The Internet Is Finished, Early iPhone Duo Reviews, SpaceXSITesla Merger Talks | Nikesh Arora, Aidan Smith, Akhil Iyer, Max Junestrand

(03:20) - The Internet Is Finished (14:52) - Trevor Milton's Jet Launch (17:09) - iPhone Duo Early Reviews (21:02) - SpaceX Explosive Growth (35:30) - Nikesh Arora, CEO of cybersecurity company Palo Alto Networks, discusses the severe PHP vulnerability, the urgent need for organizations to patch and protect critical infrastructure, and the likelihood that increasingly powerful AI models will uncover more security flaws. He also examines the risks of autonomous AI agents, the value of open-source models for transparency, and the sustained demand for AI computing infrastructure. (57:40) - Aidan Smith discusses the rapid growth of his systems-first AI lab, its billion-dollar Series A, and breakthroughs in GPU optimization through mega-kernel technology. He argues that better algorithms, architectures, and data efficiency could produce more creative, unconventional AI models while expanding automation beyond intellectual work. (01:08:05) - Akhil Iyer discusses his journey from the Marine Corps to co-founding Watchtower Labs, an AI defense startup that recently raised $35 million. He explains how its simulation platform helps military planners anticipate logistics and supply-chain disruptions, evaluate numerous scenarios, and make better decisions during conflicts, crises, and competition. (01:14:45) - Max Junestrand discusses his role as co-founder and CEO of legal AI platform Legora and the company’s $88 million funding round at a $550 million valuation. He explains how AI adoption in law demands greater accuracy and oversight than coding, while enabling smaller firms and enterprise legal teams to handle more complex work efficiently. (01:25:32) - 𝕏 Timeline Reactions TBPN is made possible by: Ramp - https://ramp.com Public - https://public.com Cisco - https://www.cisco.com Console - https://www.console.com CrowdStrike - https://www.crowdstrike.com Figma - https://www.figma.com MongoDB - https://www.mongodb.com NYSE - https://www.nyse.com Railway - https://railway.com Shopify - https://www.shopify.com Codex - http://openAI.com/codex Follow TBPN: https://TBPN.com https://x.com/tbpn https://open.spotify.com/show/2L6WMqY3GUPCGBD0dX6p00?si=674252d53acf4231 https://podcasts.apple.com/us/podcast/tbpn/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.

• 0:00Jordi Hays?

  You're watching TVPN.

• 0:02Speaker 01

  Today is Wednesday, October 21st, 2026. We are live from the TVPN, the temple of technology, fortress of finance, the capital of capital.

• 0:14Jordi Hays?

  We got bad news for you, and then we have good news. The bad news is John is not here with us today. He is under the weather. Keep him in your thoughts and prayers. We've never actually taken sick days, ever. Normally when we're sick, we just, we just keep going. But John is really down and out. And we feel like a ship without a sail.

• 0:38Speaker 01

  Yeah.

• 0:38Jordi Hays?

  A lighthouse without a light. And we miss him dearly, but the show must go on. We have a great show.

• 0:46Speaker 01

  I got big shoes to fill, literally.

• 0:48Jordi Hays?

  Huge shoes to fill. John is wearing an entire, all of John's clothing. He put his clothes.

• 0:56Jordi Hays?

  Trying to keep it together. But funny enough, the suit doesn't actually look as comical as one might think. I was hoping that it would look even more exaggerated. It kind of just looks like a normal suit.

• 1:08Speaker 01

  Nathan Fielder, yeah.

• 1:10Jordi Hays?

  Not a workout-related illness this time, just flu season. So stay safe out there. But big day today in technology. Of course, all the new vulnerabilities that we're finding out about, which are unfortunate. Was texting friends and family this morning, trying to make sure that everyone outside of X is, is well aware. But we have Nikesh Arora coming on in just 30 minutes from Palo Alto Networks.

• 1:38Speaker 01

  He's gonna break it down.

• 1:39Jordi Hays?

  Gonna break it down for us. So yeah, we'll, we'll, we'll cover a few things, but wait to get into a lot of it with him. And then we have Aidan Smith from Flapping Airplanes coming on. They have a new $800 million round, followed up by Akhil from Watchtower Labs on a launching out of stealth. And then we have our, our buddy and friend of the show, Max from Legora, coming on for a humble $550 million Series E.

• 2:07Speaker 01

  Yeah. And before I forget, let me tell you about Ramp. Time is money, save both. Easy to use corporate cards, bill payments, accounting, and a whole lot more.

• 2:15Jordi Hays?

  You nailed it. You just missed the button.

• 2:17Speaker 01

  Yep.

• 2:17Jordi Hays?

  But we're working through it.

• 2:19Speaker 01

  Having some technical, there it is, there it is. Oh, okay, it's good. We're having some difficulties here.

• 2:24Jordi Hays?

  Yeah.

• 2:25Speaker 01

  Yeah, I'll figure it out as the show goes on.

• 2:26Jordi Hays?

  John makes it look so easy.

• 2:27Speaker 01

  Yeah.

• 2:28Jordi Hays?

  Makes it look so easy, but it's in our form, right?

• 2:30Speaker 01

  It truly is, yeah. You can't really, some of the stuff, you can't even really be taught it. It's just kind of natural, I think.

• 2:35Jordi Hays?

  Totally, you're born with it.

• 2:36Speaker 01

  Yeah.

• 2:37Jordi Hays?

  Well, let's pull up this video of John shortly before coming down with an illness.

• 2:48Speaker 01

  Wow.

• 2:50Jordi Hays?

  Wow.

• 2:53Jordi Hays?

  Season got started and he wasted no time clip farming.

• 3:02Speaker 01

  Majestic.

• 3:03Jordi Hays?

  I hope he's watching this. I think he's sleeping. Anyways, let's, let's go into PHP land. Tyler, you want to kick it off?

• 3:13Speaker 01

  Yeah, I mean, so PHP, obviously like everyone knows, right? As you do, you know.

• 3:21Jordi Hays?

  Sorry.

• 3:22Speaker 01

  So something like 70% of, of all websites run on PHP. And basically there's this big vulnerability that was found in August. And now it's kind of coming out, there's a patch coming out. It should be, I think it may have just come out. It didn't come out immediately when the actual news of the vulnerability happened, but.

• 3:40Jordi Hays?

  Yeah, so this was discovered with 5.6.

• 3:42Speaker 01

  Yep.

• 3:43Jordi Hays?

  Back in August. And so for the last couple of months, all the different companies involved have been trying to inform as many as people as possible.

• 3:52Speaker 01

  Yes.

• 3:53Jordi Hays?

  Trying to make sure that, that a lot of companies can, can get ahead of this before the disclosure. The, the, the big issue, I mean, my personal point of view is like, you're probably going to be fine using services from public companies, right?

• 4:06Speaker 01

  Yes.

• 4:07Jordi Hays?

  Companies that would have been, that would have been in the loop over the last couple of months.

• 4:11Speaker 01

  Yep.

• 4:11Jordi Hays?

  The bigger issue is the rest of the internet, websites that.

• 4:14Speaker 01

  Yeah, I think there's going to be this, this kind of long tail of people that, you know, maybe are not that online, but they, you know, they're running their own server from their, you know, local business that they've had up for 20 years or something. I think that that's a scenario that like is maybe a little bit more scary where you just like have to really stay, stay up on this stuff.

• 4:30Jordi Hays?

  Yeah, I've been thinking about like all the different places that, that people have input, private information, things like social security numbers. I'm thinking like old, even like local government websites, right? All these different things. Feels like we're very close to, or effectively it's unavoidable that a lot of this stuff is going to leak out. So that's the bad news.

• 4:53Speaker 01

  Yeah, we've seen a lot of government websites like temporarily come down. I think Finland, they had some internet services that, that they like.

• 5:02Jordi Hays?

  Just took offline.

• 5:02Speaker 01

  Yeah, took offline, Netherlands, France, similar. But hopefully, you know, throughout the day, those will come back up because it seems like the, that the main patch has, has now come out.

• 5:12Jordi Hays?

  So the issue dubbed PHP2Shell represents a class of problems in the way PHP manages a computer's memory. It can be exploited in many ways, some requiring just a few seconds by hackers who would use it to run unauthorized software on any unpatched web server. It is the most severe security issue that PHP has faced in more than a decade. According to Volker Dusche, a security engineer with a nonprofit foundation that manages the PHP project. He likened it to Heartbleed, a similarly widespread vulnerability that forced a global race to protect hundreds of thousands of servers more than a decade ago. When security patches are released, it marks the starting shot in a race between defenders and hackers.

• 5:52Jordi Hays?

  Defenders have to test and install the software patches while hackers study the patches as a guide to find new vulnerabilities, looking to see what has changed and then devising ways of attacking those areas. But today's AI tools can do this work much quicker than any human, potentially making the process more risky, security experts say. Some dude on Twitter could take the patches and run AI against it and post some exploit script, said Ty, the chief executive of Callith, the security company that first discovered the issue. All hell will break loose.

• 6:24Speaker 02

  Naughty, naughty.

• 6:26Jordi Hays?

  The big bug. Ryan Austin, a researcher at Callith, uncovered the flaws with help from GPT-5.6 Sol, one of OpenAI's most advanced models, from a couple of months ago. During an audit of PHP's source code in August, OpenAI funded that and other audits, part of an effort by AI companies to help open source projects address software vulnerabilities now being uncovered by AI systems. The class of bugs had been hiding in PHP's source code for years. A security researcher had flagged it as a problem area decades earlier, but the flaw had been considered too difficult to exploit and was largely forgotten. AI found a way. Austin figured out how to control the code that was running in the computer's memory with as few, as, with as few as a few dozen requests to a server running PHP.

• 7:10Jordi Hays?

  On smaller system, the hack takes just seconds. A more complex one, it can take hours. On August 11th, Deng called PHP's leadership, there's a serious issue here, he said. I had this moment of, oh God, what are we doing now? Dusche said, how do I communicate this? And then you calm down, you let the adrenaline flow through and you get to fixing. Soon, an informal working group had formed among security researchers and software engineers. They collaborated with software distributors and security companies figuring out ways to patch PHP2Shell and prevent it from being exploited. Researchers from Google's Wiz cybersecurity team soon reached out with new exploits, which they had discovered independent of Callith.

• 7:55Jordi Hays?

  They were findings from OpenAI's research team too. AI is enabling well-meaning security researchers to find thousands of software bugs, overwhelming projects like PHP with a flood of issues that need patching. But PHP2Shell was viewed as a priority and AI's proficiency at hacking prompted worries that criminals could exploit PHP2Shell. We need to figure out how to, we need a, like a nickname for that. It's getting a little long.

• 8:20Speaker 01

  I mean, Heartbleed, that other.

• 8:22Jordi Hays?

  Yeah, that, that, that name goes hard.

• 8:24Speaker 01

  Yeah, you're not, PHP2Shell doesn't sound very scary.

• 8:27Jordi Hays?

  Yeah, it just sounds like some mumbo jumbo. Keeping the secret, PHP2Shell is the most severe AI vulnerability that was ever found and one that was likely too complex to have been discovered without AI, said Ami Lutwak, Wiz's co-founder. Dung and the other researchers kept its existence a closely guarded secret while they worked on fixes for fear that an AI-aided hacker might find and exploit it before they were done. Really crazy that this was kept like a relative secret for this.

