Darshan Shanker, Pavel and Delian Asparouhov, Alex Konrad, Jordan Schneider, Willem Van Lancker, Christian Garrett, @carrynointerest, 11x Controversy, Robo Arms

TBPN.com is made possible by: Ramp - https://ramp.com Eight Sleep - https://eightsleep.com/tbpn Wander - https://wander.com/tbpn Public - https://public.com AdQuick - https://adquick.com Bezel - https://getbezel.com Polymarket - https://polymarket.com Follow TBPN: https://TBPN.com https://x.com/tbpn https://open.spotify.com/show/2L6WMqY3GUPCGBD0dX6p00?si=674252d53acf4231 https://podcasts.apple.com/us/podcast/technology-brothers/id1772360235 https://youtube.com/@technologybrotherspod?si=lpk53xTE9WBEcIjV (01:19) - Trump Administration Signal Group Chat (18:51) - Controversy at AI Sales Company 11x (45:20) - The Arms Farm (55:43) - Christian Garrett (01:16:55) - Darshan Shanker (01:32:18) - Alex Konrad (01:44:57) - Willem Van Lancker (02:01:47) - Jordan Schneider (02:31:12) - Pavel and Delian Asparouhov

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

• 0:00John Coogan?

  You're watching TBPN. It is Tuesday, March 25th, 2025. I got it right this time. We are live from the Temple of Technology, the Fortress of Finance, the capital of capital. This show starts now. We got a great show for you, Dave, folks. We got a bunch of call-ins. We got some breaking news in the financing world. Companies are doing deals. We got

• 0:21Jordi Hays?

  Deals are getting done.

• 0:22John Coogan?

  We got, we, we, we got media announcements. We got VR announcements. We got news about China coming on. We got a bunch of people calling in, but we also got some news. I see you're enjoying some Lucy cinnamon.

• 0:35Jordi Hays?

  It's hot today here in Los Angeles. It's feeling like spring John.

• 0:40John Coogan?

  It's great. Well, what's your take on Signal? Because the Trump administration, apparently, I've heard all these defense tech founders complain, oh, I gotta use Microsoft Teams because my work is so important and like I'm saving the country, but it's such a bummer. I wish I could use Slack. Turns out they could just use Signal.

• 0:58Jordi Hays?

  I mean, they all use Signal.

• 0:59John Coogan?

  I guess.

• 1:00Jordi Hays?

  That's very common.

• 1:01John Coogan?

  Maybe you should just run the entire organization on Signal. Seems like you can just do it.

• 1:04Jordi Hays?

  Run the US government on Signal and Ramp.

• 1:06John Coogan?

  It seems like it already is running on Signal. That's of course, the news of the day.

• 1:10Jordi Hays?

  It's just wild that, that I try not to follow any political news. I try to keep my head in the sand on that kind of stuff.

• 1:17John Coogan?

  Yes.

• 1:18Jordi Hays?

  But I did see their emoji usage.

• 1:21John Coogan?

  Oh, really? I didn't actually look at the, the story or anything. I saw this as a tech story and that's the way we're treating it. Trump administration was, was found using Signal. Atlantic's top editor said he was added to a text group in which top US officials discuss detailed plans to bomb Houthi targets in Yemen and with other US officials, an extraordinary breach of security from an administration.

• 1:45Jordi Hays?

  These were the.

• 1:46John Coogan?

  That had repeatedly vowed to clamp down on leaks. Oh, that's why that's going viral.

• 1:52Jordi Hays?

  Yes.

• 1:53John Coogan?

  The, it's the fist emoji followed by the American flag emoji followed by the fire emoji. Very American.

• 1:59Jordi Hays?

  Very American, not. Not super tasteful in that situation.

• 2:03John Coogan?

  Editor in chief Jeffrey Goldberg recounted in a 3,500 word story published Monday how he got a connection request on the Signal messaging app from someone identified as Michael Walz. He initially believed the request was fake, but later realized the account belonging to the US National Security Advisor was genuine after the group discussed detailed plans for an attack on the Houthis, a militant group that has carried out numerous attacks on commercial vessels in the Red Sea. Goldberg didn't publish the actual plans in the article, but he said Defense Secretary Pete Hegseth at one point shared a post that featured operational details of forthcoming strikes in Yemen, including information about targets, weapons, the US would be deploying and attack sequencing. Hours later, the attack went

• 2:48John Coogan?

  ahead. So it's kind of, I mean, there's a bunch of like, bad takes about this. One is like, oh, Signal got hacked. That's not what happened. They literally just accidentally added the wrong person to the group. Signal was not compromised. The encryption still works. The other kind of mediocre take or bad take was like, the Atlantic shouldn't have posted this. It seems fine.

• 3:09Jordi Hays?

  It's the best possible marketing ever for Signal. Cause it's very quick, easy to understand. Okay. This wasn't a, this wasn't a hack.

• 3:16John Coogan?

  Yeah. It's a pat finger.

• 3:17Jordi Hays?

  Yeah.

• 3:18John Coogan?

  It's a pat finger.

• 3:19Jordi Hays?

  Your moment.

• 3:19John Coogan?

  Yep.

• 3:20Jordi Hays?

  Yet validating the fact that some of the most important people in the world are having the most important conversations on Signal.

• 3:26John Coogan?

  Yeah. So shout out Moxie Marlin Spike.

• 3:29Jordi Hays?

  That's right.

• 3:29John Coogan?

  Founder of Signal, creator of a great NFT, as you so. Very fun. And, and a great writer as well. Moxie is a great technologist. Anyway, Ben Thompson took the opportunity to write about this Trump administration group chat through the lens of technology. And I found his analysis hilarious and both, and insightful. It was great because of course. He, you know, there's so many ways you could dive into this as a political story. And I was like, there's no way Ben Thompson is going to write about this. It's just like, it's so out of his wheelhouse. There's no way. But, you know, here he says, I think this is a fascinating story with a very clear tech angle.

• 4:12John Coogan?

  So upfront, let me get the obvious caveats out of the way. Yes, this was very stupid and probably illegal. This goes back to the way information is handled. The government, the Hillary email situation. Although the potential illegality itself is an interesting tech story. He says, start with Signal. Given that Signal is a consumer app, I saw a lot of commentary decrying the obvious lack of security. In fact, I think the opposite is the case. Signal is actually the most secure messaging app. I summarized the differences between encrypted messaging apps in this update. And he goes on to drop a very, very detailed analysis of how encryption works in the different apps. And it's fascinating. So I'm going to, I'm going to take you through it because I really like it.

• 4:54John Coogan?

  And so basically there are three kind of patterns for encryption. And he kind of breaks them down here. So iMessage is encrypted. Apple and presumably an adversary cannot access your messages. But the way it does this is by limiting the maximum group size to just 32 people. So every message in a group chat is actually sent directly between the sender and every person in the group chat. In other words, when you send a message to a 32 person group chat, you're actually sending 32 separate messages and potentially more if some users are using iMessage on multiple devices. Of course, messages are very small. The internet is a very big pipe and so it doesn't really matter. But it's a fascinating idea.

• 5:39John Coogan?

  And this is the concept of fan out. This is also the most secure implementation. There is both forward secrecy, meaning breaking one message, like if you hack the encryption on a single message, it does not give you access to past messages. And there's also something called self-healing in encryption. This means that breaking one message gives you access to future messages until you are offline for a single message, at which point you have lost the chain. So Signal uses what is called client-side fanout. After an initial back-and-forth exchange with everyone in the group, including the exchange of send keys, which are the keys that unlock the encrypted messages, for everyone

• 6:21John Coogan?

  in the group, you send one message that is individually encrypted for everyone in the group. This provides forward secrecy, but sacrifices self-healing. However, because the send keys are themselves encrypted, there is plausible deniability in that you don't know for sure who sent a particular message. Signal does maintain the structure of the group in encrypted form on its servers to maintain a consistent state for all users over time. WhatsApp is the most reliant on a central server. This is the third type of encryption architecture that's popular these days, and they use what's called server-side fanout. So encrypted messages are sent to a central server with send keys for everyone in the group, and then they are distributed by the server to everyone.

• 7:06John Coogan?

  Part of this process entails maintaining the structure of the group centrally, and while there is a degree of plausible deniability, it does not go as far as Signal does. And so what that means is that even though Meta cannot read your messages on WhatsApp, they can basically map the network of who's in what groups, and that potentially could be, could kind of give you away. If you broke one of these messages, it's like, okay, well, this person's in this chat, and this chat, and this chat. Okay, we know who this person is, and we broke this single message. We're in, basically.

• 7:37Jordi Hays?

  Yeah, I would just say it's pretty amazing how well Signal obfuscates the complexity Of what's kind of happening behind the scenes to deliver this like

• 7:46John Coogan?

  Oh, yeah.

• 7:47Jordi Hays?

  Very, very easy to use chat interface.

• 7:51John Coogan?

  Yeah, it's remarkable. It just, it feels like every other app. I can't, you can't tell the difference between WhatsApp, iMessage and Signal even though they're using pretty different architectures from an encryption perspective. And so Ben writes, while iMessage design is the most secure and thus the least scalable, you can't go more than 32 participants in a single chat, which is something oddly I've never actually run into. But I guess whenever there is a big group chat, it's always on Signal or WhatsApp for that reason.

• 8:18Jordi Hays?

  I run into this in my neighborhood.

• 8:20John Coogan?

  You do?

• 8:21Jordi Hays?

  There's a neighborhood group chat.

• 8:22John Coogan?

  On iMessage?

• 8:23Jordi Hays?

  And not everybody can be in it.

• 8:24John Coogan?

  Really?

• 8:25Jordi Hays?

  Because there's only 32 spots.

• 8:26John Coogan?

  It's kind of a Lord of the Flies situation.

• 8:27Jordi Hays?

  Yeah, yeah. It's very competitive.

• 8:29John Coogan?

  It's great.

• 8:30Jordi Hays?

  Sharp elbows.

• 8:31John Coogan?

  Yep.

• 8:32Jordi Hays?

  HOA, you know, it's getting, getting heated.

• 8:33John Coogan?

  It's great.

• 8:34Jordi Hays?

  But, uh...

• 8:35John Coogan?

  But the problem with, with iMessage, of course, is that it's closed source. Signal's apps and protocol, on the other hand, are open source and there's no server component that needs to be verified. In other words, we have an Andy Warhol Coke scenario here.

• 8:47Jordi Hays?

  Oh, yes, of course.

• 8:48John Coogan?

  Of course. What's great about the country is that America started the tradition where the richest consumers buy essentially the same things as the poorest. You can be watching TV and see Coca-Cola and you know that the president drinks Coca-Cola or in our case, diet Coca-Cola. Liz Taylor drinks Coca-Cola and just think, you can drink Coca-Cola too. A Coke is a Coke, no matter the amount of money. You can't get a better Coke than the one the bum on the corner is drinking. All the Cokes are the same and all the Cokes are good. Liz Taylor knows it, the president knows it, the bum knows it and you know it too. I do love that philosophy. I always thought about, like, I've probably seen Jeff Bezos's favorite movie and I think that's just like really cool.

• 9:27Jordi Hays?

  That's beautiful.

• 9:28John Coogan?

  It's beautiful, although...

• 9:29Jordi Hays?

  Jeff Bezos is listening, he's like, John has not seen my favorite movie.

• 9:32John Coogan?

  Yeah, yeah.

• 9:33Jordi Hays?

  I have movies that no one else has seen.

• 9:35John Coogan?

  I bought, I bought them.

• 9:36Jordi Hays?

  I have hundreds of movies.

• 9:37John Coogan?

  He actually does because he owns Amazon Studios.

• 9:38Jordi Hays?

  It's like even, even the individual actors don't, haven't seen the movies, right? They were, it was filmed in pieces and assembled to the end.

• 9:46John Coogan?

  You have to take out the editors.

• 9:47Jordi Hays?

  He really relishes that he has his own Netflix that just entirely proprietary.

• 9:53John Coogan?

  Just his own movies. He's like, oh, yeah. Inception 2, you ever see it, John?

• 9:57Jordi Hays?

  Yeah.

• 9:58John Coogan?

  Because I made it. I spent a billion dollars on it.

• 10:00Jordi Hays?

  And it's better than the first.

• 10:01John Coogan?

  It's better than the first.

• 10:02Jordi Hays?

  He has his own awards.

• 10:03John Coogan?

  Yeah.

• 10:04Jordi Hays?

  You know, he has his.

• 10:05John Coogan?

  Godfather four. It was amazing.

• 10:07Jordi Hays?

  Classic.

• 10:07John Coogan?

  Brought me to tears.

• 10:08Jordi Hays?

  It's a classic.

• 10:09John Coogan?

  It's a classic.

• 10:09Jordi Hays?

  It's like I re-watch it.

• 10:11John Coogan?

  Constantly.

• 10:11Jordi Hays?

  Twice a year.

• 10:13John Coogan?

  Twice a year. And John, you're never getting a hold on it. Anyway.

• 10:16Jordi Hays?

  Yeah, it's like the Wu-Tang.

• 10:17John Coogan?

  Jeff, if you have a secret movie, come on the show.

• 10:19Jordi Hays?

  Album or whatever.

• 10:19John Coogan?

  Yeah, exactly. The Skrulli album. Okay, anyway, Ben Thompson goes on to say, so it is with encryption. There isn't really a more secure messaging protocol than Signal, even if it were designed by the NSA. What is interesting is that the last bullet point in my excerpt, one way in which WhatsApp in particular could be compromised is if the server which orchestrates the chat were to insert a silent participant in the chat when it was established. This silent user, which could be obfuscated in the user interface. Remember WhatsApp is not open source, so the WhatsApp code could say, if Mark Zuckerberg joins the chat, just don't, just don't show that to anyone. In theory, I'm not, there's no, there's no allegation this is happening, but it's possible. And so.

• 11:03Jordi Hays?

  If it's possible, it happens.

• 11:06John Coogan?

  But you see that Rogan clip of Antonio Garcia Martinez, where Rogan's like, the phones are listening to us, right? And Antonio has to be like, no, like I worked at Meta, like, trust me, like, if we were listening to your phones, like, the ad targeting would be better. And Rogan's like, but they're definitely listening, right? It feels like they're listening.

• 11:23Jordi Hays?

  But Antonio Garcia.

• 11:24John Coogan?

  Paid off by Meta.

• 11:26Jordi Hays?

  Awesome guy, great founder, you know, just recently exited.

• 11:29John Coogan?

  Do you need to put on the tinfoil hat for this?

• 11:31Jordi Hays?

  Yeah. Is he the guy that goes on JRE and is meant to say the phones aren't listening? It's somewhat believable.

• 11:38John Coogan?

  Yeah, somewhat believable. We'll see. We'll have to put the screws to him one day.

• 11:41Jordi Hays?

  I'm not gonna go, I'm not gonna take it this far, everybody will.

• 11:44John Coogan?

  If you don't, I'm clipped.

• 11:45Jordi Hays?

  Save that for later in the show.

• 11:47John Coogan?

  Anyway, the reason I bring this up is because that's kind of what happened here. Goldberg was added to the chat, although, albeit not silently. There was certainly a notification about his addition, and he would have been publicly listed as a chat participant. However, if you read the story, Goldberg was added at the same time as a bunch of other participants were added, and it seems like no one noticed. That means he effectively operated as a silent participant, and thus saw all the messages until the time he exited the chat. So fascinating. Anyway. What was your takeaway?

• 12:19Jordi Hays?

  I mean, my takeaway is this would, this kind of fat finger move would be ruinous for most.

• 12:25John Coogan?

  Most boys group chats.

• 12:26Jordi Hays?

  Most friend groups.

• 12:27John Coogan?

  Most friend groups.

• 12:28Jordi Hays?

  In the entire world.

• 12:29John Coogan?

  Yeah, I guess the message to the listener is, take a, take a scroll through your single group chats. Make sure you don't have any silent participants you accidentally fat fingered into the chat. He goes on to talk about transparency versus security. What is perhaps the most surprising detail about this episode, however, is that the violation was not about security, but rather transparency. In fact, the official policy of the DOD is that officials use less secure means of communication. From a Pentagon memo about the use of text messaging. Effective immediately when conducting government business on, of DOD users of government owned mobile devices and non-government owned devices. You have to use Microsoft Teams chat for text messaging. As the fully designated managed DOD mobile enterprise system.

• 13:13John Coogan?

  You, for use on government owned mobile devices, Microsoft Teams chat will be available as a managed application, blah, blah, blah. So basically, they want you to use Microsoft Teams. Shout out Satya Nadella for getting that deal done.

• 13:23Jordi Hays?

  This is one of those things.

• 13:24John Coogan?

  But it's not end to end, end to end encrypted.

• 13:28John Coogan?

  The DOD's primary concern is not message security, but record retention. They want to have all the records. They don't want it encrypted. Anyway.

• 13:35Jordi Hays?

  Yeah, this is one of those things, the challenge, anytime you're trying to roll out,

• 13:41Jordi Hays?

  roll out new software to a team or get a team to adopt software is the, the, the sort of like, people by default will flow to the, like, the, the platform with the least friction, which is like what they're already using.

• 13:54John Coogan?

  Yep.

• 13:54Jordi Hays?

  So we see this, we have Slack. We don't use it for the show.

• 13:57John Coogan?

  Yeah.

• 13:58Jordi Hays?

  Right, we just, iMessage is just.

• 13:59John Coogan?

  Yep.

• 14:00Jordi Hays?

  Still the default. And I'm sure at some point, we'll move some more.

• 14:05John Coogan?

  I mean, we need to get more secure with all the other podcasts that are attacking us.

• 14:08Jordi Hays?

  That's right.

• 14:09John Coogan?

  And trying to hack us.

• 14:10Jordi Hays?

  Yeah.

• 14:10John Coogan?

  As security, cybersecurity, I mean, we've been talking about trying to build our own version of Wiz.

• 14:15Jordi Hays?

  Yeah.

• 14:15John Coogan?

  Hiring some Israeli guys to build that for us. But this could be, this could be a good move. Yeah, tell Pio. Yeah, we need, we need the top guys for sure.

• 14:24Jordi Hays?

  The top guys.

• 14:25John Coogan?

  For sure.

• 14:25Jordi Hays?

  Podcast security.

• 14:27John Coogan?

  Secure the stream at all, at all costs. Anyway, he closes by saying, there are security considerations. Executive branch officials perhaps overstated their case when they wanted official records locked up forever. But are we really sure that we want ongoing conversations to be happening on services that are any less secure than Signal? Again, none of this is to dismiss the stupidity of this particular case, but that's why I find the story so interesting. There are a lot of, there are a lot more ramifications beyond one military operation that raise legitimate systemic questions about how the government should operate in the digital age. And it's interesting. Yeah, this relates to that other post we talked about, which was that, that in, I believe

• 15:10John Coogan?

  the UK, there was a member of parliament whose chat GPT records or AI queries were maybe like subpoenaed or released.

• 15:18Jordi Hays?

  Freedom of information.

• 15:19John Coogan?

  Yeah, yeah, FOIA. And there's this question of like, of like, what is the value of our leaders being able to have private conversations?

• 15:29Jordi Hays?

  Yeah.

• 15:30John Coogan?

  Historically, it's been very easy. You know, Abraham Lincoln walks outside with his top guy and just goes for a stroll and like, no one else is listening and they can weigh all the possible options on how they want to win the civil war or whatever.

• 15:41Jordi Hays?

  Well, we don't know at what point they develop robot birds that can sort of fly above political leaders.

• 15:46John Coogan?

  Well, I mean, the Nixon tapes was basically the start of all that, right? And he was getting wild in the boys group chat in the White House, basically, saying a lot of crazy stuff.

• 15:58Jordi Hays?

  Well, so this is interesting to, further down in the article, they talk about how there was an incident called the Salt Typhoon Hack, in which China had the ability to read pretty much every SMS message in America, which is why the US government advised citizens to use end-to-end encrypted apps like Signal.

• 16:18John Coogan?

  And that's why if you're on SMS, specifically if you're not on iMessage, like you need to be. Sharing American propaganda that is convincing to Chinese nationals and the CCP. So when they hack you and they get it, they're like, wow, capitalism is sick.

• 16:32Jordi Hays?

  Yeah, China's equivalent of the CIA is reading your messages and you gotta turn them.

• 16:36John Coogan?

  You gotta turn them, exactly.

• 16:37Jordi Hays?

  You gotta be like.

• 16:37John Coogan?

  Cause they're listening, so you gotta turn them, you gotta post.

• 16:40Jordi Hays?

  Hey, like, it's a beautiful day today. I, I'm gonna pick up my kids, you know, take them to football practice and barbecue. What are you doing?

• 16:49John Coogan?

  Yeah.

• 16:49Jordi Hays?

  And it's just like, multiple times a day.

• 16:51John Coogan?

  Exactly, exactly.

• 16:52Jordi Hays?

  I'm barbecuing, I'm barbecuing, it's, it's a beautiful day.

• 16:55John Coogan?

  What, what was your, what was your quote about, uh, uh, Marx failed to consider how making money with your absolute boys is fantastic? Something like that? You, you, you send a couple of SMSs across the cell typhoon hack and.

• 17:08Jordi Hays?

  Yeah.

• 17:09John Coogan?

  It's gonna be peace all over the world.

• 17:11Jordi Hays?

  Yeah, we should actually turn off iMessage on our phones and just text each other.

• 17:16John Coogan?

  Yeah.

• 17:16Jordi Hays?

  SMS.

• 17:17John Coogan?

  It is, it is ridiculous that they were just, uh, like spamming out these, uh, these government secrets. It's almost like, I mean, they, they should have just put it on a billboard, like, at this point. They should have just taken all of the instructions, everything, they should have just communicated through a network of billboards. They should have just gone to adquick.com.

• 17:36Jordi Hays?

  That's right.

• 17:37John Coogan?

  Because they have out of home advertising made easy and measurable.

• 17:40Jordi Hays?

  Yep.

• 17:41John Coogan?

  They could say goodbye to the headaches of out of home advertising, only on adquick, which combines technology, out of home expertise and data to enable efficiency.

• 17:48Jordi Hays?

  And adquick is very privacy oriented. People are not gonna be finding out about your campaign until you want them to.

• 17:53John Coogan?

  That's really a good point.

• 17:54Jordi Hays?

  Hits the billboard.

• 17:55John Coogan?

  Exactly.

• 17:56Jordi Hays?

  Um, so.

• 17:57John Coogan?

  Yeah.

• 17:57Jordi Hays?

  Yeah, just, just something, something to keep in mind. We'll head over to Washington, we'll let them know.

• 18:02John Coogan?

  Yeah.

• 18:02Jordi Hays?

  If you wanna, you know, if you wanna.

• 18:04John Coogan?

  If you wanna, if you wanna get your DMs to the mainstream media, just put them on a.

• 18:10Jordi Hays?

  At the right time.

• 18:10John Coogan?

  Just put them on a billboard.

• 18:12Jordi Hays?

  Yeah, you could also, uh, if you wanted to talk with, with Goldberg directly.

• 18:17John Coogan?

  Yeah.

• 18:17Jordi Hays?

  You could just buy all the billboards surrounding his home.

• 18:20John Coogan?

  Yeah, exactly.

• 18:21Jordi Hays?

  I'm sure, I'm sure it's possible to figure out. We're not gonna dox him, but, uh.

• 18:26John Coogan?

  They should already know.

• 18:27Jordi Hays?

  You don't need to add Goldberg to your secret chat.

• 18:30John Coogan?

  You don't need to.

• 18:30Jordi Hays?

  Just to send a message.

• 18:31John Coogan?

  Exactly.

• 18:32Jordi Hays?

  You can just.

• 18:32John Coogan?

  You can just use a billboard for that.

• 18:34Jordi Hays?

