that's, that, that helps everyone live longer, but I'm unclear on how it interfaces with the labor market.

• 51:51Speaker 03

  Yeah, I mean, I think the the the trend is uh you know, division increases in the division of labor, uh you know, it's talked about, which Adam Smith talked about from the the pin factory. Yeah. And when you apply that idea of the pin factory, you know, somebody shapes the pin, somebody puts it on, you know, you get two pieces and you put it right. When you apply that to the knowledge economy, then it's exactly as you said, you no longer have a physician. You have a podiatrist and you have an optometrist and you have your nose, your nose control specialist and so forth, so forth. And yeah, I think that will continue and they will all be using, you know, AI for sure, right?

• 52:34Speaker 03

  Um, but yeah, they're gonna get more, more specialized and the tasks which physicians do will differ, will change. Um, I, but uh so far, you know, I I'm not terribly worried about the job market per se. Yeah. Um, you know, uh, look, this is a problem of, you know, people worried about, people are worried about the, oh, the AI is gonna do all the jobs, right? Like, uh, this means we're gonna be fabulously wealthy and, you know, even without any jobs, just being fabulously wealthy, we'll figure things out, you know? This is the sort of problem you wanna have, right? Yeah.

• 53:19Speaker 03

  Again, this is not like a tornado or hurricane, a tsunami which destroys wealth. Yeah. This is a tsunami which creates wealth. And yes, it's, it could be a tsunami in the sense that it's gonna be very dramatic, okay? But it's gonna be very dramatic, like, you know, Santa Claus coming and leaving us goods, you know, under the, under the Christmas tree. So that's drama that we can, we can handle. It won't be, uh, uh, it it won't be without problem. Yeah. Okay? But problems where the pie gets bigger. Are problems that we can solve. You know, it's problems when the pie gets smaller when we are forced into a zero sum society of one person versus another.

• 54:03Speaker 03

  That's when society breaks down. Not when the pie is getting bigger. Like, we'll figure out ways to make sure everyone gets a decent slice. If the pie is getting so much bigger, we can solve the problem of dividing it up with everybody being happy. I'm not, I'm much less worried about that.

• 54:22Jordi Hays?

  How do you, how do you think about value capture with this technology wave versus historical technologies? You know, if you get really good at inventing engines, you can sell a lot of those engines and hopefully have a nice margin and maybe other people copy the engine and also make similar engines and benefit from that. But we're at a moment right now where frontier intelligence is like very widely available, right? There's certain internal models that aren't with the public yet. And if you have one of those Erdoche, you know, moments in medicine, it could just be an off-the-shelf model that helps make a breakthrough and you pay for the tokens or

• 55:07Jordi Hays?

  you pay your subscription. But then, right now, the labs are not really set up well to capture that value at all. It could be, you know, some, it could be a big company that captures the value, it could be another startup, there's small businesses. And so how are you thinking about value capture versus like public benefit of this technology cycle and how it would differ to prior technologies? Let's say like the internet and telecom and, and all the way back to railroads and steam engine, et cetera?

• 55:35Speaker 03

  Yeah, it's a very interesting technology because this will sound odd, but it doesn't seem that hard.

• 55:46Speaker 03

  You know, the fundamentals is, you know, it's a linear algebra. It's very surprising. Yeah. I don't think anyone predicted this, but, and it's true, of course, that the frontier models are ahead, you know, OpenAI and Anthropic, you know, have the best models, but they're like six months ahead, you know, of open source models. And for most of what you want the models to do, you don't even need the frontier models. And, you know, what today is a frontier model, like tomorrow, you know, it'll be much cheaper second rate model,

• 56:28Speaker 03

  right? Like, like, people are worried, oh, you know, some people have access to, you know, 5.5 and other people are still working with 5.4. But the big point is that even 5.4, you know, the free model is 100 times better than 3.0, right? Which was also incredible. So the model seemed to be getting more powerful and cheaper at a faster rate than any other technology that I have ever seen. So I think the gains will be fairly widespread, if

• 57:11Speaker 03

  not at first, you know, then, then soon, soon afterwards. I mean, you know, some people are obviously OpenAI and Anthropic, you know, the people who got in early and the programmers there, you know, they're going to be fabulously wealthy, no question about that. But the technology itself.

• 57:36Speaker 03

  So much of it is open source, so much of it is really quite accessible. There's no magic there as far as I can see. Like it was just, you had a few good ideas and then those ideas just turned out to be incredibly powerful. So I'm expecting to see really the technology being quite widespread.

• 57:57Jordi Hays?

  Yeah. I know, I know we're, we're out of time, but one last question. How, how do you think about the, part of the reason I think we feel this insane acceleration with this technology shift, maybe, you know, more, more so than certainly mobile, but you know, looking back to the internet and everyone in this moment wants to figure out, okay, are we in 98, are we in 99, are we in early 2000, trying to figure out the moment that we're in. And it feels like because we have the internet today, like there's this like compression in the technology cycle because ideas get distributed faster, products get distributed faster. If there's a breakthrough, it's instantly everywhere.

• 58:40Jordi Hays?

  There's instantly, you know, hundreds or thousands of companies working on, you know, improving it, furthering it. And so I find it hard to try to think about where, where we are because it felt like in Q4 of last year, we actually did have a correction. Like we were joking, we were joking like, great, the bubble popped because like there was over, like maybe too much excitement around chatbots and there was somewhat of a correction and then we got agents that really worked. And then it feels like in some ways we're in a new, a new cycle now and, and, and so I'm, I'm curious if you have any sort of frameworks or thinking around that like compression in progress that we're getting because we're building on top of all these other technology cycles for this new one.

• 59:27Speaker 03

  Absolutely, and of course, the AIs themselves are starting to improve the AIs. Right? So, some people worry that precisely because of that, we'll get a sort of a Foom scenario under which, one day, everything is fine, and the next day, you have a god in the laboratory. Right? I'm not too worried about that, but it's not, it's not insane. It's not insane. Um, yeah, so far, uh, my view is that I trust the technologists when they say that the

• 1:00:07Speaker 03

  technology is going to keep getting better, quite rapidly. Where I think the technologists are not quite right is that it's going to take much longer than they think for this to start affecting, you know, jobs and, and the economy writ large, and things of, of that nature. That'll be slower. So, the economists generally are on the slow side in terms of, it's going to take time to adapt to this technology. I mean, we saw like with electricity, for example. Um, you know, electricity was another, you know, incredible technology, um, but it took

• 1:00:52Speaker 03

  time. You know, i- i- it took time to adapt to that, even when the frontier, you know, was very far ahead, but for that to work its way in the economy and for people to figure out how they're going to change their production structure, that took time. And I think it will take time here as well. But as far as I can see, the technology is going to keep getting better, which it does give one pause, and I will say, never in my life have I felt that the window of what is possible is as large as it is today, both on the possibilities for...

• 1:01:39Speaker 03

  Superintelligence, huge gains, the boomers, and also on the doomer side. I don't discount those entirely. My view is more in the middle, but those two sides, they're not, they're not insane. So we do have to do a lot of thinking.

• 1:01:56John Coogan?

  Yeah. Well, thank you so much for taking the time to come chat with us. We'd love to have you back on the show soon. It was long overdue, but have a great

• 1:02:03Jordi Hays?

  Thanks for the time, Alex.

• 1:02:04John Coogan?

  Rest of your week, have a great weekend and hopefully we'll talk to you soon.

• 1:02:07Jordi Hays?

  Talk soon.

• 1:02:10John Coogan?

  GMU economists, always so much fun to talk to. Well, our next guest is Bill from Convective Capital here with a new fund. Get that gong ready. Let's bring in Bill from Convective Capital into the TVP. And welcome to the show. How are you doing?

• 1:02:30Speaker 04

  Doing great. Thanks for having me, guys.

• 1:02:32John Coogan?

  Kick us off with the news. What happened today?

• 1:02:35Speaker 04

  Yeah, so we raised a new fund, $85 million. There it is.

• 1:02:43Speaker 04

  Thank you so much. It's up 2X from our, from our last fund and we're focused on disaster resilience. The thesis of the fund is that the world's getting warmer. Our, our infrastructure is getting older and that's literally a recipe for disaster. And so as, as disasters rise and volatility rises in the world, there's got to be private markets that can respond and that can build solutions and services and technology to, to stop that. And so we back founders that are building those things.

• 1:03:09Jordi Hays?

  Give us an overview of the fire. Give us a fire market map. What's exciting in fire? It's top of mind right now. There's a fire burning in LA slash, I think Ventura County. And so my house has been very, it's been very smoky around my house. And yeah, I want to know. This, this feels like a particularly brutal industry because there's these like insane spikes of interest and then people just kind of forget about

• 1:03:38John Coogan?

  Are you thinking watch duty for profit conversion?

• 1:03:40Jordi Hays?

  Yes.

• 1:03:41John Coogan?

  It's got to happen.

• 1:03:42Jordi Hays?

  Yes. Lead a series A in watch duty, please.

• 1:03:45John Coogan?

  Lever it up.

• 1:03:46Speaker 04

  Yeah, John, I watched it. He's a good friend and we started, you know, I started my company around the same time he started that and he will never take that for profit. He's a dyed-in-the-wool.

• 1:03:55John Coogan?

  It's such a good app.

• 1:03:58Speaker 04

  And it's actually become the standard, not just for people that care about their homes, but also, you know, people in the fire service use it. It's an amazing example of how technology can can address this problem. So I guess to get to your question around market map. You know, we think about a lot of like, who's the end buyer? Because that's actually what's kept people out of this space historically. You know, the, you know, VCs typically don't get excited about companies that sell to utilities or insurance companies or government agencies. And, you know, our thesis is that that is in the middle of a really big change, that, you know, if you see like P G D went bankrupt a couple of years ago. The insurance companies have had to leave California in some of these really large markets. And that's changing behavior. You know, you lose $70 billion of market capitalization and you're like, you respond and you do something about it and you act differently.

• 1:04:43Speaker 04

  And so, you know, we think a lot about the market in terms of who's going to buy these technologies. And we've had a lot of success investing in startups that sell to utilities like Overstory, which, you know, uses satellite imagery to help utilities trim trees around power lines. We just invested in Fund Two in a company called Volt Air, which does autonomous drone power line inspections. So, you know, utilities cause about 11% of fire ignitions, but about 60% of the acres burned. And so if you can actually just help reduce utility ignitions, that's like a huge leverage point.

• 1:05:13John Coogan?

  Interesting.

• 1:05:14Speaker 04

  Interesting.

• 1:05:14John Coogan?

  Interesting. What what's going on on disaster prevention in like more of the consumer, prosumer space?

• 1:05:23John Coogan?

  I saw a house for sale over in Malibu and the, it was by some actor and he had installed like fire shutters and like all this different equipment. He was like living off grid and this was like his getaway. And it feels like I saw after the LA fires, like the autonomous water sprinkler that would be bolted to the top of the house. I think a lot of homeowners in Los Angeles at least were like, oh, I want one of those. And they would have clicked the button to buy it if they'd seen an ad that day, but then a year goes by and nothing happens in the next fire season and they think, ah, maybe not. But it does feel like there's some fertile ground in the consumer space, but is that more challenging than people might think it is in reality?

• 1:06:03Speaker 04

  I think you're totally right. Like, consumer demand goes in spikes. It's a very seasonal, volatile business. You know, I just saw today, WatchDuty is the number two downloaded app on the App Store today. And, you know, it probably was not the case a couple of weeks ago. So, you know, it's certainly, that's the nature of the beast here. In terms of home hardening and things you can do to protect your home, I think that also kind of goes in waves, to your point. But to me, the real unlock is going to be when insurance companies create incentives for people to actually install these things around their homes. So, we're investors in a company called Stand. They help model homes. They use computational fluid dynamics to simulate wildfires moving through the property. They come up with a list of recommendations for the homeowner of what they should do with shutters and windows and remove certain vegetation. They remodel it, and then they can actually provide

• 1:06:48Speaker 04

  discounts on insurance. I think that's going to be the real unlock that drives, you know, at-scale consumer behavior.