• 8:55Speaker 01

  Yeah, well, actually, I think the original release of this was supposed to be tomorrow, and then details started to leak, I think, a day or two ago. And so actually, like, right at the very end, it started to leak. But yeah, while they were working on it, it is, it's great that they were able, that they were able to kind of hold on to this.

• 9:10Jordi Hays?

  The patching effort was massive. There are close to 200 files being fixed, and developers wrote over 10,000 lines of code during the process. Should have called Gary Tan. He could have ripped that 10,000.

• 9:21Speaker 01

  G-Stack could have done that in seconds. I mean, yeah.

• 9:24Jordi Hays?

  In a day. Maybe hours. Eventually, a patch was set October 22nd. Then the inevitable happened. News of the patch leaked out Tuesday in a post in Hacker News. Fitting for it to go out on a site called Hacker News. Just under two days before the patch release, Dush's team decided to rush out the patch. On Tuesday, they warned the world to stand by and expect a critical security update on Wednesday. It was a good balance to inform defenders and not give attackers too much time to develop exploits. So, game time. A bunch of different, I think the Prime Minister of Japan has been posting about it. And Nikesh,

• 10:05Jordi Hays?

  our guest coming on in roughly 15 minutes, said, that's how you know it's serious.

• 10:10Speaker 01

  Yeah. Greg Brockman had a good post about this. One interesting kind of tidbit that people are pointing out, I can read it here. As vulnerability discovery ramps, we will need new defense solutions, potentially including authorized defenders such as government scanning the internet for vulnerable hosts and either notifying or in extreme cases, patching those systems remotely, which is very interesting. I mean, you can imagine some kind of service that basically they just, whenever anything happens, they are like have some sort of, you know, write access into your systems and can update them.

• 10:42Jordi Hays?

  Yep. Prime Minister posted, we have an urgent request for everyone to take action regarding PHP, which is used on many websites. The PHP security team has issued a warning about two critical vulnerabilities. Please check if you have publicly available websites that use PHP and prepare to apply the fix patch that will be released tonight at 11:00 PM Japan time. It is difficult to apply the fix promptly. Temporarily suspending websites and similar measures can be considered an effective way to reduce risk. And LevelsIO reached out to a friend. He said, I notified a friend working at a big tech company about the PHP vulnerability as their entire infrastructure runs on PHP. He answered, thanks, I'll try

• 11:25Jordi Hays?

  to patch it in a few days as I'm out of office now. And this is the modern tech company. Imagine the traditional companies running PHP. People won't update fast enough and the vulnerability will be out in the wild. Once the patch hits, as anyone can reverse engineer it based on the patch. Considering this, there's going to be so many sites hacked and so much user data exposed, I think. So.

• 11:46Speaker 01

  Yeah, not great. Also, I mean, we haven't covered this yet, but there's actually two vulnerabilities. There's a second one from eMudra, which is basically the TLS certificate, right? You know, that has the little lock on the browser. Some of them had like very trivial private keys. I think one of them was literally just number four. And so that, you know, for context, the private keys are supposed to be, I think, hundreds of digits long, these like, you know, numbers, and it's just number four. Not great. It is fascinating, though, that.

• 12:12Jordi Hays?

  But no one would expect number four.

• 12:14Speaker 01

  That's true. I looked up. I think that had been like live for like a year and a half. And no one, seemingly no one like really did anything with it. So maybe a kind of a white pill, actually.

• 12:24Jordi Hays?

  Yeah, no one expects the number four.

• 12:26Speaker 01

  Yeah.

• 12:27Jordi Hays?

  It's actually the smartest possible thing they could have done.

• 12:28Speaker 01

  Yeah.

• 12:29Jordi Hays?

  The most secure. Opening, I released a codec skill to help check whether your website is affected. They point your codecs at a GitHub repo that was just created, and it will guide you through it. So check that out or use your favorite agent. NSA cyber is flagging concern as well. And again, this is the kind of thing that you want to be staying in tune with throughout the day because there's going to be more updates.

• 13:03Speaker 01

  Yeah. Let me tell you about Cisco. Critical instructor for the AI era. Unlock seamless real-time experiences and new value with Cisco.

• 13:13Jordi Hays?

  Wow. Nailed it. That one was smooth, I think. Yeah, I was able to get it. You're picking it up. You're a natural. What else is going on? Sarah Guo says, today's example of why AI people are legitimately stressed about internet resilience in the face of agentic cyber attacks in 2026 is ongoing volpocalypse. eMudra's intermediate CA private keys turned out to be tiny numbers like four and 56. We covered this already. She says, to make this more real, you think you're on IRS.gov, there's a padlock next to the URL and all, but it's actually a scammer in intercepting the connection, harvesting

• 13:54Jordi Hays?

  your SSN or bank details, then maybe forwarding you so you never notice. Good news is the browsers already blocked the bad search. Bad news is the long tail of servers, containers, and devices that still trust them has not. One bad key generation script from 2025 is still forcing a heartbleed scale cleanup. More to come. We have plenty of internet-wide security cleanup to do.

• 14:19Speaker 01

  Yeah. So I think this is really important for kind of the long tail of services, websites, stuff like that, like we talked about earlier. I think, you know, if you're worried about within the coming days, like if you're, I don't, it doesn't make sense to be too worried about like lunging into Instagram or whatever and having that be leaked.

• 14:34Jordi Hays?

  Yeah. So you're saying, get on Reels.

• 14:36Speaker 01

  Yeah.

• 14:37Jordi Hays?

  Anytime that you might have been doing like productive things on the internet, stick to Reels.

• 14:41Speaker 01

  Yeah. Let it, let, you know, let everything clear up. Hit the Reels in the meantime. Then, you know, poke your head out every now and then.

• 14:48Jordi Hays?

  Zoomer, Zoomer cybersecurity advice, everyone. Our friend, moving over to updates on Trevor Milton's new jet startup. I don't even know if it should be called a startup just because the company's been around for decades at this point, but.

• 15:04Speaker 01

  Yeah.

• 15:05Jordi Hays?

  Friend of the show, Preston Holland, was able to actually go to the event. I was quite bearish on this strategy. Trevor Milton's obviously been pardoned. He doesn't have a record anymore. He's free to do and build whatever he want. I just think the strategy of.

• 15:21Speaker 01

  So he did nothing wrong.

• 15:22Jordi Hays?

  I'm not going to say that. Definitely not going to say that. But he is, he's a free man. And again, I think the strategy of going into private aviation where you have super discerning buyers is just not probably a good business strategy.

• 15:36Speaker 01

  Yeah. I still think you can make some argument where, you know, there's some kind of stigma discount that you can get on the plane because like if other people are worried about buying from him, that's a buying opportunity for me, right? Others are fearful. Buy when others are fearful. So I think this could, you can, there's some argument here. I think it makes sense.

• 15:54Jordi Hays?

  I think that that's typically about, that's typically about investing, not, you know, relying on a, on a machine for, you know.

• 16:02Speaker 01

  These are investments, you could say, in a way. Right?

• 16:06Jordi Hays?

  Yeah, depends on how much you value your time versus your life. But anyways, Preston got a good picture at the launch. The wings of the plane were propped up by posts.

• 16:18Speaker 01

  So is that, is that normal?

• 16:20Jordi Hays?

  No, maybe this is part of the innovation.

• 16:22Speaker 01

  Yeah, that's true.

• 16:24Jordi Hays?

  But, uh, but yeah, very, I shouldn't say it's a huge surprise, right? You would think that they'd have more confidence that the wings of the demo aircraft would be able to just support themselves, right? Considering they're meant to support the entire plane in the air, but.

• 16:41Speaker 01

  Yeah.

• 16:42Jordi Hays?

  Coming from the, the push the truck down the hill guy, can't say I'm that surprised.

• 16:48Speaker 01

  Okay.

• 16:50Jordi Hays?

  Hit me.

• 16:51Speaker 01

  Let me tell you about Figma. Agents, meet the candidates. Your AI agents can now create and modify your Figma files with design system context.

• 17:00Jordi Hays?

  Well, Don Tyler, getting the hang of it. John, take all the time you need. The main complaint with the iPhone Duo, people are getting their hands on the iPhone Duo. There's some reviews coming out, and there seems to be a lot of complaints. The big one being app optimization. Let's pull up this image. If we can scroll down, you can see how apps that you might use frequently, like Instagram or Google Calendar or Spotify. This looks like a Rivian app. Also, internet speed check. Anyways, not dialed yet. I do

• 17:45Jordi Hays?

  think that, I don't think this is necessarily going to be a huge issue. I think this kind of thing will get fixed pretty quickly.

• 17:53Speaker 01

  Are you talking about the, the big sidebar? That's kind of.

• 17:55Jordi Hays?

  Yeah, yeah, yeah. So it's like, hey, we, we made a phone whose entire value prop is that it's a bigger screen. And then as of right now, and again, I expect this to get fixed.

• 18:06Speaker 01

  That's for real estate.

• 18:07Jordi Hays?

  Yeah.

• 18:10Jordi Hays?

  The yeah, the core value prop is not being delivered on yet. Mark Gurman says the iPhone Duo reviews are some of the most brutal I've seen from an Apple product in a long time, Vision Pro aside, but I've been around long enough to remember the iPhone 5, 6 Plus and iPhone X. The app optimization issue is a non-issue and will be resolved in weeks. The one big difference I'd add, the iPhone 5 and iPhone 6 Plus gave developers one week of turnaround time, though they've had a month plus in hands-on development opportunities with the Duo. So I don't know what Google and Instagram and Spotify are doing if they've had the ability to.

• 18:50Speaker 01

  Yeah, they've had a month.

• 18:52Jordi Hays?

  They've had roughly a month. But maybe they're just bearish on the Duo.

• 18:58Speaker 01

  Well, I think for like Instagram or whatever, they probably assume that people are going to be doing kind of, they're going to have the like wider, so you can do kind of dual-wheeled reels. So they're probably optimizing for that.

• 19:09Jordi Hays?

  Yeah, I do want to see what it looks like on Instagram when you have the two screens.

• 19:14Speaker 01

  Yeah, and so I think these are starting to be delivered on Friday, I believe, the 23rd. So we'll start to get some.

• 19:22Jordi Hays?

  Yeah, but somehow people have them out in the wild now. So.

• 19:25Speaker 01

  Well, this is MTHB review, yeah. I assume that he get it early.

• 19:28Jordi Hays?

  Let's pull up this video from MKBHD.

• 19:33Speaker 03

  And it is bad. Photo quality, that selfie camera, yeah, that is, that is very first gen and it is bad. The photo quality is trash. It looks a little better on like a FaceTime call with video than just straight up taking pictures with it, but yeah, Apple clearly has done the math. Like they've assumed people won't use this camera very much and they've accepted the trade-off of image quality versus having this big dramatic uninterrupted inner display. We'll see that selfie camera.

• 20:02Speaker 01

  Yeah, I think that's a reasonable trade-off.

• 20:04Jordi Hays?

  And the camera is effectively invisible.

• 20:07Speaker 01

  Yeah.

• 20:08Jordi Hays?

  Which is extremely impressive.

• 20:10Speaker 01

  Yeah, so this makes me more bullish on this.

