Aaron Levie, Alexis Ohanian, R.J. Halperin, Cristóbal Valenzuela, David Zagaynov, Sam Lessin, xAI Merges with X, Isomorphic Labs Raises $600M

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

• 0:00John Coogan?

  You're watching TVPN. It's Monday, March 31st, 2025, and we are live from the Temple of Technology.

• 0:07Jordi Hays?

  The Fortress of Finance.

• 0:09John Coogan?

  The capital of capital. This show starts now. We got a great show for you, folks. Jordy, how was your weekend?

• 0:17Jordi Hays?

  It was fantastic. I was having an intense podcasting withdrawals.

• 0:22John Coogan?

  It's rough, right?

• 0:23Jordi Hays?

  Pretty much until last night, when I could kind of see, you know, sort of the end of the downtime on the horizon.

• 0:31John Coogan?

  Yeah.

• 0:31Jordi Hays?

  And

• 0:32John Coogan?

  We also got extremely rug pulled on the show because Elon clearly knows that we're live from 11 to 2 Pacific.

• 0:41Jordi Hays?

  So as soon

• 0:42John Coogan?

  As soon as we logged off, he announces that X and XAI are merging. Very rude of him, but we'll, we'll talk about it.

• 0:51Jordi Hays?

  We were both in the car heading to meetings.

• 0:54John Coogan?

  Yes.

• 0:54Jordi Hays?

  And the urge to just turn around.

• 0:57John Coogan?

  Yep.

• 0:58Jordi Hays?

  You know, sort of donut U-turn.

• 1:01John Coogan?

  Yep.

• 1:01Jordi Hays?

  Turn around, go back to the studio was strong.

• 1:03John Coogan?

  Yeah, it was rough.

• 1:04Jordi Hays?

  But we're back.

• 1:05John Coogan?

  Yeah, we need to figure out what our like breaking, breaking news product is. A lot of people were saying, hey, we should hop on a spaces, which I've actually never really done, kind of hearkens back to the clubhouse era. I think it would be cool. I actually had like back to back to back, not just meetings, but also phone calls. And I was like touring studios while on phone calls. It was like, I couldn't break away from it. But, you know, we were able to take the full weekend to digest the news and bring you a breakdown of this very interesting deal between X and XAI. And there's a bunch of precedent around this that I don't think people have really been talking about enough, which is that this isn't the first time Elon's done something like this. He, of course, bought SolarCity while at Tesla.

• 1:49John Coogan?

  And so I want to take us through first, the Wall Street Journal reaction to, or just like the facts of the deal. X and XAI, X and XAI are now one company. So I want to break down that. Then I want to talk about some of the reaction, what people are saying on X, what, how people think this will create value or whether it's a good or bad idea. And then I want to go through some of the XAI, the, the history here.

• 2:14Jordi Hays?

  And we're going to have the TakeSmith, former early Facebook employee Sam Lessin.

• 2:20John Coogan?

  Oh, I'm excited for this.

• 2:22Jordi Hays?

  To break down the merger.

• 2:23John Coogan?

  Yeah, I'm sure he's gonna have a good.

• 2:25Jordi Hays?

  He's gonna have, he's gonna have more takes than we can fit into 15 minutes. But it's going to be a great time.

• 2:31John Coogan?

  Yeah, and we have a bunch of other great guests on the show, but that's in 90 minutes.

• 2:35Jordi Hays?

  Yeah, the other guests, we got David, uh, who is the co-founder of Poseidon.

• 2:41John Coogan?

  I'm so glad he can come on.

• 2:42Jordi Hays?

  They launched a new plane today.

• 2:43John Coogan?

  Yeah, that's great.

• 2:44Jordi Hays?

  Uh, who else we got? We got, uh, Aaron Levie, uh, from Box, uh, who.

• 2:51John Coogan?

  I'm very interested.

• 2:52Jordi Hays?

  I don't, we gotta ask, we gotta ask the story of how he amassed two and a half million followers. And it's probably just like being like early and right about a platform.

• 3:01John Coogan?

  Oh, yeah.

• 3:02Jordi Hays?

  But still fantastic. We got, uh, Cristobal, co-founder and CEO of Runway coming on.

• 3:07John Coogan?

  Yeah, they launched.

• 3:08Jordi Hays?

  Then we have Alexis Ohanian, uh, and, uh, Newport co-founder of his RJ, who's, um, creating a new sort of like Twitch for watching sports live in a very entertaining way. And then I think there's one more. Uh, it's actually getting, nope, that's it. That's it.

• 3:28John Coogan?

  Hard to say.

• 3:28Jordi Hays?

  That's it for today. Um, very excited. And, uh, yeah, should we get into it?

• 3:34John Coogan?

  Yeah. So from the Wall Street Journal, Musk merges his AI company with X, claiming a combined value of $113 billion. That's 80 billion for XAI and, and 33 billion for X. X, of course, was bought for something like 46 billion, but had about $10 billion in debt. Artificial intelligence startup XAI has acquired X, the social media platform. He owns an all-star transaction that fuses two of the billionaire's biggest technology bets and assigns the new enterprise a lofty valuation. The deal combines the two Musk-controlled companies racing to create powerful new tools that could transform the economy with social media platform that holds a fire hose of chatter from around the globe.

• 4:19John Coogan?

  X can serve as a powerful distribution for XAI's products, including its AI chatbot Grok, and provide a valuable feed of real-time data to power the startup's models. Executives at the companies which share personnel believe, and it's funny because they've already had a deal in place. Clearly Grok is very deeply integrated in X. It says that they're already sharing personnel. And so there's very clearly like blurry lines from day one. And I think that putting the companies together actually makes a lot of sense, but I'm interested to hear your take.

• 4:49Jordi Hays?

  I generally had a mixed reaction to this. I think it makes sense for Elon. Sort of got a lot of balls in the air. He's juggling the teams were already sort of overlapping pretty substantially.

• 5:02John Coogan?

  Yep.

• 5:04Jordi Hays?

  My concern is just around focus. It's like, okay, the combined entity. Both of them are still very much startups in some way, right? Like X has been in this sort of like.

• 5:15John Coogan?

  You put it back in founder.

• 5:16Jordi Hays?

  Back in founder. Yeah, not even founder mode, but just like startup mode, like running lean on budgets, right? You know, really focusing on, you know, just growing revenue and, and, and all these things that just historically weren't super important at Twitter for, for one reason or another. So now seeing them together, I'm just, I have some, I understand how it makes sense from a team standpoint, from a fundraising standpoint. But ultimately it's just sort of unclear to me that, like, I understand that, that X can be a powerful distribution tool.

• 5:50John Coogan?

  Yep.

• 5:50Jordi Hays?

  I don't know. I don't know what it's, it's unclear. It's unclear to me that, that it's working as a distribution tool other than people use Grok.

• 6:02John Coogan?

  Yeah.

• 6:03Jordi Hays?

  Within X.

• 6:04John Coogan?

  Sure.

• 6:04Jordi Hays?

  But that doesn't necessarily need to be Brock in some.

• 6:09John Coogan?

  Yeah. I mean, it is a powerful distribution tool, but when you think about it as like, if you want to get a hundred million people to use your LLM and you have a 43 or $33 billion budget.

• 6:20Jordi Hays?

  Yeah.

• 6:21John Coogan?

  To do that, like, could you acquire a hundred million people a different way?

• 6:25Jordi Hays?

  Yep.

• 6:25John Coogan?

  And that's like buying. The entire inventory of every Super Bowl ad for the next decade, right?

• 6:31Jordi Hays?

  Yeah, exactly.

• 6:31John Coogan?

  Like, we're talking tens of billions of dollars. It's a lot of money. You could put up billboards in every single in every single metro with AdQuick. You could like, you could do a lot, right?

• 6:41Jordi Hays?

  Yeah. So, so my point of view is if any other entrepreneur in the world was doing this, I would just be like blanket bearish.

• 6:48John Coogan?

  Yep.

• 6:48Jordi Hays?

  But it's Elon, so we're going to give him the benefit of the doubt.

• 6:51John Coogan?

  Yeah. I'm actually taking the other side of this. I'm like super bullish on this. I think it makes a ton of sense. I don't know about the exact valuations, but in terms of just putting the two together, I think it makes sense for both. First, you look at how quickly Zuck was able to catch up on LLM distribution with Llama by stuffing it in Instagram and WhatsApp and how natural that distribution point makes sense. ChatGPT was able to break through because it was the first, and now the app's installed. It's on my home row. But Anthropic has not been able to get to like the normie average person.

• 7:29Jordi Hays?

  I just think it's, it's one of those things. What is the prize? Is the prize being a, an answer engine, a sort of alternative to Google search where people go there?

• 7:39John Coogan?

  Yes.

• 7:40Jordi Hays?

  To, you know, multiple times a day for information? If that's the prize, then the merger, I'm not really sure that it works because to date I've continued to use ChatGPT for a lot of stuff.

• 7:54John Coogan?

  I think more and more people are moving over and they're use the one that's just one fingertip away as opposed to swiping up and picking a different app. And so I wouldn't be surprised. I mean, the, the interesting question is like, how much traffic to Grok is driven by

• 8:10Jordi Hays?

  Yeah.

• 8:10John Coogan?

  in X app usage versus just people going to grok.com? Aside from like the market entry of, you know, obviously Grok is going to get a lot of attention just because it's an Elon project and it's going to like essentially go viral. Any product can go viral, you know, Anthropic Claude 3.5 went viral on X even though it's not an Elon project. The question is, is how much enduring value is there in distribution?

• 8:33Jordi Hays?

  I just want to see, I want to see a deeper analysis from somebody internally at XAI.

• 8:38John Coogan?

  Yep.

• 8:39Jordi Hays?

  That the distribution edge and the data edge are legitimately real and working and making people more likely to want to use Grok.

• 8:49John Coogan?

  Yep.

• 8:50Jordi Hays?

  And actually helping.

• 8:53Jordi Hays?

  Grok go mainstream, which is the final prize, right? I don't.

• 8:57John Coogan?

  Yeah, I mean, I think, I think on the distribution side, it, we learned this lesson from Facebook when Facebook was trying to launch new apps to challenge up and comers. So when Instagram launched, at one point, Facebook launched a separate app called Facebook Camera, I think it was called. And it was an Instagram clone, just a complete clone.

• 9:20Jordi Hays?

  Yeah.

• 9:20John Coogan?

  And they were like, well, we have, you know, 500 million DIUs, like, we'll just send a push notification for all of them. And of course they'll move over. And that didn't happen at all.

• 9:29Jordi Hays?

  Yeah.

• 9:29John Coogan?

  And so they added feature like camera functionality and photo functionality to the Facebook app. Then they bought Instagram. And then what happened with Snapchat? Well, they actually launched another clone at a certain point. They, and I think Reels was even like a separate app for a while. And again, and again, they've learned this, they've learned that people go to a single app and they do stuff within that app and you can kind of push them around that app. But it's very, very hard to durably move someone to a new app.

• 9:56Jordi Hays?

  Yeah.

• 9:56John Coogan?

  And so.

• 9:57Jordi Hays?

  Yeah, I'm just saying, I'm not, I'm not using, I'm not using Grok as a search engine within X.

• 10:04John Coogan?

  Yes.

• 10:04Jordi Hays?

  And I'm not yet using it as a search engine outside, or an answer engine outside of X.

• 10:11John Coogan?

  Yes.

• 10:12Jordi Hays?

  So this, I, and I don't see what they can do to, to change that other than sort of marketing Grok more as a consumer product and, and sort of.

• 10:23John Coogan?

  I somewhat disagree with that. I mean, to be clear, I'm not, you, like, Grok has not become my number one LLM. It's still ChatGPT, but, um, but I do think that there's something about seeing a post from someone who's on the edge of your understanding, someone talking about, you know, like, if I see a Joe Weisenthal post and he's going really deep on like jobs and labor and, and interest rates and all these different economic things that I'm not really fully tapped in on, being able to just click a button and just get great definitions, being able to say, hey, go, give me the historical context here, chart it out for me, pull all the data right there. I'm going to do that. And I'm already doing that in some ways.

• 11:03John Coogan?

  I forget exactly the last Grok query I went, but I, I posted, but it was something like that where someone was making a reference to something. And I didn't fully understand the, the historical context that they were referencing. And so click the button and got a pretty good answer. And I think that could grow as, because so many times when I kick off a Google search, it's like, oh, You know, Saquon Barkley won the the Super Bowl. And I'm like, ah, like, who won the Super Bowl the last 10 years? And I always just go over to Google, but if I can just click Grok right there and just say, okay, I just saw that on my timeline, there's, you know, an update about the Philadelphia Eagles Super Bowl championship run. I want more context. I can just click that button.

• 11:44John Coogan?

  I think that that could be a durable source of of like LLM entry points. And it just feels like we're, we all agree that that the that the foundation model layer is commoditizing.

• 11:57Jordi Hays?

  Yeah.

• 11:58John Coogan?

  And that the application layer is where the value will accrue. And so either you have to break through in such a massive way like ChatGPT that you you get an app that's installed on everyone's phone and then you iterate on that app so fast that you keep creating like viral moments like Studio Ghibli stuff. And then you build out, you know, all these different functionalities like the deep research tool and you and you make it an app that people want to keep opening. And ChatGPT has been able to do that. So they kind of catapulted their way to all of a sudden becoming not just a foundation lab, but a consumer tech company.

• 12:31Jordi Hays?

  Yeah.

• 12:31John Coogan?

  And it's been very hard, but they've gotten there. And then all of their competitors are typically partnered with a social network, I feel like. And so I don't know, that makes a ton of sense to me.

• 12:42Jordi Hays?

  Yeah.

• 12:43John Coogan?

  There is the other side.

• 12:44Jordi Hays?

  To be honest, when you look at

• 12:49Jordi Hays?

  when you look at XAI and X as a sort of combined 113 ish billion dollar entity.

• 12:58John Coogan?

  Yep.

• 12:59Jordi Hays?

  It is a, I'm not sort of like bearish on the overall investment at that price because you're basically getting one of the few social networks that matters in the world. That also is a professional network.

• 13:12John Coogan?

  Yep.

• 13:13Jordi Hays?

  That I think has massive growth potential by itself as a platform. And you're getting a call option on sort of like Elon's AI bet. And like, I think that if X continues to operate like it has been for the next five, 10 years, it by itself is at least a hundred billion dollar company. Yeah, I agree. And, and, and all you have to do is just sort of like, um, you know, do a, you know, you don't have to do a technical analysis or, or like full deep dive on, on meta. It's just sort of like, if there's only a handful of social networks that matter. Yep. Uh, and X can get to billions of users, which I, which I believe it can. It should have this sort of, um, intrinsic value at, at close to where it's marked at right now. Yeah.

• 13:58Jordi Hays?

  That being said, it just feels like it's like, it's, it's a very like complicated strategy. And complicated. Elon loves those. Yeah. And he, he's run these before. So again, I'm, I. No, I, I agree with you. I'm, I'm, I understand why it's happening. Yep. I'm long-term bullish on the combined assets. Yeah. I just don't think it makes as much sense as, it makes sense from, again, that sort of financial standpoint, the team standpoint, all these kinds of things. One talent org, you know, trying to just sort of become this sort of like vortex for a type of person that thinks a certain way and wants to work on, you know, Elon's AI plus social bet. Yep.

• 14:42Jordi Hays?

  But I don't think it, like, my takeaway from it is everybody that's like, oh, slam dunk. Like this makes so much sense. I agree with you. Now, now it's going to be easy.

• 14:53Jordi Hays?

  Like, there are some people on the timeline that are. Resting on their laurels. That are, well, yeah, there's some people that are fairly well-respected in the industry. Yeah. That are coming out and just saying like, yeah, this is a no-brainer, et cetera, et cetera. And, and I don't necessarily think it's a no-brainer. I think Elon will make it work. But not a slam dunk.

• 15:12John Coogan?

  I think this, I mean, it all goes back to Zerp and like if Elon had bought Twitter after the Zerp crash, I mean, Twitter would have been trading at like eight billion. Like if it had brought gotten brought back down to earth after, you know, every stock was inflated and they all went down 80%. I mean, Meta, fantastic business, drew down like 50 plus percent. And it's like, he could have bought it half off. And then at that point, I think, I think your point might be a little bit less, less real. These numbers do feel high, but of course it's Elon. Makes sense. The other interesting thing about this deal, I

• 15:51John Coogan?

  think, is does, what is the value of the data? So X has become very, very good at creating this walled garden, right? Like you can no longer just view tweets or embed tweets. The API is locked down. You can't really just view them in an incognito browser. Like, if you're not logged in, you'll see people's top tweets, but it's harder and harder to scrape this stuff out. And more and more people are bringing things onto the timeline from everywhere. So, and a lot of times that takes the form of somebody screenshots a book, somebody screenshots a Wall Street Journal article, somebody screenshots something that

• 16:33John Coogan?

  happens on Instagram, but they bring it back to X. And I think that's hard right now to categorize. Like the search function right now is not amazing because so many people are posting images and the text in the images isn't indexed. But obviously, image models are getting way better as we saw with the Studio Ghibli thing. And I think that there's a world where every image as it gets uploaded to X gets, and every video gets really well tagged with, with information, even if it's in some sort of Like latent space that isn't human interpretable, but at the very least, like

• 17:07Jordi Hays?

  Yeah.

• 17:07John Coogan?

  transcribe all of the subtitles and transcribe, even if the captions are baked in, let's transcribe those and put those in a database that can be searched. And then let's bake that into the next LLM training run. I think that's really, I think that could be valuable information. I think the more valuable information is probably just the real time nature of this, of these things, like news still breaks on Twitter immediately.