• 1:06:53Jordi Hays?

  Yeah, it has to be a real-time, like, you're renewing your home insurance, and they're like, if you do spend, you know, in California, it could be like, spend $10,000 on this new system, and if you do that, we'll give you a $10,000 reduction this year and, you know, further discounts in the future, so that you end up, you know, effectively, you know, saving real money.

• 1:07:15Speaker 04

  Yeah, exactly. I think historically, insurance companies have not done that, but that's the key to protecting, you know, homes in this kind of new era. And it's got to happen. You know, the California Fair Plan, which is like the state-backed insurer of last resort, just announced they're going to raise rates 30% this year after the LA fires. And so, you know, if we don't actually reduce the probability of homes burning, housing and insurance is just going to become unaffordable.

• 1:07:40John Coogan?

  How are you thinking about selling to the government, maybe in California or elsewhere? Anduril has this interesting story where they built a firefighting tank, they were trying to sell it to California firefighters, but there was pushback around job displacement, even though it was ideally a new capability that would actually have support staff and not really take anyone's job, because no firefighter can sit in the middle of a blaze like this particular firefighting tank could. But it was still, became a political issue, and ultimately did not become a real product. Is there movement there? How are companies positioning themselves as additive? When I think about drone review of power lines,

• 1:08:22John Coogan?

  there's probably someone that went up there earlier. Cost savings is good. Doing more with less is great, but also, there's always that pushback around job displacement.

• 1:08:31Speaker 04

  Yeah, I think there's kind of two issues at play here. First is like, is there actually job displacement? I think the reality is no. I mean, it's just, we are so under-resourced relative to the scale of these disasters. They're happening three times more frequently with huge severity. You know, CAL FIRE is the largest and best-resourced firefighting agency in the world, bar none. Like, that's not going to change. And I think it's really about how do we get leverage out of those investments? I do think, though, you're pointing at a cultural issue, though, and that's something that we've really worked at China Bridge. You know, I think it can be really harmful if like, a bunch of guys in Palo Alto sipping lattes like walk out to the fire line and try to tell people how to do their jobs. You know, there's just this huge disconnect. And so, one of the things that we built is this conference called the Red Sky Summit, where we actually get 600 fire

• 1:09:15Speaker 04

  chiefs and other emergency managers together every year in San Francisco. And we kind of create like an off-the-record venue for them to talk to people that are building stuff and technology. And it kind of creates this great sharing back and forth where, you know, you can show the value of this technology, you can have these two-way conversations, it sort of changes the tenor. And that's been a real unlock. We've seen a lot of buying behavior come out of that event. I think things like Watch Duty that show how impactful technology can be, the firefighters see that. And, you know, I think the tide and the cultural tide is really changing. And so, it's an exciting time to be building in this space.

• 1:09:47John Coogan?

  Yeah. Is there any relevance, like, we talked to some other sector-specific funds or thematic funds. And the classic example is like, in CPG, they can be a harder business sometimes, but there's a number of like, clear acquirers for mid-scale companies, like a Unilever or Coca-Cola will take out a lot of these, a lot of these companies at a unicorn valuation. And so, it sort of changes the underwriting. It's worked for a lot of funds in that category. Is there a 800-pound gorilla in this category that's maybe not being disrupted, but maybe can be a partner at some point in time? Or is the thinking like,

• 1:10:28John Coogan?

  everything is IPO, it needs to be a standalone business, or bust? Or is anything different financially about these businesses that you see?

• 1:10:37Speaker 04

  Yeah, it's a good question. I don't look at wildfire as like a market in and of itself. It's this sort of dynamic that touches these huge markets like energy, insurance, housing, real estate, forestry, you know, government emergency response. And in each one of those categories, there are, you know, really large companies. There are, you know, contractors in the utility space or providers in all of, you know, all of those markets. So I think there's certainly exit paths, but the economics here are just like immense. You know, the Bloomberg just published a report disasters cost the US economy a trillion dollars a year. That's like on par with what we pay for interest on the national debt or defense. And so it's like, you know, you, there are really big public companies that will be built,

• 1:11:20Speaker 04

  you know, solving that because that, that cost falls on these really large, deep-pocketed institutions. And, you know, we think that there's just very big businesses to be built.

• 1:11:29Jordi Hays?

  Yeah. Is there opportunities for wearables for firefighters? I was, uh, once the, the, the Sandy Fire started here in LA, I was, uh, I was showing, uh, my son some videos on like wild, uh, just like wildland firefighters. And I was shocked that a lot of them just like weren't wearing gear. They were wearing, they'll wear something like a piece of fabric over their face. Seems like there's probably opportunities there and potentially decent size market.

• 1:12:01Speaker 04

  Yeah, I mean, it's, it's a travesty what we equip our firefighters with and send them out there. I mean, it's like, you know, the, the health impacts of wild and fire smoke are just terrible. I mean, and so, and there's really not a practical way currently to help filter that air for these wild and firefighters. So they're out there, you know, really with no masks, sleeping in smoke days at a time, carrying packs. It's 110, 120 degrees, you know, they're working hard with chainsaws and axes. I mean, it is, it's a really dangerous, really grueling job. And I think, you know, part of the original thesis for Convective was I was actually volunteering with my local fire department up in Mendocino County. And, uh, you know, I just was watching this and I'm like, I can't believe we're doing this with,

• 1:12:43Speaker 04

  you know, trucks from the 1970s and, you know, axes and like, that's the state of the art. And so there's a huge opportunity there. And I think, you know, it's the, and you can look at, you know, wild and fire as a, as a market and it's a certain size, but it's also a path into all types of field service jobs and all types of worker safety. And so we've looked at a lot of companies there. We haven't made any investments yet, but that's, that's a category we're really interested in.

• 1:13:04John Coogan?

  We jumped straight into the discussion of the fund, the strategy. Can you take us back a little bit to what you were doing before? Why start this fund when you started it? Sort of the pre-history of the fund?

• 1:13:18Speaker 04

  Yeah, so I was a founder. I started a company called WePay back in 2008. It was an early fintech company and we built that up over about 12 years and sold it to JP Morgan.

• 1:13:28John Coogan?

  Where was that headquartered? Overnight success.

• 1:13:31Speaker 04

  Yeah, I wish. It was headquartered in Palo Alto.

• 1:13:38John Coogan?

  Palo Alto, okay. Yeah, I just remember running into it in Boston, I think in like 2012 or something. That was around the time. I was probably still.

• 1:13:46Speaker 04

  I actually started it in Boston.

• 1:13:48John Coogan?

  Okay, that's right. That's right, that's right, yeah, okay, got it.

• 1:13:51Speaker 04

  We started in Boston, we were funded by Y Combinator, moved to the West Coast. Built that up over about 12 years and then we sold it to JP Morgan. I left JP Morgan and I think one of the things that really suited us well at WePay was we were early to like the financial technology market. People called it like banking technology at the time. And a lot of the same skepticism that I hear around utilities and government, we heard, you know, we're trying to raise money from Boston VCs in 2008. And, you know, they were wrong. I mean, the fintech market was like the most exciting sector of technology over the next 10 years. And, you know, so as I was leaving JP Morgan, I wanted to work on something that was, you know, a market that was early and that we could be sort of one of a kind, that we could be a market leader in. And that also had an important mission, where we're helping people do good for the world.

• 1:14:36Speaker 04

  And this sort of lined up all of those things. My wife and I own a ranch up in Mendocino County, a couple hours north of San Francisco, and a fire almost burned under the property. And, you know, all the dots started to connect and here I am.

• 1:14:50John Coogan?

  Yeah, that's amazing. It's sort of like the VC version of like build something you use yourself, like the YC ethos, make something people want. Well, thank you so much for coming on the show and breaking it down for us. Congratulations.

• 1:15:02Speaker 04

  Yeah, I'm really glad you're doing this.

• 1:15:03John Coogan?

  Yeah.

• 1:15:03Speaker 04

  Thank you.

• 1:15:04John Coogan?

  We need more.

• 1:15:04Speaker 04

  Thanks, guys. Love what you're doing.

• 1:15:06John Coogan?

  Have a good rest of your day. We'll talk to you soon.

• 1:15:07Speaker 04

  Cheers, Bill.

• 1:15:07John Coogan?

  Goodbye. Up next, we have the co-CEO of Spotify, joining Alex Nordstrom. On a huge day. Calling in from Spotify Investor Day. Welcome to the show. How are you doing? What's going on?

• 1:15:21Speaker 05

  Thank you. Hey, John and Jordy, it's good to be here.

• 1:15:23John Coogan?

  Great to have you. Fantastic. First time on the show, why don't you kick us off with the news today? What's new in Spotify's world?

• 1:15:34Speaker 05

  We just had a fantastic Investor Day 2026. We talked about what we've delivered in the past four years, which put us in a really great position in terms of user growth and financial metrics. We also laid out our four big ideas for the future. And then we also talked a little bit about how we can further monetize Spotify and grow all the financial metrics and goals of the company. I want to send my greetings from Gustav Soderstrom, who was also on your show a while ago.

• 1:16:03John Coogan?

  Yeah, yeah, we talked to him at South by Southwest. It was a great conversation. We're very excited to have you here. Where should we start? I want to jump into-

• 1:16:14Jordi Hays?

  I love big ideas.

• 1:16:15John Coogan?

  Yeah, I mean, there's so many different things. Maybe we should start with the Reserve Ticket Access because I saw that organically promoted to me and it seems so logical. And I'm fascinated by the rollout, the strategy, and also like, sort of, why did it take so long? Has this been in the chamber for a long time? What has been the plan? What has been the go-to-market with this particular product?

• 1:16:40Speaker 05

  Great question. So I've been with Spotify for, I think it's now almost 16 years. And this is one of the most lovely improvements to Spotify Premium that we've done, I guess, since the founding, really. So you're right, you know, as long as we do, it's a great one. And the reason why it's so great, it's really that it solves a couple of different problems. One is, you know, who hasn't been sitting there in front of a website trying to get tickets for a concert? Like, it's very hard. And if you get it, it's going to cost you a lot, right? And the second thing is, even if you get tickets, it may not be to the artist that you actually listen to and love. Right? So this solves that. So what we're launching is basically, we're giving you, we're holding tickets for you

• 1:17:23Speaker 05

  for a certain time window for you to just go and pay and collect with our partners. So it really solves the problem in a unique way because we're matching the tickets and the concerts and the participating artists and tours with the users on our platform that are actually the true fans of this. And we look at it from many standpoints, like not just the number of streams that you're doing, so you can't just grind yourself there.

• 1:17:46Jordi Hays?

  Yeah, I imagine.

• 1:17:48Speaker 05

  It's also catalog engagement and so on. Yeah, so it's terrific. This is a fantastic improvement in Spotify Premium.

• 1:17:53Jordi Hays?

  Yeah, I have a new problem, which was, uh, which will be ticket scalpers, setting up, you know, uh, infinite.

• 1:17:59John Coogan?

  Paying the monthly subscription fee for years.

• 1:18:02Jordi Hays?

  Just to try to run algorithms. Uh, no, but I, I think it's absolutely brilliant. Solves a problem, you know, even, even from the artists, like, being in this position where you're trying to make your ticket prices affordable for your fans, but due to market dynamics, no matter where you price it, they'll, they'll go, they'll go way up. And then the only beneficiary in that transaction is the, is the person that's just buying the tickets to resell, uh, and, and everyone else loses. So, uh, I think.