• 20:13Jordi Hays?

  Yeah, it seems like a pretty good experience.

• 20:15Speaker 01

  Yeah, I did not get one, but.

• 20:18Jordi Hays?

  Do you want to?

• 20:19Speaker 01

  I could imagine other people enjoying it.

• 20:21Jordi Hays?

  You're not going to get one?

• 20:23Speaker 01

  I could.

• 20:24Jordi Hays?

  Would you get one if we needed somebody on the team?

• 20:27Speaker 01

  I could, yeah.

• 20:28Jordi Hays?

  To make a sacrifice and do it?

• 20:30Speaker 01

  Sacrifice? I would sacrifice.

• 20:34Jordi Hays?

  Because you're going to have a massive aura loss.

• 20:36Speaker 01

  That's true, yeah.

• 20:37Jordi Hays?

  So you need to be.

• 20:38Speaker 01

  You can't be seen pulling this thing out.

• 20:39Jordi Hays?

  Cracking it open. I mean, John really does need to do it. He's the newspaper guy.

• 20:45Speaker 01

  Yeah, yeah.

• 20:46Jordi Hays?

  I think he's got to do it, so I don't think you should have to.

• 20:48Speaker 01

  Okay, let me talk about Railway. Railway is the all-in-one intelligent cloud provider. Use your favorite agent to deploy web apps, servers, databases and more while Railway automatically takes care of scaling, monitoring and security.

• 21:02Jordi Hays?

  It's time to talk about SpaceX, SI, Tesla. SpaceX had their Q3 earnings call yesterday. It is one of the cooler earnings call experiences, even like the countdown, like the imagery that they have just show why the company ultimately trades in a somewhat detached way from business fundamentals, but they talk about the progress that they've made over the last quarter with Starship specifically. The stat that stood out is that one Starship that was not even full is launching the equivalent

• 21:46Jordi Hays?

  of 10 Falcon 9s worth of Starlink satellites, right? So it just shows, shows how big the payload capacity can be. And, and again, they're just like going as down the line as fast as possible to get to not just reusability, but rapid reusability. So that's what they're telling people to watch out for in the, over the next quarter. A lot of the call was focused on the terrestrial compute build-out. Elon compared SpaceX and, and the team there to the, the other sort of like cloud or NeoCloud

• 22:30Jordi Hays?

  players as this is like the New York Yankees playing in the Little League. So not, not mincing words.

• 22:38Speaker 01

  Logged.

• 22:39Jordi Hays?

  And yeah, the big numbers that stood out, they're talking about two and a half to three gigawatts online by the end of this year with, and pacing to get 10 online next year. That being said, he did, he did leave possibility for getting to 20 gigawatts next year. The logic there being like they are building out more, like they're trying to get enough effectively infrastructure in place to support 20 gigawatts, even if they don't actually have the power yet.

• 23:15Speaker 01

  Yeah.

• 23:16Jordi Hays?

  And.

• 23:17Speaker 01

  And then, I mean, he kept hinting or vaguely circling around some kind of merger, right? Between Tesla, SpaceX, that's like a lot of the news about right now.

• 23:26Jordi Hays?

  Yeah, before we get into that, we can talk about, let's pull up this clip of him talking about AI demand.

• 23:35Speaker 04

  Our belief is, is that the value of compute per watt will increase over time, not decrease. And the reason that for that, I think, I think it should be obvious to people really is that as you improve the, the AI software, as the models get better and better, they're able to, you, you get more useful intelligence per watt. And the value of that compute is proportionate to the useful intelligence per watt. And that's why you see things like even old computers like H100s renting for more than they rented when they were new.

• 24:17Speaker 04

  And I think that's, that's likely to continue. I think we're going to face a shortage of super intelligence compute and that shortage is going to remain for a long time. So, so I think the smart move is to, is to do short-term contracts and to, and essentially that, to make, to place the bet on useful, useful intelligence per watt increasing rapidly, which obviously is done, so that's what's happened so far. And also if you look at, say, how, how are our short-term contracts renewing? Are they renewing at, at higher dollars per watt or lower?

• 25:02Speaker 04

  And, and we see them renewing at higher dollars per watt, not lower dollars per watt. We are also frankly hounded relentlessly by every hyperscaler and by dozens of smaller companies to rent more of our compute. So we could rent out our compute several times over if we said yes to everyone. That's, that's just, that's just the situation here. That's why I posted that sort of video, video meme of the Monty Python cheese shop sketch

• 25:47Speaker 04

  where the guy goes into a cheese shop to get some cheese and, and they actually have no cheese. And so he goes like, what about this kind of cheese? What about that kind of cheese? And, and they really just don't have any cheese. So we've actually tried to offload some of our.

• 26:03Jordi Hays?

  Trying to explain a meme.

• 26:05Speaker 01

  To. They've got no cheese.

• 26:07Speaker 04

  More compute for training and we get the cheese shop sketch.

• 26:12Speaker 01

  Yeah, I mean, so presumably those short-term contracts talking about are the Anthropic ones, right? It's interesting that he keeps saying like, short-term contracts, because I think.

• 26:23Jordi Hays?

  Yeah, people were, people, that's how people have been making the bear case around their compute business is like, okay, like this is a, you know, temporary solution for companies like Anthropic and Google that are compute constrained, but these contracts will roll off and the demand will shift somewhere else. And what he's saying is like, no, this is intentional. We're doing this because we want to basically every year raise prices, raise prices because the expected value of the compute will go up.

• 26:53Speaker 01

  Or, I mean, or at some point like use that compute internally for, for Grok models, right? This is kind of also like the meta maybe case where like, oh, they'd have this big build-out and like, maybe they're, they're making good use of it now, but at one point people were like, oh, you should just resell it, become NeoCloud.

• 27:09Jordi Hays?

  Yeah, so he, he definitely talks about Grok Bot in the earnings call as well and says he expects most of their compute to be, to go towards Grok Bot eventually. And talks about the growth there. The big line that stood out, which was funny, this was, came at the very end of Elon's segment before he passed the mic to Shotwell. Let's listen to it.

• 27:33Speaker 04

  I mean, in a nutshell, what this implies for SpaceX annual recurring revenue by the end of '27 is somewhere between 500 billion and a trillion.

• 27:51Jordi Hays?

  Let's go.

• 27:52Speaker 01

  I mean.

• 27:53Jordi Hays?

  He literally nods.

• 27:56Jordi Hays?

  Oh, it's amazing. Big, big, big numbers.

• 28:02Jordi Hays?

  I guess in this case, it's funny, normally people would say annualized revenue run rate, but he said annual recurring revenue, but in this case, it actually could be. Maybe it's not. Yeah, it is annual recurring revenue if they start continuing to stack these, these like annualized deals. People are saying that Musk just saved the NeoCloud trade with that line. Our belief is that the value of compute per watt will increase over time, not decrease.

• 28:32Speaker 01

  Yeah, I mean, this is what like semi analysis has been saying for a long time. Right? The things just kind of keep going up.

• 28:37Jordi Hays?

  Yeah.

• 28:39Jordi Hays?

  Brett over at Arc is talking about the merger.

• 28:45Jordi Hays?

  This seems inevitable at this point. Elon's pretty clear that it's going to be up to the shareholders on either side to decide.

• 28:55Jordi Hays?

  He believes it's the right move. And again, people, one of the biggest challenges of having SpaceX and Tesla, both as public companies is like, you can't drive all of that investor demand to one place. And so you're trying to balance like supply and demand for both assets. And again, these are like, this is a portfolio of existing products as well as like, but, but the companies, both companies are valued on their future potential. Right?

• 29:23Speaker 01

  Yeah.

• 29:23Jordi Hays?

  So combining them does make a lot of sense. I can imagine this as, as it's not hard to imagine it as a sort of first $10 trillion company. Brett has a point of view on, on the merger. He says on SpaceX versus Tesla, very crudely, RoboTaxi is a bigger opportunity than Starlink, but Orbital Compute is a much bigger opportunity than RoboTaxi. And Optimus requires more baking time than Orbital Compute. And Optimus's success is predicated on access to gobsmacking amounts. Not a lot of people using that word these days. Maybe it's time to bring it back.

• 30:00Speaker 01

  Yeah, yeah.

• 30:00Jordi Hays?

  Amounts of superintelligence. The forced usage of superintelligence by our industry has been, been pretty brutal to watch. It's really, I, I cringe a little bit every time. On our modeling compared against the no merger case, even if merged at the current share price ratio, Tesla shareholders would be 1.6 better off in 2031, while SpaceX shareholders would be two times better off. On a longer timeframe, Tesla shareholders would be 5X better off having merged, whereas SpaceX shareholders would have been indifferent, would be more indifferent, 1.3X better off. So the fair premium depends heavily on your timeframe.

• 30:41Jordi Hays?

  On longer time horizon, SpaceX shareholders should be asking for a discount. On shorter time horizons, Tesla shareholders should be asking for a premium, but everyone is better off with a merged entity. A 30% premium paid on Tesla's share price today would effectively split the difference on the 2031 timeframe. Tesla acquired at a 50% discount would equilibrate return differentials on the 2036 time horizon. Elon responds.

• 31:10Speaker 01

  Interesting.

• 31:10Jordi Hays?

  It just says, interesting. This is, uh, this is obviously his way of drawing attention to, to things without, without giving them an endorsement in any way. So lawyers.

• 31:24Speaker 01

  Yeah, I mean, so many things here make sense, right?

• 31:26Jordi Hays?

  Lawyers hate this one simple trick.

• 31:29Speaker 01

  They don't want you to know this.

• 31:30Jordi Hays?

  Yeah, the big thing is that Elon owns so much more of, you know, SpaceX that he wants SpaceX to have the highest possible valuation and Tesla to have the lowest possible valuation at the time of the merger.

• 31:43Speaker 01

  Yeah.

• 31:45Jordi Hays?

  That being said, I think as soon as these companies are merged, there's going to be way more attention put on just the, not even just RoboTaxi, but the car business. Like that we know the car business is ripping, like anecdotally, the Teslas that, the Tesla that you want to buy is probably has a multi-month wait time. And I, yeah, I can't even, like the, the sort of virality of autopilot is like taking off in a way that I think would be getting way more attention from Elon. Were this merger not on the horizon.

• 32:21Speaker 01

  Yeah, definitely.

• 32:24Jordi Hays?

  What else? Hero Onata says, I know Elon stocks get totally different treatment, but this is Oracle, September 2025. Huge claims of future revenue, revenue extremely low quality, business about to become recklessly levered. So he's given the bare case here.

• 32:47Jordi Hays?

  Not Elon's first time making huge claims of future revenue. I think the interesting thing is like, even if he's off by five years on, on these sort of revenue targets, like shareholders are still going to do pretty well.

• 33:01Speaker 01

  Yeah.

• 33:02Jordi Hays?

  But yeah, very, very clear that they will be levering up in a way that no Elon company has before outside of XAI.

• 33:14Speaker 01

  Yeah. Let me tell you about MongoDB.

• 33:16Jordi Hays?

  Please do.

• 33:17Speaker 01

  What's the only thing faster than the AI market? Your business on MongoDB. Don't just build AI, own the data platform that powers it.

• 33:26Jordi Hays?

  Let's talk about Unitree. They have a new robot called the H2X Kung Fu Legend Guardian.