  You know, etc.

• 18:35John Coogan?

  That's great. Anyway, should we move on to 11x?

• 18:37Jordi Hays?

  Let's do it.

• 18:38John Coogan?

  Talk about 10x engineers, 10x spies. Now we're talking about 11x. A little bit more.

• 18:43Jordi Hays?

  11x, crazy name. They took, I mean, well, it's the meme, you know, take it to 11, right?

• 18:49John Coogan?

  Okay. Is that what it is?

• 18:50Jordi Hays?

  What's that? This one goes to 11?

• 18:52John Coogan?

  Anyway, it's an AI SDR company that's embroiled in controversy after allegations from TechCrunch that they claimed that they had customers that they don't have. And there are definitely two sides to this story, so it'll be fun to dig in. Not dead to rights yet. Some Andreessen folks came out in support. There are some haters on the timeline. Interestingly, the scoop comes from TechCrunch.

• 19:17Jordi Hays?

  I'm wondering, 11, you know, this one goes to 11. Do you remember the movie Spinal Tap?

• 19:23John Coogan?

  Yeah, I remember that.

• 19:24Jordi Hays?

  That's, that's potentially a deep Spinal Tap reference.

• 19:29John Coogan?

  I always thought that this was just like affiliated with that club in Miami, 11.

• 19:33Jordi Hays?

  That, that could be.

• 19:34John Coogan?

  That's probably, it's probably like a spinoff. Cause they were, they were getting into cryptocurrency and crypto technology.

• 19:39Jordi Hays?

  If we could make AI employees and we could spend all day at 11.

• 19:42John Coogan?

  Yep.

• 19:43Jordi Hays?

  And we would never have to work.

• 19:44John Coogan?

  Well, no, I mean, it makes sense that 11, the club would incubate something like this because they need to text their high paying clients, hey, do you want a bottle service tonight?

• 19:54Jordi Hays?

  Yeah.

• 19:54John Coogan?

  What's going on?

• 19:55Jordi Hays?

  They have a pretty sophisticated outbound.

• 19:57John Coogan?

  Do that, it makes sense.

• 19:58Jordi Hays?

  Outbound engine.

• 19:58John Coogan?

  Exactly.

• 19:59Jordi Hays?

  CRM.

• 19:59John Coogan?

  Yeah. Really, really increasing. I mean, that's high margin stuff if they get them coming in. I mean, they're not paying 250 a bottle for Dom at 11.

• 20:07Jordi Hays?

  Talk about.

• 20:08John Coogan?

  It's gonna be 5K.

• 20:09Jordi Hays?

  At least.

• 20:10John Coogan?

  Yeah. And so you gotta start using the AI sales reps to just be hitting everyone that comes through.

• 20:15Jordi Hays?

  Pounding the digital pavement.

• 20:16John Coogan?

  Exactly. Pounding the digital pavement. Anyway, let's go to TechCrunch. Last year, AI powered sales automation startup 11x appeared to be on an explosive growth trajectory. However, nearly two dozen sources, including investors and current and former employees, told TechCrunch that the company has experienced financial struggles largely of its own making. So their own investors are talking to TechCrunch. Wow. Numerous people in the US and UK told TechCrunch that the situation has become so tenuous that 11x's lead Series B investor Andreessen Horowitz may even be considering legal action. Ay yi yi. However, a spokesperson for Andreessen emphatically denied such rumblings, telling TechCrunch that A16Z, they ain't suing.

• 21:00Jordi Hays?

  Yeah, uh, this story, it's interesting. Like TechCrunch got the scoop, but it didn't have a lot of meat here. Right? It's just sort of like a lot of like he, he said, she said, former employee says.

• 21:17John Coogan?

  I think let's read through the meat that is here and then let's dig into the response from the founder, some of the support from Andreessen. And then I want to talk about kind of the meta level of where is it, you know?

• 21:30Jordi Hays?

  The big issue is this sort of like.

• 21:31John Coogan?

  How much did you fake it till you make it?

• 21:33Jordi Hays?

  The contracted ARR.

• 21:35John Coogan?

  Yep, that and then also the logo stuff. There's been a classic example of like, oh, a guy from Google signed up for my service. Therefore, can I just say Google uses my service? You know, always been questionable. So 11X offers a bot for outbound cold sales duties, including identifying prospects, crafting custom messages and scheduling sales calls. All stuff that's like very doable within the current regime of AI tools and foundation models. It's one of a number of AI startups in the hot area known as AI Sales Development Representatives or AISDRs. It was founded in 2022 by Hassan Sukar. 11X said it approached $10 million in ARR just two years after launch.

• 22:16John Coogan?

  It moved from London to Silicon Valley last July and announced a $24 million Series A led by Benchmark in September. And then very quickly followed up later that month with a $50 million Series B from Andreessen Horowitz. Three current and former 11X workers told TechCrunch that most of its early customers took advantage of break clauses in their sales contracts to discontinue using the product. Customers faced issues such as the email product not working as expected or hallucinations, according to sources, very standard stuff.

• 22:43Jordi Hays?

  Yeah, so I'd love to get a sense. I don't think we're going to get it from this article, but a sense of was this contracted ARR like, hey, we're gonna, you're gonna sign up for, you know, a year or two, but you have a three month sort of like non-paid trial that like converts in? Or were these customers actually paying?

• 23:01John Coogan?

  I think they probably paid. And I think, I think it's basically what, I, I mean, I think what, what the ARR calculation is like, the gold standard of ARR is that. If it's, if you're counting it as ARR, it by contract legally has to come in every single month for at least 12 months.

• 23:20Jordi Hays?

  Yeah.

• 23:20John Coogan?

  And so it's okay to multiply that number by 12. If you, i- i- if, if you can break out of it at any moment in time, it's annualized revenue.

• 23:30Jordi Hays?

  Yeah.

• 23:30John Coogan?

  And it's not necessarily recurring. You'd like it to be recurring. This is the case with my, with Lucy, like, we have people on subscription, they're not locked in for 12, 12 months.

• 23:40Jordi Hays?

  Yeah, same with RAR.

• 23:41John Coogan?

  But it's helpful to, to kind of look at the subscription revenue, multiply it by 12 and be like, yeah, I can probably count on 10 million coming in over the next year.

• 23:50Jordi Hays?

  We have subscribers that are roughly worth, you know,

• 23:53John Coogan?

  Exactly.

• 23:54Jordi Hays?

  this amount with a sum of discount return.

• 23:56John Coogan?

  But it's very different from, okay, you have a ironclad contract that would be very difficult to break.

• 24:01Jordi Hays?

  The big thing here is companies like 11X, and there's been a lot of them.

• 24:05John Coogan?

  Yep.

• 24:05Jordi Hays?

  They make these sort of really big promises, and I believe the potential is there.

• 24:09John Coogan?

  Yep.

• 24:10Jordi Hays?

  But the issues that, you know, 11X customers, as they're facing issues like the email product not working as expected, or the product just hallucinating. And there's a company in my portfolio that, that builds sort of similar agentic products for another vertical, and they were able to like, get a V1 that was like magical, like 60% of the time, which is not enough.

• 24:35John Coogan?

  Yep.

• 24:36Jordi Hays?

  And so they then had to spend like almost a year kind of rebuilding the product, and now it's working really well.

• 24:40John Coogan?

  Yep.

• 24:41Jordi Hays?

  But the issue is like, you go and you sell like an airtable or a Zoom info on something like this, and if you have an outbound sales agent that's magical 60% of the time, but 40% of the time it hallucinates.

• 24:55John Coogan?

  Yep.

• 24:55Jordi Hays?

  That is not a magical product, like you're gonna piss off customers, and it's like the fastest thing that somebody's gonna turn off because

• 25:02John Coogan?

  Yeah.

• 25:03Jordi Hays?

  they're, you know, gonna...

• 25:04John Coogan?

  It's just, it's so rough because, I mean, obviously, I think everyone's a believer in the agent paradigm, but we're clearly in the centaur era where, we've talked about the centaur chess, how for a long time, a human plus a chess engine would defeat both the best chess AI and the best human, and...

• 25:25John Coogan?

  I would just imagine that, you know, like what Devin and Cursor are doing for programmers, where they're not fully replacing the programmer, they're more just like an extension of the programmer. And even the way most people use ChatGPT, it's very interactive.

• 25:40Jordi Hays?

  Yeah.

• 25:40John Coogan?

  I, I, I send it some bullet points, it turns into a paragraph, I edit that, I change that. I could imagine a product in the AI SDR world being super helpful, even if it wasn't agentic, because 60% of the time, it writes me a great email and I can just click send, but I'm still reviewing it.

• 25:57Jordi Hays?

  The issue, the reason we've seen so much traction on the engineering developer tooling side is that developers can see the agentic product make a mistake.

• 26:07John Coogan?

  Yep.

• 26:08Jordi Hays?

  They can help correct it.

• 26:09John Coogan?

  Yep.

• 26:09Jordi Hays?

  And nobody's impacted other than the developer.

• 26:12John Coogan?

  Devin sends in a GitHub pull request and then a human reviews that most of the time. I mean, I'm sure you can just say merge, but you know, most people probably review the code at least a little bit or, or run a test suite against it. And if you don't have a test suite or a code review process for the emails that are being sent, it can get very spammy. Anyway.

• 26:31Jordi Hays?

  This is a funny, this is a funny line. So there was some internal drama too. Employees described an arduous, stressful work environment, even for those who embrace hustle culture. So even if you love working hard, it's going to be a stressful work environment. So anyways, I gotta, gotta call that out.

• 26:50John Coogan?

  They're also in hot water for maybe fake in customer endorsements is what's left here.

• 26:57Jordi Hays?

  I, I think.

• 26:58John Coogan?

  Using logos a little bit too aggressively.

• 27:00Jordi Hays?

  Is they had some big companies sign up.

• 27:03John Coogan?

  Yep.

• 27:04Jordi Hays?

  Do these sort of, whatever the deals actually look like.

• 27:07John Coogan?

  Yep.

• 27:08Jordi Hays?

  Churn.

• 27:08John Coogan?

  Yep.

• 27:09Jordi Hays?

  And then they kept putting them on the site.

• 27:11John Coogan?

  Yeah.

• 27:12Jordi Hays?

  I think where, where this got, I'm sure annoying for Zoom Info is.

• 27:19Jordi Hays?

  That ZoomInfo I think also has like a competitive.

• 27:21John Coogan?

  They have a competitive product, yes.

• 27:22Jordi Hays?

  Agent product now.

• 27:23John Coogan?

  And so ZoomInfo must have signed up at some point, or someone from ZoomInfo signed up. And 11X used the ZoomInfo logo along with other multiple companies on their website to show, hey, we're a real business. We have a lot of great customers. And ZoomInfo said, we did not give them permission to use our logo in any manner, and we are not a customer. So, rough there. And this happens in ad sales.

• 27:46Jordi Hays?

  Yeah, and it's been pretty aggressive.

• 27:47John Coogan?

  Like Ridge, there's been a lot of, I don't know if it happened to Ridge, but there's a lot of agencies that will do like one campaign, and they'll be like, well, we're responsible for all of Ridge's growth. Yeah, we scaled this company. We scaled that company. And then the CEO will get on and be like, hey, look, like, we were fine working with you, but like, give our team some credit here. Like, we worked really, really hard.

• 28:07Jordi Hays?

  I have that happen all the time. Still, people, I'll reach, have somebody reach out to me and they'll say, hey, so and so says they did.

• 28:17John Coogan?

  Something a part of around or something.

• 28:19Jordi Hays?

  The party around branding. And I'm like, I don't know their name. I don't actually know who that is.

• 28:22John Coogan?

  That's aggressive.

• 28:22Jordi Hays?

  I was like a part of every process. But yeah, so it sounds like they've been not just putting the logo on the site, they've been claiming it in sales calls, and now on its own like AI dialer.

• 28:34John Coogan?

  Well, were those sales calls hallucinated? Because it's possible that this is all just one, everything is just one hallucination. And they're like, well, yeah, like, we just told our AI to make a landing page. It threw some logos on there.

• 28:46Jordi Hays?

  The website feels like what, like it was entirely AI-generated? Like, if you've seen it.

• 28:52John Coogan?

  No, I haven't.

• 28:54Jordi Hays?

  It's like all AI, like, look at this. Like, like.

• 28:58John Coogan?

  Wow.

• 28:59Jordi Hays?

  It does feel like the, again, I don't want to dunk, I don't want to dunk on them.

• 29:06John Coogan?

  They're digital workers.

• 29:08Jordi Hays?

  So anyways, if you don't have anything nice to say, don't say it at all.

• 29:11John Coogan?

  Oh, they really like focus on like, it's a person. Okay.

• 29:14Jordi Hays?

  Yeah.

• 29:14John Coogan?

  Alice, Julian.

• 29:17Jordi Hays?

  Yeah, so it sounds like this blew up in their face partly because ZoomInfo had been asking them for months to take down their logo, to stop using them in marketing materials. And it sounds like they didn't listen.

• 29:31John Coogan?

  I mean, Ro is still on here. You should hit them up and ask if they're actually a client. Do some journalism here. Anyway, what I really want from them is an SDR that's just an IFBB Pro. Because Julian looks great, Alice looks great, but I want an absolute mass monster in a tank top who can really sell some supplements for me. That's the goal.

• 29:53Jordi Hays?

  Apparently the CEO doesn't believe in people taking holidays.

• 29:58John Coogan?

  Okay.

• 29:59Jordi Hays?

  Which, we can't comment on that.

• 30:06Jordi Hays?

  Ben, when did you request time off?

• 30:11Jordi Hays?

  Anyways, I thought this line was good. And then honestly, let's move on. There's a lot more under the hood. A current employee said, wow, a current employee. You should probably leave.

• 30:20John Coogan?

  Yeah.

• 30:21Jordi Hays?

  Get on with your life. One day, there will be a documentary about this guy. I do believe that's how scandalous he is. So obviously, Sukar pushed back. He sort of went through a bunch of different bullet points outlining how. But yeah, overall, you don't see benchmark in many companies that have this kind of story.

• 30:42John Coogan?

  No, totally.

• 30:43Jordi Hays?

  But this, you know, again, the sort of critique of venture in the last year and a half, two years has been, companies are growing so quickly, raising so much capital, that they are overestimating their traction. Basically, the idea of ARR is now, when everybody's saying, oh, we got to 10 million ARR in six months. Then the pressure starts building up where founders feel like, oh, well, this, my competitor is counting contracted ARR to raise more money.

• 31:16Jordi Hays?

  And so that pressure just builds up and these rounds are getting done like really quickly. And the faster, the faster a round gets done, the less time there there is to do.

• 31:26John Coogan?

  Totally.

• 31:26Jordi Hays?

  You know, real hardcore diligence. And in many ways, I'm sure, I'm sure all their investors knew that there were issues with the product, but it was a bet, you know, broadly on the category and the team.

• 31:35John Coogan?

  I mean, a lot of this comes down to the material threshold during due diligence. I remember I was using the same lawyer as Zenefits during the whole Zenefits arc.

• 31:44Jordi Hays?

  That's right.

• 31:46John Coogan?

  And we were doing a $20 million series A with Andreessen and Zenefits was doing a $500 million series C or something like that. And my deal was taking forever in terms of due diligence. It was like such a beast and I was like the lead on it. And, uh, and I was like, oh man, I can't imagine what it's like to do a $500 million round. Like that must be brutal. Like ours is taking like months. It's been so much work, like so, so many like checks on like this, this employment contract, this deal, this, this thing, get the FDA people. It was a lot.

• 32:24John Coogan?

  And, and like from a legal perspective, it's actually easier to do due diligence in a $500 million round because you set the material threshold at like 1% of the funding that's coming in. And so you might say, hey, we're doing a $20 million raise. Let's look at every contract that's over 200K. Because look, yeah, if there's some employment contract out there that's 100K liability and we get it wrong, like we'll just write it off. It's not a big deal. But when you're doing a $500 million round, all of a sudden it's like, oh yeah, if there's a $4 million liability on the balance sheet, we don't know about, like, who cares? I don't know. That's, that, that, that might not be the actual numbers, but, um, when you're a small company and they raised a, in 2023, they raised a $2 million pre-seed,

• 33:07John Coogan?

  then a $24 million, uh, round in 2024, and then immediately a $50 million round. Like it's probably still a pretty small company. And so if there's a contract out there that's like pretty small, you might just be like, well, like it doesn't really matter. Like we're not going to dig into it that much. It just doesn't make sense based on the scale of the company.

• 33:27Jordi Hays?

  Yeah. And I, I do, I do like how Andreessen and Benchmark have both come out in support of Hassan. I'm sure Hassan, like every founder has, has, you know, made mistakes, but, uh, hopefully. Sure he'll learn and the team will learn from this crisis, but Joe had a good point. What they've built is remarkable. The team product and metrics are world-class and they're attacking a market opportunity that rivals any I've ever seen. And then Sarah Tavel came out and said, one of 11x's incredible strengths that I believe will compound for many years to come is the breakneck pace at which Hassan and the team move. That kind of speed brings both opportunity and challenge, especially early on.

• 34:06John Coogan?

  Yeah, this is a cool like going direct, addressing the news. Like clearly people are going to be talking about it. He puts out all this information. Also funny to dig into, they've raised 76 million and he says like, we've barely touched our investment capital and have nearly 70 million on the balance sheet. And I mean, I guess it's only been a couple of months, like less than a year. So they're not burning a lot, but it is interesting that like, yeah, like even, even if the ARR is a little off or something or there's some churn, like they could totally figure this out and like wait, they, they could wait like, what, based on their burn, probably like a decade for like agents to get better and like LLMs to improve. Like as long as they can keep the energy in the team and like get through it, like it's probably fine.

• 34:47Jordi Hays?

  The timing of this is fascinating and that TechCrunch just changed hands.

• 34:52John Coogan?

  Yep.

• 34:52Jordi Hays?

  And they decide, yep, we're going to just like immediately do a, do like an aggressive hit piece, which is exact opposite of what people have liked about TechCrunch. TechCrunch, Adam, Adam Ryan talked about this on the show, you know, they, they talked about how he, he said that TechCrunch was the make your mom proud engine. It was a place to launch companies. And it's a weird position to be in to try to do like investigative journalism and be a launch platform.

• 35:24John Coogan?

  Yep. Oh, totally.

• 35:24Jordi Hays?

  And so again, uh, yeah, I'm, I'm sure this drives a lot of clicks. Um, but uh, but yeah, it's, it's kind of, yeah, it's just again, it's an awkward, awkward place to be in.

• 35:37John Coogan?

  Yeah. I mean, he does admit uh, some amount of fault here saying like, we regret not having a better process to remove logos from our website more promptly after customers churn. But he's, he says they've never put a customer on there who didn't pay.

• 35:52Jordi Hays?

  Yeah.

• 35:52John Coogan?

  This is great clarification and that makes sense. Like, you know, updating front end, it should be easy with AI, but sometimes stuff gets slipped and you forget that, oh yeah, they churned like, we should probably remove them. Um, and then also he says, our investors are not suing us. They categorically denied this to TechCrunch, yet this rumor was included in the article. And so, uh, a wag of the finger to TechCrunch on that one. They should have been firmer on that.

• 36:17Jordi Hays?

  Yeah.

• 36:18John Coogan?

  But good luck to them. Good luck to everyone building AI SDRs and let us know if you're building an AI SDR.

• 36:23Jordi Hays?

  Yeah, we are gonna have, uh, I almost said his real name, but we're gonna have somebody named, uh, Kerry No Interest on the show later today to just talk about the AI, uh, sales automation market generally. He's been somewhat a critic of SaaS, but he also is actively buying and transforming existing SaaS companies and is building some stuff in the space himself. So excited to have him on.

• 36:47John Coogan?

  Yeah.

• 36:47Jordi Hays?

  In a couple hours.

• 36:49John Coogan?

  Yeah. And for, and for Hassan and the 11x team, I think, you know, they have 70 million on the balance sheet still, something like that. They are clearly going through like a tumultuous time with this negative article. They gotta rebuild. They gotta redouble their efforts. And I think like, the number one thing that they could do to really get through this hard time and accelerate is just keep costs low. Get on ramp.com. Time is money. Save both. Easy to use corporate cards, bill payments, accounting and a whole lot more, all in one place. Go to ramp.com and sign up.

• 37:21Jordi Hays?

  Yeah. I mean, the strongest signal that 11x could send to the market right now is getting Saquon to, to, to come in and do, and basically.

• 37:30John Coogan?

  That would be fantastic. I, I thought you were gonna say the strongest signal they could send to the market is just putting out a press release saying like, hey, we're on ramp now.

• 37:37Jordi Hays?

  Yeah.

• 37:38John Coogan?

  Just, hey, we're taking everything seriously. This is a serious company and we are in a serious financial platform.

• 37:43Jordi Hays?

  Yeah.

• 37:43John Coogan?

  We don't mess around.

• 37:44Jordi Hays?

  We don't mess around. But an even stronger signal would be getting Saquon. Saquon's, to our knowledge, is invested in two companies.

• 37:50John Coogan?

  Yes.

• 37:51Jordi Hays?

  Ramp and Anduril.

• 37:52John Coogan?

  Yes.

• 37:52Jordi Hays?

  To.

• 37:54John Coogan?

  The third company, the trilogy.

• 37:56Jordi Hays?

  The third, yeah.

• 37:57John Coogan?

  The trilogy of Saquon Investments. If you're a founder in Silicon Valley, like you have to be calling Saquon right now to be number three.

• 38:04Jordi Hays?

  Yeah. Give him shares.

• 38:06John Coogan?

  I mean, every other VC firm that invested in Anduril or.

• 38:10Jordi Hays?

  Get Saquon to invest in your company. Go into debt if you have to.

• 38:14John Coogan?

  Yes, every other, every other Silicon Valley firm that's invested in Ramp and Anduril has a ton of corpses and bad investments. Saquon appears to be just.

• 38:23Jordi Hays?

  The guy doesn't miss.

• 38:24John Coogan?

  Doesn't miss. It's great. Anyway, speaking of Ramp Investor, Thrive Capital and AI. Thrive Capital is leading a new deal in Wall Street AI startup, Robo. Is Wall Street ready to work with artificial intelligence? Writes Natasha Moskrenas over at the information. Two of OpenAI's biggest investors think so. Thrive Capital is set to lead a $40 million financing into Robo AI, an artificial intelligence startup selling AI software for investment bankers and Wall Street analysts at a valuation of up to $350 million. You know what investment bankers need? They need that, what was Optify? That would be the big opportunity in Wall Street.

• 39:07John Coogan?

  If you want to sell into Wall Street banks, go to the Optify guys and say, hey, we're going to put cameras in every cubicle in your investment bank. Make sure these guys are really working 80 hours a week. They always talk such a big game, oh, investment bankers work 100 hours a week. Oh, show me the data.

• 39:23Jordi Hays?

  Yeah.

• 39:23John Coogan?

  Show me the data. I don't know if I buy it. It could all just be a LARP. I want to see it. Anyway, Coastal is already in. Thrive is a big OpenAI investor. They're participating in the new round. Styling itself as Wall Street's first AI analyst, Robo aims to shorten the time that investment corporate bankers spend on the grunt work of research and preparing client materials. Love that. Three-year-old startup uses LLMs.

• 39:46Jordi Hays?

  This feels like a. A better attack vector for the big slide deck problem, right?

• 39:52John Coogan?

  Yep.

• 39:53Jordi Hays?

  A lot of, a lot of white collar work is making slide decks.

• 39:58John Coogan?

  Yep.

• 39:58Jordi Hays?

  A lot of time and energy goes into it, but the challenge of making decks is not generating pretty pages.

• 40:04John Coogan?

  Yep.

• 40:04Jordi Hays?