• 1:18:29Speaker 05

  You're totally right. I mean, this, like many things that we do at Spotify, uh, we look at what organically happens on the platform and, and what we do. And then when we see that there is some sort of signal or trend that actually just come by way of organic behavior on the platform, then we double down on it. So, we've done many events, uh, uh, you know, with artists and, and groups and bands and so on over the years. And, you know, on a, on a, on a yearly basis, probably do a hundred and fifty to two hundred events. And, um, the, the magic really happens when we look at who to invite to those events. And if we can really strike the balance of, you know, getting enough people there that are really sort of on a very, very high engagement level with that artist, not only,

• 1:19:12Speaker 05

  again, not only just listening to the artist, but doing it maybe on a daily basis, listening, having listened to the whole catalog and do it for, you know, at least an hour per day or something like that. It really gives the artist also like a magical experience of facing, you know, your truest fans. And this is something that uniquely we can do for, for, for artists.

• 1:19:29John Coogan?

  Yeah. Uh, AI is obviously at the top of everyone's mind. The large taste model is the latest technology from Spotify in the AI world, but I feel like you have to have been embedding every song into some sort of machine learning, learning model for probably over a decade. Can you take me through a little bit of the history of machine learning or AI at Spotify? And then what has actually changed? Like, where are you seeing a break in the graph? Like where, where are you seeing, okay, we're, we're, we're experiencing some sort of discontinuity in the progress we were making?

• 1:20:06Speaker 05

  So you're right, it was actually just about a decade ago when Daniel and Gustav and I started investing into AI then was called machine learning.

• 1:20:16John Coogan?

  Yeah.

• 1:20:16Speaker 05

  Right, and it was very basic the algorithm then. It was almost like, okay, similar to what you do on Amazon. You know, John listened to this, he's similar to Jordi, also listened to this other thing, therefore he should listen to that too. So lookalike algorithm, if you will.

• 1:20:32John Coogan?

  Collaborative filtering, probably based on tax, not actually looking at the waveform even.

• 1:20:37Speaker 05

  Exactly like that, yeah. And so now, many, many years later, having continued to invest in that and just the data, not just the data, but the learnings we have and the feedback loops we've had over the years, it's been compounding. So, and now, you know, you're asking me what changed lately. Well, obviously, what changed is that, you know, we've gone access to, you know, large language models, like general intelligence that we can use to reason over the data that we have.

• 1:21:00John Coogan?

  Yeah.

• 1:21:01Speaker 05

  But what it comes down to really is the unique data at scale here, right? So, you know, we log probably, you know, between, I think it's three and four trillion events that happen per day on Spotify. So we really get billions of signals that are relevant to feed it, to feed the algorithm with. And then the second thing that happened is, is obviously because we started to sort of, you know, understand English, algorithms started to understand English. So we sort of started importing a lot of knowledge from outside, from the outside world, onto Spotify.

• 1:21:30John Coogan?

  Yeah.

• 1:21:31Speaker 05

  And, and.

• 1:21:32John Coogan?

  Yeah, I've noticed that the search bar has gotten so much better at detecting lyrics. Like I used to have to go and Google or search a lyric and then go to Spotify. And now I can just type it right in. I get it. I'm like, this is an amazing experience. I'm interested in your build versus buy versus fine tune an open source model. What's working? What's interesting? Music is, you know, obviously you're benefiting from transformer architectures from all the, all the open source work. But I imagine that a lot of the tasks that you're doing aren't exactly, okay, just fine tune like a text-based open source model.

• 1:22:11John Coogan?

  You might need to go a layer deeper. You might need to partner with someone. How have you been thinking about the way to deploy AI?

• 1:22:18Speaker 05

  Yeah, we certainly believe in general intelligence and, you know, we've been riding that cost curve that's going to come down, collapse by a thousand X over the last four or five years or so. So we believe in this industry commodizing more and more. So we are going to buy, you know, the best reasoning capabilities out there and then we're going to use that on top of what we call a large taste model, which we are uniquely able to using proprietary data to actually build out, much thanks to the stuff that I was talking to. The other side of the equation here that is important, I think, is also that we get a lot of feedback and data from artists as well via our Spotify for Artists application, which feeds us with data that's also proprietary and unique, which is great.

• 1:22:58Speaker 05

  So you ask about build and buy and so on. I think it's a great question. You know, if we see opportunities to actually build something to help, you know, bootstrap or add a capability, we will do it. And I'll draw two examples that are quite good. I think three years ago, we bought Synantik, which really helped us create AI DJ.

• 1:23:18John Coogan?

  Okay.

• 1:23:19Speaker 05

  And, you know, yeah, it really accelerated the build out of AI DJ and now AI DJ is all over the world and we have it in different languages and people are using it at scale. So that was a, that was a, that was a great, I think, transaction that we made. Another one that is also, it's more recent, actually. It was just before the end of last year, we bought WhoSampl, which provided us not with so much capability, but a unique set of data. So I don't know if you've used SongDNA lately. It's been killing. I think 50 to 60 million people are using it already. You can listen to a song and then you can check like which were the samples in that song. And then you can also like follow the threads down to like, okay, what's the original? Yeah, you can listen to the original track and then

• 1:24:03Speaker 05

  hear how they sort of flipped that into the new one. And you can see who was in there, the studio technicians, the artists, the composers and so on. And a lot of this we couldn't have done, or it would have taken us much longer time without WhoSampl.

• 1:24:15John Coogan?

  Yeah. Structurally, how is AI changing the work that Spotify employees are doing? Matthew Prince from CloudFlare was talking about this concept of you have builders and sellers, but just the raw measurement, that's less important as a discipline. And so he's pushing more of his staff to build new things and then go and sell it. Do you have a framework for thinking about how your employees should be using AI in the future?

• 1:24:44Speaker 05

  Yeah, I mean, we, you know, a couple of years ago, I think we all, you went through that the chat GPT moment. And just before the holidays of last year, we had a similar moment around coding tools. And we all sort of got enamored with it and started adopting it. But at Spotify, the engineering and development, you know, teams have just, you know, done a crazy good job adopting it. So we now have, I think, close to 99% adoption across Spotify. And this goes, you know, beyond the engineering team, but also into the marketing team that are using it not just for design, but also for for better gaining insight into what type of compelling stories to to to tell on top of the story. So we do have very many different use cases.

• 1:25:27Speaker 05

  And, you know, people are crazy about just creating prototypes now all around Spotify, just test things in a way faster way. So what you get basically is a lot of like productivity gains. And I know for a fact, one of my dear colleagues, the chief architect of Spotify and GN, he was just at Anthropic and he was doing a presentation for their staff. And I hear from Anthropic that we are actually one of the leading developers out there in adopting AI and using it to gain productivity, productivity improvements.

• 1:25:59John Coogan?

  Yeah. Have you thought about the, I don't know if there is a trade off, you might be doing both, but there's a world where you have some sort of engineering pod and there's an opportunity to have more members of that team pushing code, shifting to individual contributor roles, but of course they're managing agents, so it's also a managerial role, versus embedding more technically minded folks across different organizations. You have more cross functional teams, a marketing team gets an engineer who can oversee agents. How are you thinking about just spreading different, different AI tool use across different organizations that might not previously have been in a position to build a piece of software?

• 1:26:43John Coogan?

  Maybe they're in the market to buy a couple SaaS products for whatever their, whatever their vertical is, but now they have the opportunity to actually build.

• 1:26:50Speaker 05

  What you're seeing actually happening organically at Spotify is that as adoption goes up, it's typically you're by your own and you're looking at what's out there, which MCPs to connect to and how that can help your work and then you're basically sort of copying some other people's skills around at the company and you're just sort of experiencing how it is to use AI to do your work, your particular field. But what now is more happening is that all of our Slack groups and in our communities, we see people sharing use cases with each other and the next step really is that, for instance, someone, a product developer and an engineer sits down with a marketer,

• 1:27:30Speaker 05

  starts to understand, hey, okay, the three of us can actually build something of a holistic experience of not just new product and feature, but also tell a compelling story about it in a much, much more amplified and leveraged way, which I think is fantastic when that happens.

• 1:27:47John Coogan?

  Yeah, I love it.

• 1:27:48Jordi Hays?

  We got to talk about fan made covers and remixes, the new deal with UMG. Super, super excited about this personally and of course it's been

• 1:27:58John Coogan?

  You got a song you want to cover? You're finally going to do the Gunna cover you were planning on.

• 1:28:02Speaker 05

  What's your favorite track right now?

• 1:28:05John Coogan?

  I've been

• 1:28:07Jordi Hays?

  No, I think I was expecting Drake to kind of grow up by this point in his career and maybe evolve a bit more. I feel like I grew up maybe faster than Drake. He's still obviously, you know, an incredible, incredible superstar. But yeah, John was talking about Gunna. I'm a big Gunna, Gunna fan.

• 1:28:27Speaker 05

  Oh, yeah.

• 1:28:28Jordi Hays?

  So I'll be making some Gunna covers and remixes. But yeah, talk about this deal. Certainly controversial, but this feels like one of those things that people will have one reaction. And then they'll have the experience. Yep. Uh, which I'm assuming will be, you know, incredibly magical and, and, you know, we've had Mikey from, from Suno on the show. He's a friend, friend of ours and, uh, you know, people, people fundamentally, they, they, they say one thing on the internet, but when they use the products, they love them. And so I think it's, I think it's super exciting. So yeah, talk about this deal. What, what were the factors that were most important in getting this right so that, you know, fans win, artists win, uh, and everyone involved wins?

• 1:29:13Speaker 05

  Yep. Yep. Certainly. I am certainly very, very pleased with it. I mean, it's a landmark deal and it's a landmark deal from the vantage point of we're enabling something that is for the first time a legal product for users and fans to actually create these remixes and covers. Um, and what's more is that it's really the first time, um, you know, in a controlled and licensed medium that artists get to partake in, in, in the AI economy really. So that, that is like the core of it. And then if you think a little bit about what is that we're doing here? Well, you know, people love, to your point, like people love remixes and covers, um, and they've always done that. But there hasn't been any scaled way to really sort of tap into this opportunity.

• 1:29:54Speaker 05

  And what we're doing right now with, with our product is that we're unlocking this, this market. Um, so where, where we think actually in the end, it's going to be very additive to both the music industry and ourselves, including artists and songwriters. Um, so it's very cool. We're launching it as a paid add-on, which means that, you know, if you have Spotify premium, uh, you're eligible to actually buy into this add-on. And when you have the add-on, you can actually go ahead and create remixes and covers. And what's cool with Spotify is that, you know, we've been, we're very experienced when it comes to free and premium and, you know, how to convert people and lead people up the ladder. Uh, and so what we're going to do is obviously give you a certain, um, you know, limited usage on premium.

• 1:30:35Speaker 05

  So you can actually try it out, play with it, create habits around it and then commit to buying add-on. But the important point here is that you can think about it as, you know, creation is paid for and consumption is included. So basically, you know, the output that you create around the Ghana, the Ghana remix that you're gonna create, you know, I'll be able to listen it, everyone will be able to listen.

• 1:30:58Jordi Hays?

  Yeah, is there, so I can imagine, I can imagine a world, you know, maybe six months from now where the number one track globally on Spotify is a fan-made remix. Like, you know, may, may take more time, but it doesn't feel, doesn't feel, doesn't feel impossible. Is there, is, do you think this could potentially create a new category of actual artists on Spotify? Would the person that creates a remix ever be able to get, you know, some element of, of rev share? Or is this like entirely gonna be more like, you know, more like a live DJ where, you know,

• 1:31:39Jordi Hays?

  you're putting, you're mixing and mashing and putting things together and, and maybe you can build up your brand. But you're not monetizing, you're not getting royalties or any, any revenue share.

• 1:31:48Speaker 05

  Yeah, I can't speak to the specifics of it, but, but I can tell you how I think about it. You know, when I started at Spotify, together with Gustav, like 16 years ago, we had roughly, I think it was 2 million tracks in the catalog. And I've lost count, but I think it's in the order of 200 million tracks now, you know, 15, 16 years later. So the catalog being big and growing is a good thing. And the problem you're talking about, really opportunity, is for us to, to, to do recommendations well. And that's always been at the heart of Spotify. If you ask them, why, why do you love Spotify? Well, most people say, hey, it's because they seem to know me. So we're able to sort of help you discover by way of personalization, help you kind of find your tracks again that you like and so on.