• 33:40Jordi Hays?

  This video is pretty impressive. Is there sound?

• 33:50Jordi Hays?

  What did the car do to you?

• 34:03Jordi Hays?

  I think we need at least five of those to take Tyler out.

• 34:07Speaker 01

  I think I could still take this thing. So yeah.

• 34:10Jordi Hays?

  Even in John's sickly condition, I think you'd need at least 100 of these to take John out.

• 34:16Speaker 01

  Yeah, I mean, so we don't actually see the robot fighting a person. So presumably, you know.

• 34:21Jordi Hays?

  No, but, but what I've said, I do think humanoids, I, I can see humanoids having, I've talked about this on the show a couple of times, but I can see, all right, we can pause the, the loud robot sounds, please. Thank you. I can see humanoids having more product market fit in the home as for security use cases early on. Because if you have.

• 34:44Speaker 01

  Maybe outside of that.

• 34:45Jordi Hays?

  You have a break in, just having a human sized robot, like interrupting the, the thief is much easier than trying to have it do your dishes. Right?

• 34:57Speaker 01

  Yes.

• 34:57Jordi Hays?

  Like, because you just need some physical deterrent.

• 35:00Speaker 01

  But I do wonder if that only works in the short term where like, because right now, if I see a humanoid robot, I know it actually can't beat me up, like the current ones.

• 35:08Jordi Hays?

  You don't know that.

• 35:09Speaker 01

  I'm, I haven't seen any videos of people fighting robots where they lose.

• 35:13Jordi Hays?

  I'm just saying, if you're a criminal and you have five minutes to, to.

• 35:17Speaker 01

  Yeah, yeah. But if you know about humanoid robots, if these criminals have done their, you know, homework.

• 35:22Jordi Hays?

  Saying if they studied.

• 35:23Speaker 01

  Yeah, if they study.

• 35:26Jordi Hays?

  Well, it's time for our first guest of the show, our dear friend of the show, Nikesh. Here he is.

• 35:36Jordi Hays?

  You'll probably notice that this is not John. So sorry to disappoint. John is out today. He's sick. Maybe he has a bunch of old websites that he needs to update and.

• 35:48Speaker 05

  Maybe he's gone buying a watch again.

• 35:50Jordi Hays?

  Yeah, maybe that. But anyways, thank you for taking the time to jump on today. I know it's, you're, you're slammed, but fortunately you would have had a pretty long heads up on this, but how are you processing the recent news?

• 36:06Speaker 05

  Look, this is not new news. This is something that has been forecasted by almost everybody in the cybersecurity industry or the frontier and L industry, right? They've all said that we are going to see more vulnerabilities that will be discovered. And this is a public vulnerability, as you know, it's probably half the internet where people are using PHP. So this is kind of like a log 4G moment. This is a vulnerability that is serious. I think I just saw the Japanese prime minister tweet about it. So the heads of states are getting involved. This is serious. Yeah. The NSA put out a notice as well. So this is a serious vulnerability. We're going to see more of these, not less. Think this is something that we've been predicting as an industry. There's a lot of old wood that needs to be chopped before we get to a better state. It's probably the next six to 12 months, we'll see more of these.

• 36:53Jordi Hays?

  Getting more tactical right away, how should different types of companies be responding?

• 37:01Speaker 05

  Look, we ran a scan when we found out there's 22 million places where this vulnerability persists. Even if you thin it down, it's about nine or 10 million. So this is not going to go away tonight. A lot of people have to do a bunch of patching. There's a bunch of patches that have been made available. We've also made a virtual patch available. So if you have a pile of firewall, you don't have to do the patch. You can just basically, we are already pushing the content patch to your automatically secure against the PHP vulnerability as long as you took our advice and put the pile of firewall in the middle of your traffic. And so that should take care of it. But I think it's a lot of patching that's going on right now as we speak. A lot of gateways are getting these patches put in there so that bad actors can't get to your vulnerabilities.

• 37:46Jordi Hays?

  What should everyday people do? Friends, family, things like that? What advice are you giving? Like, you're cooked? It's over?

• 37:56Speaker 05

  If you're maintaining a website, you have no choice but to go back and find that PHP patches out there and go patch your situation ASAP. Hopefully, the bad actors are not chasing you down just yet. That actor is probably going after higher price targets or higher economic value targets, but this is going to happen. I think we will see people get aggressive and get disordered, but I'm more concerned about what comes next, right? This is just one. I think there's more to come. And the problem is, when you start seeing big things like this happen, you start finding people who are trophy hunters. They're going to say, well, where can I find the next PHP and prove to the world that I'm as smart as the last guy?

• 38:34Jordi Hays?

  Interesting. So you're saying, like, effectively, people that want to be the person that discovered a vulnerability at this scale because they get some status associated with that?

• 38:45Speaker 05

  Dude, it's a street cred. If you're a hacker, isn't that a street cred that I found that one? Like, literally, the moment this happened, I had four people message me, saying, "I found it," or "I found it." I'm like, dude, this is not a good thing.

• 38:56Jordi Hays?

  Yeah. And now the issue is, like, it's so much, you know, while historically, it may have taken somebody five, 10 years to find a vulnerability this significant, now that if they just have some, you know, meaningful access to compute, they could do it on a much shorter time horizon.

• 39:13Speaker 05

  Yeah, well, I meant to understand that the models that are in the offing, that are about to come upon us in the next two to three months, already have more capabilities than the ones that are publicly available. Both, you know, to defenders like us or publicly available to everybody, both in open source and in closed models. But, so you're going to see more and more capability. So what isn't found today, where the current model will definitely be found three months from now with the next model. So the question is, how are you getting ready for it? And my recommendation to everyone is, now, take this stuff seriously, because that's the easiest door for the bad actors to get in. Now, understand your vulnerabilities, scan them. There's tons of services out there. We have some, other people have some. Scan your vulnerabilities, patch what you can. Whatever you can patch, make sure there's a virtual patch in place.

• 39:57Jordi Hays?

  Yeah, so is the advice moving forward just, like, in effect, like, be more online or something, so you can be more aware of this stuff? Or is it, you know, stop self-hosting and try to move on to these, like, bigger platforms that can take care of the stuff for you?

• 40:11Speaker 05

  You can, like, big, big architectural shifts on what is basically 25 years of the internet that has been existence. I think what you can do is, you can start putting sort of fences around some of the stuff that you understand is highly critical. Look, there is going to be damage that's going to happen. Hopefully, it is not sort of permanent. You've got to make sure that whatever could be permanent damage to your business or whatever infrastructure that you have, there you have to pay attention and make sure those ground jewels are protected ASAP. I think time will take its course and we'll get better at this stuff. But people need to pay attention to critical vulnerabilities and stuff that is sitting at the core of their infrastructure.

• 40:49Jordi Hays?

  What is, can you imagine a more effective, like, you know, assume that we're going to have one of these a month for the next 12 months? What should, what should governments do to make sure that more people are aware? Just because I, I can't imagine most people that are affected, you know, 0.0001% of people affected by this follow you or NSA's?

• 41:16Speaker 05

  More people should follow me, right? That's what I'm saying, yeah. I'm ready, let's go. Then that X count up.

• 41:22Jordi Hays?

  Yeah, yeah. Got to get those numbers up. No, but like, what is, like, is this, is this, have you imagined any, any type of, like, one, it's like general awareness, but it's not about this one issue? Like, how do we make sure that business owners and people who are creating websites and services are going to be, it's almost like you need it to be, like, this needs to be something that you're putting on your calendar and, and staying on top of in a way that just people haven't had to do ever?

• 41:54Speaker 05

  Well, we've got to give credit to our friends at OpenAI and Tropic and Gemini, because they've done a very good job of creating awareness. I think more people know MITOS than know the word cybersecurity, which is great, because now suddenly people are paying attention. I think there is still a gap between awareness and action. So, you know, I was at a conference the other day with 180 CEOs, and there was a huge session, Sam spoke, and there was a huge session about cybersecurity, and there was people, obviously, who were being made aware that this is a problem. And some people take that seriously, go back and act on it. Some people think they've got more impressing priorities to go deal with, and this is just gets delegated down. And I think part of it is, you've got to take this seriously, because this is the sort of, you know, biggest risk of our times right now from a cyber perspective.

• 42:39Speaker 05

  These AI models are going to get more and more powerful, as you know. And as they get powerful, you've got to go out and make sure, you go ring fence this stuff. And there's no, there's no magic pill, there's no easy button on this. This is just grind, hard work. You've got to go through infrastructure, you've got to go clean it up, and you've got to put the patches in place. And it's going to happen. I, you know, you will see, I think the general expectation is we will see some big breaches as a consequence of some of these things. And, like, look, we just found a PHP vulnerability, right? We all have to fix it. We haven't seen somebody take some business down because of this vulnerability. Some of that stuff's going to happen, right? Because you make it easy.

• 43:15Jordi Hays?

  Yeah. What about the long tail of, of government websites? Is, are they?

• 43:22Speaker 05

  I thought that was being fixed by the chief design officer of the United States, our friend, Joe Gabi, isn't he fixing all the websites?

• 43:28Jordi Hays?

  He better, he better. I want to, as much as I like beautiful government websites, I kind of want him, I kind of want him to focus on this now.

• 43:36Speaker 05

  Oh, we can add this list of stuff to do. They need to look pretty and be safe.

• 43:41Jordi Hays?

  Yeah, no, but I mean, my, my concern is, like, you look at the long tail of websites where people have, you know, input information, stored information, it's, you know, things like, personal addresses, you know, bank details, all these different things. To me, I, I worry less about, you know, somebody's random WordPress website, which is a glorified, you know, resume builder that probably doesn't get traffic anymore anyways, versus, you know, these places that, that actually do have consequences.

• 44:15Speaker 05

  Yeah, look, this thing happened in the last, I think, less than six hours ago. Well, it's been, people have known about it for the last 72 hours, maybe. Some people claim they've known about it for a month, but people have known about it. The batches came out this morning. People have to get busy and start fixing this stuff. So I'm pretty sure there's lots of places people are focused on this. We've pushed patches out in our product. Other cybersecurity companies have also been pushing patches across their products. So we are all trying to secure the estate that is being protected by all of us. But yes, a lot of people have to go back and go fix this stuff if they're not using the right cyber tools, or they haven't patched the PHP issue.

• 44:51Jordi Hays?

  What about, what about these, the, the actual process when a vulnerability is discovered? This one was discovered in August. Talk about the dynamic where, like, you want to let the maximum amount of people know about the issue so they can fix it, but the more people that you let know about it, the greater likelihood that there's a leak and it gets into hands of bad actors? Like, how, what are best practices around navigating this?

• 45:17Speaker 05

  There's clear rules of engagement in the industry. The clear rule of engagement is if you find something, the first, first rule is you've got to tell the person whose code it is. You've got to go back and tell them that, listen, I found something wrong in your infrastructure product or your software product, here's a chance to go fix it. So if you find it in SaaS software, you call the company. If I end it in stuff like this, you go call the authors or the owners of the protocol to make sure that they have a chance to take a look at it and fix it, because you fundamentally want them to patch it, right? You don't want to do an aftermarket patch, because that would just, just like, create all kinds of collateral damage and consequential damage. So you start by exposing it to the people who are the owners. The owners will take a look at it, they'll find out a way to patch it. It's a lot easier if it's a software patch, to be honest.