• 17:28Jordi Hays?

  Yeah.

• 17:29John Coogan?

  And X really is still a place where

• 17:32Jordi Hays?

  Yeah.

• 17:32John Coogan?

  information goes out the same minute as everywhere else. And even if you look at a feed, if there's really, really huge news, it's possible that one of the mainstream media publications is the first one to report on it, but it'll hit X within two minutes. And then the other, the other, like, you know, the Financial Times will have to write about it, but it'll take them a day or it'll take them a couple of hours to get something out. So if you want your LLM to be up to date, which I think people do, and we saw that with the first version of ChatGPT where they had the knowledge cutoff, do you remember this? And, and it was like, oh, like, I can't get it to answer anything from the last three months. Like, that's unacceptable as an answer engine, right?

• 18:11Jordi Hays?

  So, and, and to be honest, I do believe that news breaks almost as quickly on Reddit.

• 18:18John Coogan?

  Sure.

• 18:19Jordi Hays?

  For example,

• 18:20John Coogan?

  Yeah.

• 18:20Jordi Hays?

  Reddit has a very active MMA community.

• 18:23John Coogan?

  Yep.

• 18:23Jordi Hays?

  The split second that somebody wins a fight, it's live.

• 18:27John Coogan?

  Yep.

• 18:27Jordi Hays?

  And it's, you know, all the information is there. So.

• 18:30John Coogan?

  And doesn't Reddit have a partnership with one?

• 18:32Jordi Hays?

  Yeah. So if OpenAI wants that sort of like breaking user generated sort of like news.

• 18:38John Coogan?

  Yep.

• 18:38Jordi Hays?

  They can go to Reddit and say, we're going to give you

• 18:41John Coogan?

  Totally.

• 18:42Jordi Hays?

  a hundred million dollars a year for just like, you know, direct access.

• 18:45John Coogan?

  Yep.

• 18:46Jordi Hays?

  And so again, I think that this data is like more accessible.

• 18:51John Coogan?

  Than thirty three billion.

• 18:52Jordi Hays?

  Yeah.

• 18:53John Coogan?

  Got it.

• 18:53Jordi Hays?

  Yeah.

• 18:54John Coogan?

  But, but it's still important. And I, and I think, I think one thing we actually should be tracking is like, what, how does, it feels like the application layer is a problem that you need to solve if you're a foundation model company, unless you're SSI and you're just going straight to superintelligence and you have no desire to play in the application space at all. But. If you're Anthropic, I feel like you need to figure out how are you going to solve the consumer angle at some point?

• 19:17Jordi Hays?

  Yeah.

• 19:18John Coogan?

  And they're partnered with a number of big tech companies.

• 19:20Jordi Hays?

  Yeah.

• 19:20John Coogan?

  Could there be a partnership with Snapchat or Pinterest or something? Are there any other assets out there that they could buddy up with? Because getting to that distribution seems important.

• 19:30Jordi Hays?

  XAI broadly and Grok will approach enterprise going forward. Just because of how tumultuous X's relationship with large corporates has been.

• 19:40John Coogan?

  Yep.

• 19:40Jordi Hays?

  Just now, it's like, okay, now we're all combined and you should plug our LLM into your.

• 19:46John Coogan?

  Well, it seems like Grok has not been super aggressive on the enterprise side. Anthropic has been much more aggressive on that side.

• 19:52Jordi Hays?

  Yeah, that's what I'm saying. But are they going to sort of say, we don't care about enterprise? We are a consumer application company.

• 19:59John Coogan?

  Yep. And Anthropic seems to be more focused on the coding and driving like the cursors and the manesses of the world.

• 20:06Jordi Hays?

  The main thing is I'm, I'm very disappointed I didn't get the deck on this one of the combined entity. Maybe there wasn't a deck ever. It's very possible that Elon is just like, this is happening now. But it, but it makes sense to me if, if it's, you know, XAI is going to be the everything app.

• 20:24John Coogan?

  Yep.

• 20:24Jordi Hays?

  It's going to be social. It's going to be video. It's going to be search. Like if Elon is making, you know, is simultaneously thinking, I want to make, I want to actually compete with, with Google. Right? He's like, it could be identity. It could be email. There's just so much.

• 20:41John Coogan?

  Yep.

• 20:41Jordi Hays?

  And so if he's 100% oriented around the sort of everything app angle, then that's great.

• 20:48John Coogan?

  You need an LLM, obviously.

• 20:50Jordi Hays?

  But it should, I almost think you drop the like XAI and just have it be X, right?

• 20:55John Coogan?

  Yeah, it is odd. All shares of X and XAI will be exchanged for shares in a new holding company named XAI Holdings Corp. And so he's, he's, he's, he's, it feels like he's waiting this as like, this is more of an AI effort. And we bolted on a social network as opposed to this is a social network that we bolted on.

• 21:14Jordi Hays?

  On a long enough time horizon, this just becomes, uh, you're in X and it's, there's no humans. It's just bots in all of your comments, every.

• 21:24John Coogan?

  It's terrible.

• 21:25Jordi Hays?

  We're about 20% of the way there.

• 21:27John Coogan?

  Not a fan of that. We'll see though. Musk has combined two of his companies before he used Tesla's stock in 2016 to buy his solar energy company, SolarCity. Musk's other closely held businesses include SpaceX, a rocket startup, which I don't think he's ever bought anything for, maybe some small, I think he did some vertical integration stuff. Neuralink, the brain implant chip firm, I could see that rolling into an AI company at some point. And Boring Company, the tunnel maker, which Boring and SpaceX were much more closely linked because if you remember when the Hyperloop, when the Hyperloop pitch dropped, Elon dropped a blog post saying, we should have these tunnels where they vacuum out all the air and then there's no wind resistance and you could travel on train

• 22:11John Coogan?

  very, very fast. He actually posted it both on SpaceX and Tesla's website, both of them. And, and it was like, okay, which company is doing this? And he was kind of like, I don't know, we'll figure it out. And then there was another company called Hyperloop that just was unaffiliated with Elon that started that company. I don't think that one went very well. Then he started Boring Company and that one's just been grinding along for a while. No pun intended. But,

• 22:46John Coogan?

  I mean, you could see Boring Company, it's like, well, they make the road that Tesla drives on, so maybe merge those together. Or, hey, it's like this super hard tech, like these mega machines, maybe the SpaceX team should be involved in that. And so bring that in. But we'll see where it goes. His role as an advisor to President Trump has added to his influence and appeal for some investors. At the time, Musk has seen the polarizing effects of his politics hit Tesla's value. Earlier this month, X raised roughly $900 million from new and existing value investors at a valuation just above its $44 billion takeover price in 2022. And we covered this a little bit, how X became profitable and on an EBITDA basis, but there were a bunch of add backs,

• 23:29John Coogan?

  so it was kind of unclear. It seems like the business has been hit on the ad side, but then, of course, is making money from the XAI deal because XAI is paying for data, which is fair, but it's like a related party transaction. So it's hard to kind of exactly price and handicap that value. But at the same time, if Elon can consistently get money for XAI and grow that, then that Pool of capital kind of continues and now they're all one. So it doesn't even really matter. I think he just needed to justify like, hey, this is like, this makes sense together and everyone's kind of in the same ballpark on this. And all the shareholders are cool. I mean, it is a private company after all, so it doesn't really matter as much.

• 24:10Jordi Hays?

  Yeah. At the end of the day, much easier to raise for this like collective, you know, just sort of, hey, you want to invest in Elon's AI bet. You know, there's basically, you should kind of pay any price.

• 24:23John Coogan?

  Yep.

• 24:24Jordi Hays?

  And we'll, we'll slap on X.

• 24:27John Coogan?

  Yeah.

• 24:27Jordi Hays?

  As, as almost a freebie.

• 24:29John Coogan?

  Yeah. It is interesting how much this has all moved away from AI safety discussions and into just, look, LLMs are valuable.

• 24:40John Coogan?

  The, it's more, he talks more about like the truth engine and, and in control of information and free speech.

• 24:47Jordi Hays?

  I think what this could lead to is more, you can imagine Elon doing keynotes for the combined entity that, and, and getting into actually sort of more illustrating. What, what is, what is this vehicle? What is the long-term purpose of this vehicle? Cause I think he got to an interesting point with Grok being like the sort of truth-seeking AI and that made sense. But now what does that mean? Are we back to just sort of the collective, everything app, AI is everything, you know, it's sort of unclear. But I'm excited to see it play out.

• 25:25John Coogan?

  Imagine he buys PayPal, rolls that back in. I mean, anything is possible with this guy. He's just like.

• 25:31Jordi Hays?

  I think he wants to kill PayPal.

• 25:32John Coogan?

  Probably. It is, it is funny to think about like if the PayPal mafia never sold and like kept running that business. Cause it's a, PayPal is a big company.

• 25:41Jordi Hays?

  It's a multi-trillion dollar business.

• 25:43John Coogan?

  If, if it stuck with it, because they'd probably have done Stripe internally, they'd done Plaid internally, they'd done Square internally, right? Like all the, all the different companies that they created externally could have just been all part of that. So there, I mean, the reason that this deal is happening so quickly, I think, is because X and XAI share many of the same investors, Sequoia Capital, VY Capital, Valor Equity Partners. X already owned a roughly 10% stake in XAI before the acquisition. Prior to the acquisition, they also shared some resources. And in XAI's early days, its employees worked out of X's San Francisco office. XAI has also leased GPUs from X. And so everything's kind of flowing back and forth. Morgan Stanley advised on the deal, I think that's Michael

• 26:26John Coogan?

  Grimes, went to my high school, shout out Michael Grimes, advised on the deal along with lawyers at Sullivan and Cromwell, according to people familiar with the matter. The social media site is expected to see ad revenue growth for the first time since the takeover this year. And Morgan Stanley has close ties to Musk, having advised on his $44 billion acquisition of Twitter. And that was a very controversial deal to work on, because of course, there's a whole bunch of debt that I think Morgan Stanley wound up holding on their balance sheet. And there was a question about like, is this just a disaster? Because obviously, the market tanked, and then the advertisers pulled out. But Elon is relentless

• 27:09John Coogan?

  and doesn't seem to like down rounds or let them happen ever in his entire career. I think he's never done down round. He's always gotten creative and figured out a way to just look towards what the future is like, and then build towards that long enough, and then he makes it happen. So it's cool.

• 27:25Jordi Hays?

  Yeah, so Tom Howard had a solid analysis. He says, hold up, he's quoting the original post from Elon announcing the deal. He says, buy distribution channel with crap monetization and non-optimal financing. So again, Elon had to really lever up to buy Twitter. He bought it at what many people would say was well beyond what it should have been priced at. Separately, launches XAI, which is basically a research project, at least initially.

• 27:58Jordi Hays?

  Now using X to sort of distribute this sort of LLM

• 28:04John Coogan?

  Yep.

• 28:05Jordi Hays?

  To a large user base and that in turn can sort of help, you know, increase the valuation of XAI. And anyways, I, I think it makes sense. Again, they were already sharing employees, resources, et cetera. They're basically one company.

• 28:24John Coogan?

  Yeah. Do you want to go to the, to the counterpoint?

• 28:26Jordi Hays?

  Yeah.

• 28:26John Coogan?

  Compound two.

• 28:27Jordi Hays?

  So, Compound two four eight. It's hard to know what to make of XAI buying X. My gut is it smacks of desperation. On the surface, the deal values X flat to Twitter's 2022 takeout takeover value despite massive underperformance on financial metrics. I would argue, I mean, wasn't Twitter, Twitter wasn't profitable at the time of.

• 28:50John Coogan?

  Yes. So it's, so it's complicated. Like Twitter in its history had only had one profitable quarter ever.

• 28:57Jordi Hays?

  Yeah.

• 28:57John Coogan?

  And so it was this weird company where, where they still were trading at a relatively high multiple. They were never really, they never really got the business working.

• 29:07Jordi Hays?

  They were trading on cultural relevancy over.

• 29:10John Coogan?

  Yeah. And there seems to be this like zombie land for these public tech companies sometimes where the ones that really get it working and are cash flowing and are, get huge like Zuck and Meta.

• 29:21Jordi Hays?

  Yeah.

• 29:22John Coogan?

  But Twitter was never really like a cash machine. They had a couple of good quarters where there were these like weird anomalies in their financials where some, some like, you know, they get some like tax credit and they'd be like, oh yeah, we generated like 600 million in EBITDA or something that quarter, but it was like kind of iffy. The, the question I think you're getting to is like, hasn't the financial performance improved because Elon famously laid off like 75% of the staff? They cut so many costs, like the cost basis has to be way lower. And I think that's true. The, the problem is, is that we as the public don't have audited public financials because it's not a public company. And so.

• 30:03John Coogan?

  We've heard rumors and we've seen that, you know, the business might be doing better, might be producing a billion dollars in EBITDA.

• 30:09Jordi Hays?

  Yeah.

• 30:10John Coogan?

  And, and, you know, applying like a 40x profit PE multiple to this thing, given all the opportunity. Like, it's not that crazy, but we don't actually know.

• 30:19Jordi Hays?

  Yeah.

• 30:19John Coogan?

  How real is that profit or what's the shape of it or how, how new is it? How durable?

• 30:23Jordi Hays?

  It's just rare.

• 30:23John Coogan?

  What's the concentration?

• 30:24Jordi Hays?

  It's rare to have transactions of this size that are trading based on narrative.

• 30:31John Coogan?

  Yep.

• 30:32Jordi Hays?

  And almost pure play, sort of like founder bets.

• 30:36John Coogan?

  Totally.

• 30:36Jordi Hays?

  And that's what, that's what, that's what's kind of eye popping about this.

• 30:40John Coogan?

  Totally. So compound goes on.

• 30:42Jordi Hays?

  Um.

• 30:43John Coogan?

  It's an all stock deal.

• 30:45Jordi Hays?

  It's a stock deal. X owners will now own 29% of the combined entity, shifting from a near pure play, social media bet in a highly strategic asset to an AI bet. That's very much.

• 30:56John Coogan?

  On the come up.

• 30:57Jordi Hays?

  On the come up, plus you get a diluted ownership in X. Yes, XAI is a powerful model, but not unusually so. XAI has de minimis revenue, is hemorrhaging cash.

• 31:08John Coogan?

  So.

• 31:09Jordi Hays?

  We don't necessarily.

• 31:10John Coogan?

  I, I gotta stop here because he's saying like shifting from a near pure play, social media bet and a highly strategic asset. Like, I think we've played the highly strategic asset game for Twitter out a decade and we've seen that Disney doesn't want to buy it. Microsoft doesn't want to buy it. Like this idea that there was going to be some like white knight, dark horse bidder that, oh, yes, it makes so much sense for Oracle to have this. So they'll come in and pay some high price.

• 31:37Jordi Hays?

  It's a strategic asset for Elon.

• 31:39John Coogan?

  Yeah, I, yeah, I, I guess, but like, like the reason that the, the reason that the valuation was always high with Twitter back in the day was like, it was like, if you want to compete with Meta and Facebook and Instagram, like buying Twitter would be a way to get in the, in the game in a serious way.

• 31:58Jordi Hays?

  Yeah.

• 31:59John Coogan?

  And I think we played that out and I, I don't know how strategic it is, if, if that's the sense of what you're saying. But I, I agree with you, I agree with your, your interpretation of like what strategic asset means. Anyway, uh, we can go on to the.

• 32:10Jordi Hays?

  Yes, so XAI has de minimis revenue, is hemorrhaging cash and its prospective business opportunity seems very difficult, given the relevant competition. A has a head start, B is murderers row, and C has existing business and GTM strategies to build on.

• 32:24John Coogan?

  Yep.

• 32:24Jordi Hays?

  So obviously, you know, primarily referencing OpenAI, ChatGPT here.

• 32:29Jordi Hays?

  And the big thing, and this is part of the reason why this transaction at a high level makes sense is like, hey, we're gonna have to lever XAI up a bunch anyway.

• 32:40John Coogan?

  Yeah.

• 32:40Jordi Hays?

  X by itself is is super levered. $12 billion of very high cost debt. I don't actually know what what they're paying on that, but I would have guessed it's like, gotta be close to like.

• 32:53John Coogan?

  Like 10%.

• 32:54Jordi Hays?

  10%, which is over a billion dollars a year just carrying cost on on the debt.

• 33:01John Coogan?

  Yeah.

• 33:01Jordi Hays?

  Without actually paying it down.

• 33:03John Coogan?

  Yep.

• 33:04Jordi Hays?

  And so that's very painful. And so anyways.

• 33:10John Coogan?

  It will be in perpetual cash raising mode until that changes, which leaves its risk to the whims of the fundraising environment and the temperature of macro animal spirits. Except Elon seems to be fine with fundraising. So I don't know how big of a deal that is. And then I think he goes on to say, I wouldn't bet against Elon. A few bonus thoughts prompted by questions. One creditors, this is clearly a better structure for creditors. They retain their claim on Twitter and pick up optionality on XAI, which you mentioned earlier to clean up. I suspect this deal is actually clean up for XAI to raise a new, a huge new equity round. And so, yeah, it's interesting. I think the, I think it makes a ton of sense to put the two together.

• 33:49Jordi Hays?

  Yep.

• 33:50John Coogan?