  It's what is the content that goes into it?

• 40:07John Coogan?

  Yep.

• 40:07Jordi Hays?

  You're going through all this data, you're creating models, you're creating charts, graphs, et cetera.

• 40:11John Coogan?

  And it seems so obvious in the context of Harvey. I'm surprised that we haven't seen anyone do this before because with Harvey, obviously it's a generative AI startup, customizes AI models using legal data such as case histories to save lawyers prep time. Harvey's ARR topped 50 million in December. We've heard that it's a pretty expensive product, but they're selling to law firms and saves them a lot of times. It's probably worth it. And Harvey is now at a $2.7 billion valuation and it makes so much sense that there would be a Harvey for investment banking. And one of the big things is, is if you're an investment banker or a lawyer, you, you're going to use chat GPT deep research if you could, but oftentimes you cannot

• 40:53John Coogan?

  put client materials into OpenAI's models that they'll train on because all of a sudden you have some secret information that's meant to be very private and they get trained on it. And then in the next version, OpenAI GPT 4.8 comes out and you ask it like, how much does this person make at this company? And it's just like, here we go. Or like, you know, what's the, what's the intellectual property behind X, Y, and Z? It's like, oh yeah, like the lawyer who was working on that intellectual property? They uploaded it all and we trained on it by accident. It wouldn't even be OpenAI trying to do that. They just wouldn't, they would just be, oh, it's in the, it's in the feed. We got the data. Let's just train on it. And so makes a ton of sense that you would run a, I guess, sequestered LLM that could, that could be adapted to all the data that the bank has,

• 41:37John Coogan?

  but then also not, not leak data from one client to another.

• 41:41Jordi Hays?

  Yeah. I'm curious to know what their actual policy is around that. They obviously want to use the data that they ingest to improve the product.

• 41:53John Coogan?

  Yep.

• 41:53Jordi Hays?

  But are they? Using it to inform outputs to other users, like actual factual outputs?

• 42:03John Coogan?

  Yeah, I don't know. I mean, I think I

• 42:05Jordi Hays?

  I don't know. I don't know.

• 42:06John Coogan?

  I think Harvey is not doing any of that.

• 42:09Jordi Hays?

  That's like the risk.

• 42:10John Coogan?

  That's the risk.

• 42:10Jordi Hays?

  That's a risk, but we don't know if OpenAI is actually doing that.

• 42:14John Coogan?

  I mean, in the, in the long term, you could imagine a kind of data sanitization and anonymization strategy that takes in private data and, and still allows it to improve the model.

• 42:30John Coogan?

  But it's probably very, very tricky because if any of that data leaks in and you ask it, like it's, it's very easy to, to, to figure out what's happening with these models. Like for a long time, if you went to OpenAI's Whisper and you just had it record some audio and then you didn't say anything and then you clicked, okay, like transcribe that, it would say, thanks for watching. Please subscribe. And it's like, okay, that's clearly YouTube data.

• 42:57John Coogan?

  And so you could imagine this data leaking out and already, I mean, I've, I'm sure OpenAI is like trying really, really hard not to let personal information leak into the training data because like I noticed that OpenAI has, has a series of like personalization features where it tries to learn about you, but I will often lie to it.

• 43:16Jordi Hays?

  Can you imagine if like how bad it would be for an investment bank if, if you were able to query like about, ask OpenAI about something and it just pulls up, you know, oh yeah, this company like tried to sell itself like three or four different times. They ran all these different processes.

• 43:37John Coogan?

  Goldman was lead left in the deal. They pitched all this.

• 43:40Jordi Hays?

  They bailed. They couldn't make anything happen.

• 43:42John Coogan?

  The name of the banker that was looking at it internally. They said it wasn't that good, but they tried to shell it on somebody. Yeah, it'd be disaster. So obviously like a clear need and a lot of people are swarming in here. Such as Hebea, which we talked to George Savalka, Model ML, Prosites going after the task typically handled by overworked analysts and junior bankers and several banks such as Citigroup and Bank of America say they're also developing AI tools internally for similar purposes. For Thrive Capital, which made big headlines for bets on OpenAI and Stripe at relatively high valuations, the Robo deal shows the firm also wants to make investments in younger AI companies. The New York investment firm is also in talks to invest in the newest financing for popular coding assistant Cursor.

• 44:26John Coogan?

  We heard about this earlier at, I think, a $10 billion valuation. And so Kushner's all over the place. He's going down to the $40 million round. He'll do a $1 billion round.

• 44:37Jordi Hays?

  He's an absolute dog.

• 44:39John Coogan?

  Size lord, but let's ring the size gong for Kushner and the team over at Thrive.

• 44:44Jordi Hays?

  Well, if you want to invest in companies that Kushner invested in 10 years ago, why not check out Public?

• 44:51John Coogan?

  Public.com, baby. Investing for those who take it seriously. They got multi-asset.

• 44:55Jordi Hays?

  Josh has a knack for investing in stuff before it ends up IPO-ing.

• 44:59John Coogan?

  Yep.

• 44:59Jordi Hays?

  Which is a pretty good business.

• 45:00John Coogan?

  Yeah, it's a pretty good business. I think he described it as like buy low, sell high.

• 45:04Jordi Hays?

  Yeah.

• 45:04John Coogan?

  I think that's the strategy over there.

• 45:06Jordi Hays?

  Exactly. Or just hold forever.

• 45:08John Coogan?

  Yeah.

• 45:08Jordi Hays?

  Hold to three Ts.

• 45:09John Coogan?

  Yeah, let's do it. Well, they got multi-asset investing, industry-leading yields that are trusted by millions. Head over to public.com to get started.

• 45:16Jordi Hays?

  Thank you to Public for supporting the show. We love you guys.

• 45:19John Coogan?

  Thank you to Public. Anyway, speaking of Mag7, big tech stocks, big market movers, Apple, Meta, Google, they're buying remote-controlled robotic arms. We talked about this briefly on a previous show, the arm farm at Google. I love this one.

• 45:34Jordi Hays?

  Wait, by the way, I didn't realize this article is written by someone at the information named Rocket.

• 45:39John Coogan?

  Cool. I like that name.

• 45:41Jordi Hays?

  Being called Rocket.

• 45:43John Coogan?

  That's a great name.

• 45:44Jordi Hays?

  And then writing about deep tech is just...

• 45:46John Coogan?

  Amazing. Great nominative determinism.

• 45:49Jordi Hays?

  Perfect.

• 45:50John Coogan?

  Your future is bred for Rocket Drew over at the information. They write, "During Nvidia's conference for developers last week, Jensen Wong showed off a software that creates computer simulations of robots. Those simulations aim to teach robots how to perform tasks from washing dishes to picking up household objects. But some robot makers I spoke to say it's better to train robots to do such tasks by having a person control them remotely, also known as teleoperation. And this has been like the most popular topic, but also controversial. Oh, Elon did the Optimus event and they were teleoperated. Is this like maybe teleoperation is actually the path to robotic AGI? And so it's good to be on that path, but then everyone else..."

• 46:34John Coogan?

  Kind of is like, wait, what? It's teleoperation?

• 46:36Jordi Hays?

  I mean, imagine if we could put each of us put an Optimus in each other's houses and instantly teleport into it. I could come over, you're sleeping.

• 46:44John Coogan?

  Hey, get up. We gotta do the show.

• 46:45Jordi Hays?

  We got breaking news.

• 46:46John Coogan?

  We got breaking news.

• 46:49John Coogan?

  That'd be great.

• 46:51Jordi Hays?

  Hey, not too distant future.

• 46:52John Coogan?

  I hope so. In a sign of growing interest in teleoperation, Scale AI is considering jumping into that market, according to people who have spoken to the company staff. I was talking to Alex Wang about this a couple of years ago, actually. He had a great interview on Invest Like the Best, and he talked about the data wall in robotics. The fact that, yes, there's a trillion tokens of words on Reddit and the internet broadly that are very easy to crawl, and that's why the LLMs have advanced so quickly.

• 47:19Jordi Hays?

  Yeah.

• 47:19John Coogan?

  That data set does not exist anywhere for

• 47:23Jordi Hays?

  Yeah.

• 47:23John Coogan?

  human motion data.

• 47:24Jordi Hays?

  Well, I'll go out and say I have content of me kickflipping,

• 47:30John Coogan?

  Nice.

• 47:30Jordi Hays?

  surfing, snowboarding, a bunch of cool stuff.

• 47:33John Coogan?

  But were you wearing a mocap suit? Because we gotta know where the joints were going. The video's not enough. Now, they can do translation from video.

• 47:42Jordi Hays?

  Put me in a suit.

• 47:43John Coogan?

  And

• 47:44Jordi Hays?

  I would like to train Tesla Optimus.

• 47:46John Coogan?

  I think that actually might be the future, and that might be what Scale's going to do. Scale might have an army of, we talked about this with Mercore too.

• 47:53Jordi Hays?

  You're gonna get paid to surf.

• 47:54John Coogan?

  Yeah.

• 47:55Jordi Hays?

  Right now, right now, knowledge workers globally can just train models

• 47:58John Coogan?

  Yeah.

• 47:58Jordi Hays?

  by writing code, answering

• 48:00John Coogan?

  Yeah, yeah.

• 48:01Jordi Hays?

  your questions.

• 48:01John Coogan?

  I mean, that's the Mercore thing. It's like

• 48:02Jordi Hays?

  You are gonna

• 48:03John Coogan?

  hire people to answer math questions.

• 48:05Jordi Hays?

  The greatest opportunity of the next five years is to wear the suit and just do awesome stuff.

• 48:11John Coogan?

  Just do sick, extreme sports in a mocap suit.

• 48:15Jordi Hays?

  Why not? Can you imagine you're like out snowboarding in this suit? And you just, just have like terrible, like you like

• 48:22John Coogan?

  Yeah.

• 48:22Jordi Hays?

  are like flailing on some jump, and you're like, alright, we gotta like cut that out, like

• 48:26John Coogan?

  Yeah, yeah, yeah.

• 48:27Jordi Hays?

  I'm sorry.

• 48:27John Coogan?

  Pull that from the training data.

• 48:28Jordi Hays?

  It's real, like it should be in the data, but like at the same time, I don't wanna, you know.

• 48:32John Coogan?

  Yep.

• 48:32Jordi Hays?

  I don't wanna set, set a poor example.

• 48:34John Coogan?

  Exactly. You gotta call all those data points.

• 48:37Jordi Hays?

  Remember, remember I talked about too, I wanna have, you know, I think that the real benchmark that matters for all humanoids is the ability to do extreme activities.

• 48:46John Coogan?

  I agree.

• 48:47Jordi Hays?

  Um, cliff jumping.

• 48:49John Coogan?

  Yep.

• 48:49Jordi Hays?

  You know, a robot should be able to

• 48:51John Coogan?

  900.

• 48:52Jordi Hays?

  Yeah.

• 48:53John Coogan?

  Backflip, barrel roll.

• 48:56John Coogan?

  Deadlift

• 48:56Jordi Hays?

  All the tricks.

• 48:57John Coogan?

  1,000 pounds.

• 48:58Jordi Hays?

  Yeah, when a robot can just be in a thousand pound.

• 49:02John Coogan?

  Clean and jerk for sure. Yeah, these are important evals. Scale has an army of human contractors who create data to train AI and evaluate the performance of AI models in difficult tasks. The company has discussed using that workforce to handle teleoperation for training robots. And I think we were talking to a company that was doing teleoperation for those small delivery robots, which have been getting more and more popular. And I've long said, I mean, George Hots had a had a take that Google Waymo was overly teleoperated in the sense that there was a human in the loop too much, basically, a human in the loop overseeing, you know, one or four, eight or 16 Waymos at a time.

• 49:45John Coogan?

  And basically, there's always a human behind the scenes in Waymo that's ready to like hop in if there's a problem. I don't really have a problem with that. Like, let's see how the economics pays like pencil out. If if there needs to be a human in the loop for most of these robotic things, and that's helped, and that helps us develop the training data to get to really, really autonomous systems over time, I'm fine with it. I I'm not, I'm not, I'm not like an AI purist in that regard. And so, large firms such as Tesla, OpenAI, Meta, and Google and Apple are trying to develop hardware or software for humanoid or home robots. There's also a bunch of startups doing this stuff. Sensei is another rival, says it wants to be Scale AI for robotics training data and aims to distribute cheap teleoperated devices to a network of human data collectors. This is your idea.

• 50:30John Coogan?

  Who will perform tasks such as folding laundry on behalf of robot developers. Yeah, we need Sensei for extreme sports.

• 50:36Jordi Hays?

  We need Scale AI for kickflips.

• 50:38John Coogan?

  Yep, I like it. Scale AI is up at 14 billion valuation.

• 50:43Jordi Hays?

  The kickflip is the final male benchmark. You can be in the thousand pound club, but you can't kickflip. What are you doing?

• 50:50John Coogan?

  Well, dunking. I would say you, you, you handle the kickflips. I'll handle the dunking.

• 50:54Jordi Hays?

  Okay. Yeah. Together we make a good team.

• 50:56John Coogan?

  But until I see an Optimus or a Figure robotic, robot dunking, I still got a job.

• 51:03Jordi Hays?

  Yeah. Figure trained their new, they trained their robots on Biden's walk.

• 51:07John Coogan?

  On Joe Biden. Yeah. On Joe Biden. I saw.

• 51:09Jordi Hays?

  And they were saying today, this is the last time.

• 51:11John Coogan?

  This is the last time it will look like Joe Biden. Because they're going to train on someone athletic next?

• 51:16Jordi Hays?

  Yeah.

• 51:16John Coogan?

  That's interesting. Cool. Um, anyway, in the relative world, in the relatively small world of robotics, teleoperation equipment is hot. Trosen Robotics, a longtime seller of robot parts in recent years, began selling Aloha, a teleoperated device with four arms that allows a human operator to use two arms to control the other two. Interesting. The device's sensors collect information while the arms move and the robot is trained to repeat the motions. There are multiple versions of Aloha, including stationary and mobile, the latter of which was designed at Stanford. Trosen is based in Downers Grove, Illinois. Last year sold more than 100 stationary and mobile Aloha devices, together which have a sticker price of more than 3.3 million, up from only a handful of sales.

• 51:57John Coogan?

  Um, and so they're doing well. There's also robotics, some roboticists are collecting teleop data using more rudimentary gear, including some game controllers. Dexterity, which develops robots that pick and pack, pick and stack packages and trucks and other areas, bought Xbox controllers and connected them to robots. Uh, very cool. Human staff use the controllers to direct its machines to stack boxes. And so maybe in the future, you'll just be downloading the latest Xbox game from Scale AI and just teleoperating for, you know, po- points in the game, basically.

• 52:31Jordi Hays?

  The golden age is going to involve people moving to very inexpensive countries and just getting paid to do fun stuff all the time.

• 52:40John Coogan?

  There was a, there was a, a performance artist named Ryder Rips who. When VR was getting hot, built a VR simulation of what it was like to be in a pick and pack facility in like an Amazon workplace. It was very bizarre. And so you would have to like, pick up the box. And it was the only, the game was just work. It was just work. That was it. It was very interesting. It was very like, how many DAUs did he have? I mean, it was like something that was shown at like, fine art museums, basically. He's like, he's an artist, essentially. But it's, it's, it's like thought provoking work. I, I'm, uh, he's, he's, he's a wild guy, but, uh, he's, uh, he's a character. Uh, anyway, uh, you know what I think the final eval will be for these humanoid robotics, these robotic arms?

• 53:25Jordi Hays?

  I know, I, I know what you're thinking.

• 53:26John Coogan?

  I think he'll be flexing with a nice watch on the robotic arm, on the robotic arm's wrist, of course. We gotta get robotic.

• 53:34Jordi Hays?

  You know, these robots aren't approaching true AGI.

• 53:38John Coogan?

  A Dilley Rock and an Aquanaut.

• 53:40Jordi Hays?

  Yeah, exactly.

• 53:41John Coogan?

  Yeah. I mean, honestly, like if you're spending, what is this, $3 million on a robotic arm? Like, throw a Patek on there. Like, why not?

• 53:49Jordi Hays?

  It's an easy way to stand out.

• 53:50John Coogan?

  At least, at least put a Daytona on the thing.

• 53:51Jordi Hays?

  It's an easy way to signal the buyers that you have shared values.

• 53:54John Coogan?

  Exactly. Hey, yeah, yeah. Uh, you know, this, this robot, it's got some class. It's not just like automating, not just stealing jobs. It's also, you know, like raising the aesthetic floor in, in your office. I love it. Uh, and so where should they go to buy watches for their robotic arms, Jordy?

• 54:14Jordi Hays?

  Uh, they should go to getbezel.com, download the Bezel app, build out your, uh, build out your

• 54:21John Coogan?

  Bezel should integrate with Scale AI. And so you can just, you, you, you're doing the training data and then you're immediately cashing out for watches.

• 54:29Jordi Hays?

  I volunteer to provide the training data for buying watches on Bezel.

• 54:33John Coogan?

  And, and yeah, training, training, okay, how do you, how do you properly check, check the time on your watch? I don't know if, uh, if a robotic arm could do that effectively.

• 54:42Jordi Hays?

  That's right.

• 54:42John Coogan?

  And so we need training data for that. And of course, we're going to head over to getbezel.com, shop over 23,500 luxury watches, fully authenticated in-house by Bezel's team of experts. Fantastic. Anyway, we got five minutes.

• 54:55Jordi Hays?

  We got some breaking news. Taylor Lorenz just commented on Alex Konrad's post, announcing that he's coming on TVPN, saying, powerful collab. And she hit it with a repost. So shout out to, uh, tech adjacent journalists.

• 55:12Jordi Hays?

  Taylor Lorenz, the one and only.

• 55:18Jordi Hays?

  Separately, Shkreli is saying that CoreWeave is 5X over subscribed and will IPO.

• 55:25John Coogan?

  He was going back and forth. So we're having Tane on the show from Wing. He does a lot of, a lot of deep dives on S1s and I asked him to prepare something for, for CoreWeave, which I think will be very interesting. But it sounds like we have Christian Garrett in the Temple of Technology. Welcome to the show, Christian.

• 55:44Jordi Hays?

  There he is.

• 55:45John Coogan?

  How you doing?

• 55:46Christian Garrett?

  Good to see you guys. I'm good. I'm good. How's it going, John?

• 55:48John Coogan?

  It's great.

• 55:50Christian Garrett?

  Good.

• 55:50John Coogan?

  I'm happy.

• 55:51Jordi Hays?

  It's a beautiful day. Where are you calling in from?

• 55:53Christian Garrett?

  I'm in San Francisco, so I am, I'm holding it down. And depending who you ask, this is the future or this is Detroit. So I'm enjoying finding out what's going to happen.

• 56:03John Coogan?

  Have you checked your Signal group chats for mainstream media reporters yet?

• 56:08Christian Garrett?

  Yeah, no, I, man, I really need to step my Signal group chat game up. I can tell you that much.

• 56:13John Coogan?

  Yeah, yeah. Just take a pass at the member list. If you see Taylor Lorenz in there, maybe create a new chat. You know, you don't need to kick her out, but you know, start a new one.

• 56:24Christian Garrett?

  Yeah.

• 56:24John Coogan?

  Move the important conversations elsewhere. Well, thank you for joining. Can you give a little bit of an overview of who you are, what you do, just for the, just for the folks on the show who might not be familiar, and then we'll go into some questions.

• 56:37Christian Garrett?

  Yeah. So I'm a partner at 137 Ventures. We're a growth stage venture capital firm. And we want to invest in what we believe are generational category defining companies that can be long compounders and have defensible, sustainable competitive advantages. Like every firm, we have a differentiated strategy. You know, a lot of what we focus on is as a liquidity partner to companies. We do, do growth capital. We do invest in primary rounds. But, you know, we saw, you know, a long time ago, really up in the heels of Facebook. And after spinning out of Founder's Fund, we saw the opportunity to partner with companies on liquidity side as a way to invest in them and build positions in them. And that's what we've been doing for a while now. And that was a contrarian bet. The company's going to

• 57:21Christian Garrett?

  stay private longer and there would be growing demand for liquidity. Now it's, you know, somewhat consensus and popular and understood.

• 57:28John Coogan?

  Yeah, I think Peter was basically banging the table saying, never go public. And now you have Elon kind of saying the same thing. Hey. Tesla's kind of rough go, obviously did very well, but got kind of, you know, beat up in the courts and whatnot. And so it's great to see that it's at least an option for those founder-led companies to stay private longer. And we thank you for your service to the capital markets. It's fantastic. You got a question, Jerry?

• 57:52Jordi Hays?

  Yeah, I'm curious. There's been a meme for a very long time that, oh yeah, I'm an early investor in SpaceX, but like, maybe there's like a bunch of SPVs separating you and like the actual, like, actual, you know, certificate, right? They certainly don't have the certificate. How do you think the average investor has done over the, that's like investing into these sort of like, which is not what you guys are doing, but

• 58:17Jordi Hays?

  when, when, when these sort of power law companies end up just crushing and growing tremendously, does it matter that you're stacked in layers and layers of fees? Do you get smoked? Can you come out alive? You know, what's been?

• 58:32Christian Garrett?

  Yeah. Well, let, let me, I'll take a step back to and kind of make a broader point. I will say it's funny you picked SpaceX. I do have a rocket engine right beside me. So yes, we do have a SpaceX rocket engine here in the office. So, uh, like I said, let's take a step back. I'd say for, you know, for the last two decades, companies have trended towards staying private longer and longer, like we just talked about. And in order to do that, companies need growth capital and they also need liquidity capital. And the secondary market is just a tool for private tech companies that works just like the public markets in that it just provides liquidity to existing shareholders. There are two distinct segments of that market, which is what you're hitting at. One segment's done in partnership with companies, which is where we at 127 Ventures focus on. And another segment operates outside of that. You don't want to operate outside of that.

• 59:18Christian Garrett?

  You know, we've been long time and real investors and they have tweeted a ton about fake allocations in their primary rounds being marketed to investors, right? And so, uh, yeah, I will say what you're hitting on is mainly just the, really just a proxy for demand. And so, uh, you know, investors want to invest in great companies regardless of how. And as demand grows, investors look for supply and there's only so much supply for primary, which I can talk a little about why that is. And secondary is another way to access a company's equity. People will do things to your point on investing in various SPVs or whatever it is as a way to access. And I think some of that is good and blessed by the company. It's just another vehicle avenue to put capital in these businesses. And then a lot of that operates outside of that and is kind of a black hole.

• 1:00:00Christian Garrett?

  And maybe not the best place to be in because you, one, don't collaborate with the company. And then two, you don't have access to information, right? And so, and the third is potentially like Andrew was tweeting about is there could be fraud as well.

• 1:00:13John Coogan?

  Sure. Can you talk a little bit about why, like, how companies think about doing these tender offers? When they do them, when's the right time? And how, how do they go over like culturally, obviously, there's some incentive and employee, just like reward the employees. But what other considerations go into a successful tender?

• 1:00:33Christian Garrett?

  Yeah, so you know, the, the tenders and just the broader market we're talking about has grown dramatically over the years. And you know, one of the interesting things, like a lot of these companies have made the transition to being cash flow positive in the private markets, which means that more shares are actually bought in secondary than primary through things like tenders, right? Over the life cycle of the business. You know, Databricks just did that massive, that massive round, right? To convert and pay the tax bill for a lot of the RSUs.

• 1:01:02Christian Garrett?

  SpaceX has raised $10 billion in primary over its, you know, 23 years of being around as a company. They've been running, you know, two tenders annually that, you know, total like more than a billion and a half dollars a year for a long time. And so, you know, I think a lot of companies are falling in, in SpaceX's footsteps particularly and building liquidity programs like theirs. Stripe, mentioned Databricks, client tuition, OpenAI, Anduril, a lot of them. What hasn't changed is that it matters who your investors are. So great investors, like they may not make your business, but terrible investors will definitely ruin it. This is why the best companies want to control their cap table as always. And you'll work with investors like us on implementing the liquidity strategy as they scale.