• 1:32:32Speaker 05

  So really, this is what you're talking to is really a personalization problem, right? So when, when this product creates more catalog, our job is to make sure that, you know, the best song gets to the best place.

• 1:32:44John Coogan?

  Last question, talk about the app icon redesign.

• 1:32:49Jordi Hays?

  We loved it.

• 1:32:50John Coogan?

  It was really cool. I loved it.

• 1:32:51Jordi Hays?

  We loved it.

• 1:32:52John Coogan?

  But I'm interested in the actual, I mean, I want to know how you

• 1:32:56Jordi Hays?

  Did you ever imagine that a disco ball could get people?

• 1:33:00John Coogan?

  People were really talking about it.

• 1:33:01Jordi Hays?

  Talking about it.

• 1:33:02John Coogan?

  But my assumption was that, you know, it was the Spotify icon is on my home screen and I click it when I want to listen to music. But it jumped out to me and I feel like that would show up in the metrics of jarring people awake. But I'm interested to know, like, what actually happened? Are you going to be changing the icon randomly every five years? Is it gotta be every 20 years? Like, what's the, what is the learning from doing something sort of bold?

• 1:33:30Speaker 05

  Right. So about 10 days ago, we decided to change our, the Spotify app icon or Spotify logo to one that is more of like a glittery disco bar version of Spotify logo. And, and, you know, to your point, this just sparked a massive conversation around the internet.

• 1:33:49John Coogan?

  Yeah.

• 1:33:50Speaker 05

  On basically every major social platform. And, and, you know, what a lovely and wonderful piece of culture to have a conversation around the change of our, our logo and icon. Right? So not only users, you know, have been sounding off, but also other big brands.

• 1:34:08John Coogan?

  Yeah.

• 1:34:08Speaker 05

  In OpenAI made their version, suggested that they would make a version like that. Kit Kat, Kit Kat joining on the fun. So, yeah. So when you have, you know, hundreds of millions of people that passionate about culture and art and Spotify. This is what happens, right? So this sparks like a massive conversation that I think is lively and fun. And to balance with you, the reason why this is happening, you know, having reflected on it a few days later now. It's pretty intense when it happens because there are two sides, right? And, you know, and then there's also all of this like byproduct. You know, the internet coined a new design term around this called Disco Morphism.

• 1:34:46John Coogan?

  Disco Morphism. Oh, yeah. I love it.

• 1:34:49Speaker 05

  Yeah.

• 1:34:49John Coogan?

  And people have been asking for an answer to flat design. Lots of people have been lamenting how boring things have gotten. You spice it up and the people, ah, I didn't mean that, which is a very funny way to process it, but sorry, continue.

• 1:35:01Speaker 05

  I mean, I mean, I just the reason why this is happening after having sort of thought about it for a few days and discussed it internally. It really is because we are truly at the intersection of the humanities and technology.

• 1:35:11John Coogan?

  True.

• 1:35:11Speaker 05

  And I think we're in a good place when it comes to that. We're at scale. Uh, you know, when, when, when hundreds of millions of people or potentially even billions are talking about you. Uh, then you did something interesting.

• 1:35:23John Coogan?

  I love it. I love it. Uh, yeah, a really, really well executed stunt and uh, got, yeah, just got everyone talking and reminding and it's hard to break through with, with something like a 20 year anniversary with a milestone like, but it's important to do something like that. So congratulations.

• 1:35:39Speaker 05

  Yeah, thank you. We did it mostly for ourselves in the beginning, but now it turns out that, you know.

• 1:35:43John Coogan?

  Music should be fun. Building a company around music should be fun. Like all of this, like it's, I, I know people have their think pieces and their deep dives on uh, contrast ratios and all sorts of things, but like, at the end of the day, it's fun for a company like Spotify to do something fun with an app icon for a few days. I love it.

• 1:35:59Jordi Hays?

  Also, I put back on those people. I thought, I thought it looked exactly like a disco ball would look if you were in a dark room.

• 1:36:06John Coogan?

  That's right.

• 1:36:06Jordi Hays?

  Listening to music and you look up.

• 1:36:08John Coogan?

  Yeah.

• 1:36:08Jordi Hays?

  Uh, so I thought it was, I thought it was pure to the, to the disco ball brand.

• 1:36:13John Coogan?

  I agree. I agree.

• 1:36:14Speaker 05

  That's good. Thank you. Keep it on.

• 1:36:16John Coogan?

  Anyway, uh, thank you so much for coming on the show. Great to hang. Congratulations on the progress.

• 1:36:21Jordi Hays?

  Congrats to the team on all the new milestones.

• 1:36:23John Coogan?

  We will talk to you soon. Have a great rest of your day. Goodbye. Uh, and if you haven't been following, the stock is up 13% today. Spotify is a 103 billion dollar company. Not too shabby. Our next guest, Jordan Schneider from China Talk. You know him, you love him. He's back on the show for the third, fourth, fifth, sixth time. Who knows how many times it's been. We've lost count, but it's been too long and we're happy to have you here. How are you doing?

• 1:36:49Jordan Schneider?

  I'm good. I gotta be honest, was also pretty confused by the Spotify disco ball. I thought.

• 1:36:56Jordi Hays?

  Why a big $100 billion company can't have fun in this country?

• 1:36:59John Coogan?

  Yeah.

• 1:37:00Jordi Hays?

  What's wrong?

• 1:37:01Jordan Schneider?

  I'm just saying, it took me longer to click it. I thought I had like some weird iOS update.

• 1:37:07John Coogan?

  I just think.

• 1:37:07Jordan Schneider?

  You know, whatever.

• 1:37:08John Coogan?

  Oh, yeah. Sure, sure, sure. I just think that like the fact that you processed it, even if it slowed you down, it put you in the, you know, the fast thinking, slow thinking, you were in slow thinking mode.

• 1:37:17Jordi Hays?

  You're not addicted to your phone enough. You're not addicted to your phone enough.

• 1:37:21John Coogan?

  Are they still, are they still rocking the, are they still rocking it? It's still a disco ball. I like it. I think they should just keep this thing. It stands out so much from every other app on my phone right now. I love it. Anyway. How are you doing? Give us, maybe let's start with the postmortem on last week. How is the China summit? And then we can just go into everything else.

• 1:37:40Jordan Schneider?

  So boring, man.

• 1:37:41John Coogan?

  I, I knew, I knew you were gonna say that. I was like, we're gonna talk about everything but China because it was so boring, but.

• 1:37:47Jordan Schneider?

  And they let me down. I mean, look, I think there is a clear, um, period of stalemate, which we've gotten into where the US has some leverage over China, um, which has been something that, really since like 2017, uh, uh, Trump won Obama, uh, Trump won Biden and then, the start of Trump true thought that they could kind of keep turning the temperature up and squeezing on tariffs and export controls and investment restrictions. And then all of a sudden China, April 2025 punches back with rare earths. And all of a sudden, um, uh, they realize, uh, you know, they run, they run the experiment and it works.

• 1:38:29Jordan Schneider?

  That actually the PRC has real leverage over the US and is able to kind of constru- like meaningfully constrain what, um, American presidents want to do when it comes to, um, more course of actions on China's, you know, technological and economic expansion. So, um, both sides have kind of realized that and what we got is a, you know, what was my headline? Prestige on the cheap, um, where, uh, the US decide where, um, you know, you have the whole cabinet, uh, flying over, you have every fancy CEO frying, uh, flying over, just being awed and wowed by, um,

• 1:39:10Jordan Schneider?

  You know, their 36 hour vacation to Beijing.

• 1:39:14Jordi Hays?

  Yeah, it felt like tourism.

• 1:39:16Jordan Schneider?

  Yeah, and look, there's an interesting debate to be had about whether the like giving them the face and giving them the atmospherics of that is actually like kinda in some level costless and maybe this like makes them feel less aggrieved, less likely to start World War III. I mean, this is the argument with Putin, right? It's just like we kept disrespecting him and then he decided, no, like, I'm gonna show you just how tough I am. So I'm not kind of on face opposed to it, but you know, it was, it was kinda just more or nothing.

• 1:39:52John Coogan?

  Yeah, I mean, you mentioned every fancy American CEO was there, but were you surprised or were you expecting, or did it break your expectations that no Sam, no Dario, no Demis, no Sundar, a sort of lack of AI representation? Yes, you have Elon and yes, you have Jensen, very important figures in the AI, American AI build out, but no true lab leaders from my, you know, rough estimate if I define it a certain way. And it felt like, okay, maybe this discussion should be about AI and it's, and it's they're, they're not even bringing the people to let them get a word in edgewise, not even a single line of conversation will

• 1:40:34John Coogan?

  happen. Was that as expected or how did you process that?

• 1:40:38Jordan Schneider?

  Yeah, I mean, it's interesting because like, um, this is phrased, this is framed as like a trade delegation.

• 1:40:46John Coogan?

  Sure.

• 1:40:46Jordan Schneider?

  Right? And so almost all of those companies like Meta excluded. I mean, I guess they had a person there.

• 1:40:52John Coogan?

  But Zuck wasn't there, yeah.

• 1:40:54Jordan Schneider?

  Yeah, but, but that person's like a Trump one person. It's kinda just like keeping with the vibes. And I guess Meta builds classes, builds classes in China.

• 1:41:03John Coogan?

  Yeah, and they, and they acquire AI agent companies, Manis, they, they are a buyer of Chinese companies or formerly Chinese companies that have moved to Singapore.

• 1:41:12Jordan Schneider?

  Which they're now not allowed to do. So yeah, they had some lobbying to do, I guess. But like the, you know, the asks I think are really inchoate. Look, the US government, we just had news today that Trump 86th a executive order because he doesn't know what he wants to do about this sort of thing about AI safety. And if like, you can't even figure out what you want from a domestic regulatory perspective. Like, are you really ready to like, put all the cards on the table and have this big, you know, grand summit with the Chinese to make sure that bioweapons don't kill us all in 2029? I don't think so. I mean, it'll happen at some point, but it's, it's just a little premature.

• 1:41:57Jordan Schneider?

  I think maybe not from the technological perspective, but from a sort of policy perspective that you do expect much of a serious discussion.

• 1:42:06John Coogan?

  Yeah. Are you, Sebastian Malabai had an op ed where he was sort of gesturing towards like the possibility of more collaboration on AI between America and China. You're, you have your hands in your face or your face in your hands. So I assume you are skeptical that that will take place anytime soon. But I mean, also the AI 2027 folks, very good at forecasting, have predicted a lot of what's happened. Say China wakes up in 2026.

• 1:42:35Jordan Schneider?

  Yeah. I mean, it's not impossible. I think the sort of, look, if the American political system has not yet woken up to an understanding that you need a different regulatory strategy in order to keep humanity safe. I think it is unrealistic to expect a strategic adversary who does, who is, you know, six, 12, 18 months behind where you are on the sort of technology development trajectory to come to the same realization. Now, you know, it'll happen at some point. I think this stuff is really powerful and the, the sort of logic that America doesn't want.

• 1:43:22Jordan Schneider?

  Uh, you know, bioweapons to be developed by Al Qaeda or ISIS or Hezbollah, just in the same way that China wouldn't want it to be done by, you know, the Falun Gong or Tibetan separatists or, uh, you know, uh, any, any group that's they see as like a non-state actor that would, that would want to kind of take down the party, um, applies, right? Um, but, uh, China, I think is deeply, the Chinese leadership is deeply hardware pilled. I think they're deeply skeptical of these sorts of arguments on face because they're kind of sci-fi and, um, the, the sort of journey,

• 1:44:03Jordan Schneider?

  the analogy or the journey that, um, the US and Soviet Union went on over the course of, uh, the Cold War to start to have real kind of discussions about strategic stability and arms control happened after you had the Berlin crisis and after you had the Cuban Missile Crisis. So like, look, Anthropic putting out a paper saying Claude Mythos is really scary is one thing, but it is different at a fundamental level than like completely shaking a society and like having the entire world realize that you are on the verge of apocalypse. So I hope we don't need that. Um, but I am, I am not particularly

• 1:44:45Jordan Schneider?

  optimistic that much will come of this in the, before it really accelerates.