  I think it's interesting to see as we play this out, how does, when this, when this machine really gets humming, how big can this get? Because I'm feeling like number one, ChatGPT is, as we saw last week, still able to be, stay on the frontier for, for nine months out of the year. And then they get beat towards the end of the year, basically. And then they come out with something new and then they're still the number one. And so as long as they continually drop the frontier and get all these people to install, they can kind of ride it out because I bet you in, in, you know, six months, people will say, oh, well, like, there's actually like better gibblies if you really care about gibblification

• 34:34John Coogan?

  in this app, but only the hardcore folks move over. And that's the same thing with like Claude, like Sonnet was like better.

• 34:40Jordi Hays?

  So.

• 34:41John Coogan?

  But people didn't really care enough to switch for, if you're like a normie.

• 34:44Jordi Hays?

  The interesting thing is, I do believe if, if this combined entity were to go public right now, it would trade well beyond the sort of private mark. It probably would pop to like a trillion.

• 34:55John Coogan?

  Yeah, I wouldn't, I wouldn't.

• 34:56Jordi Hays?

  But the, given how much sort of political pressure is on the company right now, like it would be very chaotic.

• 35:04John Coogan?

  Totally.

• 35:04Jordi Hays?

  And maybe it wasn't the right move. But if the play is to basically take it out and Bill Gurley would be watching this one. He'd be like, do not leave. But you could easily see this getting priced, you know, you could see this getting priced at a, like even sort of stabilizing at a couple hundred billion dollars, just, just purely based on.

• 35:26John Coogan?

  Yeah, the Elon thing is so crazy. It's hard to price, but I mean, we actually saw evidence of like, the market wants something that's pure play indexed to AI that's not Nvidia. Nvidia had already like run up so much, there was not much left on that, Apple or whatever. And we saw CoreWeave go out and what happened? CoreWeave priced right at 40. Bill Gurley, very happy. Didn't pop, but the, but I think the, the counterpoint to the, to the CoreWeave thing is that it showed that there was not the sensational demand for like, oh, we need, we need a AI pure play company. We, we, we, we want it so badly, like we'll pay any price, it's going to pop huge. Like that didn't happen. CoreWeave was not able to, to become like this, like meme, at least not yet.

• 36:08Jordi Hays?

  Yeah.

• 36:09John Coogan?

  But obviously XXAI is like way crazier because like Elon like has so many fans and like huge allies all over Wall Street and stuff.

• 36:17Jordi Hays?

  Yeah. CoreWeave also being a data center business that's not coming out and saying, we're going to achieve AGI. It's more like, you guys do a lot of revenue.

• 36:26John Coogan?

  Yep.

• 36:26Jordi Hays?

  You have a lot of leverage.

• 36:27John Coogan?

  Yep.

• 36:28Jordi Hays?

  And you have sort of medium term contracts.

• 36:31John Coogan?

  Yep.

• 36:32Jordi Hays?

  Right? That, that could go up in smoke. But, but who knows?

• 36:38John Coogan?

  Yeah.

• 36:39Jordi Hays?

  Either way.

• 36:40John Coogan?

  Who knows?

• 36:40Jordi Hays?

  Wild times.

• 36:42John Coogan?

  Um.

• 36:42Jordi Hays?

  The most entertaining outcome is the most likely.

• 36:45John Coogan?

  Let's go through the, the Tesla SolarCity merger. I just have some, some key bullet points that are kind of interesting to go down. Memory Lane. SolarCity founded in 2006 by Elon Musk's cousins, became number one in US residential solar installation by 2013. So he kind of delivered on the initial pitch and I heard this crazy story that like, he thought about it, he thought of the idea of Burning Man or something like that. Have you heard this one? It's like a crazy like, like he was hanging out with a bunch of people and was like, maybe we should do solar panels on people's houses. And then they just like went for it.

• 37:19Jordi Hays?

  It's so funny because my entire life, as long as I've been truly conscious, solar panels on homes are just so normal.

• 37:28John Coogan?

  Yeah, totally.

• 37:29Jordi Hays?

  That it's funny to think it was maybe one or a handful of companies that actually normalized it, but that's usually how things work.

• 37:36John Coogan?

  So at the time Elon was like famous, but really he was only known by, for PayPal and SpaceX and 2006, like these weren't like PayPal was a big deal. SpaceX was still very early. Elon provided the initial $10 million in the startup and Lyndon and Peter Reeve, his cousins ran the company. He also served as SolarCity's chairman and was the largest individual shareholder, leveraging his vision of a sustainable energy future across his ventures. SolarCity's business model focused on solar panel, solar panel leasing and what are called PPAs, which are power purchase agreements.

• 38:14John Coogan?

  The customer pays no upfront cost for rooftop solar installation, but then signs a long-term agreement to buy the power produced. So it's basically like a no money down solar leasing model. And it was wildly popular. And so there was a little bit of like hard tech here, but most of the panels, I, I don't think that they were manufacturing them at, you know, giga factory scale. I think it was mostly, hey, let's buy a commoditized product and then innovate on the financial side. And so this fuels rapid growth, but it was very capital intensive and debt fueled, of course, because you're giving someone a, you know, I don't know.

• 38:52John Coogan?

  I don't exactly know how much these cost, but let's say like you're giving someone 10,000 bucks or a hundred thousand dollars in value, like the solar panels and then the installation costs. And then you're. You're paying that and you're amortizing it over 20 years, but you're not getting those payments from the customers for 10, 20 years. It takes a long time. And so every time you install new solar panels, you're accumulating debt on your balance sheet.

• 39:15Jordi Hays?

  Yep.

• 39:16John Coogan?

  And you're also accumulating like a revenue stream, which is great, but you have a major, major financing mismatch there. And so by 2015, warning signs emerged. Solar City's stock price, which had peaked around $88 a share in 2014, began a steep decline. In October of 2025, the company lost a quarter of its market value in one day, falling below the coveted unicorn $1 billion valuation. The drop followed CEO Lyndon Rive's announcement that Solar City would slow its expansion and cut costs as years of 80 to 90% growth had led to huge investments that were not yielding cash flow yet. We talked about that. Internally, executives knew the company faced a looming liquidity crisis by late 2015. Solar

• 40:01John Coogan?

  City's aggressive growth had left it with large operating losses and over $3 billion in debt by 2016. In fact, Solar City was nearly insolvent prior to the Tesla merger. Court filings later revealed that weeks after the acquisition, auditors warned that Solar City lacked sufficient cash to meet its obligations on a standalone basis. And so there's always this question about like, you know, he kind of got a bailout. Should he have just let the company go bankrupt, buy out of bankruptcy, do a proper bidding process? Like, this was always like a hot button debated issue. But so to sustain growth, Solar City diversified within the solar value chain. In 2014, it acquired Salivo, a solar panel manufacturing startup, and embarked on construction of a massive 1 gigawatt

• 40:44John Coogan?

  solar panel factory in Buffalo, New York, with substantial subsidies from the state. The Buffalo Gigafactory 2 was part of a plan to produce advanced solar modules domestically and reduce costs. And we talked to Casey Hanmer about this a little bit, where, you know, he thinks that the Chinese manufacturers of solar panels are subsidizing them really, really heavily. And his, his argument was like, hey, when somebody's subsidizing something below their cost, you shouldn't tariff it. You should buy as much as possible to hurt them, which is kind of funny, kind of hot take. But there has been incredible international pressure with these commoditized products.

• 41:21Jordi Hays?

  We could have maybe pushed him a bit more on that and said, well, do you want to? You know, usually if somebody is selling something for less than what it actually costs, they have sort of sometime, some sort of long-term

• 41:35John Coogan?

  Yep.

• 41:35Jordi Hays?

  Strategy that that maybe isn't in your best interests.

• 41:38John Coogan?

  Yep. It's the learning curve pricing issue. So yes, they are losing money on each solar panel right now. But if we, if we all of a sudden provide to them 10x demand, they might be able to justify investments in 10x larger giga factories and they might actually be able to lower the price to the point where they are profitable at a price that we can never compete with because we just are not scaled up enough. And that's certainly what's happened with TSMC where TSMC has seen so much demand from Google and Nvidia and Apple and everyone else that that they're getting to a place where no one else can compete. And they really have like essentially a monopoly on on the 3 nanometer node.

• 42:21Jordi Hays?

  And they're running this with cars right now.

• 42:24John Coogan?

  Yeah, cars and phones and a lot of different stuff. It's all happening. So the cash squeeze got really severe. The company was holding emergency weekly cash management meetings and its executives privately informed Musk that it needed an infusion of 180 to 300 million dollars to avoid default. I feel like Elon nowadays could like raise that with one phone call for like literally anything. He could text Marc Andreessen and say,

• 42:48Jordi Hays?

  Ellison.

• 42:49John Coogan?

  Yeah, Ellison, hey, I need 300 mil. Don't ask what it's for. It's just for something cool. And be like, yeah, of course, dude. I got you. Attempts to raise equity or find outside investors during in early 2016 fell through, which is unfathomable, forcing desperate measures. The other Musk's other company SpaceX loaned SolarCity money to prevent its cash balance from triggering a bond default. SolarCity had covenants requiring cash above 169 million. Hilarious number. Even his debt covenants include the number 69. Classic Elon. Even in the debt world, he's like memeing. I don't know. It's probably just a coincidence, but you never know. In February 2016, as SolarCity's board grappled with how to avert

• 43:33John Coogan?

  bankruptcy, Musk met with Lyndon Reeve to Reeve to explore a bold situation. Tesla Inc. would acquire SolarCity, uniting Musk's electric vehicle and solar energy ventures. And I want to go through a couple bullet points on how the deal came together. So.

• 43:50John Coogan?

  So by 2016, SolarCity was in trouble. They had, they were nearly insolvent and they had $3.25 billion in debt. And again, like this is the company that was trading in the billions and then the market cap goes down to less than 1 billion. So the equity value, debt to equity ratio is like really, really out of, out of whack. And so in June of 2016, Elon proposes that Tesla acquire SolarCity to form a vertically integrated clean energy company. And it makes a ton of sense that a Tesla owner, again, it's like, it's crazy because it's one of these Elon deals where it's like him in one hand washing the other, him talking to himself and like he's on the board and he owns all this and stuff. But at the same time, if you think about it, it's like Tesla customers love clean energy.

• 44:35John Coogan?

  They have the Tesla battery pack on the wall, they Tesla charger, and of course they want solar panels. So you imagine that it makes a ton of sense for, to just sell all of this to one person. There's tons of like sales channel stuff and then also just in terms of manufacturing, like the, the, the, the, the giga factory that produces the batteries and the cars can also produce the solar panels. Like it's not that crazy to me, but the deal is kind of crazy. And so there's an all stock deal that happens. SolarCity is valued at 2.6 billion and they, and Tesla assumes 3 billion in debt. Shareholders got 0.11 Tesla shares per SolarCity share. And then Tesla went on like a generational run and every SolarCity shareholder, if they held, is very happy about this. Yeah.

• 45:16John Coogan?

  Of course, there was this conflict of interest because Elon was the chairman of SolarCity and the CEO of Tesla and he owned 22% of both. And his brother, brother and cousins were board members and executives. Despite the controversy, 85% of unaffiliated shareholders approved the merger in, in November 2016. And that makes sense. Like if I'm, if I'm an unaffiliated shareholder and I just hear about this and I've never even met Elon, I'm going to be like, yeah, of course. Like this deal makes sense, even though it's a little wonky, like put these companies together. I'm happy to be a, a, a shareholder in the combined entity. And so. Of course, there's a legal battle still because 85% approved, but some of them are upset.

• 45:55John Coogan?

  And so there's a shareholder lawsuit. They sued Tesla's board of directors for breach of fiduciary duty, which is what you sue for whenever you're unhappy about something. All directors except Musk settled for 60 million in 2020 via insurance. And so they had some key man insurance there or some, I forget what it's called. It's the executive director, DNO, Directors and Officers Insurance. Musk alone went to trial in 2021 accused of pushing the deal to bail out his failing investment and family. Plaintiff sought 13 billion in damages, which is crazy because it's like way more than the debt and more than the equity.

• 46:34John Coogan?

  It's like more than everything combined, but Musk won. So in April 2022, a Delaware judge ruled in Musk's favor, stating that Tesla paid a fair price. Of course they did. If anything, they overpaid. And so as a SolarCity shareholder, you've gotten a bunch of Tesla shares that basically like 10 axed. You got a really high price at the time of the deal. Like you have nothing to complain about.

• 46:56Jordi Hays?

  And it was a, it was a full zero, like literally three weeks later.

• 47:00John Coogan?

  Exactly. They were running out of cash. And so the Delaware judge, you know, Elon's been very rough on the Delaware judges. But in this case, they say, you know, we got Musk's back. He's right. And the deal, this deal ultimately benefited shareholders, which I think we agree with. And then there was a post-merger decline too. So even, even as they combined and they had all the resources and they took care of the cash management problem, Tesla's solar installs fell 60% from 870 megawatts to 326 megawatts in just three years from 2015 to 2018. And Tesla lost its number one solar market position to Sunrun, which is another solar installer.

• 47:40Jordi Hays?

  Yes, Sunrun's been crushing it.

• 47:41John Coogan?

  They've been crushing it. And so today Tesla has actually, has actually shifted for away from highly commoditized solar panel installation to, to battery storage. So they sell those power walls. We looked at one, it was $192 million installation, right? Wasn't that, you could just go on their configurator and say, yeah, I actually need like a gigawatt of power. Can you send me it? And they'll be like, sure. But, but listen to this, in 2024, Tesla Energy hit 10 billion in annual revenue. Powered by powerwalls and mega packs. And so like, I think of the powerwall, it's like, oh, it's like this cute like little side project. It's like the AirPods of the Tesla world. Like, that's a lot of money, 10 billion in revenue.

• 48:24John Coogan?

  And so even though like the solar angle didn't really pan out, like Musk was right over the very long term that like vertically integrated clean tech energy would be a good strategy, good company. And so just an interesting thing that like, you know, to think about with the X and XAI thing, like it's hard to predict where this goes in the next five, 10 years. Is it a good deal right now? Will there be a lawsuit? Like, all of that kind of steps to the side of really trying to concretely visualize, what does the social networking and AI slash LLM, consumer productization of AI, look like in five years, 10 years?

• 49:06John Coogan?

  And can he figure out something that is good in that space in that time?

• 49:11Jordi Hays?

  Yep.

• 49:11John Coogan?

  And I don't know, he has a lot of money and a lot of time and a lot of effort.

• 49:15Jordi Hays?

  Bad time for Ben Thompson to be on vacation.

• 49:17John Coogan?

  I know. He did one, he did one, one unscripted podcast about it and he was pretty bullish on it. He said, he said he thinks it makes a lot of sense, but we'll have to wait to get Ben's full take. Anyway, such a funny, such a funny deal. Never a dull moment in tech. My number one advice for Elon is you're combining these two companies. It's more important to control costs more than ever. So go to ramp.com Elon. Time is money, save both.

• 49:45Jordi Hays?

  Save both.

• 49:46John Coogan?

  Easy to use corporate cards, bill payments, accounting and a whole lot more all in one place. I would love to see X and XAI both on ramp. Really understand, I mean, a big thing of ramp is like you're paying for two subscriptions and it identifies that automatically, right? It's like you're merging these two companies.

• 50:02Jordi Hays?

  The SaaS savings.

• 50:02John Coogan?

  The SaaS savings, you know?

• 50:04Jordi Hays?

  Well, actually, I imagine a lot of their contracts are.

• 50:09Jordi Hays?

  Primarily seat based and maybe you aren't saving much money at all. But you can always save money.

• 50:16John Coogan?

  You know that man hates losing money.

• 50:18Jordi Hays?

  If anyone in our audience signs up for Ramp and doesn't find a way to save at least a hundred dollars a month.

• 50:26Jordi Hays?

  I was gonna say like a thousand.

• 50:28John Coogan?

  I don't know. Depends on your scale.

• 50:30Jordi Hays?

  Yeah, depends on your scale, but you sign up for Ramp, you're gonna save, you're gonna save some money.

• 50:34John Coogan?

  And you're gonna save some time, baby.

• 50:36Jordi Hays?

  And you're gonna save some time.

• 50:37John Coogan?

  Well, let's stay with Musk and go on to this exclusive in the Wall Street Journal.

• 50:41Jordi Hays?

  That's right.

• 50:42John Coogan?

  Apple and Musk are clashing over satellite expansion plans. We talked about this a little bit. The iPhone is getting Starlink direct to cell, so you'll be able to communicate with the Starlink satellites from your phone. Very cool. It's already live in some places. You can send like a single text message on a satellite network, but obviously this is a really, really tough deal and a very, and a very big, there's a lot at stake, obviously, because

• 51:11Jordi Hays?

  Yeah.

• 51:12John Coogan?

  Once you don't need the cellphone towers, you can use the, the satellite communication everywhere. That's gonna be a big differentiator for any cell provider. So, Apple, here are the key points. Apple and SpaceX are competing for spectrum rights to expand their satellite based communication services. Apple's outer space ambitions have drawn the ire of SpaceX CEO Elon Musk, who has pushed regulators to stall expansion efforts from Apple partners. Despite their, despite their rivalry, Apple and SpaceX need each other to achieve their respective goals in the satellite market. And so, Apple has been investing heavily in satellite based communications that keep users connected in places where traditional wireless signals aren't available. Musk's SpaceX meanwhile has launched more than 550 satellites that provide cellphone connectivity via its Starlink service. To build capacity,

• 51:56John Coogan?

  the companies are competing for valuable spectrum rights, airways that carry the signals which are in limited supply. It's very interesting, like, the, the wireless spectrum, when it goes, when, when there's a block up for sale, there's this whole auction, it's governed by the FCC, Brendan Carr, the new FCC commissioner is the guy who kinda oversees that now. But I don't know if you remember this, but back in 2011, 2012, TV stopped being

• 52:23John Coogan?