• 1:01:44Christian Garrett?

  And more companies as they stay private longer, as they've scaled, even as they hit cash flow positive, tenders have been a way for them to offer liquidity and kind of postpone going public. And it's a way to align incentives. It's a way for recruiting and retention. Like you mentioned, right? If you're recruiting against publicly traded companies, if you're recruiting, you know, software engineers against, you know, Google and Meta, or you're recruiting, you know, recruiting researchers from Nvidia or Google. You want to be able to offer not just a compelling package and upside, but being able to offer liquidity also helps bake into folks' kind of comp decisions. You have people that have, you know, structurally have to run these tenders based on their RSUs. Like X, you know, is on the single trigger RSUs. And so they structurally have to run them for their employees' tax bills.

• 1:02:28Christian Garrett?

  There's a bunch of reasons. You know, some people also use them to mark the business up, right? If you're not raising primary because you're cash flow positive for years, then liquidity checks a bunch of other boxes, but also allows you to continually show progress in the stock of the business. So I just think as the, as the capital markets have grown, as these companies have grown, the secondary market has obviously grown with it. And, and I think a lot of the best companies have had the privilege of working with their investors, working with folks like us, people they want on their cap table and to grow on their cap table, to run these programs and control and manage liquidity in a way that's beneficial for the company.

• 1:03:03Jordi Hays?

  Have you guys looked at any businesses that are basically building like actual like, basically software to manage these liquidity programs? And did you guys ever think about incubating something there? Or is every company unique enough that it should just be done by the investors and the company's counsel? And it's just all bespoke?

• 1:03:23Christian Garrett?

  Yeah, I mean, there's like two versions of that. There's the software to run these programs, which exists, right? Karta, Karta has great software, right, for running this. And so I, I think, you know, that's just back to like broader cap table software management trend, which is awesome. But that's like more of the execution side. The, the other side is more of creating a market, right? And then using software to facilitate more liquidity and grow liquidity. And that is basically another version of the same thing we talked about earlier, right? Which is like the best companies want to control their cap table. The best companies have unlimited. Demand, right? And so in that, in that essence, you don't need a broader market to have random buyers and sellers to do price discovery, right? And so I think the best companies generally like to run their own processes and work with, you know, their major shareholders and a lot of times, you know,

• 1:04:07Christian Garrett?

  which includes us and a lot of these, a lot of these companies as well, um, on kind of running these processes. Very similar to how the primary process would run, just a different type of transaction and goal.

• 1:04:17Jordi Hays?

  Yeah, to me, it feels like you guys are in the financial services business in many ways. When you're creating these sort of programs and you're an investor as well. And there's been, there's constantly people that see the opportunity, they see how big it is, they try to attack it with sort of software and marketplaces. And then time and time again, I feel like we see them sort of flop. And you saw this with Carta, basically kind of apparently giving up on their entire secondary brokerage business at some point. But, but again, uh, people in venture always see a problem and an opportunity and, and want to like throw software at it. And sometimes it's basically, you know, companies like Andurall saying, yeah, we want to work with 137 Ventures because they've done an exceptional job, you know, with, with their relationship with SpaceX.

• 1:05:01Jordi Hays?

  And, you know, we, we want that kind of partner as well. And that just looks more like traditional financial services versus, uh, you know, a, a venture business. Uh, do you give any attention to every once a month, these sort of lists pops up around heat around different companies? And sometimes I see this list.

• 1:05:21John Coogan?

  Well, they're doing your job for you because you see a list on Twitter and you can just go hit the company up, right? Like, you know, you, you, you can just, you know, you don't have to work that job.

• 1:05:31Jordi Hays?

  Usually you see 10 companies and you're like, all those make sense. One of them.

• 1:05:35John Coogan?

  Except for that one.

• 1:05:36Jordi Hays?

  Except for that one. Uh, so how, do you, you give any weight to these lists or is it just random?

• 1:05:41John Coogan?

  Where do they actually come from? Because it doesn't seem like it's put out by 137 Ventures, which I would trust.

• 1:05:45Jordi Hays?

  To me, to me, it could be a single broker who's just basically pumping their own bag. But.

• 1:05:52Christian Garrett?

  Yeah, you guys, you guys nailed it. Yeah. I mean, it's, it, I mean, look, it depends where these lists come from. A lot of them are noise. They're not signal, you know, of transactions. And a lot of those transactions are uninformed buyers and uninformed. Sellers.

• 1:06:05John Coogan?

  Yeah.

• 1:06:06Christian Garrett?

  As institutional firm, we don't pay attention to them and the best companies don't either. I, you know, it would be amazing if the job was so simple as to look at a list and press a button and buy. But unfortunately, there's a lot more to investing than that. So, but yeah, I, I think you'll see them either like aggregating a bunch of transactions from a platform level, but still brokerage business, or you'll kind of have brokers who are, you know, sort of trying to create a market and advertise what they may or may not have access to. So yeah, that, that is in that segment of the market that I think the best companies don't particularly like. And, um, and that you don't want to be in as an investor on the secondary side that we talked about earlier.

• 1:06:43John Coogan?

  Yeah. Can you talk a little bit about like, how do, how do secondary shares work their way into the broker system? And how transfer restrictions work a little bit and how those have evolved over time?

• 1:06:54Christian Garrett?

  Yeah. Um, so on the first part, I mean, it's a broad range, right? I mean, this, this is, uh, you, you have employees that may not be under transfer restrictions. You'll have a lot of employees that, uh, you know, may do transactions on a forward basis. So, you know, they're actually violating transfer restrictions, but you know, it's a different type of construct.

• 1:07:13John Coogan?

  Sure.

• 1:07:14Christian Garrett?

  You have a lot of this too, or just SPVs, right? So, you know, uh, as investors, a lot of institutional firms, you know, will do co-investing vehicles with their LPs. And then those LPs will want liquidity. And so, you know, you in essence have liquidity into the SPV, which then allows you access to the underlying, um, company. So there's just various forms of supply as companies grow, right? There is a lot of avenues where there just is supply. Um, and some of it is legitimate, some of it's not, but you know, definitely is, there, there is a lot of legitimate supply for sure. Right. From employees or SPVs, et cetera. The transfer restrictions side actually hits on like this whole dynamic, right? And this is, um, this actually all goes back to the Facebook days. So in the nineties and early two thousands, companies only had a right of first refusal.

• 1:08:00Christian Garrett?

  And that was sufficient to discourage random buyers. Facebook was obviously a popular consumer business and the first to go to tens of billions of dollars of enterprise value in the private markets. And there wasn't as much money in venture back then. So the company and the company lost control of its cap table because the volume of shares that traded was well beyond what the company or existing investors could purchase. And so you basically just had a lot of outsiders being able to buy, right? Cause there's tons of demand, the existing investors, you know, weren't able to just, you know, just use a rofer as a way to buy it and control it. And so once other venture companies saw this, they implemented basically blanket transfer restrictions. And that has been the default ever since.

• 1:08:39Christian Garrett?

  And so you have to understand, right, the entire benefit of being private is that companies can choose who they give information to. And allow cap table, no founder wants an activist investor. And if you pull your cap table, it's kind of no longer your choice. And so transfer restrictions have sort of been the default.

• 1:08:52John Coogan?

  Or even in the case of Facebook, like Yahoo could have potentially like built a position or Google could have built a position in the secondary market. And then had rights at some point, which would be potentially disastrous, didn't happen, but you know, that's the risk. So if there are no transfer restrictions, does that mean like an early employee could just meet a random VC at the Rosewood and say, hell yeah, I have, I'm sitting on $2 million of stock in this company. You like, you want to take it off my hands and they can just do that over a handshake and some contracts? Or does it eventually need to bubble up to like the company? How, how does the company actually go over their shareholders?

• 1:09:25Christian Garrett?

  There's still a roper, right?

• 1:09:26John Coogan?

  Okay.

• 1:09:26Christian Garrett?

  So, yeah, and like I said before, with the right first few years, it was enough to discourage this. But then with Facebook, the demand overwhelmed, the ability for the investors to actually execute, exercise that right, right? From a capital perspective and so.

• 1:09:40John Coogan?

  And the roper is just, the roper is discouraging because if I'm trying to build a position in a company through the secondary markets, there's no transfer restrictions. I know that I go to an employee, I say, hey, you have $2 million. I'm going to keep running into this problem where we get a handshake deal. I'm going to buy 2 million and then the company buys it. And then I go to the next employee, right? And it's just a waste of my time. That's the main structure of the.

• 1:10:00Jordi Hays?

  It's the company or the other investors.

• 1:10:03Christian Garrett?

  Investors, correct, exactly.

• 1:10:05Jordi Hays?

  Yeah, I guess, talk about companies you invest in, or many of them you described as having like effectively unlimited demand for, for the equity. And right now we see venture funds that have ballooned and they have more capital than ever to deploy. It used to be these companies would get to the point where the VCs would be like, I remain gig along your company. I just like, I'm fully tapped. Like I just got to let it ride. Now it's less the case.

• 1:10:33John Coogan?

  Sequoia Fund 3 with like 30 mil.

• 1:10:35Jordi Hays?

  Have you seen, do, do elbows get sharper in some of these later rounds? Where I imagine from an AUM standpoint, like you guys have a ton of AUM, but you're coming to the table with people that might have. 10 times as much AUM and these capital bases where they can hit up a sovereign and be like, "Hey, we're doing an SPV into this one. Do you want to come in?"

• 1:10:56John Coogan?

  35 billion.

• 1:10:57Jordi Hays?

  Yeah. So what's the competitive dynamic in these sort of later stage?

• 1:11:03Christian Garrett?

  Good question. You know, I think it's a bit, I'd say like to your point 100% as these companies really scale and demand, you know, demand obviously follow suit with the performance of the fundamentals of the business and how they've executed on the story. You do see obviously a ton of, I mean, SpaceX does a tender and they're 10x over subscribe, right? That is, you know, billions and billions of dollars of demand, right? That is unmet. And the investors, to your point, the venture ecosystem has grown. So there's a ton, you know, a ton more dry powder in the market as well. But also I think, you know, the size of these tenders and primary rounds does scale a bit. Definitely on the tender side. So I do think like as a company grows, the, its secondary market

• 1:11:46Christian Garrett?

  does grow and the liquidity programs grow in size. So that helps meet some of the demand. But you 100% run into that. Like, look, I think at a certain stage it works, but there's a certain stage where like there's more demand for, you know, SpaceX or Anduril than there is supply. And that just is the function of it. And I think, you know, that's where relationships really matter. But even then, right, there's still a limit, right? So I would say like, I think relationships are, end up being the biggest driver there for your ability to still, not just obviously in allocation, but also try to continue to size up the position and invest more. And, you know, I think being around, being a major shareholder, being around for a long time and having very close relationships, which is what we focus on.

• 1:12:30Jordi Hays?

  Yeah, it's a likability. It's a likability. Allocation and venture is like, often comes down to likability. It's like, does the CEO and the management team like you? If so, cool, we're going to give you preference. If not, you know, you might get your Prorata. Otherwise, good luck.

• 1:12:44John Coogan?

  Being an SPV promoter is more like being a club promoter than being like a VC or something like that.

• 1:12:50Jordi Hays?

  I have a, I have a more like-

• 1:12:53Christian Garrett?

  Yeah, venture is unique, venture is unique because, you know, it's a unique asset class, given how important access is. And, you know, access and that dynamic there, you know, leads to like, you could be a, you could end up getting access to an incredible company and, and maybe even still be a schmuck, to your point. However, doing that consistently and over a long timeframe, I think is a different story.

• 1:13:18Jordi Hays?

  Yeah, yeah, totally. How do you advise founders that are kind of reaching the territory where you guys are starting to invest? I'm going to pull out a number. Let's say they're close to nine figures of ARR, they're a real business now, it's working, they're raising a bigger round, that's some mix of liquidity for the team as well as some growth capital. And they're worried about kind of like signaling risk around selling secondary, right? In the public markets, you see this, it's like, okay, this CFO is like selling a huge amount of their position, that's obviously bad. Same thing on the founder's side, if the founders are selling huge amounts of secondary, it can be a bear signal.

• 1:14:04Jordi Hays?

  And we saw the worst of this in 2021 and 2022, where founders would be selling like $50 million, like pre-product market fit. And that wasn't common. But how do you advise founders as they start to get opportunities to get liquidity? And they're sort of worried around, well, I'd like to be able to like buy a house and put my kids through college, but without stressing about it, but I don't want to send the wrong message.

• 1:14:30Christian Garrett?

  Yeah, I mean, I think you hit on the reality of, obviously, they're the obvious extremes, right? Which is, you know, if a founder is selling 90% of his position while still operating the business, that's obviously going to raise eyebrows and people are going to protest that. And the founder, you know, sells $10, also, people probably aren't going to bat an eye, right? So what number in between is the magic number, depending on stage? And, you know, look, I think, one, it's usually driven by life needs, right? And so that de facto backs into a dollar number that makes sense, right? And so I think many times, the conversation is around de-risking, around a life need, someone just had a kid, they're starting a family, they want to buy a house, right?

• 1:15:09Christian Garrett?

  And so I would say, like, you know, you're also investing in founders that you trust and are rational and reasonable. And usually, these conversations are fairly easy from that perspective. I don't think there's like a particular dollar amount. I think one of the things to think about, whether you're a founder or on the investor's side, is more so like... You want to think about the two dynamics around percentage of holdings and then total dollar size, right? And those are interesting, right? Like in some sense, if you sold 5 million bucks, but it's half of your holdings, right? 5 million bucks at a certain stage of business is not a lot, but you know, 50% of your position whilst operating, you know, may signal something. And it works both ways, right? You may be able to sell $100 million, which is a lot, but it could be, you know, 5% of your position, right? Which generally people would not view

• 1:15:54Christian Garrett?

  as a lot. And that's the conversation. So I think it's a bit of like, it depends on the circumstances and the context. But for the most part, founders are pretty rational, reasonable. And you got to remember, most founders are the most bullish in their company, even more so than the investors. So the desire to sell is generally pretty tapered and usually driven by life needs.

• 1:16:13John Coogan?

  Makes sense. Well, thanks for stopping by. Great to have you on. Great conversation. Can we see the rocket again? Yeah, show us the rocket one last time. Let's see the rocket. And then we'll get on to the next one. Oh, that's a beautiful engine. Let's hear for the rocket, folks. If you, if you end up with a spare rocket, we'll throw one on the set. Send it over if you got an extra laying around.

• 1:16:32Christian Garrett?

  I need at least three more appearances on the pod.

• 1:16:36John Coogan?

  Okay, okay. Deal, deal.

• 1:16:38Christian Garrett?

  I can talk to the rest of my partners and maybe 137 Ventures will send you a rocket.

• 1:16:42John Coogan?

  Fantastic. You heard it here first, folks. It's great having you on. Have a great rest of your day. Talk to you guys. Talk to you soon. We're going back to back, folks. We got Back to back. Seven more guests coming into the temple. I think six. We got Darshan from Beyond. He just launched the big screen two, the VR headset. We discussed this on Monday, I believe, maybe, maybe, maybe Friday, actually. Yeah. And it's a very cool VR headset. I think we got him in the temple of technology. Welcome to the show. How you doing? There he is.

• 1:17:13Speaker 03

  Good. Thanks for having me.

• 1:17:14John Coogan?

  And congratulations. Can you give us the breakdown? What'd you launch? How did it go?

• 1:17:19Speaker 03

  Yep. So we launched last Thursday. This is our second generation product, Big Screen Beyond 2. We launched our first gen about two years ago. This one addresses a lot of the things that people really wanted out of the next gen one. So for people who probably know this old thing, this is the Apple Vision Pro.

• 1:17:34John Coogan?

  Yep. I had one for exactly two weeks.

• 1:17:36Speaker 03

  Yeah, I've got one on my desk. That's where

• 1:17:39John Coogan?

  Well, you're in the industry, so I expected you wouldn't return yours, but

• 1:17:42Speaker 03

  It's a beautiful.

• 1:17:44John Coogan?

  It's magical.

• 1:17:45Speaker 03

  It is incredible technology.

• 1:17:48John Coogan?

  Yes.

• 1:17:48Speaker 03

  And I've got some spicy takes, but I don't think anyone wants to wear a brick on their face. It's just unless you're skiing or something, maybe, but even then people don't want to wear a brick on their face. So we've been working in this company for about 10 years. We raised some capital from Andreessen and True. And we set out to build the world's smallest VR headset. So we think that VR is much more like wearables, much more fashion centric, actually. So it needs to be super comfortable. We're chasing after enthusiasts, not mainstream mass market. I think we're playing a 30 year game. People are like, kind of in it for, let's start a thing, build a whole thing, like flip it in two years, blah, blah, blah. Like, we're actually playing a long-term game here. So we built Extreme Beyond 2. It is the world's smallest VR headset. This weighs

• 1:18:33John Coogan?

  So small.

• 1:18:34Speaker 03

  Two thirds of your iPhone. Like, an iPhone is heavy compared to this.

• 1:18:38John Coogan?

  Yeah.

• 1:18:39Speaker 03

  And it looks pretty freaking cool.

• 1:18:41John Coogan?

  I think it looks great. Yeah. Congrats on the launch.

• 1:18:43Jordi Hays?

  Yeah. When you think about playing 30 year games, how do you think about just capital efficiency? There's the meme that like hardware is really expensive and all these companies like, I imagine you, you run, if you're playing this sort of long-term games, you're like, well, we need to be in business for 30 years. We need to be able to have big moments where we sell a lot of products and then

• 1:19:02John Coogan?

  Make it through the dark times.

• 1:19:04Jordi Hays?

  Yeah, we're going through dark times. I'm sure you've been through both already, but, but how do you think about durability of the business? Given that you're selling hardware, which will just end up, you're going to have fluctuations in, in demand.

• 1:19:16Speaker 03

  Couple of things. I'm pretty sure, I don't know if they would want me to say this publicly, but I'm pretty sure we're the single most capital efficient company in our, in our investors portfolios.

• 1:19:23John Coogan?

  Let's hear it for capital efficiency, folks. Thank you.

• 1:19:26Jordi Hays?

  Hit the gong for that. It's not typical, but we love to see it.

• 1:19:28John Coogan?

  We love some capital efficiency on this show.

• 1:19:31Speaker 03

  We have raised 17 million from Andreessen and True. And at some point, I think we had like 10 years of runway. Now, you know, for a couple of years, we've been cash flow positive. We could be, you know, we could be profitable any minute that we want, but we put all of our revenue into R and D and the team. And that's it. Like $0 in acquisition of customers. It's all organic. Hardware is a lot cheaper than people think. I think Meta is wildly inefficient. They're spending, you know, tens of billions a year to try to accelerate a market. They're also playing a different game. They're trying to Go, they need to get a billion users. I don't care. We can make a massive, awesome contribution to the world by focusing on people who really, really need what we do.

• 1:20:12Speaker 03

  And we can do it efficiently. Like, the number of people at Meta that are doing stuff. They just throw everything at the wall and at no cost, right? It doesn't matter. And frankly-

• 1:20:23John Coogan?

  Don't tell the shareholders that. It does have a cost. I think the cost is 20 billion. But, but, you know, respect to Zuck. I, I, I love a guy who's chasing his dream.

• 1:20:32Speaker 03

  Yeah, but like-

• 1:20:33Jordi Hays?

  Yeah, so how many-

• 1:20:34John Coogan?

  Yeah, sorry. Let's, let him continue.

• 1:20:36Jordi Hays?

  Go for it.

• 1:20:37Speaker 03

  Yeah, yeah. For, for us, we're playing a different game because we can stay focused on like real use cases and make a real business out of it. And uh, like, and just on first day of, of our sales, we did 10 times more than we did for our first gen.

• 1:20:49John Coogan?

  Wow.

• 1:20:50Speaker 03

  In a couple of weeks, we will have done more sales than we did in 2023 or 2024.

• 1:20:56John Coogan?

  That's amazing. Congrats.

• 1:20:57Jordi Hays?

  So how many, how many companies that were high-flying, amazing teams came out and raised more than you? Like, have, you started in 2014. There must have been probably 20 companies that you were like, you, you're a pretty viable competitor, flashy, raising a lot of money, but then they're just, they spent it all in two years. Is that sort of, has that happened like a bunch of times at this point?

• 1:21:18Speaker 03

  There's a bunch of times, like waves of capital and then also hype cycles, right? There was like AR wave, or there's the NFT crypto wave, or there's this or that. There's so many waves every year or two. Um, we've actually stayed extremely focused. We're focused on building an excellent VR headset for consumers, particularly like PC gamers and enthusiasts. As well as in the past year, like the businesses that have reached out that are using our stuff, like NASA is one of our customers. We have a bunch of customers in aerospace and aviation, uh, education, retail. Uh, there's like a nuclear energy department whose website looks like they're from the 90s and they've been buying our stuff. We have no idea what they're doing with it, but

• 1:21:56John Coogan?

  Interesting. Secret operations. Uh, I, I want to ask about, so I, I'm kind of like a VR enthusiast, prosumer level, maybe. I've had a number of headsets. I've built custom PCs and then video graphics cards to wire them up. Had the first Oculus and then like the next seven of them or something. They've always kind of wound up collecting dust. Can you walk me through? What would you recommend just for the first like magical big screen beyond experience? What, what, what's like the basic hardware I should get? Should I get a PC? Should I, you know, what's the ecosystem look like to knock it out of the park and like what game or what experience am I playing?

• 1:22:32Speaker 03

  It really depends on what floats your boat. So I'd suggest like get like a good PC. If you're gonna build one.

• 1:22:37John Coogan?

  Yeah.

• 1:22:38Speaker 03

  Computers, that's all I do. That love it. Great. Do that if that flows your boat. Otherwise, like buy like a good NZXT PC.

• 1:22:43John Coogan?

  Okay.

• 1:22:44Speaker 03

  Get like a RTX 4080 or 490. Get whatever you can afford. Buy the Beyond 2 and then it really depends on what you like. Like racing sims are insane in this. Just the feeling of like going down like the Nordschleife in a car like you could just. You cannot get an experience like this in real world because you will probably kill yourself.

• 1:23:03Jordi Hays?

  We're getting so we're getting we're getting a new studio.

• 1:23:07John Coogan?

  Yeah, we'll consult with you.

• 1:23:08Jordi Hays?

  And yeah, we're gonna get the full rig.

• 1:23:10John Coogan?

  Yeah, it'll be great.

• 1:23:11Speaker 03

  Flight sim is another one. Like I've literally flown a 737 out of LA at night.

• 1:23:17Jordi Hays?

  This is great. No, I think so. Here's a challenge for you.

• 1:23:20John Coogan?

  Yeah.

• 1:23:20Jordi Hays?

  Make a game that's basically, I'm sure somebody's already made this game, but you know how every guy thinks they can land at the 737 if they were asked to, right? Like that's the challenge. It's like the big screen 737 challenge. And it's like you get dropped into a plane, engine down, and you gotta land it.

• 1:23:34John Coogan?

  This is one of the craziest stories. The first time I ever went ski shooting, like shotgun shooting, I'd never shot a gun before in my life and we were competing. And I beat everyone and everyone was like, is this just beginner's luck? And I think the reason was is that I'd been playing VR shooting games for like a year straight. I've been playing Robo Recall on the Oculus and I was like, this is second nature to me. So I really think the VR training thing is real. One of the use cases that I I really enjoyed with the Apple Vision Pro while I did have it was just sitting there and watching movies in bed at night. It it could, how close are we to having just like a puck? Like I'm almost thinking like a little Mac mini that I just link under my bed that I can just kind of plug this into.