• 1:44:50Jordi Hays?

  Yeah. How much have you read into the theories that, you know, maybe China would, would fund, uh, data center, you know, pushback in the United States? I don't know that they, they would need to, but if they were, if they felt that was important enough, they would signal something about how they think about the technology?

• 1:45:09Jordan Schneider?

  I think this is cope by the labs. Look like.

• 1:45:15Jordan Schneider?

  Yeah, and the Russians won the election for Trump. Okay, I mean, you know, i- i- it is, uh, I think Ben Thompson had the right take on this a few days ago. This can be solved with money. Like, if, if you really, um, put it, uh, you know, pu- put the choice to a town saying, okay, we will pay everyone within a 20 mile radius, $10,000 a year.

• 1:45:43Jordi Hays?

  People will start moving. People will start frantically trying to buy property.

• 1:45:47Jordan Schneider?

  Wanted to live next door. Or like, look, make the data centers beautiful, build a park on top of them. Like, give me some playgrounds.

• 1:45:55John Coogan?

  That is the one that I'm the most skeptical of in the American society. I feel like they will be, companies will be paying dividends and mailing checks far beyond, far, like, for, long before anything looks beautiful in this country. We build massive, like, monolithic structures all the time. It's a lot of cement over here. I don't know.

• 1:46:15Jordi Hays?

  Turn the, turn the, turn the GPU racks into sl- free slots.

• 1:46:19John Coogan?

  Every time I see one of these, like, beautiful industrial structures, it's always in the Nordics. It's never in America. Sometimes it's in China, they build a train through a mountain or something.

• 1:46:28Jordi Hays?

  The, the, the data center, you got all the, all the different racks of GPUs. And you just put a slot machine attached to each one of them.

• 1:46:35John Coogan?

  Maybe that's it.

• 1:46:36Jordi Hays?

  Through and, and you get like three or four.

• 1:46:38John Coogan?

  I wonder, we, we, I wonder what's, you, you know those cell phone towers that look like trees? And I don't think they look any better, really, but I guess they do sort of blend in. I wonder what the, like, economic mechanism was for going that direction? Because when I'm driving in LA, I see normal cell phone towers and I see tree, like, fake trees, cell phone towers. And there had to be a reason, like, it has extra costs to make it look like a tree. Like, is that just a choice? Is this like a nonprofit that's funding this? Like, who's, who's lobbying for this? Is there a law? I don't know. We gotta dig into it.

• 1:47:09Jordan Schneider?

  Can we please get the TVPN segment?

• 1:47:12John Coogan?

  Yeah, we need to dig into this.

• 1:47:13Jordan Schneider?

  Tree, the tree phone pole.

• 1:47:17John Coogan?

  Come for the questions, not the answers. I'm just riffing about things I don't know and would like to know.

• 1:47:23Jordi Hays?

  Every time I drive by and they get me, I just start slapping.

• 1:47:26John Coogan?

  Wait, really?

• 1:47:26Jordi Hays?

  And I'm like, you got me, big telecom, you got me. I thought it was a tree.

• 1:47:31John Coogan?

  From the distance, from the distance, yeah.

• 1:47:34Jordi Hays?

  Every time.

• 1:47:35Jordan Schneider?

  Well, the bad ones are like when they're five times as tall as all the other trees around. You're just like. And like the branches only start like four fifths of the way.

• 1:47:45John Coogan?

  Yeah, yeah, yeah, yeah, yeah. It's very, it's very half-hearted in its attempt at disguising itself. Ridiculous. On, on other China issues, did you see there are two sort of dueling predictions? Maybe, maybe I'm making them dueling predictions. Chamath Palihbitya says Taiwan not going to be a factor geopolitically in 18 months. Dan Wong has talked about how technologists over represent the chip story in the Taiwan story. And in fact, the discussion over Taiwan goes back much further and is grounded in more of like capitalist versus communist decision-making and alliances. Where do you stand on the, on Taiwan today versus in two years?

• 1:48:30Jordan Schneider?

  I have to acknowledge Chamath's existence. I refuse to do that. Um, I think that Taiwan is a place that has mattered for a while and will continue to matter for a very long time to come. I mean, first, only on the chips thing, the idea like, I don't know. Semi-analysis, like the percentage of chips that are going to be manufactured in Taiwan. 18 months from now is still good. It'd be like 85%. Or 90%. So yeah, it used to, you know, it was 100% for a window. I am glad Intel isn't a flaming pile of crap anymore. And it's like, nice to see Samsung also starting to get their act together.

• 1:49:16Jordan Schneider?

  But if, if really that's the only thing you care about, no, you will still have a, you know, global economic catastrophe. If the lights go off in Taiwan in 2028. Now, why should you care about Taiwan besides the chips? I mean, it's a, it's a democracy. People have, you know, deserve to have self-determination. We can set principles aside if we really have to do that. But look, I think from a, from a sort of geostrategic perspectives, there's also this kind of concept of the first. Style and chain, I think it makes it it makes the the, you know, broader Pacific

• 1:49:58Jordan Schneider?

  architecture that America has has has built over the course of the past 75 years in Asia a lot more tenuous if all of a sudden, you know, the the kind of anchor to both Southeast Asia as well as North Asia becomes, you know, a peel and base. So, yeah, they're wrong.

• 1:50:20John Coogan?

  So so so many reasons that Taiwan will remain important into the distant future, regardless of what happens with Intel and and TSMC Arizona, etc. I agree with you on that. What do you think the next catalyst might be in the rare earth story? Because we're starting to see rumblings about funding for American indigenous supply chains there. Eventually, that becomes at least a stalking horse, if not a poker chip on the table, on the bargaining table. But where are we on the rare earth stalemate that became an important bargaining chip somewhat recently, as you put it in the intro?

• 1:51:01Jordan Schneider?

  I mean, it's a really interesting question. I've I've read reports saying that even five years from now, the leverage is going to still exist. And I think there's a sort of broader question of like, this is the second largest country in the world and largest economy in the world, and it's going to stay that way for a really long time. And the sort of ambition to fully decouple such that China does not have leverage over the US economy and can kind of squeeze it coercively seems to me to be a very tricky thing. Now, you can spend lots of money to sort of make that less acute or sort of turn it down

• 1:51:46Jordan Schneider?

  over time or, you know, protect the particular things if you're worried about, you know, individual like specialized inputs into fighter jets or, you know, something that would be really catastrophic like insulin getting Cut off or something, but it is, um, you know, this is like a, this is like a generational challenge of shoring this up and B, there's also an offensive side, right? Of, um, you know, escalation dominance, uh, in deterring an adversary from, from squeezing on stuff like this also requires you to be able to sort of credibly send signals that you can

• 1:52:27Jordan Schneider?

  take pain and cause pain in a way that would require the, um, you know, the, the other party to, um, uh, to, to back down and not necessarily use these tools. So we're, you know, we're, we're at this like awkward equilibrium. I think there's a lot of like hard thinking that still needs to be done to like, like really conceptualize like what's the right way to spend money and the right way to think about this relationship. We actually just ran a essay contest on China Talk, um, uh, about, uh, economic security. We're going to be, I have, uh, at 4pm, we're doing a, uh, a mega pod with three of the winners. So, um, maybe I'll have a better answer for you after that, but it's a hard one.

• 1:53:10Jordi Hays?

  Does Xi day trade prolifically?

• 1:53:14John Coogan?

  Who's the best day trader in the global?

• 1:53:17Jordi Hays?

  In power in China.

• 1:53:18Jordan Schneider?

  Here's the thing. I got a piece coming out about comparing American and Chinese corruption. Um, and the difference is that in China, they still feel like they have to hide.

• 1:53:33John Coogan?

  Okay. Well, we'll be an interesting piece. Uh, shifting gears, shifting gears, both literally and figuratively, cars. Have you driven any Chinese vehicles? Have you been outside in the BYD? Are you planning?

• 1:53:50John Coogan?

  I would love to see one. Have you been in a Zeeker? I keep seeing these. They look amazing.

• 1:53:53Jordan Schneider?

  Zeekers? I watch a lot of YouTube. I watch a lot of, uh, YouTube and Billy Billy reviews.

• 1:53:59John Coogan?

  Okay.

• 1:53:59Jordan Schneider?

  Um, I have been in a BYD in Norway, of all places. They had like in the main, like, like park, they had a giant setup. Um, you know, it's really impressive. Yeah, I you should get some you should get some American car manufacturers on yell at them. It's pretty embarrassing. You know, one of the more interesting developments, I don't know if you guys have been tracking this.

• 1:54:21John Coogan?

  No.

• 1:54:21Jordan Schneider?

  The Waymo using a Zeke or

• 1:54:25John Coogan?

  That's body. Yeah.

• 1:54:26Jordan Schneider?

  Um, and

• 1:54:28John Coogan?

  I would have thought there were import restrictions because if Zeke is not here, BYD is not here. You would think that like the supply chain would be restricted, but they must have found a way around.

• 1:54:36Jordan Schneider?

  So the trick is that it's there. It's the chassis and the battery and literally nothing else.

• 1:54:43John Coogan?

  Yeah.

• 1:54:43Jordan Schneider?

  So they are saving money on that, but like the the rules right now are just on all of the sort of like electronics and connected anything. So Waymo is filling up the entire car with stuff that is not

• 1:54:59John Coogan?

  They make interesting. Okay. Yeah, well, that's probably like more reassuring that Xi Jinping won't be teleoperating. You'll have a Waymo employee beaming in if you see a traffic cone out of

• 1:55:10Jordi Hays?

  What uh, what do you, how much attention do you pay to their like humanoid antics? Like, I feel like they're just leaking out videos of just this, like all this silly stuff to kind of just get us a little bit comfortable with it. But if you actually go there on the ground, it's like Droid Army, you know, they've got like

• 1:55:28John Coogan?

  Sure.

• 1:55:28Jordi Hays?

  A hundred thousand humanoids marching in unison. And then they just put out the video of it like dancing to Michael Jackson, like collapsing and getting dragged off stage.

• 1:55:38Jordan Schneider?

  You know, it's interesting because there isn't a market yet, right? Like, these are not, these are toys and these are like things you sell to universities for research. But at some point, there will be. And then there's going to be a really interesting challenge of like whether or not I think there's like some level of consensus now that the Western makers have like smarter software. But if you can like You know, it's, it's one thing to fast follow um the models themselves, but like if you can only, if you can apply them like at 100x scale, right, then um yeah, it could be really dramatic.

• 1:56:20Jordan Schneider?

  I mean, you know, I don't, I'm not doing like the, the episode, you know, Star Wars episode one, like Droid Army, like, well, that might take it, that might take a few more cycles, but just from a

• 1:56:31John Coogan?

  Imagine, can you imagine a Chinese humanoid company trying to distill Tesla Optimus after they have a fantastic data breakthrough and they're just having all the Optimus work in cubes, like trying to farm the data out of it.

• 1:56:45Jordi Hays?

  I just feel like it's such a, it's such a bad thing.

• 1:56:47John Coogan?

  Yeah, because you have to physically distill the data. So you buy, you buy a million Tesla Optimus robots and lock them in a warehouse so that they can move boxes for you so that you can distill it into your own robots or something.

• 1:57:01Jordan Schneider?

  This is a company, this is an RL environment.

• 1:57:03John Coogan?

  Yes.

• 1:57:04Jordan Schneider?

  I love it.

• 1:57:05John Coogan?

  There's something there.

• 1:57:06Jordan Schneider?

  I should start this.

• 1:57:06John Coogan?