  Over the air, like, do you remember rabbit ears? Do you remember those little antenna that you put on a TV? That just stopped. We had the digital transition TV. You could still get TV, but it wouldn't be over the air. And so that block of spectrum was then re auctioned off for other things. And that's where like the 5G spectrum kind of comes in. And so Apple's outer space investments have drawn Musk's ire. SpaceX pushed federal regulators to stall an Apple funded satellite expansion effort. The conflict intensified in recent months after SpaceX and its partner T Mobile sought Apple's cooperation to offer Starlink on iPhones. The company's engaged intense discussions, intense discussions, and eventually reached an agreement that allows SpaceX and T Mobile satellite cellphone service,

• 53:07John Coogan?

  which will debut this summer. It appears to it appear to appear seamlessly on newer iPhones. So even though SpaceX has a deal with T Mobile, they need Apple to opt in and say, yes, we're going to allow this. We're going to build this. This is going to be a function. It's not enough to just say, oh, SpaceX and T Mobile agree. You got to get it in.

• 53:26Jordi Hays?

  Has Apple any ever shared about what its long term ambitions are? Cause I imagine long term, you'd want to just cut the carriers out completely and just own, you know, basically have another $100 a month.

• 53:40John Coogan?

  Yeah, it's kind of a, it's kind of a match made in heaven with, if Musk and Apple can partner up and just cut out the middleman entirely. It'd be amazing, but again, I think the satellite internet just does not work in buildings. It just does not penetrate. And so you're like, we're not anywhere near there. So it's very much like a nice to have add on.

• 54:05Jordi Hays?

  Nothing penetrates my home because I use lead paint.

• 54:09John Coogan?

  You live in a Faraday cage.

• 54:10Jordi Hays?

  Yeah, I've developed using lead paint to create a Faraday cage in my home.

• 54:14John Coogan?

  I mean, a lot of people are doing that. They're worried about microplastics, so they're switching to leaded gasoline.

• 54:18Jordi Hays?

  Calling it now, lead paint is coming back in in a big way.

• 54:22John Coogan?

  Yeah, you don't want the microplastics. Let's just use the lead for sure.

• 54:26Jordi Hays?

  Go lead.

• 54:27John Coogan?

  Offering greater connectivity in hard to reach areas could spur more iPhone sales.

• 54:31Jordi Hays?

  Connectivity.

• 54:32John Coogan?

  Connectivity. What do you call it?

• 54:34Jordi Hays?

  Connectivity.

• 54:35John Coogan?

  Connectivity. Greater adoption of SpaceX. SpaceX is Starlink. In some ways, the companies need one another to pursue their respective strategies. So Apple's currently partnered with Global Star, which I think is one of those satellite internet companies that just puts up like a huge washing machine guy. It's like a massive knot in Leo. It's not a constellation like Starlink.

• 54:55Jordi Hays?

  And Global Star is a-

• 54:56John Coogan?

  Very high latency.

• 54:58Jordi Hays?

  Global Star is a $2.6 billion company, so.

• 55:03John Coogan?

  So there's a few of these companies. Astronis is one of them that puts up like a much larger satellite. It's locked in geosynchronous orbit.

• 55:10Jordi Hays?

  Yep.

• 55:10John Coogan?

  There's fewer satellites, but they're higher bandwidth. And then Elon, because SpaceX has all this residual capability, they can just throw up Starlink satellites whenever they don't have a full ship, basically.

• 55:22Jordi Hays?

  Yeah.

• 55:22John Coogan?

  Throw it up there, create a whole constellation. It's a lot lower. They'll burn up a lot faster. But the benefit is that it's a lot, it's a lot lower latency. And so, you know, famously like you can game on a plane. You can take a, you know, FaceTime call on, on, on your private plane if you have Starlink. Whereas with Global Star, if you've used Apple's satellite service, like you could definitely not have a conversation on it. It takes forever to upload even a small text message, but it's still very cool when it works.

• 55:50Jordi Hays?

  I was using Apple's service during the fires.

• 55:53John Coogan?

  LA fires.

• 55:54Jordi Hays?

  Because I was trying to help. There was this, you know, it was a crazy time, but I was trying to get my buddy's solar panel turned on. Cause he wasn't around to help his mother and like, and I was using the sort of very, it's a very dinky service. You gotta be outside.

• 56:10John Coogan?

  Yep.

• 56:11Jordi Hays?

  You know, pointing it around.

• 56:13John Coogan?

  This is interesting. You said Global Star is worth what? 2 billion?

• 56:18Jordi Hays?

  Yeah, not a lot.

• 56:20John Coogan?

  So last year, Apple invested more than 1 billion in Global Star.

• 56:25Jordi Hays?

  Yeah.

• 56:25John Coogan?

  And so-

• 56:26Jordi Hays?

  They must be the biggest outside shareholder.

• 56:29John Coogan?

  Unless they invested at a really high valuation and just got wiped right now. But, you know-

• 56:33Jordi Hays?

  20%?

• 56:34John Coogan?

  This, okay, they own 20, not bad. Apple services allows.

• 56:38Jordi Hays?

  Part of that $1 billion, I think, was like basically services revenue.

• 56:42John Coogan?

  Sure, sure, sure.

• 56:42Jordi Hays?

  Yeah.

• 56:43John Coogan?

  So invested in the deal broadly. And of course, the service allows you to send text messages, call emergency assistance, seek roadside help, et cetera. The new spending is intended to help Globalstar develop a new global satellite fleet to improve space-based iPhone usage. This technology has already helped save lives, Apple said. These satellite features are designed to complement carrier offerings, giving users even more ways to stay connected. SpaceX recently asked the FCC to dismiss a Globalstar application seeking permission to use certain spectrum for the new network of Apple Finance satellites document show. It's called the airwaves it uses. It called the airwaves it uses to carry Apple's users' emergency signals an underused resource. SpaceX didn't respond to comment.

• 57:31John Coogan?

  So SpaceX and T-Mobile revealed their plan to offer always-on texting in remote areas during a rollout event in Texas. Inside Apple, some staff believe SpaceX's announcement of the T-Mobile agreement was designed to front-run Apple's news disclosed soon after that it would provide emergency texting through satellites on some iPhones. Musk's Tesla and Apple long ago competed over talent for developer, for developing driverless cars. The two sides also had spats related to X. There was that famously, Apple might be pulling out of advertising on X. Elon goes and meets with Tim Cook and then they kind of like figure it out.

• 58:06Jordi Hays?

  Yeah.

• 58:06John Coogan?

  It was also the question of like, was there a way for Apple, for Elon to make X a premium service that was based on subscription revenue without causing, without paying the 30% to Apple? Which would be obviously very, very cumbersome for him. The social media company relies on Apple for distribution on its App Store and advertising dollars. And then there was also the question of like, if Musk goes too far with the free speech, will Apple kick them out of the App Store? That didn't happen, but Musk at times has considered building a smartphone himself over frustration with how Apple controls distribution of third-party apps. But nothing's really, really happening there. And then he said, Elon said, "The idea of making a phone makes me want to die, but if I have to make a phone, I will." I love it.

• 58:51John Coogan?

  Cracking a market dominated by Apple and Samsung, whose devices account for around 40% of the global smartphone market would be tough, according to analysts. In orbit, SpaceX through its Starlink operation has far more satellites than Apple and industry leaders believe Global Star alone won't be able to satisfy the iPhone maker's needs. Apple has held talks with other satellite providers over the years to secure more spectrum. People familiar with those discussions said it explored investments in the Colorado-based satellite operator Echo Star to provide more satellites and spectrum to support iPhone connectivity, the people said. Apple previously worked on a satellite plan with Boeing and everyone is trying to do deals with everyone in the great space phone race of 2025.

• 59:36Jordi Hays?

  It's fascinating because Global Star has contracted SpaceX to launch satellites.

• 59:41John Coogan?

  Of course, yeah. There's no vertically integrated satellite internet or satellite internet provider. They're all using either SpaceX's launch capacity or separately, and we'll talk about this today, their pure play on launch capacity. So SpaceX is definitely unique in the fact that they make the satellites and then also launch them. And so that's obviously much better for margins and all the different stuff.

• 1:00:06Jordi Hays?

  And again, part of the, there's a world in the future where X is not only the everything app, it's your personal AI, it's your cellphone, it has sort of 24/7 connectivity via satellites, and you're hopelessly dependent on it in the way that you are the iPhone. And I'm sure.

• 1:00:25John Coogan?

  But can you imagine if your phone only worked on Starlink? So it's like, yeah, you gotta go outside. You gotta touch grass.

• 1:00:31Jordi Hays?

  That would be bullish.

• 1:00:32John Coogan?

  That'd be bullish. I think it would be great. It'd be like Pokemon Go. Everyone, I saw a bunch of people playing Pokemon Go at some meetup in Pasadena and they were all on their phones. It was very dystopian, actually, but it was cool to see them all walking around a golf course, like at least they were getting outside.

• 1:00:45Jordi Hays?

  In the middle of a driving range.

• 1:00:47John Coogan?

  Oh, yeah. They shut down the whole golf course to for an exclusive Pokemon Go event.

• 1:00:53Jordi Hays?

  Can you imagine being the golfer that's just showing up on a Saturday, just like, ah, finally get a little time off.

• 1:00:58John Coogan?

  It is funny because they only, they only shut down half the golf course, like one of the, one set of the 18 holes was shut down for the event. So you could actually play and then you'd see like, you know, a thousand Pokemon Go players like heads down like, oh, I caught a Charizard, like very excited. It's great. Anyway, if you're traveling a lot and you have a Starlink and you want to hang out, why don't you find your happy place at wander.com?

• 1:01:23Jordi Hays?

  Find your happy place. Find your happy place.

• 1:01:27John Coogan?

  Book a wander with inspiring views, hotel-grade amenities, dreamy beds, top-tier cleaning, and 24/7 concierge service. It's a vacation home better, folks.

• 1:01:34Jordi Hays?

  I gotta say, go, go follow Kyle Tibbetts on X.

• 1:01:39John Coogan?

  Historical run.

• 1:01:40Jordi Hays?

  At Kyle, K-Y-L-E-T-I-V-B-I-T-T-S. He posts some of the best wanders every single day.

• 1:01:48John Coogan?

  He's their chief marketing officer.

• 1:01:50Jordi Hays?

  Yeah, he's their CMO. He's a friend of ours. And he just posted one a bit earlier called Malibu Ridge. That just looks

• 1:01:56John Coogan?

  10 out of 10.

• 1:01:58Jordi Hays?

  Iconic. We gotta get over there. Sure it's close to my house. And yeah, we got some, we got some shoots coming up. We got some shoots in the pipeline. We're gonna be leveraging some wanders.

• 1:02:10John Coogan?

  I love it.

• 1:02:11Jordi Hays?

  Very excited about that.

• 1:02:13John Coogan?

  Well, should we move on to Isomorphic Labs?

• 1:02:17Jordi Hays?

  Yeah.

• 1:02:17John Coogan?

  600 million dollars for AI drug development. They were backed by Google. Thank you for the size gong. Demis Hassabis, the CEO of Isomorphic Labs, of course, has been at Google for years. He founded DeepMind and famously beat Lisa Dahl in Go with his AlphaGo product and team. Fascinating documentary, if you haven't seen it, all about AlphaGo. Move 37 really shook Lisa Dahl to his core. One of the greatest moments in, in AI history, basically. But we'll take you through it. It's very interesting. It's very early. Everyone kind of expects AI will help in drug design, drug development, could help us live forever,

• 1:03:00John Coogan?

  like really, really amazing applications. But we haven't seen AI really move the needle or move the biotech markets yet. So still early, but Thrive Capital's getting in early as you should if you believe that this is the future. So they raised 600 million dollars in the first external funding round to boost artificial intelligence drug design pipeline across multiple therapeutic areas. And so they're taking an ensemble approach. They're really looking at not just one drug, which is the kind of the normal biotech strategy. Even a company like Moderna, before they got into mRNA vaccines, they were focused on, you know, one, one specific biotech technology.

• 1:03:40John Coogan?

  And a lot of companies will go public as biotech companies saying like, we're an Alzheimer's company. We're, we have a drug that's targeting Alzheimer's, not isomorphic labs. Isomorphic wants to work across multiple therapeutic areas. And so this is actually a subsidiary of Alphabet, started four years ago. Thrive Capital led the funding round with participation from Google Ventures, but they're potentially spinning it out. And we've seen this with Waymo too, where Waymo's starting to take external funding and potentially spinning out as well. This company is based in London and they'll receive follow on capital from the existing.

• 1:04:14Jordi Hays?

  So fascinating that, that Google allows for this sort of massive external investment in companies that are, you know, they're effectively acting as some type of like venture studio. But you'd think with how much cash they produce, they would just want to own all of these. But sometimes having an external, you know, board members can, can help.

• 1:04:37John Coogan?

  Yeah. I mean, I, I think that there's something about, maybe this is a kind of an ad, like an admission by Google that says like, hey, like these companies, these ideas are great, but they can't really thrive when they're a hundred percent owned by Google. Like we just need the.

• 1:04:56Jordi Hays?

  Yeah. It's almost that external pressure.

• 1:04:58John Coogan?

  Totally. External pressure. Yeah. It's like, um, who are we talking to about this? Where, um, I think maybe Delian was, was talking about this, where it can be very tricky when you have, uh, when you're a company and you have like a billionaire patron who's just kind of paying payroll off their own balance sheet and they can kind of bail you out forever, but there's no pressure. And the venture model of like, hey, you raised enough money to get to the next milestone. You have 12 to 18 months, maybe you stretch that to 24, maybe it goes somewhere else, but like, you have to deliver some sort of milestone and get on, you're off the research track. This is not go spend 20 years and figure out if you can create a grand unified theory of the universe. This is, can you commercialize?

• 1:05:43John Coogan?

  Can you make really, really solid traction to justify the next round? And that treadmill has worked in technology development for decades. And so I think Google's maybe just admitting that. There's also the question of just if, how do you incentivize someone who's at a subsidiary financially? Like if you go and take-

• 1:06:04Jordi Hays?

  And I wonder what these cap tables look like, right? Cause you have to imagine-

• 1:06:08John Coogan?

  A hundred percent Google, it's at the start, right?

• 1:06:10Jordi Hays?

  Yeah, but, but post-investment, you've got, you know, the founders gotta have some direct exposure, I would imagine, the team that's now working on it would want exposure, you know, who knows?

• 1:06:25John Coogan?

  Yeah, I mean, I would imagine that Google, outside of GV, Google Ventures probably owns 50% of the company still or something like that. They probably gave a lot to employees and founders, but they, you know, it was definitely incubated there and built there, and so they, they deserve a, a large chunk of the equity, but that will probably get diluted down over time as the company does more, more investment rounds. So the company will use the investment to advance AI research and development and expand its team.

• 1:06:54John Coogan?

  Demis said, "This funding will help further turbocharge the development of our next generation AI drug design engine." And of course, while at DeepMind, Demis worked on the team that's created AlphaFold, solved the protein folding problem. That was an interesting development because everyone thought that protein folding was extremely resistant to computational efforts, that it was not going to be solved. They solved it very quickly, but also when they did solve it, it didn't really move the biotech markets in an interesting way. Like you would expect, it's like, hey, like the thing that's really hard just got solved. It's now trivial. Like you would expect all of the companies to kind of get a little bump, but nothing happened in the market because it turns out that protein folding,

• 1:07:39John Coogan?

  while it is important in drug development, it is not a major cause center. Yes, you need to use this, I think it's like an x-ray crystallography machine or something. You need to use some like really expensive equipment, but at the end of the day, you kind of just pay a PhD to do it and they're kind of a starving student and it's not that big of a, of a barrier to drug development, even though it is from a, from like a philosophical and mathematical perspective, like a very, very difficult problem and it's very impressive that they solved it. It didn't really unlock, it wasn't like, oh yeah, protein folding, AlphaFold came out and then we got a new cancer drug the next day. Like that's, we were not that limited on it. And so, this is the interesting quote, Demis says-

• 1:08:22John Coogan?

  His mission is one day solving all disease with help of AI.

• 1:08:27Jordi Hays?

  Yeah.

• 1:08:27John Coogan?

  He's coming for it all.

• 1:08:28Jordi Hays?

  Yeah.

• 1:08:29John Coogan?

  Not just one area.

• 1:08:30Jordi Hays?

  And while OpenAI's GPUs burn due to the Ghibli usage, Google's TPU is

• 1:08:39John Coogan?

  Burning.

• 1:08:40Jordi Hays?

  Is on fire, trying to, trying to further Brian Johnson's goals of living forever.

• 1:08:48John Coogan?

  They already have partnerships with Eli Lilly and Novartis for drug design and development through AI. And they put out a press release, they talked a little bit more about this. They're bringing together top tier investor groups with deep AI and life sciences expertise. They want to transform the industry through an interdisciplinary approach. It feels like this press release was maybe written by Gemini 2.5. Who knows? Press releases just sound like boring all the time. I wish he'd just done a thread. He did, he did post about it, but it was kind of like, okay, yeah, we get it. You're bullish. There was an interesting post I saw by Zachary Spiro here.

• 1:09:28John Coogan?

  He says, this means isomorphic has raised somewhere between 12 to 40x the average UK funding round for companies at this stage.

• 1:09:36Jordi Hays?

  Even at that stage?