• 46:01Speaker 05

  The best, best problem to find is one where I can push the patch. So if I'm running a SaaS company and you find something in my software, I can push to fix, it's gone. Like, nobody finds out, there was a vulnerability, you push to fix, it's fixed, nobody's going to get it. The next set is where you have a piece of software, I use it, you can patch it, but I have to deploy it, because I don't have the, you don't have the ability to push yourself, which is kind of this case. They can put the patch out there, but they can't push the patch, right? We have to all go take it, embrace it, and deploy an infrastructure. That's the second, which makes it a little harder, because not everybody's aware of them using this protocol. Not every long-tail website in the world is going to be aware this has happened, even though this has got widespread awareness. I'm sure that lots of people have no idea this is, this is going on.

• 46:46Speaker 05

  So there's that problem. I think the hardest ones are when you find a vulnerability in a, in a box, as in a piece of hardware. But now, it's even worse, because you have to go build the patch, and I can't even push it, I can't deploy it. The customer has to go test it, then deploy it. So that's kind of the, the, the sort of degree of complexity of getting these perpetrated or diffused. But there's a, as I said, there's a certain protocol. You tell the owners, then you go inform certain parts of the government, depending on how critical, how important it is. And then you go talk to the industry and let the industry know if, for example, we found out the 48 hours to spare allowed us to go build all the tooling that is needed to go push the, the patches out. So there's, there's a protocol. The problem is, timelines are compressing, right?

• 47:29Speaker 05

  This is, you don't have that much time to go fix these things. And that's going to happen worse and worse. So I think there'll be a time where you won't have the luxury of weeks to be able to go figure out if this is real or not. You'll find out in the morning, when you wake up, that somebody found a big vulnerability, and they posted it out there for everybody to see.

• 47:47Jordi Hays?

  Scary. Do you think that?

• 47:50Speaker 05

  The sound of revenue, Jordi.

• 47:52Jordi Hays?

  What's that?

• 47:53Speaker 05

  It's the sound of revenue for the

• 47:54Jordi Hays?

  It's the sound of revenue. No, it's a good time, a good time to be in your business, even though, even though it's scary. Do you think that, you know, historically, like cybersecurity specialists or IT people were like some of the last hires that a, that a, that a scale up would make?

• 48:13Speaker 05

  Not anymore.

• 48:14Jordi Hays?

  Yeah. Do you think it's, do you think it's time for like, you know, the, the, somebody in that sort of category to be like the 15th hire if you're a company that's scaling up quickly?

• 48:27Speaker 05

  Look, I think, especially if you're building an AI business, I think that needs to be part of your early hires. Because AI as a technology has not even built the hooks that are needed to make sure you can observe it and you can secure it. So you need to be very clear that as you're building the capability, I'm sure you heard recently, one of the AI companies got breached because they hadn't thought about security at all as a concept. So, you know, there are many AI companies that are out there that are being built, they, that are not putting any harnesses or any guardrails around how this stuff's gonna happen.

• 49:05Speaker 05

  On top of that, if you, the complexity is that these AI models are, have their own brains. They're all reasoning models, so they can actually be deceptive on purpose if they want to. So it's not just normal cybersecurity, actually, how to build capability, where it says, how do I make sure this, this agent acts the way it's supposed to act without, even if nobody's looking at it?

• 49:27Jordi Hays?

  On the topic of, of personal agents, what, what new security challenges are you seeing? Or are your customers thinking about now that clearly consumers want to be able to use Muse?

• 49:41Speaker 05

  You mean you haven't given your bank account details and the details to, on access to your email and everything to your personal agent yet? You're behind the times.

• 49:49Jordi Hays?

  I can't say I have, but, but, but people are, you know, you can get, if you want to, if you want to give, if you want to give all your data to a new AI agent, sometimes they'll offer you a free slice of pizza.

• 50:02Speaker 05

  Wow, amazing.

• 50:04Jordi Hays?

  It's definitely a trade to make, but, but, but yeah.

• 50:08Speaker 05

  I'm curious, why haven't you given it, you or Tyler, why haven't you given access to your bank account and ability to send wires and, you know, respond to your emails just to your personal agent yet?

• 50:18Jordi Hays?

  It's funny because I used to get so annoyed that I'd have to go in and, and go into a branch and approve a wire or take a phone call and do a wire, and now it's like so obviously a feature.

• 50:31Speaker 05

  And now you're happy?

• 50:31Jordi Hays?

  Yeah, yeah, yeah. Now I'm happy.

• 50:33Speaker 05

  Now you're happy that you have to take the phone call, you wonder, oh my God, please call me before you send that wire.

• 50:37Jordi Hays?

  Yeah, exactly. No, but how are your, like, are, are Fortune 500s, like, it seems like they're basically just saying like, sorry, no, like, we've made our products like extremely efficient and we care more about security than saving you, you know, 20 seconds? Like, certain companies-

• 50:56Speaker 05

  I think the big, the big challenge that you have, and we can abstract that beyond just the personal agent part, right? Look, first of all, we know that the personal agents are still, are not fully tested in terms of what they're able to do. And I don't think where any one of us is ready to give access to a personal agent where it could indulge in a non-reversible act or something that you care about, right? They book the wrong restaurant, fine, okay, I'll deal with it, you know, I'll have to go figure it out myself. If it possibly books the wrong airline ticket, it's inconvenienced, it's irritating, you'll never do it again. But you're willing to take the financial outcome of that. But if you send a hundred thousand dollar wire, you don't really want that to happen. So there are certain, that I'd say, boundaries right now with personal agents where people do not want to give them access to certain

• 51:40Speaker 05

  actions or tasks. I said, this is giving AI arms and legs. You don't want to do that just yet. I think on the enterprise side, people are not ready at all. I mean, I still heard that a bunch of banks don't want you connecting their bank accounts to personal agents because who's got the liability, right? If a hundred thousand dollars vanishes from your bank and you had empowered your personal agent to do it, the banks are saying, listen, don't look at me, I'm not gonna take the liability of that wire transfer going out because your agent did it. So I think there's a bunch of stuff that needs to get resolved, a bunch of trust that needs to be built and comfort that needs to be built, and explainability, auditability before those things become commonplace.

• 52:14Jordi Hays?

  Yeah.

• 52:15Speaker 01

  But it's fun. Customers increasingly asking you about, like, open source models as, as defense? Or are they focused on like trying to get into these, you know, invite-only frontier lab programs where they can get the, the models? Or how are you thinking about like open source?

• 52:31Speaker 05

  Look, I think there is an argument which is in favor of open source and open weight on two counts. One, open source and open weight models allow you to inspect the chain of thought. So if you're trying to deploy an enterprise model, you want to be able to see why is the model wanting to do something? Because every company has some obligation, explainability, and auditability and verifiability. It's not okay to go to your board and say, I don't know, AI did it. That doesn't, that doesn't work as a defense, you know, you pretty much will get fired. So if you're gonna deploy AI in a responsible way in a company, I think you have to be able to inspect the chain of thought. And the only models that allow the inspection of chain of thought today are fundamentally open source, open weight models.

• 53:16Speaker 05

  I think that's a bigger argument in the favor than other arguments that we've heard. I think the second argument you're seeing right now is that open source models are effectively free. But I think that's a bit of a fallacy because even if you go get yourself an open source model and train it, or open weight model and modify the weights to your product or your, your application, you're still gonna go find compute. And right now the gating factor is compute and the cost of compute, which is kind of, you're seeing that in the cost of tokens, which is the current metric in the frontier labs, and seeing that it is a metric on the open source side. So I don't know if there's much of a difference in the models when you deploy them fully into your infrastructure, where the cost of deploying an open source model is marginally lower than the cost of tokens you're gonna have to pay are front of the frontier labs.

• 54:01Speaker 05

  But I think as compute costs rationalize or normalize, you'll see that difference a bit more stark.

• 54:08Jordi Hays?

  Last week, everyone was worried about AI demand. This week, everyone is excited about how much, how many gigawatts are coming online in 2027? This, the, the, the two things, it's kind of interesting to me that, that someone can be, you know, worried about demand last week and then excited about new supply coming on.

• 54:29Speaker 05

  I think there are different people, though.

• 54:30Jordi Hays?

  Yeah, no, they, they are, they are, but-

• 54:33Speaker 05

  Hopefully they are, or they're schizophrenic.

• 54:37Jordi Hays?

  But how are you, how are you processing that, right? Like, people want to basically attach a number to the, you know, tie revenue potential for new gigawatts in 2027 to current spot prices. And I think if you want to do that, you have to assume massive capability increases, which I don't think there's any reason not to, but what, what's your view?

• 55:02Speaker 05

  Look, I think if you, you have to look at it two different ways, right? Look, there seems to be more demand than supply at the moment. If you try to get yourself compute today, whether you get it from a hyperscale or you get it from some of the Neo clouds, it's expensive. It's a lot more expensive than it was two years ago. So that's clear, you only see expensive compute and people willing to pay that price if there's a shortage of supply. So clearly there's demand. There's no indications out there that tell you that the demand is about to abate. I think we're in the, we're in the flip phone version of the mobile phone revolution, if that's the right analogy. Or in the, you know, we're sending emails to each other, we're excited, and the internet's just come about. So I think we're in that stage of AI in terms of the diffusion of the technology and the capability of the technology.

• 55:45Speaker 05

  So there's no doubt in my mind, you will see insatiable demand in the next time to come, and you can decide where you want to put a pin. The challenge right now, the market is trying to get a sense of, this is the, the economics of this are different, right? That people are trying to figure out, is there enough money that some of these people can find to be able to fund that capacity build-out that is needed to satisfy the demand on this side? And how many of these business models are gonna survive? And that's fine, that's normal in any technology cycle of this scale and this degree of enthusiasm, I won't call it bubble. The degree of enthusiasm we're seeing around it, and, you know, all kinds of business models are being tried, some are gonna survive, some are not gonna survive. And I think that the concern the market has is which ones are the ones that are gonna survive? Which ones are more stable in the long term, which ones are not? And where, where will the profit pools move?

• 56:30Speaker 05

  The profit pools today are solely in the hands of the infrastructure players. You see the memory guys and the chip guys are, you know, getting the profit pools because that, that's the one, this is the gating factor. Tomorrow it's gonna be, you know, shell, power, and land. Because you suddenly say, we got enough chips, but we can't seem to find enough data center sites. So profit pools might start balancing between infrastructure and them. And eventually, if some of the larger AI businesses have to succeed in the long term and sustainable business models, they have to be able to partake in the profit pools, otherwise they end up just being passed through to the profit pools of infrastructure. So I think all this stuff will evolve over the next five, three to five years. However, I think there's no question that there is going to be insatiable demand for the next three to five years, and that's what you gotta balance.

• 57:14Jordi Hays?

  We'll leave it at that. We know we're over. Thank you for jumping on. And thank you for, for all the work that you and the team are doing. And yeah, enjoy, we enjoy listening to the sound.

• 57:23Speaker 05

  You can say thank you for your cyber service.

• 57:25Jordi Hays?

  Thank you for your cyber service.

• 57:27Speaker 05

  Thank you. Nice to see you, guys.