• 1:24:16John Coogan?

  Cause I know it's not fully standalone, but the benefit is that it's not gonna be heavy on my face. Is there is there a way that I could kind of get that level of experience with the big screen beyond two?

• 1:24:26Speaker 03

  Yeah, so the company's named BigScreen for a reason. This, we actually started building hardware because we wanted, we made software for a long time.

• 1:24:33Jordi Hays?

  Yeah.

• 1:24:34Speaker 03

  And we hit limitations. Our software is still there on, on the Meta Quest and stuff like that. Uh, I've got like, I don't know, six, seven million users in VR. We actually have a very sizable software platform. But the hardware just was such a big limiting factor for the past five years. We couldn't achieve the vision we wanted to under the platform that was given to us. We had to go build it ourselves. And it turns out other people wanted it too, for all these other use cases in gaming or in, in enterprise use cases as well. So we want to build hardware that you can actually use for movie watching, but the problem is, like, I could go right now, turn on my TV and watch Netflix in 4K HDR on OLED TV in 10 seconds.

• 1:25:12Jordi Hays?

  It's pretty good.

• 1:25:13Speaker 03

  VR to get to that level and I'd say we're halfway there. We're getting closer. And we had to build incredible hardware for it. We're building the software for it. And at some point, our path to going mainstream is basically, Meta's path has been like $300 headset. There's something like 20 million of them. It's doing really great with kids.

• 1:25:31Jordi Hays?

  Yeah.

• 1:25:31Speaker 03

  Uh, our path, I don't think it's actually, it's not about price. It's about price to utility. So we want to deliver you like a $2,000 or $3,000 incredible home movie theater system.

• 1:25:42Jordi Hays?

  I love it.

• 1:25:43Speaker 03

  And yeah, you can play games with it. You can do all this other stuff with it too. But it's not about price. It's, it's really, Apple Vision Pro is $3,000, but I'm not going to wear this for,

• 1:25:51Jordi Hays?

  Yeah.

• 1:25:51Speaker 03

  actually the battery life limitations, the weight, the ergonomics, it's not right. It's not the right factor.

• 1:25:57Jordi Hays?

  What is Apple doing with VR? Cause I've, I've posted a few times. I was like, Apple's like, they're sort of giving up on it. Like you, you can tell they don't have real conviction. They're just like, they're in this highly commercial phase where they're just going to extract as much value out of the existing technology that they have and, and that's, you know, can be good for business. But I posted a couple of times and people get angry. They're not quitting VR. They're not, it's blah, blah, blah. But what are they actually doing in, in your view? And are you the next CEO of Apple?

• 1:26:29Speaker 03

  I think Apple, I'm actually surprised that Vision Pro came out. They've been doing the work for a long time, but I wouldn't have put it out, not this way. I mean, it's it's setting the wrong expectations, creating weird hype cycle. This is not the next iPhone, but I think Apple is patient and is gonna play a 10, 20 year game as well. They don't need this to become an overnight success. It's fine. Who cares what the markets say? Like, they've got the cash for it. They can they can do it. And they're also doing it in a relatively cash efficient way compared to Meta. So they're playing a long term game. I think they'll stick with it. I think it's in the hands of developers, but I think the problem is there isn't really anyone saying no. In my opinion, I don't know how Apple actually runs it, but in my opinion, no, people aren't saying no enough, like.

• 1:27:14Jordi Hays?

  Yeah. Well, yeah. So on that note, how do you? How do you think about focus generally at big screen, right? I'm sure people are saying, hey, build this for factories, build this for the military, build it, you know? And I'm sure you've had to, in order to be capital efficient and great, create great products, you've had to say no a bunch. Do you have ambitions outside of entertainment in the long run? Or are you?

• 1:27:38Speaker 03

  Absolutely. The the nice thing about what we do is that we're laser focused on a set of problems that happens to cater to the needs of a bunch of people. So the enterprises that are coming to us, they're using VR for real work for many hours a day. Versus the cycle, they all have Apple Vision Pro and Quest and all that. They can afford all the devices. They've tried them. But you'll use it for an hour, you achieve your thing, and you gotta go charge it for an hour. That doesn't work for most use cases. Think of this as Apple and Meta trying to build the next smartphone. Meanwhile, we're trying to build the next workstation, the next TV.

• 1:28:13John Coogan?

  They actually can't, Apple actually canceled their workstation focused VR thing. I I want to, I want to ask one more question. On the Apple Vision Pro, can you give me like your pros and cons? Like, what did they get right? I feel like the the external battery and puck was really controversial, but some people say that's really great. What's your take on Apple Vision Pro?

• 1:28:34Speaker 03

  I think they established that this industry is really not going anywhere. Like, it's not gonna go away. It's, this is gonna be here. Spatial computing is gonna be a thing. It might take a long time, but it's gonna happen. Apple and Meta are at it. They're gonna go push it. Uh, that's the best thing that they've done here is, is they've made the world really understand what is VR or spatial computing and it's gonna happen. What they're getting wrong is comfort and ergonomics matters a lot more. People are trying to build the next iPhone, but again, no one wants to wear an iPhone on their face either. There's literally a MacBook Pro inside of this thing. I don't wanna wear a MacBook Pro.

• 1:29:08Jordi Hays?

  Yeah, makes sense. Yeah, it makes sense. Last question. Broad applications of spatial computing in the military. Andrew was in the news with winning the IVAS program. Is the technology ready? Is it just about getting the product right? And again, I imagine that's sort of a 10, 20-year kind of vision as well, but uh, and it's not where, where you guys are building, uh, to my knowledge, but uh, yeah, what's your take on that? Was it Microsoft just had a good shot, but didn't have the, the sort of leadership to deliver on it? Or was the technology just truly never ready for, for what they were being asked to do?

• 1:29:49Speaker 03

  I think that came out of an older generation, the like 2016 era hype cycle, where a lot of products were coming out that were telling a story that they really couldn't meet. So HoloLens, uh, Magic Leap, et cetera. We're, we're touting this vision of like, oh, we're gonna be able to do all these things. And what really matters in a nascent emerging technology is, yeah, but what can you do with it today? Like, be honest that when you come out of the gate, what is this gonna be amazing at right now? Like, so for us, racing simulators, gaming, entertainment, like really great things that people can do right now, today with this, and we're honest about that. Too many companies back in that first generation hype cycle. Yeah, like they were putting out a product that the military could not, it didn't work at

• 1:30:31Speaker 03

  all. And it was billions of dollars for that. So now you're having people come out like Anduril that are putting out devices that should be able to actually deliver with, you know, the promise of current generation technology. What can you actually do with it?

• 1:30:44John Coogan?

  That's great. Well, thanks so much for coming on. We got to have you back to talk about VR. Every time there's more news.

• 1:30:48Jordi Hays?

  Yeah, you're, you haven't opted in, but you're official VR correspondent.

• 1:30:53John Coogan?

  There's so much to talk about here. It's such a fascinating technology. And I think people have kind of like written it off from time to time, but I'm continue to be fascinated by it. There's so many cool developments.

• 1:31:01Jordi Hays?

  I'm really happy for you and the team too. I'm sure the last week has been massively vindicating and you guys deserve it. 11, 11 years in, here's to the next 11. And look forward to the next conversation.

• 1:31:13John Coogan?

  An overnight success, really?

• 1:31:15Jordi Hays?

  Yeah.

• 1:31:17John Coogan?

  Have a good one.

• 1:31:18Jordi Hays?

  Later.

• 1:31:19John Coogan?

  Thanks. Well, coming up next, we got Alex Konrad, but we got some breaking news. Ramp has partnered with FP Journe. Did you see this? They're having a Pavel tournament in Miami and the partners are Ramp and FP Journe. You'll love to see it, folks. Love to see it. FP Journe, of course, maker of fine watches owned by, owned by none other than Mark Zuckerberg has some FP Journe's. Francois Paul Journe, one of the greatest watchmakers in history, still alive, still cooking, and he's using Ramp, baby. He's on.

• 1:31:51Jordi Hays?

  I, yeah, I don't know if this was supposed to be breaking news, but it is now.

• 1:31:55John Coogan?

  Okay.

• 1:31:56Jordi Hays?

  It's pretty awesome. Pretty awesome.

• 1:31:58John Coogan?

  If you text us, I'm going to talk about it. It's amazing. It's a public website.

• 1:32:02Jordi Hays?

  Yeah.

• 1:32:02John Coogan?

  I think. I mean, maybe this is, I think this is a public website.

• 1:32:05Jordi Hays?

  Yeah.

• 1:32:06John Coogan?

  I think, I, I, I think this is a public website.

• 1:32:08Jordi Hays?

  Extremely tasteful.

• 1:32:09John Coogan?

  We will share this. I'm very excited about this. If you like Pavel, we will, we'll, we'll share the link at some point. You can go ours.

• 1:32:15Jordi Hays?

  Fantastic.

• 1:32:16John Coogan?

  Anyway, we got Alex Konrad coming into the temple of technology. Welcome to the show. Congratulations.

• 1:32:23Jordi Hays?

  Big day. Hit the gong for Upstarts.

• 1:32:25John Coogan?

  Let us know what you're announcing. What are you doing? Break it down.

• 1:32:28Speaker 04

  Yeah, thank you, guys. I'm so excited to announce my new startup today called Upstarts Media. Upstarts Media is a new tech media publication focused on the startup ecosystem.

• 1:32:37John Coogan?

  Fantastic. What's the angle? What are you doing differently? What are you leveraging? And will there be a list of the best and more importantly, the worst venture capitalists dropping soon?

• 1:32:50Speaker 04

  I know, I know that I have a customer in you for that for sure.

• 1:32:53John Coogan?

  Yes.

• 1:32:54Speaker 04

  Basically, I'll. Yeah, yeah, I'll think about that. You know, I actually did 25 audience calls ahead of time and I should have, I should have asked that specific question. Should I launch an anti-midas list? But yeah, for, for your, your audience who don't know me, I spent 12 years at Forbes covering venture capital and startups. I really lived in that world, you know, wrote a bunch of cover stories about folks like Melanie Perkins at Canva, the Collison Brothers at Stripe. Um, I wrote one about a software reported with, which has been in the news a lot, you know, really enjoyed writing about startups and the VCs who fund them.

• 1:33:25Speaker 04

  And I felt like we ran a moment where so much traditional tech media coverage is focused on big tech, politics, you know, we have tech people in the White House, um, big policy debates, not so much on sort of the startups that I really love writing about. You know, I just heard from so many people that it was just hard to kind of get those founder journeys, um, you know, startup storytelling out there right now. And so I'm hoping to do my small part to just tell those stories.

• 1:33:51John Coogan?

  How do you think about the, the different products that are offered in the media ecosystem? I mean, most people just think like it's a news article, but once you dive in, you realize like there's investigative journalism, there's breaking news, there's profiles, there's op-eds, there's editorial, there's all this different stuff. How do you think about the landscape and what interests you the most?

• 1:34:11Speaker 04

  Yeah. Well, first off, you know, these, these tech bros showed up and they just completely created a seismic event for us in, in media. No, but, but seriously, like jokes aside, you know, I think you guys and a lot of these new brands that have been the most interesting in tech journalism and media right now have kind of come from these adjacent spaces. They haven't been traditional journalists.

• 1:34:31John Coogan?

  Yeah.

• 1:34:32Speaker 04

  Um, we have seen though, some people go independent and try to kind of get more direct, you know, we, we keep hearing go direct, you know, from certain founders and, and PR folks. And I think that's great for certain people. But my hope is that there's still room for curated storytelling from journalists like me who can help, especially those founders who maybe don't have the platform to go direct. And also can just maybe connect the dots in ways that you wouldn't get from some of these awesome podcasts and shows like your own.

• 1:34:57John Coogan?

  I, I mean, I really do agree with you. We were talking about to Lulu about this yesterday, just the idea of like, yes, you should go direct and post your own news, but then you should also talk to new media like you and, and us. And then you should also talk to the Wall Street Journal if they call, if they come calling and it's really like an ensemble strategy to build this like. Cinematic universe around you and what you're doing, if it's important.

• 1:35:20Jordi Hays?

  Yeah, how do you think about, funny, funny timing. So we talked about this last week. About TechCrunch selling. It was unclear what they were going to do. I think TechCrunch had sort of created this. The thing they did well was like make people's parents proud, right? It was like you wanted to get into TechCrunch. It was just sort of like this moment in every founder's journey. You go there to announce a round or for a product launch or whatever. And they sell to private equity, which people were like, oh, great. Like private equity is just going to come in and, you know, I don't, you know, nobody knew what they were doing. And then the first TechCrunch headline I see is this like hit, you know, drive by hit piece on 11x.

• 1:36:02Jordi Hays?

  Which whether or not it's fair, it's like TechCrunch is in a very weird position around. They're, I guess, trying to do investigative journalism, but then they still want to be the place that maybe you launch your startup. Are you trying to pick a lane in saying like, we are pro founder, we are pro tech. We know this is hard, but we want to like, you know, tell your story in an authentic way that makes like, are you looking to really like develop trust with these founders? And cover them across their entire career? Is, you know, what is that like? I'm trying to kind of hone in on, on your specific angle because I think the temptation is. You know, somebody starts out writing tech positive and then eventually they get some crazy scoop and they're like, oh, this is going to get so many, this is going to get so many.

• 1:36:47Jordi Hays?

  Yeah, I'm just going to publish this fund's returns, you know.

• 1:36:53Jordi Hays?

  But I'm curious.

• 1:36:53Speaker 04

  Yeah, I hear you. I have like three different responses for that, but I can try to keep them short. It's really an important, important debate, I think. You know, first I would say our ideology is that Upstarts was founded on the belief that startups are at their best when they punch above their weight. Challenge the status quo, try to improve the world in some way. And I think at that core, I believe that technology is great for the planet, great for our daily lives. And I want to write about that. Um, I think at the same time, you know, I am going to be a journalist. I am going to be independent, so I'm not a cheerleader, you know? And, and just because a lot of my, you know, Midas VC, you know, pals might be subscribing today. Doesn't mean I'm going to suddenly write about their portfolio company or something like that. You know, I, I want to keep a really impartial and fair view.

• 1:37:38Speaker 04

  But that's really what I tried to build in the last 15 years, writing about startups was that sense of trust that you can expect me to be fair, to, to have sort of the good of the ecosystem at heart. So if I do something that doesn't feel super comfortable, um, I'd say that's actually a good thing because you can get that from an amazing VC podcast, or you can get a beautiful marketing video. I might ask questions that push you a little bit, but I am in the ecosystem. I, I do consider myself a founder of a startup here and I have that empathy that I'm going to be only punching up really carefully. I'm not going to be punching down, you know? I, I never want to get out of bed and be like, what startup am I messing with today?

• 1:38:12John Coogan?

  It's no gawkers, you point out, but, uh, I want to talk about like the instantiation of the work that you do. Uh, obviously you're a writer first and foremost, right? And, and most people experience your work through Forbes.com essentially. Um, but have you thought about where that lives? Is it, are you, are you targeting the email inbox? Will there be a printed version? I'd love a coffee table book of the Konrad list maybe this year. I think that would sell really well. I think every single VC firm would probably pay a thousand dollars for the, for the Konrad printed coffee table book. Sell a lot of those. Uh, are we going to get videos, podcasts? What are you thinking?

• 1:38:50Speaker 04

  Yeah, so it's a little crazy because I am bootstrapping this business at first to kind of control my outcomes and test the product market fit. But I kind of want to do everything you said. I mean, maybe not the, the coffee table book just yet. That could be a year or two goal. But I'm going to be launching a live video series of monthly interviews. Very different from what you guys do, but just a quick fun interview with a CEO, uh, next week. And I'm doing that like my newsletter over Substack, who have been a great partner. So, um, working closely with them and going to be publishing twice a week. I also got a shout out, you know, and this, this might be controversial on this show, but, um, I am going to be working with partners to make sure that one edition of my newsletter is free each week.

• 1:39:30John Coogan?

  Okay.

• 1:39:30Speaker 04

  I want to be proving this can be a sustainable business, but also inclusive to folks who may be our early career students, you know, founders who are cutting their burn and they want to get high quality news, but they don't want to pay yet. And so I actually signed a launch partner in Brex.

• 1:39:45John Coogan?

  Oh, okay.

• 1:39:46Speaker 04

  Brex is my launch partner, but I'm always happy to work with others down the road. Um, but yeah, I mean, that's basically the way I'm thinking about this is multiple streams, a newsletter.

• 1:39:56John Coogan?

  Yeah.

• 1:39:56Speaker 04

  I'd love to do a podcast eventually, um, but I'm going to be building in public. I'm going to be screwing up a lot. I think that'll be, that'll be authentic with this audience, you know? You guys, you guys will see that.

• 1:40:05John Coogan?

  Awesome. Yeah, that's great.

• 1:40:06Jordi Hays?

  Uh, what's the future of the Forbes brand? It's been in an interesting spot. Uh, I'm saying this, you're not saying, uh, or confirming this, but I know they've been like on the market, trying to sell themselves for a long time. They sold off a bunch of random assets.

• 1:40:21John Coogan?

  Austin Russell was circling.

• 1:40:23Jordi Hays?

  Forbes, Forbes book publishing is not really tied to the parent company anymore. You know, it's like very unclear, like it's, it was an iconic media property. You tried to keep it alive. Uh, and you know, you.

• 1:40:35John Coogan?

  And certainly more brand cachet than TechCrunch, I think, like the Forbes brand still has a lot of.

• 1:40:40Jordi Hays?

  Yeah, but, but it's been diluted over time and, and part of, you know, if you had stayed and said, I'm going to recommit the next decade and sort of bring it back, I, I'm sure there's a variety of factors that, that didn't allow for that. But, uh, what happens with Forbes? I know you probably can't, uh, maybe you can give the, your, your most sort of positive perspective on it.

• 1:41:01Speaker 04

  Upstarts is acquiring Forbes in 2026.

• 1:41:05John Coogan?

  You heard it here first. Scoop, scoop.

• 1:41:08Speaker 04

  But, but, but to answer Jordy, to answer Jordy a little more seriously, you know, I started covering startups in 2010. You know, TechCrunch was a giant, VentureBeat was a giant, you know, Forbes, the website was still very siloed. So it was fortunes, like media has changed a ton in the past decade plus. I think like people forgot that the Midas list was actually started in 2000. So way predated me and it will outlive us all, whether VCs like that or not, you know?

• 1:41:33Jordi Hays?

  Yeah.

• 1:41:33John Coogan?

  Yeah, that's great.

• 1:41:34Jordi Hays?

  That makes sense. Uh, how, what, what do you think the? What's the future of Substack? They went through this kind of period of massive hype. And then there was a period where every media platform was attacking them. And then it seems like they've come out of it. And now people are deciding to go on and build real businesses from day one on the platform. What's your take on? Are they having real network effects? Like, do you think their sort of existing audiences there are going to help you accelerate your growth faster? Maybe kind of break down the decision to start there versus working, you know, ground up on a Beehive or one of these other products?

• 1:42:16Speaker 04

  You know, I think it's good if there are multiple options out there and that they get better and better. And I think companies like Beehive are pushing Substack to update their own technology. You know, from a technical component, I was really impressed with Beehive. Ultimately, Substack was where a lot of my peers, a lot of the folks I think are startup curious are today. It is, I think, an effective social network. And so when I was thinking about who I wanted to partner with, that was really important for me, you know, other journalists, other writers who are in the ecosystem who aren't journalists. I hope that we can collaborate. They can, you know, send their audiences back and forth. And I think, you know, what they're doing in video notes, they're trying to kind of adapt and have new ways to reach audiences. And that's going to be a huge priority for me.

• 1:43:00John Coogan?

  I had a crazy idea. I pitched another writer, I want to get your take on. The 30 under 30 list is, it's controversial, but I think generally, like, there's a lot of people that want to be on it. They're excited and then they get frustrated when they turn 31 or they're ineligible. My idea was every week for the full year, you post, here are 20 cracked 20-year-olds. And then the next week, it's here are 21 really great 21-year-olds. Here's the 22-year-olds. And you're just chronicling all the great people in tech. It's an opportunity to get on a list every single week. It's massive viral fuel. Do you like the idea? And can we expect it from your media empire in the near future?

• 1:43:41Speaker 04

  I promise, I promised everyone I would wait at least two quarters before I shipped a crazy list. So I got to add that to the product roadmap. But I do want to cover non-CEOs. I think there are a lot of cool people in startups.

• 1:43:53John Coogan?

  Totally.

• 1:43:53Speaker 04

  We don't ever hear from.

• 1:43:54John Coogan?

  Totally, the operators, right? Yeah.

• 1:43:56Speaker 04

  Yeah.

• 1:43:56John Coogan?

  Makes a lot of sense. Well, I mean, thanks for stopping by. Congratulations on the launch. We'll definitely stay tuned. We'll have to have you back when you break a big story or do a wonderful.

• 1:44:06Speaker 05

  And it'll be my goal to have you guys on my show someday.

• 1:44:09John Coogan?

  Fantastic. We'd be happy to do it.

• 1:44:12Jordi Hays?

  Yeah, we're down, but we will also be streaming our show at the same time. We will have dual syndication.

• 1:44:17John Coogan?

  I love it. Well, thanks so much for stopping by. Good luck.

• 1:44:20Jordi Hays?

  Congrats again.

• 1:44:21John Coogan?

  Congrats again.

• 1:44:22Jordi Hays?

  Talk soon.

• 1:44:22John Coogan?

  Talk to you soon.

• 1:44:23Speaker 05

  See you guys. Thank you.

• 1:44:25John Coogan?

  Fantastic. Well, coming in next, we have Willem. This is your buddy?

• 1:44:29Jordi Hays?

  Yes.

• 1:44:30John Coogan?

  You want to give a little backstory on who this guy is?

• 1:44:32Jordi Hays?

  Yes. I mean, he should be in the waiting room any second. I will make sure.

• 1:44:36John Coogan?

  From terrain.com. Good, good domain.

• 1:44:39Jordi Hays?

  Fantastic domain.

• 1:44:40John Coogan?

  Fantastic domain.

• 1:44:42Jordi Hays?

  Fantastic domain.

• 1:44:43John Coogan?

  Single word. Nice little logo. Says, "Call your shot." Terrain is an early-stage investment firm focused on software and technology.

• 1:44:49Jordi Hays?

  Okay, so Willem.

• 1:44:49John Coogan?

  Not giving me a lot to work on there, but we'll hear it from him. He's here to break it down for us. Willem, are you there? What is Terrain? Welcome to the show.

• 1:44:57Jordi Hays?

  What's going on?

• 1:44:58Speaker 05

  How are you?

• 1:44:59Jordi Hays?

  Look at this. Popping in with the art. What do you got behind you?

• 1:45:02John Coogan?

  Yeah, bring it down for us.

• 1:45:04Speaker 05

  This is actually a piece that my mother made.

• 1:45:06John Coogan?

  Oh, that's nice.

• 1:45:07Speaker 05

  So I'll put a plug out for her, her work. It's Catherine Van Lancker.

• 1:45:12John Coogan?

  Shout out Catherine Van Lancker.

• 1:45:13Speaker 05

  She's been a painter my whole life.

• 1:45:15John Coogan?

  Fantastic. Can you break us down? What is Terrain? What are you working on? What are you announcing most recently?

• 1:45:22Speaker 05

  Yeah, absolutely. And thanks for having me here, guys. It's great to have you.

• 1:45:26Jordi Hays?

  It's great to have you.