• 1:09:38John Coogan?

  Yeah.

• 1:09:38Jordi Hays?

  Well, how's he describing stage?

• 1:09:41John Coogan?

  Probably growth equity or like series B or something like that. I don't know.

• 1:09:44Jordi Hays?

  Cause if this is the first, is this the first external round?

• 1:09:47John Coogan?

  It is the first external round, but yeah.

• 1:09:49Jordi Hays?

  Forty times the average preseason. Clearly saying it's more of a, more of a growth.

• 1:09:53John Coogan?

  But this is the interesting, this is the interesting benchmark. It's so large, it's equivalent to more than a quarter of all UK life science VC investment in 24, 2024. So last year,

• 1:10:06Jordi Hays?

  Yeah.

• 1:10:06John Coogan?

  All UK life science VC companies, VC backed companies raised just four times what they just raised.

• 1:10:13Jordi Hays?

  Thrive.

• 1:10:13John Coogan?

  Like two billion.

• 1:10:14Jordi Hays?

  Thrive goes to, to London for one trip and they're like,

• 1:10:17John Coogan?

  Let's just buy it all.

• 1:10:17Jordi Hays?

  We are venture capital in the UK.

• 1:10:20John Coogan?

  Basically. But it makes sense. It's like, like Demis has had, you know, an incredible impact on the industry. He's built DeepMind, which became Google's like fantastic AI research organization. Google at one point had Google Brain and then also DeepMind and they wound up merging them because it was too much. And they had two research orgs that were kind of going back and forth. But he's a legend in the industry and he's, and he really has again and again and again, just created.

• 1:10:48Jordi Hays?

  He's an absolute dog, John.

• 1:10:49John Coogan?

  He's an absolute dog. He's an absolute dog. He really is like, I mean, solved Go, Mu Zero, another legendary AI system. Same thing with, I mean, yeah, it's like, Google's been doing an incredible amount of work on the research side. Just, I think that the productization has been a little bit slow because a lot of these organizations within Google, they feel like modern interpretations of the academic lab. They're very much just, hey, you have unlimited money, unlimited time. Go work on science and research and don't even think about how this will actually make money.

• 1:11:31John Coogan?

  And that's produced some incredible results, but at the same time, it's not, it hasn't really produced incredible products or businesses or durable value. And so I, I, I'm in support of them spinning it out.

• 1:11:43Jordi Hays?

  Yep.

• 1:11:45John Coogan?

  But.

• 1:11:46Jordi Hays?

  Yeah, we don't want these moonshot projects just living within Google without any sort of urgency to actually deliver commercial results.

• 1:11:56John Coogan?

  Yeah, I agree. But until Demis solves all disease, I think the best thing that you can do for your health is just get some good sleep. Go to 8sleep.com.

• 1:12:06Jordi Hays?

  Nights that fuel your best days.

• 1:12:10John Coogan?

  And. Turn any bad into the ultimate sleeping experience.

• 1:12:13Jordi Hays?

  Called out on X that you can use your TruMed funds.

• 1:12:17John Coogan?

  Oh, yeah, that's right.

• 1:12:18Jordi Hays?

  Buy your 8Sleep.

• 1:12:19John Coogan?

  Yeah, shout out Justin.

• 1:12:20Jordi Hays?

  Basically buy.

• 1:12:21John Coogan?

  Brother of the week.

• 1:12:22Jordi Hays?

  8Sleep pre-tax.

• 1:12:23John Coogan?

  Yep. So if you have a FSA, HSA account, you got some money burning a hole in your pocket. Head over to 8sleep.com and check out with TruMed. Can't recommend it enough.

• 1:12:33Jordi Hays?

  Just do it.

• 1:12:34John Coogan?

  And a lot of these companies, they have FSA, HSA programs. You can just start accruing it, pay it down. There you go. It's all good.

• 1:12:40Jordi Hays?

  How'd you do last night?

• 1:12:42John Coogan?

  I, I imagine I did well. Let's check.

• 1:12:48Jordi Hays?

  I, to be honest, I was watching White Lotus.

• 1:12:54John Coogan?

  Ninety-eight.

• 1:12:55Jordi Hays?

  And I don't recommend Night Lotus is.

• 1:12:57John Coogan?

  Night Lotus.

• 1:12:58Jordi Hays?

  Night.

• 1:12:59John Coogan?

  Night Lotus. Never Night Lotus. Day Lotus only.

• 1:13:02Jordi Hays?

  White Lotus before bed, not a, not a great combo. I only got six hours and forty-two minutes of sleep last night.

• 1:13:08John Coogan?

  I got seven twenty-four.

• 1:13:10Jordi Hays?

  So much of sleep is just getting, you know, really getting the time in, you know?

• 1:13:15John Coogan?

  Yeah, you gotta put in the time.

• 1:13:16Jordi Hays?

  And once you're getting the time in, sleep on your pod.

• 1:13:20John Coogan?

  Yeah.

• 1:13:21Jordi Hays?

  Not in the pod.

• 1:13:23John Coogan?

  You need a good morning routine. You're gonna need a good nighttime routine. You gotta go to bed. You gotta start your bedtime routine at five-thirty PM.

• 1:13:29Jordi Hays?

  I need a keg of Saratoga water to just do a quick keg stand.

• 1:13:34John Coogan?

  There you go.

• 1:13:35Jordi Hays?

  Keg stand in the evening, Saratoga water.

• 1:13:38John Coogan?

  Yeah, you're good.

• 1:13:39Jordi Hays?

  Sparkling.

• 1:13:39John Coogan?

  You could do it with Aurora. Aurora is a keg. You should flip that bad boy over.

• 1:13:43Jordi Hays?

  We should. You're a huge keg stand guy.

• 1:13:45John Coogan?

  I'm a huge keg stand guy.

• 1:13:46Jordi Hays?

  You're bringing keg stands back.

• 1:13:47John Coogan?

  Yeah, yeah. We need to take back Tech Bro.

• 1:13:50Jordi Hays?

  That was a great.

• 1:13:51John Coogan?

  Take back Meathead.

• 1:13:53Jordi Hays?

  That was a great post earlier.

• 1:13:54John Coogan?

  It was fun.

• 1:13:55Jordi Hays?

  Maybe it was last night?

• 1:13:56John Coogan?

  I think it was last.

• 1:13:56Jordi Hays?

  For those that missed it, John said, if you're trying to avoid microplastics, don't drink beer out of those red plastic solo cups. Stick to keg stands.

• 1:14:07John Coogan?

  Stick to keg stands.

• 1:14:08Jordi Hays?

  And that only got about twenty-five percent of the likes of your other post, which was the heat death of the universe is unacceptable. We need to address entropy in a meaningful way within the next ten to a hundred years. At Gary Tan. So hopefully.

• 1:14:22John Coogan?

  Is that one doing well?

• 1:14:22Jordi Hays?

  It's, it's over four hundred.

• 1:14:24John Coogan?

  Okay, we're, we're going with that one. Yeah, the at Gary Tan one went viral.

• 1:14:28Jordi Hays?

  Any problems that you have right now?

• 1:14:30John Coogan?

  Yeah.

• 1:14:30Jordi Hays?

  Just tag, tag, tag GT.

• 1:14:33John Coogan?

  This, of course, comes from like a pretty serious post, Deep Prasad, who I've actually met years ago. Nice guy. He said, last night around three-thirty to four AM. Okay, that's your first mistake, Deep. You should have been sleeping.

• 1:14:45Jordi Hays?

  Yeah.

• 1:14:46John Coogan?

  But this is crazy. He said he was shot at twice near his hotel in San Francisco. Very scary. He said, they chased me to my hotel and shot the second time when I ran inside and got one. Of the staff to come out. We both heard a Glock and he saw the gun while I saw the bullet impacts. I'm still shaking. Very sorry to hear that. I hope you're okay. That is very rough and it was no laughing matter until we found out that you were safe. And then at the end of your post, you just added Gary Tan, like, hey, help me. And so people had a lot of fun with this. It turned into a meme. Glad that you're safe. But we're gonna meme.

• 1:15:21Jordi Hays?

  I mean.

• 1:15:22John Coogan?

  And.

• 1:15:22Jordi Hays?

  He's safe.

• 1:15:23John Coogan?

  Gone.

• 1:15:23Jordi Hays?

  New meme format.

• 1:15:24John Coogan?

  Says, I'm sorry that happened, but what is Gary going to do? And there is a little bit of like Gary Tan has just become like Batman of San Francisco. You just like put up the bad signal anytime anything bad happens. And so we had a lot of fun with this. Jordy put up a similar post in the format, talking about the difference between East Coast and West Coast time and how the East Coast has a three hour advantage on us and Gary Tan should fix it for us.

• 1:15:54Jordi Hays?

  It's absolutely brutal.

• 1:15:55John Coogan?

  It's absolutely brutal.

• 1:15:56Jordi Hays?

  Perpetual three hour head start on the day forever. We should flip it.

• 1:16:01John Coogan?

  We should flip it.

• 1:16:02Jordi Hays?

  Every six months, it should flip.

• 1:16:04John Coogan?

  Yeah. That wouldn't cause chaos at all.

• 1:16:06Jordi Hays?

  In, in sports, you know, you don't let one, you know, team just sort of like pick their side.

• 1:16:13John Coogan?

  Well, you know, China, one time zone.

• 1:16:14Jordi Hays?

  Yeah.

• 1:16:15John Coogan?

  Russia, 13 time zones.

• 1:16:18Jordi Hays?

  13?

• 1:16:19John Coogan?

  Yeah. So long. And it's funny because it's like, they're both like pretty big countries, but it's clear that like Russia was just like, let's have as many time zones as possible. And China was like, let's have as few as possible. And so, yeah, I think if you're on like the, I think if you're in the western side of China, like the sun sets like really early.

• 1:16:37Jordi Hays?

  Yeah.

• 1:16:38John Coogan?

  Something, something odd happens, but you gotta deal with it because they're not putting up an east-west rivalry. It's one team.

• 1:16:44Jordi Hays?

  Well, I got, I got some breaking news.

• 1:16:46John Coogan?

  Okay, hit me.

• 1:16:47Jordi Hays?

  We have a new partner.

• 1:16:48John Coogan?

  Oh, yeah.

• 1:16:48Jordi Hays?

  If you look in the ticker right now, you'll see a lovely logo for numeral.

• 1:16:55Jordi Hays?

  So shout out to Nate, Sam, and Matt over at Numeral. So

• 1:17:00John Coogan?

  Break it down. What is Numeral?

• 1:17:01Jordi Hays?

  You're about to note Numeral puts sales tax on autopilot for leading ecommerce and SaaS businesses. It is the platform for sales tax compliance. John, you already know that. They already work with 1,000 plus different ecommerce and SaaS businesses. They power Ridge Wallet, our friends Sean and Connor. They also power Graza, which is a company that is absolutely crushing.

• 1:17:27John Coogan?

  It's in the Hayes portfolio.

• 1:17:28Jordi Hays?

  It's in the Hayes family portfolio. I think it's like a clean 50x. They got their own ticker too. So they're ticked up.

• 1:17:36John Coogan?

  They're ticked up.

• 1:17:38Jordi Hays?

  We love to see it.

• 1:17:38John Coogan?

  You gotta scroll down so that

• 1:17:40Jordi Hays?

  Fantastic rating on G2.

• 1:17:42John Coogan?

  Our ticker doesn't block their ticker. Let's look at their ticker.

• 1:17:43Jordi Hays?

  Benchmark Series A.

• 1:17:44John Coogan?

  They got great teams. Very cool. And I mean, two things, like, like, sales tax is such a hassle. Because it's, there's just so many sales tax jurisdictions. It's like the perfect thing for automation and software.

• 1:18:00Jordi Hays?

  I was deathly afraid because I just yelled out, "Benchmark Series A." And I was like, "Oh, wait, did that not get announced yet?" It did get announced.

• 1:18:08John Coogan?

  It's leaking it live.

• 1:18:10Jordi Hays?

  It got announced last month. So absolutely fantastic. And I'm very excited to be, Sam, the CEO, splits, spends time in LA.

• 1:18:23John Coogan?

  Cool. Yeah, we'll have to have lunch with him as soon as he's back on. Do you remember the golden age of ecommerce when you just didn't have to pay sales tax? And Amazon was just like, "Yeah, if you're not in Seattle, like, we're a Seattle company." Like, "We don't have Nexus in California."

• 1:18:36Jordi Hays?

  Yeah.

• 1:18:36John Coogan?

  And they just wouldn't. And it was this crazy arbitrage because you could buy things and you just wouldn't pay tax if you bought it online. And then eventually, Amazon was like, "Okay, yeah, we actually have Nexus everywhere. We gotta pay tax everywhere." And it got a lot less fun. But now that it is a lot less fun, the fun's coming back. Because of sales tax automation. So what's it called the action?

• 1:18:58Jordi Hays?

  Go to numeralhq.com.

• 1:19:00John Coogan?

  Numeralhq.com.

• 1:19:02Jordi Hays?

  Yeah, we're pumped to have him on the show.

• 1:19:04John Coogan?

  It's great.

• 1:19:05Jordi Hays?

  We are eventually going to sell some merch. And we will be running on numeral.

• 1:19:09John Coogan?

  That's great. Guillermo, friend of the show, former guest of the show, has a post here. There's no better investment in the world than America. It's people, it's culture, it's land, it's companies, it's freedom. Leaders in AI, there's no second place. I'd buy every stock in every square foot. It's only been in the blink of an eye since 1776 and the best is yet to come. Let's hear it for America. Let's hear it for America, folks. Thank you Guillermo.

• 1:19:36Jordi Hays?

  John, what happened to the American flag that we used to have on the set? Did you take it for your bedroom?

• 1:19:41John Coogan?

  I don't know. I was thinking we need a massive American flag somewhere on the set.

• 1:19:45Jordi Hays?

  Yeah.

• 1:19:46John Coogan?

  Well, we're working on a new studio, folks. I'm sure we'll, maybe we should just paint the whole wall, American flag. I'm also seriously looking at a Cybertruck that's wrapped with the American flag and throwing a sticker on there. I bought this before Elon went crazy and see if people fall for it. Just the most aggressive screaming eagle and be like, yeah, yeah, I bought it before Elon went crazy.

• 1:20:09John Coogan?

  Or, or maybe you throw the, I bought this after Elon went crazy.

• 1:20:14Jordi Hays?

  I kind of want to do a copy pasta of this Guillermo post that says, there's no better investment in the world than Versell. It's people, it's culture, it's land, it's companies, it's freedom. Leaders in AI, there's no second place. I'd buy every stock in every square foot. It's only been a blink of an eye since 2012.

• 1:20:31John Coogan?

  When they incorporated, when Guillermo launched NextJS.

• 1:20:37John Coogan?

  Isn't that the one he launched? Very funny. Anyway, if you're looking to get in on America, on the action in America, buying every stock in America. Go to public.com.

• 1:20:47Jordi Hays?

  To invest in America.

• 1:20:48John Coogan?

  Investing for those who take it seriously. Multi asset investing industry leading yields and they're trusted by millions, folks. Anyway, let's move on to Tom Bloomfield over at Y Combinator. He says, software engineers are highly paid farmers tending their crops by hand. We just invented the combine harvester. The world is going to have a lot more food and a lot fewer farmers in very short order. I think this is true of doctors and lawyers too, but maybe a year or two later, we're going to have abundance of, an abundance of incredibly high quality knowledge work at very low prices. Instead of living off gruel, everyone is going to have bananas and kiwi fruit for pennies. The farmer, but the farmers will need something, to find something else to do with their time.

• 1:21:29Jordi Hays?

  It's actually so wild that you can take a, you can, you can take any type of media, whether it's text, screenshot, PDF, image, et cetera. Put it into any of these models and get and say, pretend to be this and give me an analysis of this content. And then it just spits out a really robust analysis from the lens. And you're effectively getting to hire a lawyer and intelligence operative, a doctor, et cetera, to do this sort of pretty in-depth analysis for effectively zero dollars. And that is still just dramatically underhyped.

• 1:22:14John Coogan?

  This is a very, potentially a very stupid take, but I haven't seen it and I wonder if there's something good here. Like, we talked about Jevon's paradox where deep-seak drops the cost of inference and paradoxically, the overall demand goes up, right? That's Jevon's paradox. Now, I've always wondered, like, is Jevon's paradox just price elasticity? Because if a product is very price elastic, like a price inelastic good is cigarettes. Like, the price goes up, people buy the same amount, but with a price inelastic good.

• 1:22:46Jordi Hays?

  Inspire myself.

• 1:22:47John Coogan?

  To grind harder, of course. But, yeah, well, that's a Veblen good. And recently I said, we should put 100% tariffs on Veblen goods because Veblen goods are goods that the demand increases when the price goes up. So that's something like a Patek Philippe is a Veblen good because you, you're like, oh, it's a $200,000 one. I want to buy it more.

• 1:23:08Jordi Hays?

  I was joking about the auto tariffs being

• 1:23:12John Coogan?

  Yep.

• 1:23:12Jordi Hays?

  Actually good for the economy because, okay, if, if, you know, whatever, if a Daytona SP3 costs 25% more,

• 1:23:21John Coogan?

  I'm gonna work harder.

• 1:23:21Jordi Hays?

  I'm simply gonna grind harder.

• 1:23:23John Coogan?