  In China?

• 1:57:09Jordan Schneider?

  Oh, no, I mean, or just like uh

• 1:57:11John Coogan?

  Reseller.

• 1:57:11Jordan Schneider?

  In the US.

• 1:57:12John Coogan?

  Yeah, yeah, yeah. You need a hairdryer to remove the Optimus sticker and slap on some other sticker. That's where the money is being made these days. But you gotta hide that corruption.

• 1:57:23Jordi Hays?

  And it's really great that we have a software advantage and they have a hardware advantage on this. That's really bullish for us.

• 1:57:30John Coogan?

  Yeah, because software

• 1:57:31Jordi Hays?

  Because like they would never be able to copy like software off of a hard drive and put it on their hardware.

• 1:57:37Jordan Schneider?

  Well, and that's the thing is like, this is the difference with AI, right? Is at least America has way more chips and way more compute.

• 1:57:44John Coogan?

  Yeah.

• 1:57:45Jordan Schneider?

  As long as Taiwan still exists.

• 1:57:46John Coogan?

  Yeah.

• 1:57:48Jordan Schneider?

  But that will not be the case for the like, you know, humanoid embodied AI takeoff. Is like the thing you need to actually use the fancy model.

• 1:57:58John Coogan?

  Yep.

• 1:57:58Jordan Schneider?

  Is almost certainly going to be manufactured in China and manufactured at the scale that um could be like, you know, multiple orders of magnitude bigger than in the West. Now, this may change, like, once this becomes economic.

• 1:58:13John Coogan?

  Yeah.

• 1:58:13Jordan Schneider?

  Right? So.

• 1:58:15John Coogan?

  America can, I mean, Like you look at you look at space like like we have multiple companies that land rockets very capital intensive. It's an industrial process. You would assume that China would win that, but they are, but we have a lead in in master orbit still. And so it's not impossible, but we do tend to let our leads languish like we have in the car industry.

• 1:58:38Jordan Schneider?

  And it'll be interesting because there'll be this lag where China like because they already have all these humanoid companies that like have the ability to scale. We'll scale faster. Once the kind of like economic utility of these things turns on.

• 1:58:52John Coogan?

  Yeah, definitely.

• 1:58:53Jordi Hays?

  If you if you believe in AI progress, do you have to believe in a Taiwan invasion? Because assuming assuming, you know, we keep making progress or we have accelerating progress. Doesn't that just increase the prize for?

• 1:59:10John Coogan?

  Yeah, but it might increase the defensive capabilities.

• 1:59:13Jordi Hays?

  Sure.

• 1:59:13Jordan Schneider?

  Yeah, and I think there's there's like plenty of other things you can do to be obnoxious. And there's so much there's look, this is this is why Chamath is wrong about everything is because it's not all about technology. Like there are other risks and incentives at and like institutional dynamics and historical dynamics at play. And there are a whole lot of downsides to starting something that you don't know how like you don't know how it's going to end. Which is a lesson that she has now got to relearn from Putin over the past five years. So.

• 1:59:50Jordi Hays?

  What last thing we touch on it briefly and then I I know we're over time. What happens with Manus? What's your prediction? Are they gonna are they gonna buy the company back from from Meta and just head home? Is there any precedent for something like this?

• 2:00:06Jordan Schneider?

  I don't really understand. I mean, like, all of the employees, like, do they have to give the tech back? They weren't really buying the tech. They were buying the, it was like an aqua hire. Everyone's in Singapore, except for the two founders. So like, maybe the founders just get screwed out of all this money. And, uh, you know, the employees continue on their merry way in Singapore. I think it's a, uh, it's a messy one. And, uh, I don't know, like, Meta eats a loss.

• 2:00:36John Coogan?

  Yeah.

• 2:00:36Jordan Schneider?

  Something. I hope Bill Gurley's okay.

• 2:00:38John Coogan?

  Before you go, we have an answer to the question of telephone pole camouflage. Tyler, do you wanna, do you wanna give us a little update on this? Uh, can we, can we do, yeah, let's cut to Tyler.

• 2:00:48Speaker 02

  Yeah, telephone pole camouflage basically began after the 1996 Telecommunications Act. Uh, so it basically like restricted the ability of local communities to, uh, regulate like the actual placement of the telephone pole.

• 2:01:00John Coogan?

  So a city can't say, you can't put a telephone pole there. You can't put a, a, a cellphone tower there, but they respond.

• 2:01:07Speaker 07

  But, but, but they basically made it so, whoa, they, they, they made it so, um, the local governments would say, you have to camouflage it, right? So now we see there's all different forms of these. There's, there's trees, there's cacti, uh, there's like church steeples.

• 2:01:22John Coogan?

  Oh, yeah, yeah.

• 2:01:23Speaker 07

  Yeah, they do these.

• 2:01:25Jordan Schneider?

  A lot of chipmunks run up and down those, uh, those poles too, right?

• 2:01:28Speaker 08

  And camouflage can add over a hundred thousand to tower construction prices, which is still cheaper than losing the site. Tree towers can cost up to double.

• 2:01:39Jordan Schneider?

  Hey, two can play this game. Two can play this game.

• 2:01:41John Coogan?

  You have a soundboard too?

• 2:01:43Jordan Schneider?

  I got my buttons.

• 2:01:46John Coogan?

  We have a guest with buttons. Let's see. Can he get it to work?

• 2:01:49Jordan Schneider?

  Uh-oh. Oh, no.

• 2:01:51John Coogan?

  Oh, no. Another one.

• 2:01:53Speaker 08

  That's a narrative violation. Will it work? Let's find out.

• 2:01:58Speaker 02

  Uh, your buttons aren't working.

• 2:02:00John Coogan?

  Anyway.

• 2:02:02Jordi Hays?

  But bring him next time.

• 2:02:04John Coogan?

  Bring him next time. It's been too long. We'll talk to you soon, Jordan. Have a great.

• 2:02:07Jordi Hays?

  Great to see.

• 2:02:09John Coogan?

  Hey, there we go. Hey, well done. Thank you so much for taking the time. Have a great rest of your day. We'll talk to you soon. We went overtime, so we will bring in our next guest immediately. We have Christina Lee Storm from Secret Level. Welcome to the show. Sorry for the delay.

• 2:02:26Jordi Hays?

  What's happening?

• 2:02:28Speaker 09

  Hey, how's it going?

• 2:02:29Jordi Hays?

  We're having a little too much fun with our soundboard.

• 2:02:32John Coogan?

  Fun with a regular.

• 2:02:32Speaker 09

  I love it. It's great.

• 2:02:34John Coogan?

  Cues, all sorts of stuff. But since it is your first time on the show, please introduce yourself a little bit.

• 2:02:40Speaker 09

  Hi, I'm Christina Lee Storm. I am head of studio over at Secret Level, which is an AI-native studio. And I also am co-founder over at Playbook, PLBK.

• 2:02:50John Coogan?

  Yeah.

• 2:02:51Speaker 09

  I identify myself as a producer, like an independent film producer.

• 2:02:55John Coogan?

  Yeah. How are you thinking about the blurry line of how AI works its way into productions these days? You know, you have Toy Story with CGI. You also have, you know, a little set extension and maybe even a little CGI creeps into a Nolan movie every once in a while. But AI is very different. People are thinking, maybe it'll generate the whole movie. Maybe it'll just sort of, you know, make a green screen a little bit sharper. How are you thinking about the opportunities and the trade-offs?

• 2:03:24Speaker 09

  I mean, it's interesting because we've had technology in the entertainment industry for a while. I was a consulting producer on a film called Jurassic Punk, which was about the birth of computer graphics. It was about a gentleman who was from Canada. His name was Spaz Steve Williams. And he actually created the first walk cycle, uh, D-Rex for Jurassic Park. And he was a total rebel. And in the documentary, we talk about how he just felt like, you know, we could do this with computer graphics. At the time, Jurassic Park was like, hey, we're going to do it. And a electronics, we're going to do it old school. We'll do onset.

• 2:04:04Speaker 09

  And there was an ability to actually now like, wait, hold on a second. We could create this. And so. When Spielberg and Kathleen Kennedy saw the first walk cycles, he was playing it on his computer screen, you know, just sort of, he knew when they were gonna walk by. It changed everything and that was the birth of computer graphics. So we know that technology has always been a part of that story. And so I think, you know, it is quite, a lot of people like to use the headlines like disruptive, but I think it's just an ongoing process of how things should sort of evolve. And me being, my background's a traditional

• 2:04:45Speaker 09

  production producer, I've been an independent producer for a while. I think it's just, it's part of the process. And I think before, I think a lot of producers would just offline, you know, any kind of technology or any specialty to different departments or groups. And today, I think anyone who's gonna really survive and thrive into the new world order of this, you know, everything's sort of shifting and changing, we have to actually lean in. And there's this interesting like, technology storytelling, you know, convergence entertainment that is exciting. And I think, you know, that's, yeah.

• 2:05:23John Coogan?

  On the topic of Jurassic Park, grade this, grade this prediction. Jurassic Park, massive success. The franchise has grossed, I think billions, maybe over a billion dollars. It's a fantastic financial success. But interestingly, Jurassic Park, of course, is owned by Universal. And, but dinosaurs are not particular intellectual property. It's not like Superman. The T-Rex is not something that a studio can own. Oddly, no other studio has created like the Superman to Spider-Man. There's not the Marvel Universe to the DC Universe. I would have expected a reaction series to Jurassic Park and that IP library

• 2:06:08John Coogan?

  at some point. Never, never really developed. But in the age of AI, where it's increasingly easy to generate imagery of dinosaurs, and you don't have any intellectual property concerns because you're not recreating a particular actor, I predict that there will be a massive surge in dinosaur themed movies. What do you think?

• 2:06:27Jordi Hays?

  You need to create the Dino Prize. The Gugan Dino Prize.

• 2:06:30Speaker 09

  The Dino Prize, you know.

• 2:06:31John Coogan?

  Is there anything here? Am I thinking about it correctly?

• 2:06:34Speaker 09

  I think that you're on the right track in terms of like dinosaurs are not, you know, there's not a particular IP, but here's the thing, and this is sort of where it does fall back to traditional methods. It's like the storytelling is everything. Like you could have, there's a lot, there's a lot of different ways, you know, that you can tell and share stories, but it's really, what is this, you know, what are the specific things with the character, what's happening, what's the world? And so, yeah, someone could come up with a dinosaur type movie, but what is it, why, why is that special? Why is that undeniable for someone to say, yes, I want to watch that? And I want to, and I want to engage in that. So I think the concept of that is, is good. I think, you know,

• 2:07:19John Coogan?

  Potentially half-baked, but we'll get there.

• 2:07:22Speaker 09

  Well, that's the difference between really great, like, no matter what the technology is, you have to still be a really good storyteller.

• 2:07:30John Coogan?

  Yeah. Please.

• 2:07:32Jordi Hays?

  Article in the Wall Street Journal this morning about a new film called Hellgrind that's, I guess, premiering at Cannes. They're saying that it costs half a million dollars to make and around 400,000 of that was compute.

• 2:07:44Speaker 09

  Yeah.

• 2:07:45Jordi Hays?

  I'm sure there were, you know, there, with all these things, there ends up being costs that aren't kind of captured on, on maybe a napkin.

• 2:07:54John Coogan?

  Sort of a deep-seak moment.

• 2:07:55Jordi Hays?

  Yes. But, but is this the beginning of, of like, do you expect hundreds of these over the next year? Or I imagine you're, you're hearing and seeing a lot that are in the works and, and working on some yourself, but.

• 2:08:10Speaker 09

  Yeah. Yeah. So, I mean, I think there are, you know, Cannes, I actually didn't go this year. I usually go every year. I knew that there was going to be a lot of announcements about different projects and things and at secret level, you know, we actually will have an announcement next week. I was like, should I come on the show today? Because next week there's going to be, you know, so I, at the, I'm happy to come back. But at the end of the day, I think, you know, It's, it's, let's just be real. Let me just be real. There's a lot of things that are being pioneered. Like, what are the costs? What's happening here? How do we align with even like guild-related things that are issues? You know, how, how can we, it's not just like, let me just get this out.