• 1:45:26Speaker 05

  Great to see you both. So Terrain is an early-stage investment firm that I started last year with Eric Stromberg. And we back founders who have specific and ambitious views of the future. We like to say these are people who call their shot. These are folks like Zach Dell and Justin Lopez at Base Power, Alex Mather at Eternal, Zach Abrams and Sean Yu at Bridge. And increasingly, we think that this is just going to be very important to build a meaningful and lasting company, whether you're attracting capital or building an audience or building a team, that being able to clearly articulate your vision of the future is just going to be the, the

• 1:46:10Speaker 05

  things that separates the good from great.

• 1:46:13John Coogan?

  Yeah, definite optimism. I, I want to know about like the whole call your shot, your declare your free agency thing. It feels much earlier than, hey, show up on Sand Hill Road and raise a mango seed round in a weekend. Walk me through the different options that founders are facing these days. They can go do YC, especially if they're, if they have a good track record. They can even do EIR programs at Founder's Fund, or that's what I did. I wound up doing this.

• 1:46:43Jordi Hays?

  Friday and slip.

• 1:46:43John Coogan?

  But, but at VC funds, they have EIR programs that are like a little bit more flexible for folks. But, but where, where do you see slotting in? Cause it sounds like you're thinking pretty early stage.

• 1:46:53Speaker 05

  Yes. So, you know, first and foremost, we're an investment firm. We invest from that really early stage, which I'll talk about shortly, through to seed in Series A. So we're very kind of flexible in kind of where we enter and, you know, work with, you know, those companies that existed are, you know, raising mango seeds or Series A's, wherever you want to call it. This most recent program we launched is called Free Agency. And what that is, is a concentrated 90 day period before you have your idea to go through a focused exploration to uncover your idea. And this stems from the belief that it's kind of a missing thing in the market. It's something that I saw while I was at Thrive Capital, where we were partnering with people

• 1:47:36Speaker 05

  who had an edge or an interest area in a certain technology or a background, but we're not yet convicted behind what that is. And, you know, the venture industrial complex tries to, you know, give you capital and, you know, quite frankly, perhaps before you're ready and make those commitments and those decisions before you're ready. And so with Free Agency, what we're doing is we're unbundling that from selecting your idea and taking capital. So there's no strings attached. There's no cohorts. There's no demo day. There's no kind of deal that you have to take. It is really this period of open exploration. And our hope is that it results in more thoughtful and deeply convicted ideas from the founders we get to work with.

• 1:48:18Speaker 05

  And on the other side of that, if it makes sense to partner with Terrain, fantastic, we will be there and waiting. But we believe that that is just something that is really needed. And we're on the last day of applications today. And quite frankly, I've been really surprised and elated by how many people this seems to resonate with.

• 1:48:37Jordi Hays?

  Do you think most people can figure out if an idea is good or bad without spending money? Because the typical accelerators like come in, we're going to give you 200 to 500 grand, maybe a little bit more, and then you're just going to start spending money to like figure out if the sort of high level idea that you had is good. Now, I think a lot of really brilliant entrepreneurs do all the work to sort of like make that idea concrete, sometimes for years prior, without ever spending sort of explicit dollars. But venture dollars are so available, so as part of this program to basically say like, all you need to do is invest time and energy into exploring your idea. You actually don't need money, but when the time comes to actually hit go,

• 1:49:20Jordi Hays?

  we'll be there, you know, other funds in your network will be. So maybe talk about that, because like you at Thrive Capital, leading incubations, you guys incubated a lot of companies. I'm sure you also explored potentially thousands of ideas, right? And so maybe talk about kind of your process. And I imagine a lot of free agency is like built out of, and your sort of process internally is like, how do you evaluate ideas? How do you kind of build conviction without having to spend a lot of money?

• 1:49:53Speaker 05

  Yeah, so one good feature of today's ecosystem is that we actually have access to a lot of resources that maybe didn't exist in decades prior. Every person that participates in free agency gets access to over 350 grand in compute resources and service resources, that sort of thing. So there is some capital to deploy via technology. That is not dilutive or anything in that regard. You know, the process, and I'll kind of go back to kind of zooming out for a second.

• 1:50:28Speaker 05

  Each of these products, EIR, Accelerator, Incubator, Free Agency, they're products for founders, right? And so you have to meet the founder kind of with what they need in that moment. Free agency is not going to be for every single type of founder, and it doesn't need to be. You know, if you're a young person and you're looking to get access to network and you know, entre into Silicon Valley, accelerators are phenomenal for you. But what we found with the people that we're engaging with is that we don't, they don't want to be put onto that track. They don't want to be kind of put onto that timeline and make those decisions kind of too far upfront. Instead, what they want is close partnership to dissect an idea, to dissect a market with the perspective of investors

• 1:51:12Speaker 05

  and with the perspective of someone who can be that thought partner through the journey. And you know, you guys have both started companies, like you know that feeling of being close to something, but not quite there. Like it is not the myth that is often told on stage where you know, you're struck by lightning one day or like the, you know, almighty comes down and just drops the idea into your head. It is a process of iteration of staring into the abyss at times. And we just think that there can be some structure placed on that and some shortcuts to you know, strengthen the business model or strengthen their travel through the idea. It's what we saw time and time again at Thrive. And the reason to not attach capital to it is one, both for that point of commitment and restriction.

• 1:51:57Speaker 05

  But the other is I think it makes you make decisions differently. I think that you either, if you have that stipend and you're hanging out in the offices and you're drinking the spa water in the VC office every day. I think you have a different mentality about the burning platform and the company that you need to go and build. And so we think that, you know, actually creating a little bit of a pressure cooker during that time is really, really important.

• 1:52:20John Coogan?

  Yeah, I completely agree. Why C is

• 1:52:23Speaker 05

  I love spa water too.

• 1:52:24John Coogan?

  I mean, yeah, but one of the best benefits of Y C is just like the competition of like seeing everyone around you, the pressure and having a deadline. It's great. I, I wanted to ask about like archetypes that you're seeing. Like there's so many different people that I could imagine going into this from the, the repeat founder who really wants to make sure that they call their next shot and they take a big swing in it. And they're ready to set up with a lot of capital when they're going versus the employee, early stage employee at a growth stage company that wants to move on to something new, leverage something, but wants to fully transition out of the previous company. Versus like the high school, college dropout.

• 1:53:01Speaker 05

  Yeah.

• 1:53:01John Coogan?

  Is, is there a pattern or are you just widely open to everything?

• 1:53:04Speaker 05

  It's been, it's been really open. So we've had hundreds of applicants already. You know, these have been engineers and designers and companies like OpenAI and Databricks, SpaceX, Ramp, you know, like you name it. We have a Gen Z creator who has millions of followers and more research focused people like, you know, from DeepMind. And then some successful repeat founders, both in our network and kind of entering, you know, from, from the application. And I think what it illustrates is that there isn't something really like this. And I, and I feel, you know, kind of, uh, you know, you're supposed to keep these things secret for a while, but it really feels like we've hit on something to, um, to meet people in this moment at this stage. I think with this first batch, we're going to experiment and try to take on a real diversity of, of people while

• 1:53:49Speaker 05

  keeping it focused. Um, but I imagine over time we'll start to see a kind of a consistency form. Um, but you know, more than anything, I think these are people who are not starting something because someone else told them to. They're starting something because they believe that this is the, almost the last resort, right? It's like, I can't join a great company or I'm at a great company and I have this thing kind of burning in me to go build a company.

• 1:54:13Jordi Hays?

  Is talk, when you're, when you're calling your shot, you have a big sort of vision for the world, is talking to customers overrated? Like the Y C approach is like, have a loose idea, iterate quickly, talk to a lot of customers and that clearly works. But at the same time, we've seen some other like sort of major power law businesses where they clearly just had like a vision for how they imagine the world. And yeah, you got to talk to customers along the way because you have to sell to them. Uh, but, but you know.

• 1:54:43John Coogan?

  It's the Henry Ford thing. Like if I asked people, they would have said a faster horse. The ultimate like, I didn't talk to customers, guys, Henry Ford.

• 1:54:50Speaker 05

  Yeah. Look, I think, you know, Henry Ford certainly talked to customers along the way, but I think that had the vision of what he wanted to create. And that's the case that we see with, you know, with people like, um, you know, Zach Dal at base. It's like, he wants this idea of, um, you know, energy too cheap to meter, right? And that's where the starting point is. And let's work backwards from that because if we can achieve that view, we know we can appeal to customers, right? Or, um, you know, Zach, uh, a lot of Zachs, Zach at Bridge, uh, you know, started that company not during a time when, uh, cryptocurrencies and stable coins were all the rage, right? It was, it was built on internal conviction over many, many years. And I think that in the environment today where software has eaten the world

• 1:55:35Speaker 05

  and you should assume that if you're on to something interesting, there are two or Three other competent, well-funded, you know, good people going after as well. It has to be, you know, from that kind of internal conviction. Not from, you know, I pulled 500 people and they told me that, you know, dogs want this type of, you know, X, right? There was an era where I think that worked and I think we're out of that era.

• 1:56:00Jordi Hays?

  Do you think founders get way too much validation of their ideas from investors? Because I've fallen into this trap before where people will invest in your company. You know, if really smart people will invest in your company, sometimes you can think, oh, I must, this must be a good idea, you know, because people were willing to bet on it. When usually from the investor's point of view, there's tons of scenarios where investors are like, yeah, I'm sort of so, so on the idea, but this guy is just so great. So is that some kind of like, you know, I'm curious if like, you know, one of the, like, you should basically get validation in your idea by spending enough time with it, spending time, talking with other intelligent people that aren't just incentivized to deploy capital,

• 1:56:44Jordi Hays?

  but actually want to help you find that, you know, help you get to the point where you can actually call your shot.

• 1:56:50Speaker 05

  Totally. Look, I think that maybe 15 or 20 years ago, when C2C and early-stage venture was more scarce, you could rely on that. Like, you know, you could say, well, you know, there's someone who's willing to stake capital on this and thus I've passed through some barrier. Now, that didn't mean that it was, you know, the next Google or Facebook, but there was some barrier that you passed through. I don't think that's the case. And I think that honestly, the best founders are not solving for capital at the beginning. There, you know, there's, there's more options available for them than ever. There's bootstrapping, there's, you know, coming in with past success. There's friends you have around the table. And so what I think that means is that the moment you put up that flag and say, I want to start something

• 1:57:34Speaker 05

  and you're, you know, a talented individual with great experience, those offers start rolling in. And you have to have the internal fortitude and disposition to say,

• 1:57:46Speaker 05

  You know, I'm I need to make sure this is the right thing because that investor or that angel investor is going to place who knows how many bets and you're going to place one during this period of time. You are an investor of your time and that is one thing that you can do during this period and you have to take that really seriously. So I think that it's it's much more about finding that for yourself because you can't outsource conviction and you can't outsource that type of diligence. Especially when the incentives aren't necessarily fully aligned.

• 1:58:16John Coogan?

  I have a question.

• 1:58:16Jordi Hays?

  Go for it.

• 1:58:17John Coogan?

  You used LeBron James in your launch video. Where do you stand on the GOAT debate? Is he a better basketball player than Michael Jordan?

• 1:58:25Speaker 05

  As a kid of the 90s, I think it's got to go to it's got to go to MJ. That video, it pained me as a Celtics fan to to show him in a Lakers jersey winning winning championships. But look, he's someone that I think, you know, had doubters throughout his career, even does today, and now Bronny, you know, after him. So I and you got to tune it out, you know, and I think that if you're doing something right, then people will throw shade at you and I think it's a great thing.

• 1:58:52John Coogan?

  It's still a great metaphor. Do you have a last question?

• 1:58:54Jordi Hays?

  Yeah, last question. I'm sure you get hit up by people all the time that are starting venture studios, incubators, etc. You like ran incubations at Thrive. Now you're running a traditional venture fund. I'm sure you could do an incubation. But do you think that that model is best done opportunistically versus, you know, systematically? What's your takeaway from, you know, doing a bunch of these?

• 1:59:24Speaker 05

  Totally. The, you know, going back to that kind of idea of products from a product person, like you have to be building a product for a great audience. And I think that you need to be honest with yourself about what value you provide to a founder. And, you know, incubation is a really appealing tool, right? And I think it's like, hey, we can get more ownership and we can kind of, you know, I have all these great ideas and I can create it. But I see a lot of VCs piling into it, I think, for the wrong reasons and are going to make some mistakes. I think there's a real alchemy that it takes to. Get it right. And you have to know, just like as a founder, I think you have to know where your edge is. And when I was at Thrive, you know, my focus was on incubations and it was working really closely with founders

• 2:00:04Speaker 05

  right from the beginning. But there was always a humility in the fact that the founders are going to build this company, that we need to, you know, put the right environment together to help them, you know, find it. And also there's a lane of where we can incubate and where we can't. These are areas that at Thrive, it was, you know, heavily regulated industries. There are really large markets that perhaps would take deep capital availability to succeed within. And it wasn't everything. And that I think was the beauty of being able to do both things of do early stage investing and incubate allows you to have that flexibility. And it's something that, you know, I believe we'll do really well at Terrain too.

• 2:00:40John Coogan?

  Awesome. Well, congratulations and good luck.

• 2:00:43Speaker 05

  Yeah, no, you it's open for until the end of today, maybe.

• 2:00:46John Coogan?

  People can apply right now?

• 2:00:47Speaker 05

  Maybe midnight? Yeah, people can apply. It's been open for the last few months.

• 2:00:51John Coogan?

  And you got a great domain too, Terrain.com.

• 2:00:53Speaker 05

  Terrain.com, Terrain.com/freeagency. It's a short application. Hope to see some people that cite TVPN as the the source that they got it from.

• 2:01:02John Coogan?

  Thank you. Your next Powerball winner is coming from our audience.

• 2:01:05Speaker 05

  There we go. There we go. Thanks, guys.

• 2:01:07John Coogan?

  We'll see you soon.

• 2:01:09Speaker 05

  We'll see you.

• 2:01:09John Coogan?

  Thanks so much. We got, we got Jordan Schneider from China Talk coming on next. I'll let him give the pitch, but this is fantastic.

• 2:01:17Speaker 05

  China, China.

• 2:01:18John Coogan?

  It's one of those podcasts that's completely a portal to another world where on most shows, it shows up in your RSS feed, you probably haven't heard of the guest, but you, so he's doing, he's doing not only the great work of putting together the show, but also curating the guests, bringing you information that you would just never find otherwise. And it's, he's been a really fascinating host. So I think he's here. Let's bring him on down. Jordan, how you doing?

• 2:01:50Jordan Schneider?

  I'm doing amazing. It is a rare occasion where I get to get actually dressed up for something. So this is a real tweet treat for me as my camera totally fucks up.

• 2:02:01John Coogan?

  It's okay.

• 2:02:01Jordan Schneider?

  And we switch to the shittier one.

• 2:02:04John Coogan?

  Oftentimes an audio show, but that looks good, too. That's great.

• 2:02:08Jordi Hays?

  There we go. Lovely jacket. Lovely jacket.

• 2:02:11John Coogan?

  Great to have you on the show. Can you give us a little bit of like a-

• 2:02:13Jordan Schneider?

  I wore this for my wedding. It's my only look.

• 2:02:15John Coogan?

  Nice, nice. Can you give us a little high level on China Talk, what you're building? Just introduce yourself to the fans.

• 2:02:23Jordan Schneider?

  Well, yeah. Hello, everyone out there. I guess I just first want to start off by saying, you know, I grew up listening to sports radio and to have like a call in show be revived on a vertical that I now spend way too much time of my life thinking about, I just think is great. So like, I'm rooting for you guys. I think you're on to something.

• 2:02:42John Coogan?

  We appreciate it.

• 2:02:43Jordan Schneider?

  What is China Talk? It is a podcast and newsletter about US-China and technology that I've been running for the past eight years now. And John did a really good introduction. I don't know. It's kind of weird. Like, I'm not really trying to like break news or report on news. It is just, the best tagline I've given for myself is Dwarkesh for the deep state.

• 2:03:09Jordan Schneider?

  Just like, like the stuff that politicians and intelligence officials listen to on their drive to and from work where, I mean, I guess now we're bringing cell phones into skiffs and texting about targeting information. So maybe my, maybe my window is gone.

• 2:03:29Jordi Hays?

  You need to get added to the chats.

• 2:03:30John Coogan?

  Yeah, yeah. They should have added you. It would have been great.

• 2:03:34Jordan Schneider?

  I can neither confirm nor deny that I told the missile to be, you know, 500 meters to the right and be released right after the goat ended up, you know, doing its feeding or whatnot.

• 2:03:48John Coogan?

  I mean, speaking of the Signal chat thing, what is your take on that? And what has the, has there been a reaction in China or amongst your sources and friends and people you text with?

• 2:03:58Jordan Schneider?

  It's just fucking embarrassing. It's amateur hour. This is the D team. And I think this is like the best. Like, everyone knows that these are not all the sharpest tools in the shed. And I think there are different levels of competency that you see across the cabinet level of this administration. And the problem is, is like, when you look at the discourse of actually the quotes and the arguments that they were going back and forth to each other, like, honestly, I feel like my high school Model UN team might have been able to do a better job weighing the pros and cons and timing of this sort of stuff.

• 2:04:39Jordan Schneider?

  So that's really what, beyond the sort of like, obvious like illegality and of like texting about classified information. I was just kind of bummed that like, you know, you grow up being like, oh, man, maybe one day I'll be a national security advisor. And then it's like, oh, wait, like, I, I actually did a better job of this when I was 17.

• 2:04:59John Coogan?

  I mean, this is what Trey Sevanis always says, there's, you know, you, you, you, you, you expect that there is a queue in, from the James Bond universe with secret gadgets and, and an all-knowing eye and a man in the chair and secret agents running around the globe. But in fact, there is no queue. You have to build it yourself.

• 2:05:17Jordan Schneider?

  I got a book recommendation for you, John. So there's this, there's this book called The Wizard War by R.F. Jones, who was 28 years old and a PhD physicist out of Oxford. When in 1939, World War II breaks out and he is like the only scientist in the entire British intelligence community. And basically, he was a complete bull in the china shop, telling everyone they were full of shit. And ultimately Churchill, he got into a meeting with Churchill and there are some, you know, 50-year-old people who are saying X, and he's like, no, it is Y, and here are the 20 reasons why it's Y. And then because he impresses, you know, the big dog, he ends up really getting to have a big impact

• 2:06:00Jordan Schneider?

  doing all this cool stuff around, you know, radar and targeting systems and whatnot. And it, and it goes to show that like, like- Yes, Trey Stevens is right in that at one level, there's no there there, but it also means that like really excellent people at a certain point in history, when they get the right level of top cover can like really punch above their weight. And what is concerning, I guess, about watching the past few months of this administration is like that bench of extraordinary, like, like it's great if you have the extraordinary cabinet secretary, which I don't think there are any, but like one level down and two levels down, like you want at least the cabinet secretary

• 2:06:45Jordan Schneider?

  to be able to note this sort of mid-level person who's really great and give them room to run. And I just, I'm worried that's not the timeline we're living in, but anyways, we can talk about tech too.

• 2:06:56Jordi Hays?

  Let's talk about.

• 2:06:58John Coogan?

  We never talk about politics on the show, ever. No politics. So let's move on to tech and geopolitics. Let's talk about China.

• 2:07:05Jordi Hays?

  You can talk about whatever you want. Uh, yeah, just maybe, maybe I'd like to go a little bit back in time and talk about what drew you to be interested in China in the beginning. I studied Mandarin in college. Uh, I decided instead of going to, you know, study abroad in Barcelona and just, you know, party or whatever, a lot of people do in college. I decided to go to Shanghai. And I was working out of a, of a Chinese startup accelerator that was bringing sort of Western startups in, which is the most flawed idea. China accelerator in, uh, in Shanghai.

• 2:07:41John Coogan?

  Yeah, sure.

• 2:07:42Jordi Hays?

  Yeah, yeah. It's, it's like, it's, it's one of the, it's like.

• 2:07:45John Coogan?

  So Jordy has a ton of experience in China and I had a layover in China once. I was there for 12 hours in Guangzhou. So you're talking to experts and don't dumb it down for us. But some of the listeners might be less familiar. So why don't you take us through how you got into China?

• 2:07:59Jordi Hays?

  Some, I had this idea as a kid, but you know, a lot of kids wanted to be astronauts and things like that. I wanted to be an international businessman. I had this sort of extreme vision of myself with a briefcase, you know, traveling to Asia to do deals. Like that was like foundational. Memory. And then I went to China and I realized, one, I was really frustrated that nobody really wanted to speak Mandarin in Shanghai because they speak Shanghai's, which is like a completely different dialect. And so I was like, what am I even doing here? And so, and then I very quickly like, I feel like I clashed with the culture. I had, you know, friends that were, you know, local. Chinese, but overall, from a, from a business culture standpoint, it just didn't work.

• 2:08:40Jordi Hays?

  I felt like the entire model of the accelerator that I was working out of was flawed because they were trying to bring Western companies in to build in China. And we were just constantly getting blocked on everything. It was like, clearly China didn't want us to thrive there. And we've seen this with other big companies. So anyways, I got a sort of bad taste in my mouth, left, decided never to come back, stopped studying Mandarin. But I'm still very fascinated with it, but I'm curious, you know, to hear about your kind of journey into all this.

• 2:09:12Jordan Schneider?

  Sure. Well, what was that, what was the timeline? What were the years of that arc for you?

• 2:09:15Jordi Hays?

  This was 2016, so it was like during the Trump Hillary election cycle.

• 2:09:22Jordan Schneider?

  Okay, so yeah, I mean, my, my China arc was 2017 to 2020. And I think I was living in Beijing, which is a, you know, different experience on, for a number of reasons than, than Shanghai. But I also came to China wanting to work in tech. I guess like my, or I came to China and then very quickly it was clear to me that like the only interesting jobs were ultimately going to be, not in like Western firms trying to enter China, but this was like the hot minute where Chinese firms were trying to expand around the world. And that wasn't like quite as sensitive as it ended up turning out to be. So, you know, working at places like ByteDance and, you know, the company that turned out to make Timu,

• 2:10:07Jordan Schneider?

  all were the sort of interesting jobs for foreigners because you were totally right. Like, like the alpha of being a foreigner, a foreigner doing business in China is like a 1980s, 1990s, you know, first half of the 2000s story. And then sort of your only alpha as a foreigner in China was not even like, you know, working at Microsoft China or whatever, what have you, but like helping the Chinese firms explore the rest of the world. So I moved there in 2017 for graduate school. Very quickly it was like, all right, if I'm going to stay here, it's going to be working for a Chinese firm. Cause like.

• 2:10:46Jordan Schneider?

  Like there's no other interesting jobs. I did that for uh it's like nine months, I think I was at KAI Show. Which was actually the first company to do short video and got completely blown out of the water by ByteDance. But within two months of being there, I was like, oh, this is really silly. Like they're asking me to expand into Turkey. And I don't speak Turkish. Um, and doing my podcast and newsletter when I was at work was more fun. So I kind of rode that until they realized that and fired me and then COVID happened. And I left. Um, so anyways, I mean, good time. Don't regret it.

• 2:11:26Jordan Schneider?

  But yeah, the uh, the sort of the, the, the time where there was any edge in being a Western business, trying to expand into China. I think closed um before your or I'd or ours time.

• 2:11:39John Coogan?

  Well, I want to go through some of the big topics that you've covered recently. Maybe we should start with just the foundation model battle that's going on. Can you give us a lay of the land over in China? What's happening on the LLM front?

• 2:11:51Jordan Schneider?

  All right. I gotta, I gotta take for you that I'm parroting from Alvin Wong, who gave it to me today at breakfast. America created DeepSeek. So um, there is this window uh in around 2017 or 2018. Where the calculus of the top students in China about where they want to go to undergrad and where they want to do. Uh, you know, masters and PhDs changes. And part of it is a function of opportunities in China where wages are increasing. There's this big, exciting startup ecosystem, but there's also a big part of it of the Trump administration and just like, you know, the vibes being bad.