  And you're joking, but that's actually the economic analysis of what a Veblen good is. That's exactly how an economist would describe how a Veblen good works, which is why I think that post is funny. But what's interesting is like, if you have, if you have price in a last, if you have price in elasticity for AI inference, as the price goes down, if it's truly very price in elastic or price elastic, what will happen is your, your demand increases disproportionately to the price. And so you're actually selling more at the lower price. And so your overall revenue goes up and that's what Jevon's paradox predicts about GPUs and new technologies. But is there a Jevon's paradox for software?

• 1:24:06John Coogan?

  And I think that's what we're hearing from a lot of folks in the industry who say, hey, yeah, it's gonna be much easier to write code, but there's a lot more code to write. And so what's interesting is like, it's possible that the software engineering industry actually grows, even though the price of software engineering declines and you have a sort of Jevon's paradox, but we'll have to figure it out. We certainly see that with, with Studio Ghibli's, like someone was chirping at Mike Tyson for posting a Studio Ghibli photo of him with a, with a pigeon. And somebody was like, you're, you're a millionaire. Like, why aren't you paying an artist to do this?

• 1:24:45Jordi Hays?

  Oh, I saw this.

• 1:24:46John Coogan?

  And, and, and the thing was like, look, like he was never going to pay an artist to do that because like, he doesn't have the time to hire, he's not thinking about that. That's not something he was doing.

• 1:24:55Jordi Hays?

  Somebody quoted that and said something to the effect of, "Hey, I'm looking for an artist to make me a picture of Mike Tyson, you know, with a pigeon, and my budget is $0."

• 1:25:07John Coogan?

  Exactly.

• 1:25:08Jordi Hays?

  "Let me know if anybody wants to do it."

• 1:25:09John Coogan?

  Let me know if anybody's interested. Exactly. And so, and so you have this weird, this weird paradox where, where it's possible that like demand for, for art and demand for engineering, it all increases and...

• 1:25:22John Coogan?

  It's kind of unclear what that does to jobs. Like you would imagine that there's fewer software engineers like what Tom Bloomfield here is saying, but we could see a lot more code, a lot more doctoring and lawyering. And we certainly can imagine that with with legal where all of a sudden like everyone's suing each other constantly because it's all AI powered and it's going to get very weird. But

• 1:25:45Jordi Hays?

  Yeah, but uh, yeah, it's one of those things. I think I do think more legal work will happen when you have these sort of chat GPT like, I mean, people are already using chat GPT to generate legal docs. I think it's more dump in legal docs. And usually those types of people were never going to hire a traditional lawyer. But then there's some intersection of people that would have hired a lawyer, but now will just pay, you know, or they're like, I pay 200 bucks a month.

• 1:26:16John Coogan?

  Hey, chat GPT, draft a restraining order for a podcaster who stole my idea.

• 1:26:24Jordi Hays?

  Let's get to Aaron. Using that 50 times a day.

• 1:26:27John Coogan?

  Aaron, the CEO of Box is coming on the show in just a few minutes. I want to read his post because

• 1:26:34Jordi Hays?

  No, he's actually coming on at 1245. We got

• 1:26:36John Coogan?

  Yeah, I said 15, in 15 minutes. Sorry. But I want to give some context about what I'm excited to talk to him about because he has been very rigorous in his evals. And I'm sure Avi Schiffman from from friend.com is just kicking himself reading this post because Aaron's saying that Gemini 2.5 Pro is a big step towards AI being useful in the enterprise. So Box has an AI enterprise eval, an evaluation, and Gemini 2.5 Pro scored three points better overall than Gemini 2.0 Pro for accurate, single-shot data extraction from enterprise docs. This entails asking the model to pull out many fields at once

• 1:27:21John Coogan?

  from the doc. And the jump is actually bigger specifically in areas where it must work through a complicated, through complicated logic in a doc. Obviously, this is extremely helpful for Box. You have a ton of documents in your Enterprise kind of, you know, document, storage warehouse and all of a sudden you can just query across everything. It doesn't matter if it's PDF or Excel sheets, it's going to pull it all out, which is awesome. It performs much better when tasks require more time thinking and not just jumping to the first answer it assumes is right, such as deducing dates in a contract when you have to reason through multiple sections in the content to come up with the correct answer. Accuracy and data extraction is obviously insanely critical for enterprise AI use cases. You can't get data wrong when working with enterprise information for a mission

• 1:28:05John Coogan?

  critical use case. This is the difference between being able to deploy AI or not in financial services, healthcare, life sciences, and many other places. It's amazing to see the continued performance and capability breakthroughs happening in AI, but it only seems to be accelerating. So what I'm interested in is like Gemini 2.5 Pro, like it's a Google product. Google has Google Drive. Box obviously competes with Google Drive. He's going to be probably offering this as a product. How does that deal get done? What are the risks to partnering versus building your own foundation model? Is, is AI and data extraction a sustaining innovation or a disruptive innovation? Box is unique in that they're still a founder mode company. Aaron's

• 1:28:48John Coogan?

  still the CEO. He founded the company. And so you would imagine that he'd be able to move faster on product and that could be a pretty big differentiator in the short term. So I'm excited to hear what he has to say about all that. And, you know, if he gets it really working, he should run some more ads on Adquick, out of home advertising, made it easier.

• 1:29:07Jordi Hays?

  That's right.

• 1:29:08John Coogan?

  Say goodbye to the headaches of out of home advertising. Only Adquick combines technology, out of home expertise and data to enable efficient, seamless ad buying across the globe. We have someone.

• 1:29:16Jordi Hays?

  Who is on the cap table of Adquick?

• 1:29:19John Coogan?

  Who?

• 1:29:20Jordi Hays?

  Alexis Ohanian.

• 1:29:21John Coogan?

  Let's go.

• 1:29:21Jordi Hays?

  The man himself.

• 1:29:22John Coogan?

  And he's coming into the temple of technology right now.

• 1:29:26Jordi Hays?

  From, uh, see if he's here.

• 1:29:30John Coogan?

  Let's go.

• 1:29:34Jordi Hays?

  And this is maybe our second time having two guests.

• 1:29:38John Coogan?

  We're still figuring it out. We might do a four up. We might just see one person and they'll scroll back and forth depending on who's talking. But we always love having Alexis on the show. He's got so much to talk about, so much history.

• 1:29:51Jordi Hays?

  And he's always cooking.

• 1:29:52John Coogan?

  He's always cooking.

• 1:29:53Jordi Hays?

  He's a chef.

• 1:29:54John Coogan?

  And hey, how you doing?

• 1:29:56Jordi Hays?

  RJ.

• 1:29:57Speaker 02

  Hey guys, I wasn't sure if you could see me or not. Not gonna lie.

• 1:30:00John Coogan?

  We can see you now. How you doing today?

• 1:30:03Speaker 02

  I'm good, guys. How are you?

• 1:30:04John Coogan?

  We're good. Can you start with just like a little bit of intro yourself, your company, what you're working on?

• 1:30:09Speaker 02

  Yeah, yeah, really quickly. I'm RJ. I'm the CEO and co-founder of Playback. I can go more detail in my background, which is really high level. I actually have a little bit of a non-traditional background for a startup founder. I was a hedge fund analyst at an activist hedge fund based here in San Francisco called Value Act Capital. So kind of investing in large pack cap public companies. In terms of Playback, look, the idea is pretty simple. We're trying to create a better way to watch sports by integrating creators and communities directly into the content itself. And practice what that looks like is it looks like a little bit of a combination of like a traditional NBA or MLB broadcast with a Twitch creator stream overlaid on top of it.

• 1:30:50Speaker 02

  So creators can basically add their own voice, own commentary, and most importantly, they can actually interact with an audience while they watch these games. And what we found is that that's just like a way, better way to watch sports. And then I'm sure we can get into more detail on this stuff, but we had a couple of big announcements last week in terms of obviously adding Alexis and 776 to the team and a new partnership with MLB. But yeah, that's the high level.

• 1:31:14Jordi Hays?

  Dude, I loved it right away for a few reasons. One, we basically are doing for technology and business news what you're doing for sports in a way where we don't do any journalism. We're basically sort of providing sort of this like commentary.

• 1:31:28John Coogan?

  Reactions.

• 1:31:29Jordi Hays?

  Reactions to the news. And I think what you tapped into is basically, you know, just an existing behavior, which is so many people are sort of consuming sports content in this sort of bifurcated way where they're getting their commentary from YouTube or Twitch. And then they're getting their, the broadcasts, you know, through these sort of legacy providers and like sort of putting that in the same place just makes a lot of sense. Cause I don't, I don't watch. I don't watch a ton of, I don't watch a ton of sports, but if I want to like get a recap on F1, I'm going to YouTube. I'm not turning on the sort of like post-race reaction.

• 1:32:06John Coogan?

  Yeah, I watch a lot of those like F1 reactions and they can barely even use photos. They have to go to Getty Images, license them. They can never use the real footage. And I'm just like, as a viewer, I want, I want everyone to be able to use the footage in the right ways. And it just requires figuring out all the licensing and stuff. I remember seeing on Twitch, someone was watching a boxing match that was clearly pay-per-view. You've probably seen this and they're holding the controller and they're like, I'm, don't worry. It's just a photo real video game I'm playing. I'm just playing the photo real video game.

• 1:32:37Speaker 02

  Dodging and diving too.

• 1:32:38John Coogan?

  Yeah, yeah, exactly. They're like getting really into it. And it's like clearly they're just, they're just like pirating the pay-per-view stream for their viewers. And the viewers are just like ignoring that guy and just watching the, the pay-per-view stream.

• 1:32:49Jordi Hays?

  Talk about how, talk about how the licensing and the rights work for all this stuff.

• 1:32:56Speaker 02

  So just, just first off, totally agree with everything you guys are saying. Like it's one of those things where to me, like one of the internal maxims we use is like, you know, can the next Stephen A. Smith just be an independent creator on playback? Like they don't need to go work for ESPN. They don't need to go work for Fox or one of the big traditional media companies. And I think the only thing that's held back, like independent sports creators is the lack of content and the lack of rights. Like it's just been too hard to do it. So one of our goals was to kind of mesh those two things together. The way we've done it is actually pretty interesting. So essentially both, this is true, and I think you guys know this, but we have partnerships now with NBA and NBA League Pass and MLB and MLB TV. And the way those partnerships actually work is MLB TV and NBA League Pass are just apps on playback.

• 1:33:37Speaker 02

  So we kind of created this like bifurcated system where there's like an app layer where these like, you know, content companies and streaming services can put their content, still deliver it the exact same way in a lot of ways, still get all that user data, still have the same subscriber relationship. But then we can overlay on top of it this creator experience because sort of everyone agrees that this is a good idea. It's just really hard to actually. Fit it into the existing rights ecosystem and the way we've been able to do this with this app layer just makes it a lot easier. It was still a lot of work to get the partnerships over the line. Like our MLB partnership went live on Thursday. We first agreed to that partnership in July of 2024 and had actually been negotiating and talking about it for like nine months prior

• 1:34:19Speaker 02

  to that. So it's still a long process, but I think the like sort of structure we've set up here is pretty scalable and it can hopefully work with anyone, basically.

• 1:34:27John Coogan?

  That's awesome.

• 1:34:28Jordi Hays?

  Amazing. Well, natural fit to partner with Alexis, given that he not only is a sports fan, but he's creating new leagues. Obviously, I wanted to give you an opportunity to talk about Athlos, but maybe before we get into that, I'd love, I'd love to kind of get your take on it, Alexis, and what kind of got you over the line to partner up in a big way.

• 1:34:48Alexis Ohanian?

  Dude, I had a tweet from six years ago ranting about it only being a matter of time for someone to build the product because there is a lot of product that gets done. So the syncing and everything works well and the partnerships and took a minute, but thankfully RJ and the team did it. And, and the only reason this one was an easy one to spot even six years ago is, is I think for anyone who spent time in gaming, we watched the ascent of Twitch, you know, shout out to Justin and Emmet, who, who found that one of the most popular things people would want to watch people watch was video games, esports, whether it was competitive or not. And what are games other than, you know, whether it's sporting events or League of Legends, it's abstracted away.

• 1:35:33Alexis Ohanian?

  It's the same damn thing, but what gets you in the way is the rights deal. And that was obviously not going to be solved easily. But I first got into sports. It was actually one of my first investments after leaving Reddit in 2020 and splitting initialized up was launching Angel City FC, now the most viable women's soccer team in the world, or sorry, women's professional team in the world. But what I found getting into sports was here was this world, especially in the emerging side, where folks Didn't really have any of the media dollars at stake, so they could move a lot faster with innovation. Because you weren't looking at billion dollar rights deals. You could just assess from first principles. And I think that's why we've had the success we've had in emerging sports.

• 1:36:13Alexis Ohanian?

  And then what it was gonna take was really seeing the uptick of this new generation of sports fan. That's the reason Angel City has been so successful. We're talking to a very different sports fan than the traditional one. It's a fan that lives here, that watches on their terms. It's a younger fan. And so now, thanks to the success of emerging leagues, the big four can look and say, okay, like, maybe we need to reach out to fans here and technology is the way to do it. And it just took time, but the market's ready now and RJ delivered.

• 1:36:42Jordi Hays?

  Yeah, and talk about kind of with playback, you have an opportunity to truly sort of productize sports culture in a way that I feel like Twitch early on was just very much like video game culture. Like, the entire thing was built around that. How are you approaching kind of like bringing sports culture into the kind of the product layer?

• 1:37:05Speaker 02

  Yeah, it's a good, it's a good question. Honestly, the easiest way we've kind of done this is, I think, a hallmark of sports culture is that people like to get their takes off. Like, they're very interactive and active in their fandom. And it's honestly like the biggest dividing line between what a 24-year-old fan looks like versus a 48-year-old fan is like, you know, 48-year-old fan leans back, turns on the TV and just like relaxes and probably still yells at the TV. But a 24-year-old fan actually wants to yell and be heard while they're yelling. And so one of the first tweaks we made to the product is we actually built it originally in sort of the Twitch style of like a one-to-many. Like, it's just a creator basically talking. And what we did is we switched that from like a one-to-many to actually a stage concept.

• 1:37:46Speaker 02

  So creators can actually bring people from the audience up on stage to chat with them, debate with them, do whatever. And like, our best users are like very frequent stage requesters or even joiners. Like, they're always trying to kind of get their takes off. And I think that's kind of a microcosm for how we think about why we're focused on sports. It's like, if we can continue to tailor it to this user and this use case, like, we're gonna have a much better chance of like carving out our niche and kind of winning the use case. But yeah, there's lots of other little things, but hopefully that gives you a good, at least, early signal.

• 1:38:18Jordi Hays?

  Yeah. Do you see, you know, maybe it's happening today already, but do you see former pro athletes sort of like retiring in the same way they do now, saying, I'm going to start a podcast, you know, once, once they're out of the league, you know, I'm going to get on playback and I'm going to just start being basically a super fan, providing that commentary. Is that part of the vision?

• 1:38:39Speaker 02

  Our biggest creator is Gilbert Arenas. So very classic example of that. And I've also been very successful as like an independent content creator. He has a show called Gilbert Arena. It's very similar to what you guys are doing live on YouTube, four times a week. Been super successful in that venue and has transitioned to a playback creator too. He's live, you know, four times a week with us at night and will be basically seven times a week for the playoffs on. And he's been super successful because I think he has like the right blend of like, he has a content creator mindset. Like he can actually think like what's going to go viral, what's interesting to people, what do people want to talk about, like what's just basically fun. But he's also an ex-player. So people sort of naturally want to hear what he has to say. But yeah, he's been super successful. I can even, I can send you guys a clip. He had a really fun

• 1:39:22Speaker 02

  clip that went very, very viral this past week when, when Giddy hit the game winner, basically for, for Lakers versus Bulls. That was really fun. But yeah, I can follow up with that.

• 1:39:33John Coogan?

  Can you talk a little bit about monetization on your end? Obviously I'm paying the MLB through their app. You're sitting on top of that. It makes a lot of sense that if I'm following a creator and I'm tipping them, that money just flows through. You take a cut of that. But on Twitch, they're actually running ads as well. I imagine that the MLB would be pretty upset if you just start running ads on top of their ads and kind of disintermediate them there. Is there some sort of partnership? Like you obviously as a digital platform have even more information. You could target better. There's a lot of different things. How are you thinking about monetization over the long term?

• 1:40:07Speaker 02

  Yeah. So short term, it's just focused on the creator monetization that you referenced. Like I think we have a long runway and we have great investors to kind of build to the long term. But yeah, near term, it's all about basically these independent sports creators. Can we actually help them build a business? So obviously tipping is one category, but even just room subscriptions is what we call them. Like the ability to offer an actual subscription to their audience for either like limited interactive, interactivity, or even like premium streams. That's the primary focus right now. Long term, though, I think there's sort of two options. One is like, there is already a proven model around like advertising sponsorships in partnership with the leagues, right? So the leagues do have these partnerships with Amazon and YouTube and other like obviously fully scaled platforms to deliver ads for them and then a healthy cut goes to the partner,

• 1:40:52Speaker 02

  basically. So that's one category. The other category is like, I kind of think, once we're big enough, there's going to be a really big opportunity for what we call like platform revenue, which is basically like some percent of our of the subscribers we drive, obviously, to these partners. We should earn a percent of that. But also, there's going to be new services that we can kind of offer. So the two obvious ones that come to mind are e-commerce and sports betting, right? Like being able to bet from within this experience, being able to buy a ticket from within this experience, like, all of these are going to be sort of like high quality opportunities. And we expect to go enable that and make money from that, if that makes sense.

• 1:41:27Jordi Hays?