• 2:08:54Speaker 09

  You know, I think there's something even bigger to, to that degree. You know, I think people, a lot of people could say, yeah, I can make a movie. But I think it's really, again, I'm gonna go fall back on story. I'm gonna fall back on what is the process and which that's gonna happen. Like, at secret level, we do, we have our own proprietary workflow pipeline. That really, really allows us to scale. And I think those costs, when those get flagged, it's like, yeah, what, what's the total cost in it? Um, there's, there are a lot of costs. And so I don't think, I think it's really, I, I think when people talk about like the, the budget and they're just focused on the budget, I think they've missed the mark on, on the bigger.

• 2:09:34Jordi Hays?

  Uh, so what, what is your, maybe it's too early to say, but what do you think is gonna be the winning formula? Obviously, you're, it's still an experimental time, but you said story matters a lot. Obviously, technology matters a lot, the, what models you're using. But where are you thinking of taking, you know, traditional filmmaking approaches versus like reinventing your approach?

• 2:09:57Speaker 09

  Yeah, I think there's, okay, there's a couple of things here. A great question, ready? I think that there will, you know, we had, there was a time where like independent film was like on the rise. It was awesome. We saw really great filmmakers come out of that, like, you know, going to Sundance and whatnot. And I think that that's really important to feed and, and bring about like creativity, really great stories. So I, I do believe that with the tools, we have more of an opportunity for independents to sort of bring that to the forefront. But again, you know, sorry, it's about the story. Like, is it gonna be a really great story? I think the other piece is, is will we see this?

• 2:10:41Speaker 09

  Yeah, I, I kinda share with this, because I've been a former student, surviving student executive, and also a producer. And I think that what's need is, you know, is the chasm gonna widen? Like, how do we sort of bring that? Do we wanna bring the chasm closer together? So it's not just traditional, you know, in, um... Studio fair, or do we want to like really see these independent voices come out and we can see those play out. And I think as time tells and how people will refine their storytelling abilities, I think that's really important. I think there's also, to be honest, there's

• 2:11:18Speaker 09

  a way in which filmmakers who use AI tools are using it at their the best abilities is is it almost a slight variation than maybe a traditional approach from let's just say like a studio, you know, pipeline type film. I think, and that reminds me of like, you know, when, you know, when George Lucas came out, like, you know, he was breaking new ground in technology. He was like, this doesn't exist. So how do we create something that doesn't exist? And I think we have to allow for that creativity to be to birth.

• 2:12:01Jordi Hays?

  Totally.

• 2:12:01John Coogan?

  I want to take a question from the chat. What is your favorite movie?

• 2:12:04Speaker 09

  Oh, gosh. Whew. I have a lot.

• 2:12:08John Coogan?

  Or maybe something just with a great story that you think is.

• 2:12:11Speaker 09

  I love Inception.

• 2:12:13John Coogan?

  Inception. That's a great movie. Have you seen that?

• 2:12:15Jordi Hays?

  I have.

• 2:12:16John Coogan?

  Yeah, there we go.

• 2:12:18Speaker 09

  I like to say, and I'm going to embarrass him, our founder, Jason Zada from Secret Level, I call him like the, he's like the, like the blossoming Chris Nolan.

• 2:12:29Jordi Hays?

  Whoa.

• 2:12:31Speaker 09

  And he's just really creative. He, the way he approaches story.

• 2:12:35John Coogan?

  Does he use a phone? Christopher Nolan famously, no phone.

• 2:12:39Jordi Hays?

  It's a no phone guy.

• 2:12:40John Coogan?

  This week, he did an interview with, he doesn't, no email either. Printed out emails if somebody needs to email him. No phone. Also doesn't like maps because they reorient you. They don't always face north and he doesn't consider that a map. Very interesting lifestyle.

• 2:12:54Speaker 09

  Yeah.

• 2:12:55John Coogan?

  Anyway.

• 2:12:55Speaker 09

  I would, Inception, I would say, like, let's go really old school. It's a Wonderful Life.

• 2:13:01John Coogan?

  Ooh, yeah.

• 2:13:02Speaker 09

  And then if I get my, like, like. Just real old school. I love like great character based When Harry Met Sally. I'm all over the place. I'm all over the place. I like being that way. So people can't say, oh, like sci fi or she, you know.

• 2:13:18John Coogan?

  Sure, sure, sure.

• 2:13:19Speaker 09

  Godfather, Godfather.

• 2:13:21John Coogan?

  I saw When Harry Met Sally in an outdoor movie theater at one of the screenings. You buy tickets to seeing an old movie outside with a bunch of people. Tons of fun.

• 2:13:29Jordi Hays?

  Last question from the chat. What is your single favorite piece of fully AI-generated content? It could be like 30 seconds long, a minute long. I can't really expect anything else. I think for us, it's like Harry Potter, Balenciaga, which funny enough was like a year, a year, a year and a half ago, maybe at this point.

• 2:13:52Speaker 09

  So if you haven't seen it, yes, you know, it's a secret level, The Heist.

• 2:14:01John Coogan?

  Okay.

• 2:14:01Speaker 09

  Watch The Heist. When Jason shared his first 30 seconds, I was like, okay.

• 2:14:06John Coogan?

  Okay, we got something.

• 2:14:08Jordi Hays?

  We're cooking.

• 2:14:09Speaker 09

  We're approaching some really interesting things. So you can see a lot of things at secret level.

• 2:14:15John Coogan?

  Yeah, I love it.

• 2:14:16Speaker 09

  At CEO.

• 2:14:17John Coogan?

  Amazing. Well, thank you so much for taking the time.

• 2:14:20Jordi Hays?

  Really great to meet you. Make sure to share your announcement next week with us.

• 2:14:24John Coogan?

  Yeah.

• 2:14:25Speaker 09

  I will.

• 2:14:25John Coogan?

  Cover it on the show.

• 2:14:26Jordi Hays?

  Can't wait.

• 2:14:26John Coogan?

  Have a great rest of your day.

• 2:14:27Jordi Hays?

  Cheers.

• 2:14:28Speaker 09

  Hey.

• 2:14:28John Coogan?

  Go bye.

• 2:14:29Jordi Hays?

  Bye.

• 2:14:30John Coogan?

  Up next, our last guest, Eric from Modal Labs with some big.

• 2:14:34Jordi Hays?

  It's been a minute. It's been a minute.

• 2:14:36John Coogan?

  I'm excited to catch up. How you been?

• 2:14:37Speaker 10

  Good.

• 2:14:39John Coogan?

  You been busy? What'd you do?

• 2:14:40Jordi Hays?

  Cooking.

• 2:14:40John Coogan?

  Tell us what happened.

• 2:14:43Speaker 10

  We just announced a C round today, which is very exciting.

• 2:14:47John Coogan?

  How much?

• 2:14:48Jordi Hays?

  How much?

• 2:14:49Speaker 10

  How much? 4.65 post value.

• 2:14:56Speaker 10

  Racing 355 million. So general catalyst led it together with Redpoint.

• 2:15:01John Coogan?

  Fantastic.

• 2:15:02Jordi Hays?

  What was the specific catalyst that led to this round?

• 2:15:06Speaker 10

  There's been a lot of stuff that's been going on. I think one particular exciting moment in the last 12 months, or really the last six months, has been we've we now have a product called Sandboxes that's just growing insanely fast, almost 2X every month for the last six months. So, Sandboxes, if you don't know, basically the idea is like you can take typically LM-generated code and execute it in a safe environment. So it powers a lot of reinforcement learning, powers a lot of vibe coding apps, a lot of background agents. But yeah, I mean, in general, we've seen tremendous growth also with inference. Model has always been kind of, we started the company five years ago with the idea of building pretty general purpose infrastructure. We felt that a lot of infrastructure wasn't really built for

• 2:15:47Speaker 10

  AI. And so when you look at all these companies out there building sort of AI applications, they all need different things. Some of them need sandboxes, inference, training, bath shops, like all kinds of stuff. And our goal is to provide all of that and really kind of build a new sort of, almost like a new cloud in a way, that supports all these types of very cool applications.

• 2:16:07Jordi Hays?

  Very cool. I feel like it's been almost a year since you were on, which is like, you know, 15 years, 15 years.

• 2:16:16Speaker 10

  It was back in October.

• 2:16:18Jordi Hays?

  October. Well, there we go. Feels like, feels like, feels like a year ago, even though it's maybe, maybe less. What, yeah, would have been the key kind of inflection point since then. Sandboxes sounds like, sounds like one, but I imagine a lot of this is, the space is moving so quickly, if you get a signal from two or three customers, hey, we have this problem, can you build a solution? And then you can just see tremendous growth in like a very short period of time. And so in some ways, like you have an existing portfolio of products that are all, you know, growing, but are you trying to constantly be making, you know, new bets based on customer needs? Or is it, is that maybe not even the approach?

• 2:17:01Speaker 10

  I think one of the benefits of building infrastructure is like you can sort of, you know, look at customers, of course, and see what they're doing. But I think with the infrastructure, you can also sort of argue a little bit more from like first principles, like what are the building blocks that people are going to need in terms of compute? So, Sandboxes was actually something we launched three years ago. And it really started taking off like nuts in the summer last year. And similarly, I think with, you know, in France, it's sort of similar. We launched it almost four years ago. We're working on some other really cool stuff around training and some other products. And I think one of the benefits of infrastructure is you can have a little bit more sort of a first principle like, you know, let's build the right building blocks and then let our customers sort of figure out what to use them for.

• 2:17:44Jordi Hays?

  How, how do you think about planning? Like planning, planning demand?

• 2:17:50John Coogan?

  Add a zero to last year.

• 2:17:52Jordi Hays?

  Add two, add two zeros. It's everything. Yeah, but yeah, it just feels like the, you know, the best, this is the hardest like demand planning challenge that really any set of businesses have ever faced in history.

• 2:18:06Speaker 10

  Yeah. It's rough. Like, I mean, for us, it's like, we basically look at like the last couple of months, figure out, you know, we're growing 30, 40% every month. You just, you know, take, you know, take the power of three. That's how much you're going to need in three months. That's how many GPUs. You go out and get those GPUs. You can typically get GPUs with like about three years of, sorry, three months in advance.

• 2:18:29John Coogan?

  Sure.

• 2:18:29Speaker 10

  But yeah, that's a big part of how we think about the business today. It's like, we need to get the GPUs now that we're going to need in three to six months, which is a lot.

• 2:18:35Jordi Hays?

  Yeah. Yeah. In some ways, it's like, you know, not, not too dissimilar to the challenges that a, you know, consumer, consumer packaged goods founders facing, you're growing super quickly. But if you want to stay on that growth curve, it means you need to be committing to things, you know, now and committing capital. But.

• 2:18:54John Coogan?

  What's exciting to you across?

• 2:18:56Speaker 10

  Luckily, we have capital now.

• 2:18:57John Coogan?

  Yeah. Well, what's exciting to you across the semiconductor ecosystem? There's a whole bunch of ASIC startups that have been on the show, Cerebras IPO'd. Every hyperscaler is working on different chips at this point. What's most interesting? What's under discussed? What's on your roadmap or what have you already sort of sunk your teeth into?

• 2:19:21Speaker 10

  Yeah, I mean, there's some really cool alternative accelerators. I'm quite bullish on TPUs, AMD, Trinium, like all of these things.

• 2:19:29John Coogan?

  Yeah.

• 2:19:29Speaker 10

  We see zero demand from our customers for any of those things, to be clear.

• 2:19:34John Coogan?

  Because only the really big labs, Anthropic, can actually go and figure out how to run it. Is that the issue?

• 2:19:40Speaker 10

  Exactly. Yeah, I think the cost today of rewriting your software to run on those stacks is just like very high.