• 2:12:34Jordan Schneider?

  And that the vibes being bad for Asian Americans, uh, you know, whether that's like realized by the numbers or just amplified by Chinese propaganda. And then COVID where um, sort of like uh, China was doing fine over the course of 2020. Um, and America wasn't. So the sort of choice and it was also very difficult to go. Go back and forth between the two countries, which, you know, if you're going to be deciding to like go and live halfway across the world, like you might want to see your parents every once in a while, which was not a straightforward thing during the lockdown years. So what used to happen pre 2016, 17 is the best Chinese students would go to the tier one universities in the US.

• 2:13:18Jordan Schneider?

  The sort of next rung down would go to the tier two universities in the US. And then the third rung down would go to the best Chinese, the best universities in China. And that was kind of a clear hierarchy. But once you had these three factors of China's economic, you know, earnings potential in China expanding, like bad vibes for Asians in America and COVID. A lot more of those sort of top folks who would have ended up wanting to go to, you know, MIT or Stanford just stayed in, in China. And the core of DeepSeek's engineering base are all under 30 and all from those top Chinese universities in that cohort. So we really messed up our shot to do this whole brain drain thing.

• 2:14:02Jordan Schneider?

  Or we had a great thing going for like 40 years of really getting the best Chinese talent to come to America, get their education here. And by the way, like 85% of the folks who end up getting PhDs in STEM in the US, like either try to stay or end up staying. But by sort of screwing that up, we've really undercut ourselves, I think, for the, for the long term. That's a good trend.

• 2:14:24Jordi Hays?

  What's your take now on the true cost of DeepSeek? Because they came out with this like clearly a number that, that was just shockingly low. And it felt like it was designed to shock the market. And then more truth sort of came out over time, but it's, it's less, you know, it's less impactful when it's sort of dripped out and saying, whoa, we had, we did have these chips and well, we didn't count our R and D costs. It was just, you know, it just seems like to me it's now unclear, but clearly was more, more expensive. Do you have a good, sort of, have you sort of tried to triangulate it?

• 2:15:02Jordan Schneider?

  Yeah, I mean, like, look, it's not dirt cheap, but they also don't have as many chips as Anthropic or OpenAI or Google. So, you know, there's some sort of triangulation that that you can do. I'd point you guys to Nathan Lambert, who kind of did the back of the envelope math. He came up to like a, like $300 million a year, like annual run rate for DeepSeek, something like that, right? I mean, it's a, it's a very successful quantitative hedge fund. They have money to burn, but they are also not Google, right?

• 2:15:34Jordi Hays?

  Yeah.

• 2:15:34Jordan Schneider?

  But I do think this sort of interesting angle or story from this is that there is an aspect of not necessarily like constraints breeding creativity. Well, there's a part of that, but also the sort of constraints lead you down different technological trees. And which is not to say that like the US or Western labs can't like explore the more, the things where you're not necessarily pushing capabilities, but pushing efficiency, which I'm sure they are as they kind of reach the limits of like, oh, man, like, I guess we're gonna have to do $100 billion run to make our model better. But I think DeepSeek kind of came to that earlier, the sort of need to really push on

• 2:16:19Jordan Schneider?

  kind of the the efficiency frontier as opposed to the capability frontier, because they ran out of chips before the likes of OpenAI and Anthropic.

• 2:16:28Jordi Hays?

  Well, yeah, on going after that, when you're trying to understand something related to China, how many different sort of data sources do you need to basically triangulate? Because my experience living in China, people were willing to just basically say nonsense or lies to sort of further a, one of their ambitions. And so like, I came away from that experience being like,

• 2:16:59Jordi Hays?

  Not having a, it wasn't a very like high trust dynamic between me and anything coming out of sort of specifically like national security, you know, sort of like critical, critical issues. I just sort of like state media, anything along those lines, you know.

• 2:17:16Jordan Schneider?

  What's the algorithm for finding?

• 2:17:18Jordi Hays?

  Yeah. What's your truth algorithm?

• 2:17:20Jordan Schneider?

  What's, what's the algorithm for finding truth in Silicon Valley? I mean, I was about to say. Besides watch this show, right? Yeah. I mean, there's a ton of hype in, in Western.

• 2:17:28Jordi Hays?

  And I, and I, and obviously, obviously every company comes out and saying, we're replacing $5 trillion of labor with our AI agents and we're doing this and we're doing that. But, but I do, I do think it's.

• 2:17:42Jordan Schneider?

  Yeah. I think there, I think it's interesting in this, there are sort of different heuristics you can apply to different, you know, to different fields, right? So for instance, Jeffrey Goldberg, you know, the equivalent of the Chinese Jeffrey Goldberg, if they were added to the, you know, war planning group, WeChat group, would not have published that, right? So like, I think, you know, the closer you get to kind of like, you know, national security adjacent questions, the more, yeah, you know, you're dealing with a, with an authoritarian state who has complete control of media and like, there, there's a whole kind of ecosystem of people who try to like read through the lines of state media

• 2:18:27Jordan Schneider?

  and, you know, PLA journals to try to understand what this stuff means. I think for the sort of more commercial tech focused stuff, um, yeah, you know, these are mostly private sector firms trying to play games and, you know, Raise money. Raise their next round, right? I think the one difference is that there is more money that flows directly from firms to journalists in China. So the sort of discount factor that you have to apply to Chinese technology coverage, specifically positive technology coverage, or even negative technology coverage, because sometimes that's like seeded by the,

• 2:19:08Jordan Schneider?

  you know, enemy company or whatever, tends to be, tends to be higher. So, you know, it's fine and you, you get to know the journalists and you get to know which outlets are, are more or less credible. But that I think is the, is the main difference here.

• 2:19:23John Coogan?

  Can you talk a little bit about humanoid robots? I keep seeing these incredible videos of Unitree robots. There's a lot of skepticism around the American robotics companies being maybe behind or maybe teleoperating a lot. Like, what's your take right now on humanoid robotics?

• 2:19:39Jordi Hays?

  Yeah, specifically, does the US need to pay more attention to Unitree running this sort of DGI playbook with humanoids?

• 2:19:51Jordan Schneider?

  I mean, I don't know about humanoids, man. I mean, like, like, it is, I think it is obvious. It is pretty, like, we did two features on the Chinese humanoid robotics industry and then Chinese industrial robotics industry. And I think the sort of, the big markets in the, you know, three-year horizon, let's say, are much more on the industrial robotics side. But in general, like, we don't build robots here. And so, from a, from a, yeah, I think any sort of like, large-scale manufacturing thing,

• 2:20:31Jordan Schneider?

  whether it's Unitree or another, or industrial robots, or cars, or what have you, like, China has a really remarkable advantage in scale, in manufacturing scale. And the US, like, it's not just the cost of labor, it's the experience, it's the network, and it's the kind of like, 25 years of learning that all these firms have been doing to get to the place where they can, you know, manufacture a drone 15 times cheaper than the US can. So, yeah, I think it's, I think it's real. I don't really know how to solve it. I mean, you're friends with all the Gundo bros, like, ask them for the, for what they need to build a billion of these, but, yeah, I'm a little worried.

• 2:21:13Jordi Hays?

  What's your take on the news out of Ant, talking about how they, they've had some training model breakthroughs through, like, leveraging what they're saying is entirely Chinese chips? Do you, do you have a good read on, on that situation yet? Is it, is it important, or is it just? Another headline.

• 2:21:36Jordan Schneider?

  I don't really buy it yet. I think there's a, there's a really interesting wrinkle in the sort of Chinese domestic chip manufacturing arc. So just to back up for all the viewers out there, America in October of 2020, or the Biden administration in October of 2022, had this big export control push where they were just like, we're going to do everything on our power to, well, we're going to start trying to restrict China's ability to import semiconductor manufacturing equipment so that they would not be able to, to make frontier AI chips to train the next generation of models. And kind of ever since Huawei, the China's leadership designer and SMIC, the kind of analog to TSMC,

• 2:22:21Jordan Schneider?

  have been trying to push back against that, you know, fight through loopholes and make the, the sort of level of chips. And the quantity of, sort of the quantity and quality of chips that Nvidia is able to do at TSMC. So, you know, it is a big open question whether or not they'll get there. I think the jury is very much still out. I would be kind of wary of headlines because the, the sort of most important, there are two important facts to understand. Looking at this over the next three years. First, Huawei was able to manufacture an enormous amount of chips at TSMC

• 2:23:01Jordan Schneider?

  by basically creating a shell company, TSMC, you know, deciding to look the other way about some Chinese firm manufacturing all these AI chips. And then the US government catching them and be like, what the fuck? You can't do this anymore. So they have an enormous amount of supply. And so any sort of, we train this on only Chinese AI chips is not actually like SMIC chips. It's sort of like, you know, off-brand TSMC chips. So the big challenge is going to be whether SMIC can do them, can do kind of competitive chips at scale domestically. And the, the challenge there is they are not allowed and have not.

• 2:23:44Jordan Schneider?

  Yet been able to replace uh electrolyte uh EUV tools, which is what um ASML makes. And you can't really sneak it in. It's incredibly difficult to sort of re-engineer. And that's really the final frontier for Chinese domestication. And despite a handful of headlines, I think that uh over the past week, I think that is much more um uh smoke and fire.

• 2:24:05John Coogan?

  So I mean, th- they do have a competitor to ASML in SME, correct? And then they also need to rebuild SK Hynix at some point, I imagine, for the for the memory in the flash, right?

• 2:24:16Jordan Schneider?

  Yeah, I mean, they were also able to stockpile an enormous amount of memory. It was so awkward because there is literally a Reuters article in like the summer of 2024, like BIS is planning to crack down on memory. And then they did it a little bit, but like wrong in October. And then they finally didn't fix it until like the like, like a week before the Trump administration came in. So just fuck-ups all around. And uh yeah, at some point, but there's, there's, there's a whole lot of memory sitting, sitting in warehouses and in, in China that they'll be good through for at least the next two years.

• 2:24:51Jordi Hays?

  All right, so I'm going to massively generalize here and then you can try to piece it apart and, and, and fi- figure out uh if, if there's any meaning here. But uh China had, you know, decades to sort of embed uh embed Chinese, you know, either former or uh uh current Chinese nationals in US, in the US companies, which then were able to over time bring, bring back sort of important uh information, IP in different ways to sort of like catch up on uh, you know, advanced uh, you know,

• 2:25:31Jordi Hays?

  basically catch up on developing their own versions of products from everything from like the F-35 to phones and things like that, right? Now China, now we're in a position where like China is Much more advanced in sort of manufacturing, robotics, some of these things that you're saying. And we don't have the same benefit of being able to send a bunch of Americans over there for decades to sort of then like help us re-engineer that. What's the US's like actually viable strategy to kind of like catch up again? China's caught up on product development. Can we then, can we catch back up on advanced manufacturing? And what would be?

• 2:26:12Jordi Hays?

  Yeah. Is it, is it possible?

• 2:26:14Jordan Schneider?

  I got you. I got you. Yeah. So the thing that I always used to hold my hat on was America attracts the best scientists and funds the most science in the world. And that is a thing that may just stop happening because the Trump administration doesn't care about the National Science Foundation, National Institutes of Health, wants to blow up universities for better or for worse from their perspective. But like, this is the thing that won us the Cold War is getting the best immigrants and having them like do crazy STEM stuff. And so, yeah, I am worried about this because that was kind of my ace in the hole is like,

• 2:26:57Jordan Schneider?

  yes, you know, there will be this sort of like technology flow or sort of like human, human talent flow back and forth between the US and China. I think it's kind of like inhuman almost to cut that off. But the sort of hope and expectation is that like America is just a better place to live and folks will want to stay here and more like America will gain more from that exchange in the long run, just like, like what I was talking about in the, in the sort of deep seek context. And when you look at, you know, a lot of the founders of these AI firms, a lot of, a lot of sort of the top research engineers, like an enormous amount, like a, I would say over 75% of them were not born in the US.

• 2:27:40Jordan Schneider?

  So that is like our real superpower here is this being a country that is attractive to and like to a certain extent welcomes the world's best talent and kind of giving that away is just makes it a lot. More difficult because you do need to run faster on all of these different dimensions. And the way you do that, I mean, I, I, I buy into this sort of Silicon Valley mindset that like, like, uh, sort of like, the, the, there are such things as 10x engineers and you want to be able to like, capture as much of them and the extraordinary founders or whatever. And sort of losing out on that is, is, is gonna be, is gonna make it a whole lot more tricky.

• 2:28:19Jordi Hays?

  Last question. Peter Zeihan, very popular in tech. He likes to talk about how China's, you know, population is in free fall and the Chinese state as we know it is unsustainable. Peter Zeihan is one of those guys. The, the criticism is that when you hear him talk about something you know nothing about, you're like, this guy knows everything. He's like completely brilliant. And then when you hear him talk about something you actually know about, you're like, what is this guy talking about? I'm sure when you listen to Zeihan talk about China, you have some thoughts, but talk, talk about, you know, he, he basically is writing them off. He's saying, you know, yes, they're a force, but he's sort of like writing them off long-term in many ways due to the demographic issues, you know? Do you have any comments on that?

• 2:29:04Jordan Schneider?

  What, what's that Mad Men line? I don't think about you at all.

• 2:29:08Jordan Schneider?

  I mean, like, I think, I think in general, um, sort of, there are nuances to everything I've said here, which I have, you know, kind of tuned up for, uh, for, uh, our new generation of sports call and radio. Um, I think there are demographic challenges. China is not 10,000 feet tall. There are definitely things that it has been really overperforming on and some of the trend lines, um, you know, some of the trend lines I think are very worried, were some to Washington. Other trend lines are very worrisome if you're running China. Um, and kind of understanding the nuances of that and, and also baking in like different potential futures of like things that America

• 2:29:50Jordan Schneider?

  could screw up, things that, uh, China could screw up, things that America could screw up, not relation indirectly to China, but relation to the way it deals with the rest of the world are all, I guess I gotta make the plug now. The sorts of things that we explore on China Talk, our podcast.

• 2:30:04John Coogan?

  We love plugs here.

• 2:30:06Jordan Schneider?

  Plug, plug, plug. Anyways, for more on that, that's, I guarantee you, more thoughtful and engaging than Peter Zeihan. Please search China Talk one word and your favorite podcast.

• 2:30:18John Coogan?

  China Talk dot media is the website. Go subscribe, add it to your podcast player.

• 2:30:23Jordi Hays?

  Well, you are now our official Eastern correspondent.

• 2:30:27John Coogan?

  We'd love to have you back on. I have like 25 more questions. Energy, we could go through chips more. There's so much we could do. We'd love to have you back. Thanks so much for coming on. This is fantastic.

• 2:30:36Jordan Schneider?

  Talk soon, guys.

• 2:30:36Jordi Hays?

  Thanks for coming on. Cheers.

• 2:30:39John Coogan?

  And we got some breaking news coming up. A big fundraising round, over $20 million pouring into friend of the show Pavel Asper Uhob's new startup. He should be joining in just a minute. We're excited to have him on the show to break it down for us. As soon as I saw the news break on X, I texted Delian three red alert emojis saying, get in this thing.

• 2:31:03Jordi Hays?

  Massive.

• 2:31:05John Coogan?

  And I think Delian's hopping in as well.

• 2:31:10Jordi Hays?

  No way.

• 2:31:12John Coogan?

  The big brother coming to pump the little bro's bags.

• 2:31:17Speaker 07

  And tell him to clean his camera. Clean up the camera. Got a good view. Got the boat to spare. This is the first time we're ever making an appearance on anything together. So, you know.

• 2:31:25John Coogan?

  Fantastic.

• 2:31:26Jordi Hays?

  Not the last.

• 2:31:27John Coogan?

  Welcome to the show, guys. Break it down. What's happening? What's the company? How much you raise? What are you doing with the money?

• 2:31:34Speaker 07

  So, the company, basically the root of it is healthcare providers in the United States spend a ton of time just dealing with the paperwork from insurance companies. And it really both distracts from patient care. So clinicians are just able to serve less patients. And when something goes wrong clerically, it can actually lead to like a delay in patient care. So depending on like some of our customers are autism therapists and it's like that delay in care for some of those kids can really lead to adverse outcomes. So we built this basically AI that merges basically like moves data from point A to point B. Cause fundamentally, it's just, as much as, you know, maybe other curly haired technologists like to say, it's not, it's not as much of a systemic issue

• 2:32:18Speaker 07

  as it is a, you know, technological issue and the.

• 2:32:24Speaker 07

  We're we're just really like insurers set up reasonable processes and have an appropriate check and balance in this workflow where you as an employer don't want to be paying like unreasonable premiums. You as a patient don't want to be getting care that's not medically necessary. But the problem is is like there's a competitive space between all these insurers. There's like 10 different insurers that a individual clinician might work with. So there's 10 different processes that have to manage. So it's really about plugging these two parties, making them just like work together better. Um, we sort of raised 27 million dollars across our seed and series A, 5 million seed, 22 million series A. And where we're taking that capital, we really just want to double down on our core product set.

• 2:33:07Speaker 07

  It's basically like expanding into more specialties and really we want to go a layer deeper into the extent that we help clinical staff. Today, we really just help with like the clerical parts of things. But as we sort of sit between these two parties, we really start to understand insurer guidelines. Like we understand why often might reject something and we just make sure that the insurers are able to get clean streamlined data that has passed all the basic validation. So that's where we're bringing the capital and hiring engineers, sales, operations, just really trying to scale the machine and expand on our core product set.

• 2:33:40John Coogan?

  So Bing Capital did the deal. Did the deal get done at Fogo de Chao? You gotta let me know.

• 2:33:45Speaker 07

  Did the deal, oh, oh, Dalian, oh, that was a Dalian question. Go ahead.

• 2:33:49John Coogan?

  No, no, that's for you because I saw you posting about it like two years ago.

• 2:33:53Speaker 07

  Fogo de Chao. No, the, uh, you know, I, it was part of the close more so than anything else.

• 2:33:59John Coogan?

  That's what put you over the, over the finish line. That's great.

• 2:34:02Speaker 07

  Yeah, right at the finish line. No, deal, uh, we were fortunate enough where, uh, this actually this deal didn't hit the market. Uh, we were fortunate enough to close it from our New York office.

• 2:34:12John Coogan?

  Fantastic. Fantastic. Uh, do you have a

• 2:34:15Delian Asparouhov?

  Say which, you know, sort of probably, uh, kind of covered, but I think for the broader audience, you know, that are maybe not super familiar with healthcare. The way the providers have gotten paid has just kind of fundamentally changed over the past like 10 years. Where basically 10 years ago, provider provided care and then went to insurance companies and said, hey, here's basically, you know, sort of what I did. I'd like to Get paid etcetera and sometimes the insurance companies would look and be like whoa, this is like really out of whack like this is not what I wanted to pay for. And so you have these kind of like, you know, sort of misaligned incentives. And so Pavel's whole companies focused on this like new workflow on basically within a prior authorization. So it's basically like. Now you have to go to the insurance company first, but because it's sort of like net new workflow.

• 2:34:53Delian Asparouhov?

  And it slows down care, right? Because before you just go to the doctor, they would give you the care and then you you deal payments. Now the insurance company is set up in the pre-work. But then because that if that takes too long, now all of a sudden you're like slowing down the patient experience.

• 2:35:05Speaker 07

  Yeah, which is also directionally like good. You don't want to be hit with like an unexpected medical bill, right? Like that's a lot of the times when you hear something like unexpected medical bills happening is because. You don't want the check happening after the fact. You do want it happening upfront, but like with our technology, you're able to do that upfront check without necessarily delaying the patient getting care.

• 2:35:22Delian Asparouhov?

  Yeah, if it takes like thirty days and this person needs like some cancer treatment, right? Like you want to be able to like, you know, get this stuff like approved quickly. And so there have been like. With the rollout of this new process, there's definitely been some patient backlash being like, what the hell? Like the doctor gave me my care plan. I would like to proceed. And I'm like waiting on my insurer to approve my ability to even go get, you know, care in the first place, you know, before the bill. And so it being fast is like super critical. The other thing that I wanted to mention is Pavel, co-founder of these two guys, Sagar, who was previously at Truework, but then the CEO is this guy Jeff Morelli. That was actually my high school buddy that, you know, has known Pavel since he was, you know, sort of fourteen years old. You know, the, you know, sort of first time they met, I think was like up on the ski slopes in, you know, sort of Utah where I peer pressured Pavel. Smoking some weed for the first time when he was way too young to smoke weed.

• 2:36:05Speaker 07

  Allegedly, allegedly.

• 2:36:07Delian Asparouhov?

  Allegedly, allegedly. Officially, according to regulators, Pavel has never smoked marijuana. But, you know, I think that provided a good bonding moment. And then Jeff actually came and worked with me on my first company. Which was not in the prior authorization space or like financial services, but it was actually in the healthcare space. That's right. Software for autism therapists. And so he has pre-existing understanding of like the field, you know, autism therapists, what their workflows were. Again, we were more focused on like clinical workflow software. But it all kind of ties together of like, you know, Jeff and I used to work together and, you know, had been friends in high school. He had known Pavel since he was, you know, sort of fourteen. Pavel cracked it at ramp and like, you know, being in the first twenty-five employees and helping build out there, like, you know, sort of build pay products. Which has been phenomenally successful for them. And so actually, both were in like this like co-founder dating

• 2:36:50Delian Asparouhov?

  process, like whatever it was like, you know, sort of two years ago. And I was like, guys, like, you guys should 100% consider, you know, sort of, you know, working together, given the overlap of interests. And so in some ways, what they're working on today is like the perfect marrying of those two backgrounds of like, you know, financial, you know, sort of services and what Pavel has done, and then just background and like, you know, sort of go to market in healthcare, marry the two prior off is like this crazy background trend. And, you know, the aspiration of magic can, you know, make space factories and it can, you know, uh, you know, make patients' lives and clinicians' lives way easier. Uh, part two, hopefully, uh, Solna ends up way better than Nightingale ever was.

• 2:37:22Speaker 09

  I love it.

• 2:37:23Jordi Hays?

  Uh, talk about, uh, so we had Lulu on yesterday. She was talking about the golden ratio shipped to Yap. I think it was, had to been a pretty, uh, intentional decision to wait and announce the company and two separate financings at the same time. Uh, Pavel, you're a generational poster, you know, uh, you know, potentially poster of the year, if you really get back into the game.

• 2:37:47Speaker 09

  Yeah.

• 2:37:47Jordi Hays?

  Uh, maybe talk about that decision to not, you know, be posting 10 times a day about the company when there's probably an argument that maybe that would have helped in different ways, but clearly you made an intentional decision to just keep quiet and, and focus on building.

• 2:38:00Speaker 07

  Yeah, I think if it had meaningfully blocked the business anyway to not be talking about it, then we absolutely would have launched. But I was just like, you know, early hiring is predominantly in network and doctors aren't on Twitter. So it wasn't necessarily that we weren't like talking about what we were doing, but it was, we weren't talking about it in front of like a tech audience. I think also just there's a degree of focus that can come from down trim not being in the public eye. I think it's limiting in a lot of capacities. I think as we're scaling, that was sort of the decision now. And I think part of it is just, you know, I think we had sort of an opportunity when we closed the A earlier than we anticipated to really just come out and like,

• 2:38:42Speaker 07

  you know, I'd say like a bunch of things get lost in, especially in like AI hype cycles. A lot of things get lost in the noise and it's like even like healthcare AI, it's like, is this even real? What's going on here? But it was, I think it was really compelling to us where you will come out of the door and be like, hey, we operate in like 45 plus states. We work with hundreds of insurers. We have 10s of thousands of patients. It felt like that was more powerful. And I think it's sort of like, I, I, I think it's really important to me that like I work on something very tangible with like,

• 2:39:15Speaker 07

  Less I I didn't want I don't want to be a hype guy. I'll hype my stuff up, but I want to hype it off the back of something like very real. And I think we're coming today with very real business progress to show the world.