  Yeah, for me, it's kind of silly right now that you have a creator who's providing reactions and commentary to sports on one platform and saying, use my code and go to PrizePix or go to, you know, Underdog or Joey and Jake's, you know, platform, like,

• 1:41:46John Coogan?

  Better.

• 1:41:47Jordi Hays?

  Better. Like, it's very silly that these are just happening in one place where a sports fan wants to like post up, they're just like fully immersed in the game, the commentary, and whatever sort of activity they're doing on top of that. So.

• 1:42:00John Coogan?

  I mean, maybe merge in a social network and an L L M foundation model company as well.

• 1:42:04Jordi Hays?

  Yeah.

• 1:42:05John Coogan?

  Just merge it all.

• 1:42:06Jordi Hays?

  Yeah, yeah, L B O, a big.

• 1:42:07John Coogan?

  Quarter trillion. I see a quarter trillion dollar opportunity here.

• 1:42:11Jordi Hays?

  Yeah.

• 1:42:12John Coogan?

  Let's throw it all together.

• 1:42:13Jordi Hays?

  Um, we got a minute left. Alexis, tell us, I wanted the the update on Athlos, uh, since it's like there was some stuff going on over the weekend.

• 1:42:23Alexis Ohanian?

  Yeah, the greatest show in track. Uh, we started this women's track league last year. Three million people tuned in for it. I was the biggest person in the history of the sport, fastest ladies in the world, and it was a blast. Uh, we're doing it again October 10th in New York. And of course, we're going to be streaming it on playback.

• 1:42:39Jordi Hays?

  Yeah, I was gonna say, are you gonna have a, are you gonna be providing commentary?

• 1:42:43Alexis Ohanian?

  Uh, you don't. Want to hear my commentary, but this is to your point, though, right? This is why I love the idea of building in a new, in this case, building a brand new league, but even in emerging sports is, is you can re underwrite everything from first principles, right? We can say, because we don't have a billion dollar streaming deal, media deal yet, we can say, okay, what's the best thing for fans? And what's wild is there is a long, long, long tale of creators who love this sport, or even just mildly curious about this sport, who are going to be able to bring their audience to watch it. And I really believe if you haven't watched John Boy, like, I'm not an MLB guy, I'm not a baseball guy, but I fell in love with this sport through this random creator, happens to be a Nick,

• 1:43:25Alexis Ohanian?

  not a Knicks fan, a Yankees fan, nobody's perfect, but he's a big Yankees fan and does these voiceovers of baseball that delight even a non-fan, like, it's just so engaging. And to me, that, that is the future of sports. And it just seems kind of silly that we've had all this talent emerge from streamers talking about video games, but we've never seen the new John Madden or the next Pat McAfee. And it's, it's going to happen here imminently in these next years.

• 1:43:49Jordi Hays?

  Love it, guys. Thank you for jumping on. Very excited. I'm going to hit the size gong for you. And we look forward to tuning into some playbacks in the near future and hope you guys crush the rest of your Monday.

• 1:44:01John Coogan?

  Yeah, good luck. Thanks, guys.

• 1:44:04Alexis Ohanian?

  Thank you.

• 1:44:04Jordi Hays?

  Cheers. Very cool. It's crazy that, that do people bet on running a lot yet? Horse betting's huge. Why is betting on, you know, people like these personalities, track stars? Why is this not?

• 1:44:20John Coogan?

  You should be able to do a whole track day. Just head to the track, get some, get some mid juleps.

• 1:44:25Jordi Hays?

  I mean, I respect horses. We love horses.

• 1:44:27John Coogan?

  I went to the Kentucky Derby. Why can't I just go to, you know, the human Derby?

• 1:44:32Jordi Hays?

  The Derby.

• 1:44:33John Coogan?

  The Derby.

• 1:44:34Jordi Hays?

  The Derby.

• 1:44:36John Coogan?

  How we doing? Do we have our next guest? Not yet. Hopefully coming in soon.

• 1:44:43John Coogan?

  I think that's very cool. It's interesting. I mean, you have to wonder if Twitch is thinking about that. They're so big. Amazon has the rights to a bunch of stuff. It seems so logical, but man, I mean, it's been a decade and they haven't done it, so.

• 1:44:54Jordi Hays?

  I mean, part of it is, it's great for, it's great for business if your competitor is owned by

• 1:45:04Jordi Hays?

  Amazon.

• 1:45:04John Coogan?

  Yeah, exactly. And

• 1:45:06Jordi Hays?

  Not that they can't innovate at all, but

• 1:45:07John Coogan?

  I mean, for a long time, Emmett Shear was the CEO of Twitch and was running essentially an independent organization from Amazon. But of course, he stepped down and now Twitch has been much more absorbed in the Amazon ecosystem. It is a fascinating model. Have you have you seen on Twitch how the Twitch Prime model, how if you have Amazon Prime, you get one free sub subscription to a creator. And so, most people who use Twitch, they really have one favorite person that they tune into every time. It's not really like YouTube where you're bouncing around, watching 25 different creators. And so, you you go in and you get a free one. And so, they would give $5 a month. And then the Twitch Prime, I think, delivered maybe $2. Only like the margin went through.

• 1:45:50Jordi Hays?

  Right.

• 1:45:50John Coogan?

  But still, you would have these, these creators with like huge organizations. What are you looking for? Water?

• 1:45:58Jordi Hays?

  I was looking for a year, but I thought you had two.

• 1:45:59John Coogan?

  Oh, no.

• 1:46:00Jordi Hays?

  We got Aaron in the chat here.

• 1:46:01John Coogan?

  Bring him in.

• 1:46:02Jordi Hays?

  There we go.

• 1:46:03John Coogan?

  How you doing, Aaron?

• 1:46:03Aaron Levie?

  Hey, guys, how's it going?

• 1:46:06Jordi Hays?

  We're doing great.

• 1:46:07John Coogan?

  We're doing great.

• 1:46:07Jordi Hays?

  Finally have you. You should have been on like, you know, we've had like 50 plus guests at this point. You should have been on the first one.

• 1:46:13Aaron Levie?

  Why wasn't I a launch partner for this thing?

• 1:46:15Jordi Hays?

  I know.

• 1:46:15John Coogan?

  Seriously. Oh, well, we're making it up for today.

• 1:46:18Aaron Levie?

  Okay, great. Another podcast. Awesome. Good work, guys.

• 1:46:20Jordi Hays?

  Yeah, yeah, yeah. That was the genesis, right? The world didn't need another podcast.

• 1:46:25John Coogan?

  Technology needed a podcast.

• 1:46:26Jordi Hays?

  Yeah.

• 1:46:26John Coogan?

  That was the idea, for sure. I want to talk about the enterprise AI eval and how the different LLMs are interacting at box. Is this a sustaining innovation? Is this a disruptive innovation? Is Google a rival? You're gassing them up. What's going on?

• 1:46:45Aaron Levie?

  There were like nine questions in there. Where do you want me to, where do you want me to start?

• 1:46:48John Coogan?

  Wherever you want.

• 1:46:50Aaron Levie?

  Yeah, I mean, we're pretty pumped about AI as you can imagine. So we We've been building this platform to help enterprises store their their their data for a couple decades now and we have hundreds of billions of files within Box and what the you know the one challenge with with content, you know, financial documents and resumes and marketing assets and contracts is you create it, you share it, and then you kind of never look at it again.

• 1:47:13John Coogan?

  Yep.

• 1:47:14Aaron Levie?

  And so what happens is you see this this sort of, you know, curve of, you know, people, you know, content remains hot for a day or two and then and then it kind of goes into an archive state.

• 1:47:24John Coogan?

  Yep.

• 1:47:24Aaron Levie?

  And AI is the first thing that lets you actually tap into all of the value of all of your data, you know, no matter how old it is and when it was created and who it was shared with and where it is. So for us, it's this massive breakthrough, which is you can turn all of this unstructured data into, you know, effectively usable knowledge for an organization. And so we we were kind of betting the whole company on this idea of in the future, when you work with your content, you're going to have AI agents that go out and and read your documents for you, you know, create analysis, you know, go through all your contracts, find exactly the data you're looking for, automate workflows across any business process. So that that's effectively why we're all in. And and so we're, you know, trying to think through what are the implications in the future of enterprise software.

• 1:48:07John Coogan?

  Yeah.

• 1:48:08Aaron Levie?

  You know, I I'm very much on the side right now that it's a TAM expansion of software as it as opposed to kind of a TAM compression. I think this lets enterprise software, you know, startups or incumbents go after much bigger markets because you're now tapping into the, you know, just a completely different budget pool in in an organization. But but yeah, lot lots happening at the moment.

• 1:48:29John Coogan?

  What about training a foundation model? Did you consider it? It seems like, can you talk a little bit about value accrual versus foundation model layer versus application layer?

• 1:48:40Aaron Levie?

  We thought about it for like six and a half minutes.

• 1:48:42John Coogan?

  Okay.

• 1:48:43Aaron Levie?

  And That's a long time in 2025. Exactly. So in in back in, you know, the moment we saw chat GPT, like, there was like one brainstorm of like, oh, do we need to like fine tune our own models and or even train our own models on on, you know, certain data sets? And and we basically quickly concluded like, no, that doesn't make any sense. And the math is really clear. It's like if you have Google and XAI, we didn't, you know, didn't have XAI at that point, but, but you had, you know, OpenAI, Anthropic, Google Meta at a minimum, you just don't want to be, you don't want to be fighting that war from a capital standpoint, or even just a deep research talent standpoint. So, you know, you always want to be as a, you know, a startup or any size company, you kind of want to be on the side of the tailwinds of, of the market. And the tailwinds in this case are that there's

• 1:49:28Aaron Levie?

  like now five or six at scale companies that are deploying hundreds of billions of dollars, you know, on computers and, and, and training data and talent. So you want to be riding that wave as much as possible. And, and so we've built an architecture that lets us tap into any of the AI models, you know, whoever makes them.

• 1:49:44John Coogan?

  Great, Tori.

• 1:49:46Jordi Hays?

  You had quoted somebody, I think it was a couple of days ago, that, that basically delivered a pretty good prompt about a paragraph of text describing a website that they wanted, and it just sort of pops out this beautiful, you know, landing page. And the designer said, "We are so cooked." That was a reaction for a lot of people last week. Maybe that was a reaction if you're Studio Kipley. I'm kidding. But, but you said, "Here's how this plays out. AI makes producing amazing designs more affordable and faster. Designers get to offload the long tail work, iterate faster and serve more clients or projects. Customers get better results faster or cheaper, inducing more demand for great design." Basically calling Jevon's Paradox on Design. Is there any like context that, that you feel like is worth adding there?

• 1:50:29Jordi Hays?

  Because I think they're, they're generally, you see these sort of big, you know, exciting releases or updates to models, and there's like a lot of sort of doom. But if I was, if I was in high school and I like enjoyed design, I would be calling up every single SMB, and I wouldn't even, what I wouldn't do is say, "Hey, will you pay for this website?" I was, I would say, "I designed this website for you already, and you can have it for whatever, a hundred bucks." And you could just be printing in like seconds, right? So I had a positive takeaway, I think you did too, but I was curious if you had anything else.

• 1:51:05Aaron Levie?

  I mean, that I took it way, way further than the initial thought on, you know, how you kind of growth hack that, which is, which is, I think, a great idea. The, I think we, you know, everybody got really excited about Jevon's paradox because of, you know, the, the efficiency of AI models, the theory that as they get more efficient, consumption goes up. But there's an equal amount of, of Jevon's paradox of all of the applied use cases of AI. And, and so that's, that gets you closer to, to then the, the human labor side, which is, which is, if you just think about like, most markets on the planet, I would argue are, are sort of smaller than they should be.

• 1:51:45Aaron Levie?

  If the cost of delivering the service was, was cheaper, you would have Jevon's paradox for almost every domain in the world. Like, and let's take a very easy one. If healthcare was cheaper, we'd probably consume it more. Like, my biggest hurdle to seeing a doctor is, is just, it's a nightmare to, to just like even get, you know, you know, a date on the calendar to, to see anybody. And so, so just, just think about all of the things, if you could increase the productivity of that particular category, which is, which is an inverse or a corollary to lowering the cost of delivering that thing, or making it more available, or making it more accessible, would the consumption of that category go up? And I think there's not a lot of markets that are kind of at this perfect saturation level of, of what the potential demand is.

• 1:52:29Aaron Levie?

  And we saw this in the very, you know, I think in modern tech, we saw this, let's say in Uber as an example. There was this really funny article that, that some economists wrote like 15 years ago about Uber. That was like, the best case scenario is this takes like half the taxi revenue and it's like a $5 billion business or something. And, and like what the guy like obviously totally missed the forest from the trees is if you, if you just make Uber, you know, and liquidity of, of, of a taxi service 100 times more efficient. You know, the market actually goes up by it, let's say, you know, a hundred X and and he couldn't kind of quite process that. But we were doing the same thing over and over again in AI where we're sort of thinking like, oh, wow. You know, we made this thing way more efficient. That means it's going to compress the size of that market.

• 1:53:12Aaron Levie?

  When actually, what what it will mean is is that is to your exact point. All of the people on the planet that have really bad design right now. But they'll have some some entrepreneurial, some, you know, high ingenuity person going and saying, OK, now I can actually do better design. For the first time ever, because it's affordable to do great design for this small bakery. That that would never have hired a designer. They never would have, you know, thought even to make their their website look good. Uh, but now it's actually affordable to do so. And so I think that's actually going to play out, you know, many, many times over. Uh, in AI, there'll be some categories where where this where we are at sort of equilibrium of of of sort of supply and demand. But I'd argue most categories are are this is not the case, you know, e- even as an example.

• 1:53:54Aaron Levie?

  Taking like another knowledge workspace, let's say, you know, there's a lot of AI startups doing legal legal work, um, you know, AI for lawyers. And, you know, one theory is, OK, wow, is it a really bad time to be a lawyer? Um, on the other hand, if you make it much more accessible to now ask a a question that's a legal question. I'm still going to follow up and say, OK, can you paper this now as a contract? Or or can you just give me a little bit extra advice? But the we've lowered the barrier to now getting access to even thinking. About what is the legal implication for a particular thing that then grows? The demand of that space and and, um, you know, even in the category of, let's say, internal legal work at a company. If I could make it so we could review contracts faster with customers that we're going back and forth on.

• 1:54:39Aaron Levie?

  I'm not going to have fewer lawyers in the company. We're going to actually just have higher throughput of our deal review process. So there's a lot of these areas where where where, you know, you're just going to actually see an increase in demand of the overall category. Uh, as AI comes and drives productivity in these uh, these spaces.

• 1:54:55Jordi Hays?

  Talk about just hiring and headcount expansion generally. You have thousands of employees already at Box. When you're talking with the team about doing headcount, planning, are you pushing people to say, do we actually need this person? Or if you just figured out how to use sort of these tools better, could we get away with without sort of adding that incremental person? Because there's been a lot of, you know, the Klarna CEO came out and was basically like, we're not, we're never hiring anyone again. And like, obviously, that's really good marketing. But like, what's the reality? And how are you approaching it?

• 1:55:30Aaron Levie?

  Yeah, so we are, we are 100% committed to being an AI-first company just across the entire business. So we want every employee using AI to be as productive as possible. You know, with all the right asterisks of, you know, if you're doing production code, you're still responsible for what the AI produces. It's not the AI agent. So, so all the, all the normal, you know, kind of Ts and Cs on that. But for the most part, we look at it through the lens of if we can cause efficiency in a particular area of the business, we want to reinvest those gains back into a, another area in the business, might be even the same category or same function. But we want to use those dollars that we're freeing up to actually reinvest into the areas that were previously constrained.

• 1:56:14Aaron Levie?

  And this is sort of, you know, even in the case of things like customer success, where you're getting kind of like the first line of defense, you know, hey, I need to reset a password. Those types of things that we can now begin to automate with AI. The dollars, at least in our case, that we, that we save on that kind of, of, you know, you know, kind of human labor, that will actually go back into the same exact organization. But now for more proactive customer success managers that we're always constrained by, we can't, we can't hire enough people to go out and do a proactive outreach to our customers and help them strategically, because we have to have people that are responding to tickets. And what's interesting in this case, and I think it's an optimistic.

• 1:56:55Aaron Levie?

  You know, sort of story about AI. In most cases, it will be the same person that that sort of moves from one type of work to the other. You know, our our classic kind of customer success manager type roles oftentimes started in support at either our company or some other one. So so what really what it lets you do is is recalibrate your talent to increasingly more strategic ways of of using it. You know, the the sort of, you know, go in and translate this marketing asset into 10 languages is a much less strategic use of time than help go work on the next marketing campaign that we want to go deliver. So it's it really just lets you readjust into more and more strategic things. And that I think is a is an analog for what we can expect for most AI impact in in an enterprise context.

• 1:57:40John Coogan?

  Can you talk about going public? Is it as bad as people say? You went public young, you're a young guy, your hair is gray. Is it the responsible of the is it because of the SEC?

• 1:57:50Aaron Levie?

  Uh, it's it's actually not because of the SEC, it's because of the hedge funds.

• 1:57:53John Coogan?

  Okay.

• 1:57:54Aaron Levie?

  So that that I my my, you know, there's always this conversation of, you know, if we if we magically change the listing requirements or something of a company, you know, would that be better? I I actually don't think I think that's a red herring. Uh, I I think that the the scrutiny that the SEC requires, the governance that you have to have, I actually think is all net positive on on companies. I think that that like just lets you run a more stable, mature, you know, thoughtful business. And and, you know, any reduction in that probably, if anything, just causes adverse selection for the kind of companies that eventually go public. Uh, I think I think the the the and this, you know, Brad Gerson kind of kicked this conversation off a couple of days ago or yesterday online of of like,

• 1:58:37Aaron Levie?