• 2:19:45John Coogan?

  Sure.

• 2:19:45Speaker 10

  So while I remain like very bullish on this sort of, you know, two, three year horizon.

• 2:19:49John Coogan?

  Yeah.

• 2:19:49Speaker 10

  You know, I do also want to like

• 2:19:51John Coogan?

  Yeah.

• 2:19:51Speaker 10

  temper the expectation a little bit like this is like, you know.

• 2:19:53John Coogan?

  It has a fixed cost to rewriting for that chip stack. And if you're not doing billions a month in revenue, it's hard to amortize that cost.

• 2:20:01Speaker 10

  That's exactly right.

• 2:20:02John Coogan?

  Yeah.

• 2:20:02Speaker 10

  It's just not worth it unless you're, you know, operating at a very large scale. So but I think that that cost is going to go down over time. We're going to have software that basically lets you take existing CUDA compatible stuff and run it on other alternative accelerators. So

• 2:20:13John Coogan?

  Yeah.

• 2:20:14Speaker 10

  I think it would be good for everyone to have a little bit more competition in this space. But we also love Nvidia and that's what our customers want today.

• 2:20:19John Coogan?

  That's great. Uh, do you have a view or any opinions or predictions about the compute futures market that's been talked about? Uh, any, I've seen like these price charts of like B200s going up and down. Everyone is trying to read the tea leaves, understand, you know, where we are in the various AI cycles, uh, based on it. But, uh, is that something that's relevant or important at all? Do you, do you look at that data? Do you have your own internal data set that's more relevant to you?

• 2:20:48Speaker 10

  We, we, we look at it a lot. I mean, also like, I feel like we're very plugged into the market. We talk to NeoCloud all the time. We get capacity all over the place. So we're, we have like a very good like pulse of the market. I think the market is going to remain quite tight.

• 2:20:59John Coogan?

  Yeah.

• 2:20:59Speaker 10

  I, I think fundamentally, like also like, that's a big part of what we do is like, we offer, you know, that as a product. Like, don't think about capacity, come to us instead.

• 2:21:07John Coogan?

  Yeah.

• 2:21:07Speaker 10

  And so that becomes now our problem is like managing that capacity for thousands of companies at the same time. Like we built a multi-tenant product that sort of aggregates all that demand. So if you need a thousand GPUs, you can come to us and we'll give you to that, give you those GPUs. Like often within minutes, because we have like a very big pool we can sort of tap from.

• 2:21:24John Coogan?

  Yeah.

• 2:21:24Speaker 10

  But, but yeah, like I, I, you know, I think GPUs are going to be tight. We look at the prices, they keep going up. At some point, obviously, I think it's going to normalize like most markets do, but it might remain tight for the next year or two.

• 2:21:36John Coogan?

  When I think about the big applications of a big pool of compute, I think training and inference of LLMs, coding models, agentic workflows, I think image, video, audio generation. What's next? What do you think the next big driver of demand is? Is it world models? Do those fit in? Are those structurally different? Is there something else that you're tracking where you're seeing customers come to you with sort of like a different product, but it fits in the same shape so you can work with them as a business partner?

• 2:22:07Speaker 10

  Yeah, we have a very wide range of customers. So we have everything from Suno, which generates using AI, Cognition is training, coding models using reinforcement learning, Ramp uses us for background agents. We have a lot of vibe coding platforms like Lovable. We also have, you know, drug discovery companies like Chai using us to simulate, you know, molecular dynamics and we have weather forecasting companies, robotics. So we have, you know, very general, you know, we look at across like a lot of different verticals. Obviously, like the big application in the last couple of years has been LM inference and that keeps growing a lot. But we've also seen some really cool applications with diffusion models. In

• 2:22:48Speaker 10

  terms of what I look forward to, like I think that probably personally, the coolest thing I kind of expect to happen in the next couple of years is speech to speech. Like imagine just like talking to a computer. In order to figure that out, we need to get the latency down, you know, for all the three components of speech to speech, you know, doing the LM and the, you know, text to speech and stuff like that. So that's something very cool. But also really cool about, I think it's incredibly cool that we can, I don't know, cure cancer or something like that.

• 2:23:15John Coogan?

  Yeah. Yeah, it's interesting because I'm with you on that, on that timeline, speech to speech being, you know, somewhat impressive, but you're often not actually hitting a real reasoning model. There's so much speed up, you know, we could be, we probably need to be 100x faster, 1,000x faster on the response time to really have a breakout moment. And then you watch Google I/O this week and you see with Omni, a glimpse of, okay, it's more like a FaceTime. Call with the AI and it's generating a video in real time and you know how long it takes to crank on video models to get an eight second clip. It's minutes and minutes.

• 2:23:54John Coogan?

  Uh, and, and, and there still have errors and stuff and we're still not even at the, the super, the superhuman element. So lots to do, lots of service to rack, lots of GPUs to set on fire. I'm sure.

• 2:24:06Jordi Hays?

  Yeah. What?

• 2:24:08John Coogan?

  And CPUs. Yeah.

• 2:24:10Jordi Hays?

  Any, any plans to actually, you know, go full stack, get your own, you know, LAN power, powered shells, et cetera. Is that like not the highest and best use of your guys' talents?

• 2:24:24Speaker 10

  We, we think of our values like adding a big software layer on top of the underlying computer, uh, on the underlying compute layer. So we think of ourselves as almost like a cloud, like one layer up from the existing clouds. The existing clouds are very good at running computers, you know, in the cloud and, and offering that through an API. We, we would love to keep tapping that as much as we can. If we can't get the capacity we need, we might have to bill it ourselves. Ultimately, it's like, you know, it's a kind of a economics question or, you know, a practical question. I, I wouldn't rule out any sort of move. Uh, the idea of, you know, racking computers and plugging in cables and dealing with, you know, fires and data centers and whatnot. Like to, to me, that's not super appealing, but, but at the end of the day, we'll do it if we have to. Absolutely.

• 2:25:06Jordi Hays?

  Yeah. Makes sense.

• 2:25:07John Coogan?

  Well, congratulations.

• 2:25:09Jordi Hays?

  Yeah. Congrats to the whole team on an awesome milestone and, and incredible progress. It felt like a year.

• 2:25:14John Coogan?

  You did.

• 2:25:15Jordi Hays?

  Only been since October.

• 2:25:16John Coogan?

  Only a couple of months.

• 2:25:17Speaker 10

  Yeah. It's like 10 AI years.

• 2:25:18John Coogan?

  I love it. Congratulations. We'll talk to you soon.

• 2:25:21Speaker 10

  Thank you so much.

• 2:25:21Jordi Hays?

  Cheers.

• 2:25:22John Coogan?

  Have a great rest of your day. Let's click through the timeline. See if there's anything that we missed before we jump off. DJ Kavs has an idea here. Found a $10 bill. It took five seconds to pull, to pick it up. That's $63 million in annualized ARR.

• 2:25:43John Coogan?

  This is the thinking you need to be deploying if you're going to be raising money potentially. No, don't do that.

• 2:25:51Jordi Hays?

  I didn't know that Messi, the football player, had a prime copycat called Moss.

• 2:25:58John Coogan?

  Moss.

• 2:25:58Jordi Hays?

  And it's shutting down after 23 months in business.

• 2:26:02John Coogan?

  I wonder if that has to do with the logistics of shipping internationally because he is an international icon. But setting up distribution and retail presence across many countries very quickly. It's not quite as easy as dropping it on Amazon and flying off the shelves. A lot of those are sort of one country by country, and I wonder if that has a piece of what happened. So this is shutting down fully, Moss Plus. Interesting. Well, Mitchell Baldridge recommends setting up a Vanguard account, not Fidelity, not Schwab, Vanguard. Smart advice, you might think. They do have the lowest fees. If you want to get up to speed on Vanguard, listen to the latest episode of the Acquired FM podcast.

• 2:26:46John Coogan?

  But he says, wrong, it's not because they have the lowest fees. It's because their interface is so awful, you will never trade. It has made his clients millions.

• 2:26:54Jordi Hays?

  Let's close it out with this video.

• 2:26:57John Coogan?

  What you got?

• 2:26:58Jordi Hays?

  Playing Catan with a billionaire.

• 2:27:00John Coogan?

  Yes.

• 2:27:02Jordi Hays?

  I think, I think you'll like.

• 2:27:04John Coogan?

  What is this face? Is this a face filter or a background replacement or both? Something funny is going on here.

• 2:27:09Jordi Hays?

  Face filter.

• 2:27:09John Coogan?

  Okay, face filter. My turn, I'm going to put down a data center.

• 2:27:16Jordan Schneider?

  That's against the rules.

• 2:27:18John Coogan?

  How else am I supposed to AI generate my Christmas card?

• 2:27:22John Coogan?

  Not popular. I'm not joking.

• 2:27:27John Coogan?

  Do you like it?

• 2:27:28Jordan Schneider?

  No, it's blocking all the land.

• 2:27:30John Coogan?

  Wait a minute, are you one of those paid protesters?

• 2:27:36John Coogan?

  Next turn, I'm going to use seven water on my data center.

• 2:27:40Jordan Schneider?

  That's not how that works. That's not a resource in the game.

• 2:27:43John Coogan?

  How else am I supposed to power it? The water stuff is really, it's so interesting that no one has moved to energy. Like, natural gas, there are natural gas turbines that would be opposed, and yet, people are focused on the water.

• 2:27:57Jordi Hays?

  Stop giving them ideas.

• 2:27:57John Coogan?

  I know, I'm doing their job for them, I suppose, but, it's like, I don't know how, I don't know why the water... I think it's just because, like, water's delicious and electricity is vague and abstract and you don't think about it. Like, you can visualize a glass of water, it's hard to visualize a battery in the same way. But, yeah, what is it, it's like, it's like, dozens of LLM queries every day for a full year is equivalent to eating a single almond, something like that.

• 2:28:29John Coogan?

  But, Matthew Ball is back at Xbox, congratulations on the move, he announced it yesterday. We're gonna try and get him on the show, 'cause he's one of my favorite people, favorite authors. If you haven't read his book or his blog, he has a fantastic mind for future of technology and he... I could not be more optimistic about the future of Xbox with him on the team. Take him says this hire is a literal game changer. Matthew Ball knows gaming and what needs to be done. This news makes me the most bullish I've been on Xbox in seven years, and I completely agree.

• 2:29:01Jordi Hays?

  And, to close it out, the White House is awarding $2 billion in grants.

• 2:29:06John Coogan?

  Oh, yeah.

• 2:29:06Jordi Hays?

  $1 billion directly to IBM, to nine quantum computing companies, and taking an equity stake.

• 2:29:13John Coogan?

  Equity stake.

• 2:29:14Jordi Hays?

  Their grants, overtaking an equity stake.

• 2:29:17John Coogan?

  It's an investment.

• 2:29:18Jordi Hays?

  It's an investment.

• 2:29:18John Coogan?

  It's an investment, and you, American taxpayer, will now own a basket of quantum computing companies.

• 2:29:26Jordi Hays?

  Spaghetti computing is up...

• 2:29:28John Coogan?

  That's not spaghetti computing, it's rigetti computing.

• 2:29:30Jordi Hays?

  Spaghetti computing is up 30%.

• 2:29:33John Coogan?

  Who calls it that? Who came up with that? That seems like a Trump, like, something he would say.

• 2:29:37Jordi Hays?

  I created that.

• 2:29:38John Coogan?

  You created that, okay.

• 2:29:39Jordi Hays?

  Just now. I like spaghetti. I'm sure I'm not the first person to think of it, but, anyways, folks.

• 2:29:46John Coogan?

  Thanks for watching, leave us five stars on Apple Podcasts and Spotify, sign up for our newsletter, tbpn.com, and we will see you tomorrow, Friday. Goodbye. We'll smoke you later.

• 2:29:57Jordi Hays?

  Have a wonderful evening.