• 2:39:26John Coogan?

  Uh, has your hiring criteria changed? You're on record saying that you have two hiring criteria. Uh, you need to have that dog in you and you need to be nice with it. How has that evolved recently?

• 2:39:38Speaker 07

  It's a perfect framework. I don't know why you why, why, why.

• 2:39:41John Coogan?

  Can you unpack it a little bit for us? Break it down?

• 2:39:44Speaker 07

  Yeah, yeah, yeah. So it's sort of we, we, we sort of sit someone down. We, we, we just dig through every life decision they've ever made. And then after that, we, we sit all in a room and we go through the two avenues of like, okay, let's all start. Everyone go around. Do you think they have the dog in them? What's the, what's, what did we learn about them that showed that they have the dog in them? And then, um, are they nice with it? That's just, you know, we sit down. You know, we hire everyone that they're supposed to be nice with something. We don't hire like a ton of like, you know, we don't have a lot of generalist strategists around. It's like, we have a specific skill set. And so you're making sure the process sort of shows like, I think it goes back to like that tangibility is like,

• 2:40:23Speaker 07

  don't get me wrong. We do have generalist work to be done. We always hire someone like on the back of some specific tangible skill set that we can check for.

• 2:40:31John Coogan?

  That's great.

• 2:40:31Jordi Hays?

  That makes sense. Talk about the moment you were working on integrating GPT three into like what you were working on at Ramp was like, was that like, like mind blowing at the time? Did you feel like you had discovered something that, uh, you know, discovered a broader opportunity? And you just said, I need to dedicate my life to creating business efficiency using artificial intelligence. I guess just like, talk about that. Talk about that moment.

• 2:40:57Speaker 07

  I, I think it was a few things. I think like it was Jeff, my co-founder, his just like family is on like his mom's a nurse. His uncle is the CEO of a hospital system. So you just had this like really native understanding of what the problem space was. I think at the time, so we were basically deploying LLMs in the context of like pulling out vendor contract data. And I think what I found in my kind of ramp is like top tier company, best of the best. I, I, I think when I was sort of looking at my domain and like just the area of fintech, if you go, if you go talk to like, uh, Finance person about their like technology stack, they're pretty happy with it. And so part of what it was, I wanted to be able to operate in a space where the technology we were delivering

• 2:41:39Speaker 07

  was truly like revolutionary in nature, something like 10x better, not 10% better. So I think healthcare was this like awesome moment where it was like, hey, healthcare data is fundamentally textual in nature. Like you can't tell me what's wrong with your knee with a bunch of like toes. You need to just like verbally explain to me what's wrong with your knee. And so the sort of combination of all these things is like, actually, LLMs are basically able to unlock that 10x experience. And there's the funny thing that happened is that like the last big technological wave, like web apps, which is sort of like web apps and like SaaS tools and APIs, which is what a lot of the successful startups of like the late 2010s were. Um, it didn't hit healthcare in the same way. Cause frankly, like a web app isn't like for a physical therapist, a web app isn't like 10x better than like a filing cabinet.

• 2:42:23Speaker 07

  Cause you're already in person, there's already these physical like notes. And what you're finding with LLMs is you're able to really drive like both technological waves in. So you're able to do like, we're delivering a ton of value with the same sort of technical skills that I learned and developed around. On top of just like this AI blend is really able, like you can see some of the quotes on the cellnethealth.com of like, we've just become like immediately this artery and like game changer for a lot of our customers. Which for me is just like really engaging, gets me excited to get up and work on the problem every day.

• 2:42:54John Coogan?

  One of the frameworks for looking at these startup ideas is find an industry that's highly fragmented and low NPS. Can you talk about the previous structure of the industry, uh, prior to you launching?

• 2:43:07Speaker 07

  Yeah, well, what I'll say is that's a great structure if you're an analytical guy, not a vibes guy. So we just like to kind of like the problem and people would talk to us for a long time about it. So that's how we land on it. But yeah, totally. It is like a real, uh, it is a real. Fragmented market where frankly, there was not meaningful solutions on the market that could solve this in a holistic way. There were little tools here and there that you basically had to in this, the fragmentation maybe is a little different in that the tools were all fragmented and you would still have to basically employ someone to go through and use those tools and run the workflows. Where we operate is we're just like an end to end solution. You plug us in, there's no tangential tools. You're were able to get it. So like patient comes in, you

• 2:43:49Speaker 07

  give us their insurance card. We tell you exactly what clinical documentation we need and tell you like, hey, yep, patient cleared for care, get them scheduled without having anyone on their end necessarily there to manage the process. So I think that's how we think about a lot of the consolidation that we're able to do.

• 2:44:04Jordi Hays?

  Do you have any advice for founders out there that are seeing your announcement today? All the money you've raised and and want to copy you?

• 2:44:11John Coogan?

  Go to Fogo de Chao.

• 2:44:13Speaker 07

  Yeah.

• 2:44:13John Coogan?

  Take Paul.

• 2:44:14Speaker 07

  Fogo de Chao, post more on Twitter.

• 2:44:16John Coogan?

  Yup.

• 2:44:18Speaker 07

  Generic advice is that like, uh, not generic advice. My advice if I had to give the world is a, uh, I think Keith has said it, but I'll sort of reiterate to someone that's lived it is like, work at a great company before starting your own. I think that has been like massively helpful from like basically like inception. We have like seed funding. It allowed us just to take a longer time horizon. However, you're thinking about it. It just really shifts the model. When you're talking to candidates, you're, I'm able to point like, hey, here's the track record. And I think that's something I reflect on a lot. It's like that Keith advice, go work at a good, Rapp was a great company. I had an opportunity to work there and I think it's just made the first like year and a half of entrepreneurship a lot easier than it would have been otherwise.

• 2:44:55Jordi Hays?

  Well, hopefully you provide that for the younger versions of you out there.

• 2:44:59Speaker 07

  Yeah, yeah. We got, we got some young men. We got new pawels.

• 2:45:01Jordi Hays?

  Yeah.

• 2:45:02John Coogan?

  Fantastic.

• 2:45:02Jordi Hays?

  Uh, last, last question for you. Uh, is there a certain milestone that you want to hit before you cut your hair? Is it a hundred million ARR? Is it 500? Is it a billion? You just

• 2:45:14John Coogan?

  It might just be the look forever.

• 2:45:16Jordi Hays?

  Growing it down to your waist.

• 2:45:18Speaker 07

  I think it aligns like, look, it aligns with whenever I can start tweeting whatever I want.

• 2:45:22Jordi Hays?

  Okay. There we go. There we go. I want to see the hardcore buzz cut pawel. That's gonna be it.

• 2:45:29Speaker 07

  It's primarily like you want some pretty quickly when they see me to be like, ah, that guy, that guy works with computers.

• 2:45:36Jordi Hays?

  Yeah, yeah. Everything's computer. Now, it's great. It's great having you on. You're our new healthcare expert.

• 2:45:43John Coogan?

  Fantastic. We'll have you back soon. Congratulations.

• 2:45:47Jordi Hays?

  No, it's been, it's been, I remember, I remember I came over to Will's office. It was just you sitting there by yourself. You told me roughly what you were working on. It's fantastic to see all the progress and I'm.

• 2:46:01Speaker 07

  Yeah, thank you. Thank you guys.

• 2:46:03Jordi Hays?

  As Joe Rogan would say, it's an honor to, you know, cover your fundraising announcement.

• 2:46:09John Coogan?

  Yeah, exactly.

• 2:46:11Speaker 07

  Thanks for having me on, guys. Really appreciate it.

• 2:46:12Jordi Hays?

  Cheers.

• 2:46:13Speaker 07

  Bye.

• 2:46:14John Coogan?

  And see you, Delian.

• 2:46:15Jordi Hays?

  Later.

• 2:46:16John Coogan?

  Couldn't get a word in edgewise, but.

• 2:46:18Jordi Hays?

  It's so funny to be like, yeah, little bro, I'm coming on your fundraising announcement.

• 2:46:23John Coogan?

  I love it. I love it. That's the nature of the call-in show. He's just in the text message group. Can I hop in just to hype up Pavel?

• 2:46:31Jordi Hays?

  There we go. No, I mean, I can't, I can't, Pavel's smart enough to know that he should leverage every single advantage that you have in life. And having a big brother like Delian, who can be your hype man, who can help you avoid pitfalls, help you make sure you're actually focused on the racing. Help you avoid bad investors, et cetera.

• 2:46:49John Coogan?

  I mean, there's another thing that he's really good at leveraging and that's Eight Sleep. Nights that fuel your best days. Turn any bed into the ultimate sleeping experience. Go to eightsleep.com/tbpm.

• 2:47:00Jordi Hays?

  $350 off your pod.

• 2:47:02John Coogan?

  That fuels your day.

• 2:47:03Jordi Hays?

  I saw Andrew posted 100 sleep score.

• 2:47:06John Coogan?

  Oh, no. Devastating. I don't think I'm anywhere near there. I woke up at like 4 a.m. unintentionally.

• 2:47:12Jordi Hays?

  I actually, I actually did put up 100 last night, which is crazy.

• 2:47:16John Coogan?

  Oh, you prepped this, didn't you?

• 2:47:17Jordi Hays?

  Okay, so we have somebody joining the show. We have exactly, and don't say any names. So this is somebody named Carried No Interest. They are a prolific poster on X.

• 2:47:30John Coogan?

  You're gonna hear their voice. You won't see their face.

• 2:47:32Jordi Hays?

  Quite the following and he's gonna come on and talk about the, the situation with all these AI SDRs, all these companies saying they're gonna automate outbound. And then, very exciting, he's gonna dox himself in like two weeks, live on the show.

• 2:47:48John Coogan?

  Live on the show.

• 2:47:49Jordi Hays?

  So I'm very excited for that, but let's bring him in.

• 2:47:51John Coogan?

  Face reveal. Let's bring him in. He's coming down. Well, in the meantime, we can talk about Wander. Find your happy place. Find your happy place. Book a wander with inspiring views, hotel-grade amenities, dreamy beds, top-tier cleaning, and 24/7 concierge service. It's a vacation home, but better, folks. Go to wander.com, use code TBPN.

• 2:48:10Jordi Hays?

  However, however good you think it is.

• 2:48:11John Coogan?

  Could be better.

• 2:48:12Jordi Hays?

  It's better.

• 2:48:12John Coogan?

  Could be better. We've taken you on a whirlwind tour of the world today. We've taken you to China.

• 2:48:17Jordi Hays?

  We got.

• 2:48:18John Coogan?

  We've taken you to the east coast.

• 2:48:19Jordi Hays?

  We got Kerry.

• 2:48:20John Coogan?

  No better place to get on Wander. Welcome to the show, Kerry.

• 2:48:24Speaker 09

  I've arrived.

• 2:48:25John Coogan?

  Great picture.

• 2:48:26Speaker 09

  I have arrived.

• 2:48:28John Coogan?

  How are you doing today?

• 2:48:30Speaker 09

  My hair is wonderful right now, too. I want to show it off so bad.

• 2:48:34John Coogan?

  But you sound, I mean, are you doing a Danny DeVito impression right now? You sound kind of like him.

• 2:48:39Speaker 09

  You like that? No, it's just a lot of smokes, boys. That's all.

• 2:48:43Jordi Hays?

  I've almost said your name.

• 2:48:45John Coogan?

  10 times already.

• 2:48:47Jordi Hays?

  But anyways, for everybody, this is Kerry.

• 2:48:50John Coogan?

  Kerry, no interest.

• 2:48:51Jordi Hays?

  He is a private equity investor skewing towards software, former head of AI at a billion-dollar PE fund, and doing a bunch of interesting stuff in SaaS and looking at businesses as well that are using AI to sort of reinvent themselves. But you were chirping on the timeline earlier today about 11X. Wanted to just have you on. I don't want to pile on 11X too hard, but I do want to talk about the broader, sort of like, sales automation space.

• 2:49:26John Coogan?

  What's going on with AI SDRs?

• 2:49:27Speaker 09

  So here's my hot take, right? Like, some, some software companies will be AI-first and succeed massively. I think that the notion of the AI SDR is flawed permanently, whether it's 11X, whether it's some of the ones from Y Combinator. And there's a few different reasons. Like, the first reason to me is that cold email is functionally like an alpha game. You are constantly trying to take advantage of a bunch of different quirks about cold email so that you can send 5,000 to 10,000 a day. And when you abstract all of these quirks away, I know there's a bunch of cold email wizards that will agree with me, you actually lose some of that alpha. When you just say, hey, here's this tech company, I'm gonna let you run large scale cold email.

• 2:50:10Speaker 09

  Very tricky, right? Very hard. That's the first piece that I just don't love. The other piece is like, when you think about, hmm, when you think about it, to me, there's five reasons that make it tricky. The first reason with these AI SDRs, you're relying on someone else's cold email data.

• 2:50:29Speaker 09

  You can guess what happens to your gross margin when that occurs, right? So if you're an AI SDR company, you have this big database of emails, you're mooching off somebody, you're gonna take a hit on gross margin just there, right away, right? The second issue is that, in my opinion, you have a high probability of potentially being embarrassed. So...

• 2:50:50Jordi Hays?

  And embarrassing the end customer, right?

• 2:50:53Speaker 09

  Both, right? You have this AI that is sending out emails, who knows who it targets? You know, that's a tricky situation, right? When you think about the AI utility relative to the magnitude of mistake, Coogan's Law, I have to find a way to coin this, I really do. When you think about that ratio, let's think about cursor really quickly, right? You get all of this instant efficiency from cursor, you get more code written. If you know anything about developer environments, if you push bad code, it should get caught in testing. The magnitude of the mistake relative to the efficiency gain of the AI is very low. You get all this output, the mistake is caught before it goes to prod. Win-win for everybody, right?

• 2:51:35Speaker 09

  On the AI SDR front, no such thing, right?

• 2:51:40Jordi Hays?

  We're doing it live.

• 2:51:41John Coogan?

  Yeah, we talked about this. It's a good point.

• 2:51:43Speaker 09

  Like, there's an opportunity for a high degree of embarrassment.

• 2:51:46John Coogan?

  Yep.

• 2:51:46Speaker 09

  And I think that that that is actually leading to a lot of churn. So I've seen like behind the scenes on a few of these businesses. The churn does not resemble like top enterprise software companies. It simply doesn't.

• 2:51:58Jordi Hays?

  Well, yeah, and one of the issues is you wouldn't want to use an AI SDR on a very important account. Because let's say you're trying to close an account that could be worth... $2 million a year. Well, is it worth any potential embarrassment to just spam them with a bunch of emails? Where it's like, hey, I saw you live in New York. Have you checked out Central Park? You should see a Broadway show, right? Like, it's like, it's just not worth it. It's like, hey, this could be, you know, hugely creative.

• 2:52:24John Coogan?

  At least keep a human in the loop.

• 2:52:26Jordi Hays?

  Yeah.

• 2:52:26Speaker 09

  Yeah. And I don't think it's an 11x problem, by the way, right? I think it's a entire notion of the idea problem. Here's another tricky part. Let's talk about, and I, you, us three have talked about this privately, but like, you only grow to $100 million in ARR the way Cursor did by being self-serve. Right? The, and, and some of these AI-first companies are incredibly self-serve, meaning your CAC is extremely low. Your onboarding time is very low. You can grow really quickly. That's a double, double-edged sword for a bunch of different reasons, right? But now let's think about the AI SDR. Not only do you have this high potential for a mistake, the onboarding is a whole thing. You need like a full customer success team. You need constant check-ins.

• 2:53:11Speaker 09

  The amount of OpEx you're dedicating to maintaining an existing customer with a bad churn rate, that is not the profile of an excellent software business. Does that make sense?

• 2:53:20John Coogan?

  Yeah, yeah. I mean, overall, I feel like, um, the, the risk to what AI is doing to these high-growth startups is that we're seeing conversion rates go up, ARR's skyrocket, but churn rate also goes up. And that's the real, uh, underlying question here because we have so few months of churn data on this new generation of companies that look very different and have different switching costs and different installation costs. And, and there's a new hot model every two weeks. And so people are bouncing around a lot.

• 2:53:51Speaker 09

  And so there's like three buckets to me as like a very boring software investor. You have your very high self-serve, very sticky, low ACV, and a low CAC. That is Cursor, if I remember correctly. I don't know if they spent a dime on marketing, right? Their ACV isn't very-

• 2:54:09John Coogan?

  Couple of weeks ago, they said they'd never spent a dime on marketing, but I'm, at some point that will change, I'm sure, but.

• 2:54:14Speaker 09

  Yes. Yeah. And so think about that. You're high self-serve. You have no customer success. You're very sticky. Your, your contract sizes aren't big, but it doesn't matter because your CAC is low.

• 2:54:22John Coogan?

  Yep.

• 2:54:23Speaker 09

  That's 100 million of ARR in two years, right? Now let's think about a business like Salesforce, non-self-serve, extremely high ACV, and very sticky. Also a good software business. Now, let's think about an AISDR software company. No self-serve, many touchpoints, worst gross margin because you have LLM calls and you're depending on somebody else's email and contact database. High CAC because again, you don't have this amazing self-serve option. And as we all know now, bad churn.

• 2:54:58Jordi Hays?

  What is, what is in your view, the future of enterprise sales broadly? Is it, is it just back to basics, golf courses, car clubs? You know, you're just, you know, bro-ing down and you, you know, you meet, you, you're, you just become boys with the buyer.

• 2:55:17John Coogan?

  Yeah, Le Mans, the best deals in software. We done at Le Mans and F1 and all these different places.

• 2:55:23Speaker 09

  I think there's no substitute for that, Jordy. For a million dollar contract, there's no substitute. What I do want to highlight is, on the notion of the AISDR, the idea of LLMs automatically market mapping and targeting your personas, but not sending the emails is obviously high utility, right? Like, that is a good thing. So I think that the future of like, really high-ticket software sales is probably LLM-assisted market mapping and like persona identification, right? And then the golf course, right?

• 2:55:57John Coogan?

  I love it.

• 2:55:58Speaker 09

  The only problem is, that first step, that's not a venture backable company, gentlemen. That's just a really good feature of ZoomInfo or Apollo or any new market entrant, right?

• 2:56:09John Coogan?

  What do you think about the cursor model for SDRs? And so it's something, I remember there was a company called Streak that was a CRM that plugged into Gmail and it was very self-serve. And the idea was, you're a small company, maybe you've just been tasked with sales, you don't even have budget from your boss, you just want to speed things up. You plug into Streak in your Gmail account and all of a sudden you can do some mail merge and some automation. Cursor for SDRs might look like some email generation functionality, but it's very much that centaur model where the human's working alongside the AI. Could that be the next 100 million ARR company in the next few months?

• 2:56:52Jordi Hays?

  Well, yeah, and to be clear that the sort of like AI sales copilot probably has 50 companies running at it.

• 2:56:58Speaker 09

  Yeah.

• 2:56:58Jordi Hays?

  But I'm curious.

• 2:56:59John Coogan?

  No, I think we're, I think we're actually the first ones to ever think of that.

• 2:57:03Speaker 09

  Yes.

• 2:57:04John Coogan?

  Let's incorporate right now.

• 2:57:06Speaker 09

  You know, I like to think about, I like to about, I like to think about this. Coogan's Law, this also needs to be coined. I don't know what to call it yet. For an AI product, how many times per day does it call an LLM and derive utility? So let's think about cursor. You're constantly coding, maybe three hours of deep coding work a day. You're hitting an LLM API constantly, or at least once per 10 minutes, let's just say. Great, AI for software, sticky. Let's go back to what you said. With the notion of an AI SDR, self-serve. To me, the utility is how many times are you really hitting an LLM per hour, right? I don't know, right?

• 2:57:45Speaker 09

  And so to me, I, I, I think that there is going to be a self-serve AI SDR feature that is nice. Happenstance from Y Combinator did catch my eye. I don't know if you guys saw that.

• 2:57:56John Coogan?

  No.

• 2:57:56Speaker 09

  It caught my eye. Doesn't seem like a hundred million dollar ARR business to me yet, right?

• 2:58:02John Coogan?

  We'll see. Well, good luck to him.

• 2:58:03Speaker 09

  You know, I think Happenstance is very cool. I don't see it being a hundred million dollars of ARR, uh, this year or next year, right?

• 2:58:10John Coogan?

  Well, the gauntlet's been thrown. Happenstance, you gotta do it. You gotta hit a hundred million and come on the show to prove, carry no interest, wrong.

• 2:58:18Speaker 09

  Prove me wrong.

• 2:58:19Jordi Hays?

  Last question, uh, our mutual friend, uh, Jeremy Giffon likes to talk about the sort of iron law of the business universe, which is like, if you grow revenue just shockingly quickly, eventually, you know, you might fall back to earth or, uh, you'll, you could potentially lose it just as quickly. So what's your take on, you know, generally on some of these, uh, various, the, the cursors, the windsurfs, et cetera? Um, do you think that revenue, do you think they can get to a point where they sort of have a durable, uh, moat? Or, uh, are they going to just be, uh, forever, uh, relegated to, you know, extreme competition?

• 2:59:00Speaker 09

  I get a lot of, I have a lot of VCs who I talk to in my network that ask me that all the time, right? Um, you know, here's the real question, and I think let's just cut straight to it. If Cursor hits 300 or 400 million dollars of revenue, could they IPO? And would the share price be supported? Right? Let's cut all the way through it, right? And, and, and, and I think that the answer is it could go the way of Slack, right? It's a double edged sword, and I think Jeremy's right, my love, shout out to Jeremy. I think he's completely right. It's a double edged sword. There's no way around it, right?

• 2:59:32John Coogan?

  Yeah.

• 2:59:32Speaker 09

  That as soon as you gain that, that person as a customer, you could just as easily lose them. You know, I think that, that there could be a Slack Teams situation that plays out with Cursor, right? That classic Slack is amazing, you know, Slack is, is, is the trailblazer. And all of a sudden, everybody realizes Teams is just fine, right?

• 2:59:53John Coogan?

  Yeah.

• 2:59:53Speaker 09

  And, and Microsoft just decides, you know, it's time to come for them. I think the same issue could happen with Cursor on a variety of dimensions. Yeah, I, I can't say with any confidence that Cursor is going to IPO. I do think it could get acquired for a, like, gangbusters deal, like insane, right? I don't think it's an IPO worthy company, given the churn rate and the, the, the potential for Microsoft or any, any of the big kind of like tech distribution companies to, to go at them. I think that it's a double edged sword. I could eat all those words. They could IPO next year. What do I know?

• 3:00:25John Coogan?

  We'll see.

• 3:00:25Jordi Hays?

  We'll see.

• 3:00:26Speaker 09

  We'll see.

• 3:00:27Jordi Hays?

  We gotta get on with Taipei. It's been fantastic having you. Close out the show with us. Let, uh, let the audience know to go give us five stars on iTunes and Spotify, or not iTunes, Apple Podcasts.

• 3:00:38John Coogan?

  Apple Podcasts.

• 3:00:39Speaker 09

  Five stars, five stars for these guys.

• 3:00:41Jordi Hays?

  Five stars.

• 3:00:41John Coogan?

  Thank you, everyone.

• 3:00:42Jordi Hays?

  Kerry said it. Thank you for joining the show.

• 3:00:44John Coogan?

  This is fantastic. We'll see you tomorrow.

• 3:00:46Jordi Hays?

  Take care. You're the man.