• 57:28Jordi Hays?

  Yeah, great to see you. Good luck out there.

• 57:30Speaker 01

  Yep. Let me tell you about Consol. Consol builds AI agents that automates 70% of IT, HR, and finance support, giving employees instant resolution for access requests and password resets.

• 57:40Jordi Hays?

  Well done, Tyler.

• 57:43Jordi Hays?

  Dialing it in. Oh, there he is. He brought the milk, as usual. It's a big, is that a bigger jug this time?

• 57:53Aidan Smith?

  No, it's actually empty. Last time, here you'll recall, I, I came with a lot, and well, we, we finished it coming up to this round. The new shipment is coming in, we're gonna have a few more gallons for, for the B.

• 58:03Jordi Hays?

  There you go. Aidan, it's great to see you. Tell us about, as much as you can about the progress you've made since, since the last round. What's the, what's the one simple trick that the big labs hate that you've discovered? No, I'm just kidding. What's new?

• 58:24Aidan Smith?

  What's new? Well, so much. I mean, first of all, when the seed was raised, it was three guys in a trench coat. We're like 25 now, the team is incredible, I'm so grateful every day to work with these folks. I mean, the town density is off the charts. It's very nice to walk into every room and be like the worst guy in the room at half the things. It's, it's been a real privilege.

• 58:41Jordi Hays?

  It's a good feeling.

• 58:41Aidan Smith?

  And part of having great folks means that you develop really great IP, and you're able to do things that I frankly would not have thought possible before I thought them done. The most credible place of advancement, if you look on the internet, is the systems work we've done. If you see our mega kernel work, you'll probably be delighted if you know anything about GPUs, because-

• 59:02Aidan Smith?

  I guess my co-founder Ben basically invented the mega kernel for AI. Like he wrote the paper. You should go, go read it.

• 59:08Jordi Hays?

  He wrote the paper.

• 59:10Aidan Smith?

  In the time since he wrote that paper, they've gotten kind of popular. You may have seen on Twitter, lots of people saying, oh, mega kernel this, mega kernel that. What I've gotten to see is Ben reinventing the mega kernel again. And this time there isn't really a paper, but there is a lot of evidence in our reports. And I guess in the receipts of the actual models we're training and the work we're doing as a company, showing that when you do not just think of a mega kernel as like a singular entity for a given model and one way to speed up a given workload, but as an actual framework and a way to speed up arbitrary workloads and even, you know, create a control flow of really diverse kinds of models and architectures and optimizers and things. You can actually run things on GPUs that people thought really were not possible. And so this is kind of the heart of a lot of our alpha. We're really a systems-first AI lab. We view our alpha as being that we actually just like think about how GPUs work. And then we build everything on top of that.

• 59:55Aidan Smith?

  Our, our post-training team sits in the same team as the people who write the kernels. And I think that the kind of architectures and conversions on really reflect that.

• 1:00:04Jordi Hays?

  Very cool. What's the news today if for anyone that can't read?

• 1:00:08Aidan Smith?

  Well, the big news is the billion dollar series A.

• 1:00:15Jordi Hays?

  There we go. Was it a billion or 800? I thought it read 800.

• 1:00:20Aidan Smith?

  You may have seen in the news that it was 800. There was a lot of demand. The price actually went up a little bit.

• 1:00:25Jordi Hays?

  Wow, price went up. Price went up.

• 1:00:27Aidan Smith?

  We would like to take more money, but frankly, we have a lot to do with this money first.

• 1:00:32Jordi Hays?

  Good problem to have.

• 1:00:36Jordi Hays?

  What, um, how are you like, over time, do you see,

• 1:00:42Jordi Hays?

  do you see flapping airplanes as being like sort of chip agnostic? Like, would you, would you work in the sort of TPU ecosystem? Or is there enough work to do in the Nvidia ecosystem?

• 1:00:53Aidan Smith?

  I mean, there's lots of great chips out there. Frankly, we think that GPUs are uniquely powerful, actually. And we think that a lot of the AI work of the future will really be especially effective on GPUs. Because GPUs have this ability to be really dynamic. Like I said, a lot of our compiler work is cool because it means you can run these workflows, which are not just like matmul, matmul, matmul, matmul, but are a lot smarter and more creative. And I think that as kind of our size starts to take off, you'll see that the power of the GPU is that it can adapt with the intelligence of the underlying architectures and things.

• 1:01:20Speaker 01

  What is your like current relationship with a lot of these terms like data efficiency? Or, you know, continual learning? Do you think these terms are still like useful in a sense? Like, or is it all just kind of like describing the same thing? Which is like make the model better and faster and cheaper to run?

• 1:01:36Aidan Smith?

  Well, it does all gesture towards just make better models. But I think there is something really credible to that. And I think that we really do need fundamental advances in data efficiency. Because there's, when you break down the economy, the section of it that's making a lot of progress right now, all this really highly verifiable software side stuff where there's infinite data. And then there's the rest of it, this just, you know, 30 plus trillion dollars of other labor and things that frankly, the models today suck at and don't even seem close to penetrating. And I, as a developer, I'm really excited because I see that my individual confidence writing code is no longer that useful. But I still can lift boxes with the best of them. I actually kind of would rather a future where my job is not a ditch digger.

• 1:02:16Aidan Smith?

  I hope neither of you are either. And I think that we want to build algorithms that really empower people.

• 1:02:21Jordi Hays?

  Box lifter ditch digger here. That's really offensive.

• 1:02:26Jordi Hays?

  Now, continue.

• 1:02:28Aidan Smith?

  Yeah, I think that AI really should be a tool to let people go and think about things they want to think about and empower people. And it's sort of a shame that AIs first come for these things, which are more intellectual and gratifying versus these more banal things, which we seem to have not cracked in this really, really strange morve X paradox kind of way.

• 1:02:45Jordi Hays?

  How are you like, how frustrated are you with how

• 1:02:54Jordi Hays?

  current models are just not, uh, they can, they can, they can do tasks, but they don't, they can't generate like new ideas, right? When you look at any AI output, it's always because there was a smart or a funny human that put a couple of ideas together, had some sort of unique vision, and then they told the model to do it. Like where, how far away are we from, from models that can then, in your view, that can generate? I don't know if there's any truly novel ideas in a bunch of domains, but there's still just like this main, that's, that's the frustration that I have. Cause I've, we've, I've been delighted every single day by AI outputs in different ways. But it was always because of a smart human.

• 1:03:38Jordi Hays?

  And as, as great as humans can be, I want to like scale that generation of, of new ideas.

• 1:03:47Aidan Smith?

  Yeah. I mean, I think the big labs are making great progress on this. The model's getting a lot smarter. We certainly have made immense progress on very creative ideas in places like mathematics or places where you really can kind of just go search this tree of possible idea space. You might say, there's no such thing as a new idea in mathematics. It's all just axiomatic. Well, actually, no, there's lots and lots of things where if you piece these things together and create a ways and kind of redefine your terms and come up with new ways to go, you, you have these new ideas in essence. I however, am really bullish on new algorithms unlocking models that think in very different ways. I think that one thing that brings a lot of flappers together is that we all are a little bit odd in that we don't just think this one linearly linear way of like, this is the, the only thing that can be true. Here's how this stuff works. We're actually kind of willing to go off the beaten path. Likewise, I think that models can be pushed in this direction if they're trained on more limited data.

• 1:04:31Aidan Smith?

  If you look at why all the models talk the same way, I mean, the Claude leash and all the Chinese models maybe being especially notable version. It's because they're trained on the same data. I mean, frankly, even like one Claude to the next Claude, it's still just a lot of the same traces from last time. The good rollouts, the things that save you a lot in compute. But me and your model just becomes more and more pigeonholed into this thing, which is kind of a parody of itself. But if you really do build data to function algorithms and you can train models that are as smart as you and I with, you know, the same amount of data that you and I have, then they can think in a little bit weirder ways. They can make inferences off of more limited data.

• 1:05:04Speaker 01

  Do you think different architectures can solve this kind of like ever increasing spikiness of the models, right? This is kind of what Jordi said earlier, but like the, the models are obviously incredible in math. And, you know, still at writing jokes, there's, I, I think there's been, you know, almost no progress. Is that an architecture problem, this kind of like spikiness? Is it inherent to, you know, doing a ton of post-training after you do this big pre-train or?

• 1:05:27Aidan Smith?

  Yeah. As you described, I think it's more of an algorithms problem for some of these things. Where really you're able to optimize the model in the places that are optimizable. There's this kind of street lighting where, oh, I can see if this is right or this is wrong. Let's push that down. Let's push that up. And so the model becomes really, really well calibrated on what correct math is or like what code that works looks like. And still can't escape the, the Claude basin where it tells you about how load bearing that is.

• 1:05:49Aidan Smith?

  I think that there is some evidence of this being architectural thing. Insofar as architectural advancements have made models generalize better. Like if you go and look at the literature, the last four or five years, you'll see that as you've made all these little tweaks to the architecture to make it better, the models generalize better, have more interesting properties, maybe are more interpretable. There's, there's all kinds of nice things downstream of that. And I sincerely hope that substantial revisions in our architectural work will actually make it even more the case. But as far as the, the friedness of modern models, I think that's mostly downstream of the post-training.

• 1:06:18Jordi Hays?

  Yeah. It's interesting. The thing that the line that stood out to me is like models that think different. Because the, like right now, every model is just like thinking like the most logically that you possibly could, right? And, and that's like so great for all these tasks. And then when you think about like the great moments and like human creativity and the, and the arts and even like marketing and advertising, it always came from somebody seeing something a slightly different way and maybe doing something that wasn't at all logical. And so it's interesting to like have this, I think we're going to have to sort of like carve out and identify what, what intel, what, what is this category of intelligence that's not logical,

• 1:07:00Jordi Hays?

  but creates amazing outputs and can, can lead us to amazing things?

• 1:07:06Aidan Smith?

  I guess you're talking about thinking differently, you know, models that don't take your jobs, models that Steve Jobs.

• 1:07:11Jordi Hays?

  Yes.

• 1:07:14Jordi Hays?

  Good one. Good one. Um, what, uh, are you guys going to hire some new people? You've got some, some.

• 1:07:21Aidan Smith?

  Oh, absolutely. If you're listening to this and you're a creative researcher who thinks a little bit more oddly and frankly, believes in yourself, does not believe the end of history has come for AI, reach out. We are always hiring wonderful folks. I have been impressed at how the bar for talent has just gone up over time. And that every day I get to come in and spend time with some of the brightest folks I know.

• 1:07:40Jordi Hays?

  Soon you're going to be the dumbest person in the room, in every room of the office. And you're going to be the happiest, happiest guy.

• 1:07:45Aidan Smith?

  I would love to be dumber than you in that room. So, so please come. Make me feel better.

• 1:07:48Jordi Hays?

  Amazing. Great to see you. Great update. Excited to see more of your guys' work.

• 1:07:52Speaker 01

  Awesome progress.

• 1:07:53Jordi Hays?

  Cheers.

• 1:07:55Speaker 01

  Let me tell you about CrowdStrike. Your business is AI. Their business is securing it. CrowdStrike secures AI and stops breaches.

• 1:08:03Jordi Hays?

  Well said, Tyler. Well said. Uh, let's bring on our next guest.

• 1:08:10Jordi Hays?

  Here he is. What's going on? Welcome to the show.

• 1:08:12Speaker 07

  Hey Jordi, how are you? Long time no see. I think a year and a half ago in a little bit of a different capacity. So great to see you Tyler. Welcome, my guest, to your first guest.

• 1:08:22Jordi Hays?

  Yeah, welcome to the show. Yeah, Tyler's filling in today, but he's doing a fantastic job and we're excited to have you on the show.

• 1:08:31Speaker 07

  Thank you, you as well. Thanks for having me.

• 1:08:33Jordi Hays?

  Well, let's get right into it. Introduce yourself and the company and you already know that we have a gong that we will inevitably hit.

• 1:08:41Speaker 07

  That's right. Yeah, so I'm Akhil, originally from Buffalo, was fortunate to serve in the Marine Corps for a while. Left active duty and over the last 18 months have helped build Watchtower Labs with an awesome team. And to the gong, are coming out today with our $35 million round. Headshot Capital, Sarah founders, or Sarah Head, Conviction, Trade founders, and Ikey Tel. So we're excited. Not just getting started here, we're certainly not the prior speaker nor the one that's upcoming, but we're excited where we're at right now.

• 1:09:15Jordi Hays?

  Amazing. Talk about the company, what inspired it and where you're going.

• 1:09:20Speaker 07

  Absolutely. Yeah, so actually about the time I came on the first time a year and a half ago, we were just starting to have a conversation with some senior military commanders who, like many, recognize that the federal government and the military world could be supercharged and accelerated by superintelligence. And we were fortunate to come on a problem which was specifically, how do you help military planners and decision makers anticipate and think about the future? Using not just AI, but simulation and a combination thereof, and make it easy for planners to think about it as easy as possible, knowing that the complexities can abound. What happens in the Middle East, what happens to our supply chains, etc. And the ask was, let's specifically focus on logistics and supply chain constraints.

• 1:10:04Speaker 07

  Because in this day and world, a lot of the constraints associated with what you can do in the future are bound by our supply chain challenges. And so we went off and built a platform that can help military planners think about the future, simulate a distribution of outcomes going into the future, and ultimately help them make better decisions in both conflict, competition, and crisis.

• 1:10:27Jordi Hays?

  What, how do your customers actually, like, how? We're moving into a world where you can simulate an infinite number of possible futures. Like, how does the process of prioritization work? And can we move to a world where a black swan is impossible? Because it's already been simulated and modeled and prepared for it to some degree.

• 1:10:58Speaker 07

  Yeah, you know, my prior past in the military always tells me that black swans are possible. I mean, there's just so many things, right, that could happen. The most important thing is allowing planners and folks to just think about it. There's a classic General Eisenhower quote from World War II, right? Which is, "Plans are nothing, but planning is everything." The actually most important thing is being able to congregate around some sort of tool with real people to think about what all the potential options could be. There's a running joke in the military generally that when you plan for a future operation, you usually present three options. You know, it reminds me of some of the Simpsons vignettes. You present three options and really, most people just worked on the first one. Because they didn't have enough time to work on options B and C.

• 1:11:42Speaker 07

  And so you present, you know, option A is the best one. But if you have a simulation tool, you know, that makes and uses natural language to reduce the barrier to create those, you can actually have realistic courses of action, A through Z, that think about a bunch of disruptions, think about a bunch of what-if factors. You know, again, think about what's happening in the role. Think, you just had Nikesh on, there's a cybersecurity attack somewhere. What does that actually do to our ability to flow logistics to a certain place? Do I know what's going to happen? Maybe, maybe not, but I at least need to plan for it.

• 1:12:13Speaker 01

  How much do frontier models accelerate the ability to make good plans? Like, I can imagine on some level, like, you know, the models of a year ago can like find information very well. And like current models can do some incredible math problem or whatever. But like, maybe they're actually not that much better at like finding, you know, a bunch of like data online or somewhere. Are the new frontier models like constantly making these, you know, plans much better? Or is it kind of leveled out?

• 1:12:40Speaker 07

  Yeah, it's an awesome question Tyler. It's something that our AI team spends so much time on. And with the added complexity, right, that we're working with the government. So think about the types of models that are deployed to the networks that they have. The inability to access data. You actually have to do a lot more, like, the models can do a good deal. But let me give you an example. You know, our engineering team, they worked on, they worked on Copilot at Microsoft, saw some of the challenges early on with deploying AI in that world. We've spent a lot of time developing an in-house simulation tool. To be able to connect a frontier model, be able to build a harness that is most effective for it, and then actually run that simulation.

• 1:13:21Speaker 07

  And then on the backend, be able to output something that is interpretable by your everyday users. And so I guess the short answer to that question Tyler is, it has definitely accelerated in some places. But it is staggered a little bit because of what the infrastructure can provide and some of the uniqueness of the customers that we're deploying with.

• 1:13:38Jordi Hays?

  How have you been building out the team? Like, how much of the company is in DC area versus the rest of the country?

• 1:13:47Speaker 07

  You know, most, actually Jordi is not in DC. We also, most of our core engineering team, you know, a year and a half ago was Bay and mostly Seattle based. And then as we started to get with our customers and users, we absolutely built out. So actually, we have DC now, obviously the Bay in Seattle, and Hawaii as well. So not a bad place to be at certain times of the year.

• 1:14:10Jordi Hays?

  That's a talent play right there. You got, if you want to work in applied AI from Hawaii, you don't have that many options outside of Watchtower.

• 1:14:20Speaker 07

  That is very, that is very true.

• 1:14:22Jordi Hays?

  I have some, I have some friends that I'll pass this to, that I'm sure would love to join. But amazing progress since the last time. Congrats on the new round and looking forward to the next one.

• 1:14:34Speaker 07

  Absolutely. Thanks Jordi. Thanks Tyler.

• 1:14:36Jordi Hays?

  Cheers.

• 1:14:38Speaker 01

  Let me tell you about Shopify. Shopify is the commerce platform that grows your business and lets you sell in seconds, online, in-store, on mobile, on social, on marketplaces, and now with AI agents.

• 1:14:47Jordi Hays?

  Nailed it. Here he is.

• 1:14:52Speaker 05

  Hey guys, how's it going?

• 1:14:54Jordi Hays?

  Dude, great to see you. We always have a ton of fun when you come on. It's like, you're...

• 1:15:02Speaker 05

  The time sequencing is getting shorter and shorter.

• 1:15:04Jordi Hays?

  Shorter and shorter. We should just schedule tomorrow already, just in case a new round happens between now and then. Yeah, but I guess, tell us about the progress that you made in the last like two weeks or however long it's been.

• 1:15:17Speaker 05

  Well, what's been really fun is, you know, I went on this adventure with our CFO to meet another type of investor in this round. We ditched the VCs, we didn't want to date them anymore. And we met with the institutional investor, with Fidelity, with, you know, Baron Capital, with Capital Group. And it's been a really enlightening experience in terms of, you know, what do these really long-term shareholders look for? And I think it's helped us, not only internally, but also externally, sharpen that story and think about how we play the long game here.

• 1:15:57Speaker 05

  We want to be the partner and the platform where all legal work runs on. And that needs to be taken in a very long view. And so I think that has been a fun, new experience for the company as we start to grow up.

• 1:16:13Jordi Hays?

  I, a buddy was telling me a funny story, which he's brought on some of these kinds of investors that you were just describing, and they don't have the same... They've taken a slightly different approach to communication post-investment, where they'll reach out like multiple times a day, being like, hey, do you have five minutes to chat on like this thing? And they're very, like, you sort of lose that, like, you know, founder-first, like, service mindset at times. And it just transitions to like, I'm a shareholder, I'm going to call you any hour of the day, and you're going to answer all my questions.

• 1:16:50Speaker 05

  Yeah, I mean, it's fun, right? Like, when we were talking to VCs for the previous rounds, it was a lot about them selling us, right? Like, you know, why should we pick you over them? And this time around, you're talking to people who have access to the entire public markets and basically every investment that they want, so it's a bit of a reverse, reverse sell.

• 1:17:10Jordi Hays?

  How is, how is a legal AI market different than the coding market? Because I think everyone watching and everyone in tech is well aware of like, how companies adopt these tools, how they, you know, how they deploy them across organizations, willingness to use a bunch of different tools.

• 1:17:30Speaker 05

  And I was an engineer. I like to say, I think I was the worst engineer and that's why they made me CEO out of our founding trio. But we look to software engineering a lot for our inspiration, right? And I think the main difference is that in engineering, the individual practitioner is like, just always trying new things. And they're sort of like leaned in to an extent where it doesn't matter if it's wrong. You can vibe code it and, you know, the products get better over time and that's okay. In law, you're not allowed to vibe draft. You can't vibe research. It has to be correct and the verifiability of the product is very different.

• 1:18:13Speaker 05

  You can compile the software code, you can write the tests, and if it passes all the tests, we're good. In law, it doesn't really work that way. Because you don't know that you're wrong until you're very wrong or unless a senior person in the organization can take a view on that work. And so the degree of adoption is accelerating exponentially, but it's doing so at a more...

• 1:18:40Speaker 05

  You know, careful rate and and and and sort of the the degree of let's totally leave this out to an agent is moving slower in legal than it's moving in software. I think that's for a good reason. And it it it sort of hurts us when, you know, some uncareful lawyer uses chat G P T and it hallucinates a case and it makes it into the Financial Times. Like, that's that's not good for what we're doing either. And so I do think that the the change management is just larger in in this practice than it's been with software engineers.

• 1:19:15Jordi Hays?

  How are uh small law firms or or single person operations adapt uh adopting A I differently than than some of the bigger firms? Because it feels like the big firms are like, all right, we have these amazing businesses. We have tons of associates. We maybe have, you know, it's constantly trying to find that balance between having enough people but not having too many. Um, but but generally like rates have outpaced inflation and it's been a great time to be a lawyer. Whereas and and so when they adopt A I, they're like, well, we need to show that we're forward thinking and that we really care about innovation and all these things. But that's quite a bit different than like uh uh in independent uh lawyer who's just like.

• 1:19:58Speaker 05

  Well, it's helping it's helping the small firms and small in-house teams take on substantially more work and and and and do substantially more complex work than they were able to before. Take a big litigation as an example. If you have a big litigation matter, typically you would need an army of associates to help you come through all of that documentation and actually take on that case. Now, a smaller firm can do that with the help of software. And it's been one of the fastest growing parts of our business. Uh, in this next quarter, more than half of our incoming business is also from enterprise. So from legal departments like Salesforce and B M W. And what's exciting about that

• 1:20:37Speaker 05

  is those internal legal teams want to do more. And they're seeing more claims, they're seeing more litigation, they're seeing more M and A activity. And now there's an opportunity to review every type of contract. And so what's been fun for me is um, it's like everybody gets to come in on the fun. Uh, like, like the the Lagora party tent is very large and we can fit everybody under it. And those maybe smaller practitioners now have access to the same tools that the bigger guys do. And so it's really a battle of your intellect and of your experience and your expertise and all the other traits that make up a great practitioner, rather than do you have access to an, you know, an army

• 1:21:21Speaker 05

  or or um, um, you know, tools that are otherwise locked behind very large paywalls.

• 1:21:28Jordi Hays?

  That makes sense. Uh, how do you think about our our last guest was uh was on talking about uh simulation, using A I to simulate different scenarios for military planning. Uh, how much do you guys think about simulating litigations? Is that something that?

• 1:21:46Speaker 05

  I think it's super interesting. And and I actually love the work that happened on the Navier-Stokes um math problem of of OpenAI. I think that is a great example of what if we take really smart models, you hook them up, you allow them to communicate, and you throw them at a really hard problem. And you just like let them cook. You know, can you do the same in litigation? Super interesting question. And can you especially?

• 1:22:10Jordi Hays?

  Because there's so many different, there's so many different factors. It's like, okay, you have the two parties of litigation, you have each lawyer on each side, and and all of their history, you have the judge and a certain jurisdiction, and then all of the precedent associated with it. And it feels like you can get to the point where you can throw fifty thousand dollars of of compute at something and be able to make decisions that that are gonna make are gonna cost millions or even billions of dollars.

• 1:22:37Speaker 05

  Right. If it's about the company litigation, you're willing to spend a lot more than fifty dollars, fifty thousand dollars to make that work. And the the the the uh, the growth that we've seen this year has also been fueled by rapid expansion inside of enterprises to new teams. So we've been very, very focused on law. Uh, that's why we've got Jude Law. But it's also now getting moved into compliance, into tax, and and this sort of like we're getting pulled into new uh adjacencies inside of the enterprises because um they're getting jealous of all the fun that the legal teams are having.

• 1:23:08Speaker 01

  How much utility have you guys gotten out of benchmarks? Like, a lot of times we see these new models come out, especially some of the like open source models, and they always have very good benchmarks on like the legal scores. And I'm wondering, um, do you find these to be like very like benchmarks or something? Or or do you find those like public legal benchmarks like actually do apply very well to these kind of internal tasks?

• 1:23:32Speaker 05

  Um, I I don't find that the external benchmarks are very good. Uh, like, here here is our version. I don't know if you can see my screen. We just published our own benchmarks on this. And I think this it's been a really interesting exercise of building up this um internal library of use cases, together with the law firms and and practitioners that we work with. So we built up over five thousand uh real uh sort of life tasks. And what you can see is it's a very jagged frontier, like different models are good at different things. And so if you want to optimize across this entire um, you know, figure, you basically need to work with different models under the hood all the time. And you need to be able to swap them out really quickly, especially when the underlying like model layers is

• 1:24:13Speaker 05

  moving so quickly. Um, we need better benchmarks in legal. Um, part of this is, you know, our I P. And being able to route the models very effectively is like super core to the Lagora I P under the hood. And it also allows us to make the car much more efficient. Like, for every token, we are significantly more efficient than any of the frontier labs and our competition because of how we route with the models. And we deliver the same, if not better, performance.

• 1:24:45Speaker 01

  I believe you you raised.

• 1:24:46Jordi Hays?

  Hit the gong and then uh I'll have one more question. It's time. What was the number? What was the number? We need the number.

• 1:24:54Speaker 05

  Five fifty on eight eight.

• 1:24:56Jordi Hays?

  Boom.

• 1:24:59Jordi Hays?

  Powerful number.

• 1:25:00Speaker 05

  We need we need a bigger sales gong in our office now. I feel a bit like gong logged by you guys.

• 1:25:05Jordi Hays?

  Yeah, yeah. Well, we have, we have all the, our supply chain is dialed. Um, but uh, great to see you. Amazing progress and and looking forward uh to your next appearance. We'll get it on the schedule for next week.

• 1:25:17Speaker 05

  Thank you.

• 1:25:18Jordi Hays?

  Cheers.

• 1:25:18Speaker 01

  Thanks for coming on. Uh, let me tell you about Codex. Uh, oh, that was a little slow. Codex is a powerful workspace for getting work done with A I agents. Whether you're writing code, analyzing data, creating content, or automating business workflows, Codex helps you move projects forward from start to finish.

• 1:25:36Jordi Hays?

  Matthew Zeitlin says the American capital markets are the eighth wonder of the world. And he's quoting The Economist. And it says, in the past year, American markets have digested the largest ever initial public offering, SpaceX, equity raised by a public company, Google, or a foreign firm, S K Hynix, private funding round, OpenAI, and private debt deal Broadcom, as well as most of the biggest bond issue in history, Amazon. There was the first one trillion dollar exchange traded fund or E T F. Uh, Vanguard, a record-breaking cash pile, Berkshire Hathaway and stock buyback program, Nvidia, and can consummation of the largest ever leveraged buyout, E A. Then there was the enormous mergers in railways,

• 1:26:20Jordi Hays?

  Union Pacific and Norfolk Southern Utilities, Next Era and Dominion Energy, and media, Paramount and Warner Brothers Discovery, the last of which led this week to the largest ever junk bond offering, beating a record set only last week by SoftBank. New market, new markets have been created out of thin air for compute or become much bigger for predictions. Worries about massive corporate scandals, first brands, and hedge fund blowups, situational awareness, which would have once occupied investors' attention for months, are steamrolled by the relentless totalizing and extraordinarily flexible machine that is American finance.

• 1:27:01Speaker 01

  Let's go. Well, speaking of capital markets, let me tell you about N I C E. Want to change the world? Raise capital at the New York Stock Exchange.

• 1:27:10Jordi Hays?

  David Winter says, way better ad read. You did not sound like a bot that time. It's all about the inflections and emphasis. So thank you for the live uh coaching, but.

• 1:27:20Speaker 01

  I'm getting better.

• 1:27:22Jordi Hays?

  Yeah, truly, it's been, it's been such a, the the other crazy thing about um about a lot of these deals is like they weren't even the current thing at the time. Like, it was kind of thing where it would be maybe get a a mention on on the front page of the journal or just be buried in the business section. Um, big news today, uh, somewhat unexpected, OpenAI models are coming to Google Cloud. Um, two uh frenemies now, I guess, in many ways. Um, OpenAI and Google strike major A I distribution deal. Uh, OpenAI will bring its frontier A I models, including G P T six, Astro and Codex to Google Cloud in the coming weeks. Enterprise customers will be able to purchase them through Google

• 1:28:07Jordi Hays?

  Cloud Marketplace using existing cloud spending commitments. Uh, the agreement follows OpenAI's expansion to A W S after its exclusive Microsoft distribution arrangement ended. Um, in other news, uh, OpenAI acquired Orchestra Bio, a platform that helps biopharma teams coordinate the complex process of drug development. Um, Rhendra goes to OpenAI, absolutely massive news and super excited for the team over there. Um, Ken Griffin had some comments yesterday. Uh, he said, we're almost certainly in an A I bubble, but that sounds way more bearish

• 1:28:51Jordi Hays?

  than what he was actually saying. He he uh, in his comments, he's talking a lot about um, uh, disruption due to A I, but also said it would be a golden age of entrepreneurship.

• 1:29:04Speaker 01

  Let's go.

• 1:29:06Jordi Hays?

  So uh, not all bad.

• 1:29:10Speaker 01

  Well, if you think it's an A I bubble or not, you can go on public. Let me tell you about public. Invest across all assets.

• 1:29:17Jordi Hays?

  You missed the button, buddy. Oh, you hit it.

• 1:29:19Speaker 01

  Automate anything with A I agents, run trading strategies, risk management, money movements, and monitor markets with A I agents for investing on public.

• 1:29:27Jordi Hays?

  I don't know if this is a serious comment or not, but let's see. Brian Johnson says, I have an AI agent that logs every negative comment someone makes about me online, then creates a profile of the person, maps all of their social connections, and finds all their emails. Tomorrow morning, my AI agent will send out an email blast to everyone's extended social network detailing the horrible things they've said about me. And he says, just kidding, it's not just to their social network, but to the extended network of everyone they know as well. I'm for real, just kidding on all of this. I thought he would do it. I thought that was actually kind of an interesting experiment, just sort of narking on everyone. Narking on.

• 1:30:10Jordi Hays?

  On, it's probably millions, don't you think it would be millions of people?

• 1:30:13Speaker 01

  Yeah, I mean, if you include, you know, every Instagram comment, there's, I think there's a long tail of these things, so.

• 1:30:20Jordi Hays?

  Yeah.

• 1:30:21Speaker 01

  Yeah.

• 1:30:22Jordi Hays?

  Puko Capital says, some years ago, I just stopped logging into Netflix and never really thought about it again. Honestly, surprised it's still worth 275 billion. I read this and, and I agree. I think I still pay for Netflix, I never use it. I would, it's interesting to think about how much you would pay for YouTube.

• 1:30:45Speaker 01

  Yeah.

• 1:30:46Jordi Hays?

  Versus Netflix. Like, my willingness to pay for YouTube would, would probably be in the thousands of dollars a year.

• 1:30:55Speaker 01

  Yeah.

• 1:30:56Jordi Hays?

  And I would probably take a thousand dollars in exchange for never being able to use Netflix ever again.

• 1:31:04Speaker 01

  I, yeah, I, I agree. I mean, so much, so much of the content stuff is, is hard because now, like, 10 years ago, whatever, you don't have all the competing streaming platforms with like, oh, actually, my favorite show is on this, so maybe for this month, we'll get this, and our family, there's, you know, we can move over for a little bit to try this one. I have not used Netflix in a long time.

• 1:31:24Jordi Hays?

  I think that's the show. I think that's the show. We made it. Oh, WAP raised 200 million in Series D funding from Sequoia and Shopify. Very cool to see Shopify coming in as a strategic. And, yeah, I think that in many ways, WAP is the Shopify for a whole new category of work on the internet. And I think Steven and the team have been pretty consistently underestimated by a lot of the market, but are extremely serious operators and, and have shown like massive

• 1:32:04Jordi Hays?

  ability to like, be flexible and evolve with their customers.

• 1:32:10Speaker 01

  Yeah.

• 1:32:11Jordi Hays?

  Which, yeah, the, the work that they're doing in various forms, whether it's clipping or, or courses, is constantly, constantly evolving, so.

• 1:32:21Speaker 01

  Yeah.

• 1:32:22Jordi Hays?

  But, but that's it. We did it. We made it through. We made it through. I've always said that if, I wouldn't be podcasting if it wasn't for John, but.

• 1:32:35Speaker 01

  Nor would I.

• 1:32:36Jordi Hays?

  Nor would you. Nor would any of us, but, but I'm glad we can do it. It's good, it's good that we can, we're not gonna do it again. That's John's last, that's John's last sick day, sick day for the year, so. As we head into flu season, just remember, John, you already used your day up. It's over. Any, any final words? You remember what John says?

• 1:33:01Speaker 01

  Follow us on Apple Podcasts, Spotify, YouTube, subscribe to our newsletter. What else is there? I think that's it, right?

• 1:33:13Jordi Hays?

  Can't forget.

• 1:33:14Speaker 01

  Oh, how many days? Oh, yeah, what are we at?

• 1:33:16Jordi Hays?

  64 days.

• 1:33:18Speaker 01

  We're right there. We're in the final stretch now.

• 1:33:22Jordi Hays?

  We're in the final innings. That's it, folks.

• 1:33:25Speaker 01

  Leave us five stars.

• 1:33:29Jordi Hays?

  Wow, really delayed flash. We love you guys, see you tomorrow.