  I, you know, about the supply of IPOs, I think this is firmly actually in Brad's hands. Uh, this is a private, this is a private capital market dynamic, which is as long as you have, you know, him and the co2s and the, you know, Sequoias and everybody else doing very large late stage deals. It's, you know, as long as you have capital in the private market to stay private longer, uh, that is the the real thing that will reduce IPOs. And I don't necessarily know that there's any any kind of grand economic loss for that. But this is this is now this SEC has nothing to do with this. This is firmly, you know, in the private private sector, we could we could decide do we want more IPOs or not.

• 1:59:16Jordi Hays?

  Last question, did, how did you react to the XAI X merger? You have more followers on this platform than probably anyone I follow, but Elon himself. Yeah, I'm curious what your take is. You've been, you've been here since day one.

• 1:59:33Aaron Levie?

  I, you know, was, was early on the, the Twitter wave.

• 1:59:39Aaron Levie?

  I know, I mean, I mean, the Elon clearly likes to keep buying X, so it's, he will find another way. I mean, the

• 1:59:47John Coogan?

  Twice now.

• 1:59:48Aaron Levie?

  Yeah, I have, I don't have a particularly strong opinion other than, you know, I want, I do wonder if like Tesla is the ultimate acquirer of XAI. But, but I, you know, I don't know how, how he's gonna kind of, you know, make, make all these worlds come together. But, you know, it will be interesting to see and, but no, no impact on my life.

• 2:00:07Jordi Hays?

  Yeah, yeah, as long as we can post.

• 2:00:09John Coogan?

  As long as we can post, we're good. Just don't turn off the posting.

• 2:00:13Aaron Levie?

  Don't turn off the posting. And what I don't want is, I don't really want like a write this tweet button. I hope that's the one thing that they won't do. I think, I think that like a lot of these platforms, like LinkedIn has this, you know, like help AI write your post. And like, I just think you get slop, like it would be nice if, if this could be like a slop free environment.

• 2:00:32Jordi Hays?

  Artisanal.

• 2:00:33John Coogan?

  Slop on X? What are you, no way, unfathomable.

• 2:00:39Jordi Hays?

  No, we want a handcrafted artisanal, organic farm to table posts.

• 2:00:44John Coogan?

  Yes, exactly.

• 2:00:45Aaron Levie?

  We need artisanal content.

• 2:00:46John Coogan?

  We need artisanal content. I agree with that.

• 2:00:48Jordi Hays?

  It's great to have you. We'd love to have you back on when you have Box News.

• 2:00:51John Coogan?

  We'll talk to you soon.

• 2:00:52Jordi Hays?

  See ya.

• 2:00:52John Coogan?

  Bye. Who you got coming in next?

• 2:00:55Jordi Hays?

  We got Sam Less in the waiting room.

• 2:00:57John Coogan?

  Oh, we can keep it on, on X and XAI. Let's bring him in, get a hot take, then get him out of here.

• 2:01:04Jordi Hays?

  The take Smith himself.

• 2:01:06John Coogan?

  I want to hear, I want to hear, you know, it's going to be good. Is that a yes or a no?

• 2:01:09Jordi Hays?

  He's here. There he is.

• 2:01:11John Coogan?

  Welcome. To TBPN.

• 2:01:13Sam Lessin?

  You gonna get me in here and get me out of here? Want some hot takes? Spice it up?

• 2:01:16John Coogan?

  Yeah, I mean, you know what we're talking about. XXAI, what's the take? Sustaining disruptive hyperseller.

• 2:01:23Jordi Hays?

  We technically have like 12 minutes, so we should probably just let you just go on a gig a rant.

• 2:01:27John Coogan?

  Just rant.

• 2:01:28Jordi Hays?

  But first, I want to say you're the only person I know that's been getting more tan throughout winter. And I think it's because of all the tennis. But you also were, were you skiing recently?

• 2:01:38Sam Lessin?

  It's because of the skiing and I'm not done. I'm not done.

• 2:01:42Jordi Hays?

  He's not done.

• 2:01:43John Coogan?

  Putting up 60 days on the Epic Pass.

• 2:01:47Sam Lessin?

  Epic Pass? What do you think I am, a basic bitch?

• 2:01:52Jordi Hays?

  Where there's no passes.

• 2:01:54John Coogan?

  There's an app that you track your days in. I forget what it's called, but it's people.

• 2:01:58Sam Lessin?

  Garmin. Maybe it's a Garmin watch.

• 2:02:00John Coogan?

  Okay, Garmin.

• 2:02:01Jordi Hays?

  Yeah.

• 2:02:01John Coogan?

  Garmin will track it.

• 2:02:02Sam Lessin?

  There is no Epic where I go.

• 2:02:04John Coogan?

  Okay, yeah. There's no chairlifts. It's all helicopters and cats, right?

• 2:02:07Jordi Hays?

  Oh, it is.

• 2:02:08Sam Lessin?

  Listen, I'm just trying to live the VC dream, you know?

• 2:02:11John Coogan?

  You're doing it. You're doing it. Keep it up.

• 2:02:13Jordi Hays?

  Yeah.

• 2:02:14John Coogan?

  Speaking of VC dream, opine on something.

• 2:02:16Jordi Hays?

  Yeah, you were probably, you know, midway down some peak when the news broke. But talk to us, what was your reaction? We had sort of a, you know, sort of, I remain sort of long-term bullish. Elon having a sort of an AI bet and.

• 2:02:32Sam Lessin?

  How could he not?

• 2:02:33Jordi Hays?

  Yeah, yeah, yeah. And, and on, you know, this platform that we've built are, you know.

• 2:02:39John Coogan?

  Show on?

• 2:02:40Jordi Hays?

  Our show on. But to me, it's like, you know, it's generally like complicated. There's a lot of ways to kind of like, you know, maybe poke some, some holes in it. But I was curious to get your initial reaction as somebody who's been, you know, bearish, bearish on just a lot of stuff in AI.

• 2:02:56John Coogan?

  On everything except meta.

• 2:02:57Jordi Hays?

  Because the reaction was like, like people, people were really.

• 2:03:00John Coogan?

  Big tech.

• 2:03:01Jordi Hays?

  Yeah, people were just like, immediately like, yeah, this makes. Total sense, you know, etc. But, you know, there's

• 2:03:07Sam Lessin?

  So, look, I actually think to Elon's credit, it makes total sense if you're Elon, right? Like Elon is the king of cheap money, right? If no one played Zerp in history better than Elon, right? You basically come up with a long-term vision that can require infinite capital. You're the world's greatest marketer. You sell this shit out of it. You raise infinite free money and you build stuff, right? He did that great. Now, it turns out the Zerp free money is over, but you know where this free money? AI narratives, right? AI narratives is where the free money is. So obviously Elon's got to have an AI narrative because he's the king of free money. And so I think when you look at the Twitter X thing, I mean, it seemed, I mean, he literally named them. They're like, how could they not end up combining? Like literally one was distributing the other. They're layered on top of each other. They basically have the same name.

• 2:03:52Sam Lessin?

  And to Elon's credit, in terms of pulling this off, I mean, what is this really? This is AOL Time Warner. If Time Warner had like a ton of debt, right? Like, and so, and so you use an inflated, you can use the zero cost capital inflated valuation thing, which is the AI thing, to buy the thing you also happen to own. That's an actual asset. Twitter's great. I love Twitter, right? But it also has a, whatever, tens of billions of dollar debt noose around it, right?

• 2:04:25John Coogan?

  It's 12, it's not 10s, it's 12, exactly.

• 2:04:28Sam Lessin?

  Oh, 12s, sorry. A 12 of debt around it. And like, what's not to like about it, right? If you're Elon, it's a great deal all around, uh, is what I would say. But what does it actually add up to? I mean, like, look, the entire question is what are these, I call them mid-market AI players actually worth? Right? And that's the, I mean, I, again, as you know, I've been very consistent on this for years. If you're the biggest in the world and your cost of capital is zero, um, sure, like build out a huge AI infrastructure. Ideally, one where it's non-cannibalistic, like Meta. Ideally, one where you know how to make money off of it, like Meta. If you're a tiny baby player. Take all the leverage, fire your customer service team, like be more efficient, hooray.

• 2:05:12Sam Lessin?

  But I think these mid-market players, I don't understand the numbers.

• 2:05:15John Coogan?

  I mean, you said it makes sense for Elon, but I feel like when we were looking through the deal, it's like the SolarCity Tesla acquisition.

• 2:05:22Sam Lessin?

  A hundred percent.

• 2:05:23John Coogan?

  And it looks, and it, and it looks good for the Tesla shareholders too, because they, they effectively get out at the same price they got in and out there in this new thing. If you're a Tesla shareholder, are you happy or not?

• 2:05:34Sam Lessin?

  Well, wait, which one's Tesla now? Are we saying that, that X.ai is Tesla?

• 2:05:38John Coogan?

  No, no, no. So, so if you went in on the Twitter deal and you're sitting at X and it, and the valuation probably went down and then it goes back up and it get, and you get out at like 44, it's about where you got in, but now you're in this combined entity.

• 2:05:52Sam Lessin?

  Well, let's, let's put it this way. I think the question, the question is, there's probably, and I don't know this, you guys probably do, there's gotta be some market for XAI shares floating around on, in, in markets, you know, things that are worth what people are willing to pay for them. So if you bought into Twitter at 44 and it's not worth 44, despite the fact I love it, despite the fact you guys love it, just not, right? And all of a sudden, there's a market for XAI plus Twitter at whatever the number is, and you can get out and you want out, well, who cares, right?

• 2:06:20John Coogan?

  So this seems like a win-win. It's not just Elon. The, the original Twitter slash X shareholders are also happy. But I guess.

• 2:06:26Sam Lessin?

  But if you're, I don't know, if you're an X.ai shareholder, it's just kind of, I mean, this kind of fits in the world of, you know, we, we live in a world of spheres of influence right now. This is not my line, by the way, it's a smarter hedge fund friends of mine line, which is we've gone from kind of a legalistic, globally open market to a world, a multipolar worlds of fears, spheres of influence. You know, if you bought into X.ai, you bought into Elon's fear. If you bought into Twitter, you bought into Elon's fear. What are things actually worth? Meh, you know, like who knows, but like you're kind of just betting on Elon holistically. And this is a nice consolidation, which by the way, gets him out of a very large debt bill, right, that he was personally liable for in some way, shape or form.

• 2:07:06John Coogan?

  But I mean, it, it just feels like Tesla, SolarCity all over again. But if you play out Tesla, SolarCity, that deal worked out for everyone.

• 2:07:14Sam Lessin?

  Well, but this, well, sort of, I mean, well, it's not clear it actually worked out for Tesla shareholder. It's fine because it's a rounding error, right?

• 2:07:21John Coogan?

  They're making 10 billion now. They're making Tesla energy on batteries and stuff. Yeah, they pivoted away from that.

• 2:07:26Sam Lessin?

  Did they need SolarCity for that?

• 2:07:28John Coogan?

  Maybe not, maybe not.

• 2:07:29Sam Lessin?

  Like, if you think about the SolarCity story, when it was pretty weak when it was acquired, it was, "We're gonna stick solar panels on the roofs of Teslas and that's why we should buy this thing." Like, it didn't really make any sense, right?

• 2:07:40John Coogan?

  You're taking it to the house of the Tesla owner, right?

• 2:07:42Sam Lessin?

  Eh, I mean, sure.

• 2:07:44John Coogan?

  It's like you're already there to install the battery pack, install the charger, install the...

• 2:07:47Sam Lessin?

  Look, we all, I get it. I'm saying, we all know, you look back on the history of that deal, that was a, "This thing is about to die, bail out, I'll come up with a one-page letter that justifies it, because we're gonna put some solar panels on the roofs or some shit," right? It was like, completely made up. Now, when number go up, all sins are forgiven, right? And so what I'd say is, number go up, so everyone's fine and no one's gonna...

• 2:08:09John Coogan?

  And he's the master of number go up.

• 2:08:10Sam Lessin?

  He's the master of number go up, right?

• 2:08:12John Coogan?

  So everyone should be happy.

• 2:08:13Sam Lessin?

  So, is, and look, that's kind of, that's the kind of story in general. I think there's a real Elon narrative, which is, master of zero-cost money in, master of narrative number go up, right? And the reality is, it's kind of like very Roman, is like, as long as everyone's getting paid, everyone's on your side. Even Doge, right? Like, the whole thing with the Doge coin is brilliant. Like, the best way to build more followers is to get them paid, right? And Elon has been the king of that. Now, the question is, it works in both directions and we'll see how that plays out now. But, you know...

• 2:08:44Jordi Hays?

  I think what I'm, what I'm interested in is like, I want to hear Elon speak for an hour about the combined entity and what that really means versus data and distribution, right? Like, the two narratives have been like, you know, XAI gets distribution, X and, and sort of data, so it makes sense. But for me, it was, it was more easy to visualize how X was worth $44 billion when it's sort of an Elon pure-play sort of social media bet and a, you know, strategic influential asset. And if he is able to continue to grow earnings and grow the importance of the platform, it's easy to see how that's like... You know, maybe it's a hundred billion dollar company someday.

• 2:09:29Jordi Hays?

  Now you have XAI and it's, you know, you're sort of looking at this collective entity being like, it's a founder, it's a pure play like founder bet at this price.

• 2:09:40Sam Lessin?

  I mean, look, I, in the end of the day, the problem with all this AI stuff is it's either worth infinity or zero and no rational person can do a discounted cash flow on an infinity or zero. Right. And, and I think that's kind of where everyone stuck, which is why it's so narrative dominated. Personally, I have to say, I actually quite like Grok. I use it like I have on my home screen, Grok and OpenAI and all of them next to each other. And when my finger goes, which button do I press? I press Grok, you know why? Cause it's kind of marginally faster and fun, whatever. I don't know what that's worth, right? But we'll see, right?

• 2:10:14Jordi Hays?

  And the, and the, and the, the bull case for that behavior is that Grok could replace Google.

• 2:10:20John Coogan?

  Exactly. I, I say, and Google's a multi-trillion dollar company. You slice it up and all of a sudden you're getting a couple hundred billion dollar bets.

• 2:10:28Sam Lessin?

  Maybe, maybe. This is the one, this is a mistake. Maybe, this is a mistake that people make, I think consistently when thinking about AI, which is the story of will you use LLMs to look things up? Yeah, of course. Yeah, you're definitely going to use them like, you know, but the idea, it's kind of the same stories when people say, hey, I pay accountant $120,000 a year. AI accountant $10 a year, therefore AI accountant worth 120 times. That's not how it works. It's just, it's worth 10 and like the, it's all about the marginal advantage. And so it's not clear to me, I mean, the, it is very clear to me that a lot of search volume that currently goes through Google and gets resolved by, you know, shitty webpages.

• 2:11:11Sam Lessin?

  People have set up to farm those searches goes, that behavior goes away. Um, where commerce go, where the ads dollars actually go? And whether just searches, like it's just not the same market configuration anymore. And who gets that money? That, that's all like really TBD is my view. Um, and it's really unclear. I mean, again, it's a very binary game. So that's the one that so I think it's very hard to value right now, but I think the big picture is like so long as private investors are willing to foot the hail Marys, the binary outcomes and believe that, you know, again, Elon is the king of cheap money.

• 2:11:48John Coogan?

  How do you feel about market concentration? Google has like 99% of the search market. Meta has 99% of the social networking market. It feels like LLMs could be a little bit more oligopolistic on the consumer side, but if history is any guide, like these monopolies kind of run away with it at some point. What are you feeling?

• 2:12:09Sam Lessin?

  You know, actually, I think the question is, if you think that really what I'd say with Google and Meta are is they're not technologies, they're economies, right? And this is the really, I think the mistake people make is if you think that Google's a technology company and Google search is technology purely, then and you're like, wow, technology tends to compound and run away. Then you're like, yeah, like this would end up that way. Same thing with social networking. There's no actual techno. I mean, yes, there was like some stuff Facebook invented on the way to scale, but like it's not fundamentally a technology company. It's an economy. And I think the problem with LLMs is people are equating them to an economy, but they're not. They're just a technical level. Now, if someone actually nailed the everyone's pouring every single thought they have into

• 2:12:51Sam Lessin?

  it and all the knowledge of the world into the LLM, and then that single element aside is like the smartest fucking thing in the world.

• 2:12:57John Coogan?

  But that's what they're doing with this deal.

• 2:12:59Sam Lessin?

  Yeah, but they're not.

• 2:13:00John Coogan?

  You go on X and you get paid a creator payout for bringing information to X and then that gets siphoned into XAI and Grok gets better answers.

• 2:13:07Sam Lessin?

  Agreed. But here's the thing that you have to understand, and this is really important, is one of the big economic failures of the internet is that the economy of the internet, both social and search, is actually driven around entertainment, right, and engagement, not around information or truth, right? And so the reality is what you're basically at best, that's what the economies work. That's why we're so screwed on so many things is because there's actually no economy of truth. There's an economy of entertainment. And I think that's getting going to get quashed in a bunch of ways because again, if nothing else, and LLMs do generate infinite free personalized entertainment, right? And like that's going to like Crush that economy. It's not clear to me. I mean, I can tell you the vision where, yes, for some reason, X becomes this machine that pumps all of the world's knowledge.

• 2:13:51Sam Lessin?

  And then somehow Grok has some fundamental advantage on knowledge. I can tell you the story, but I don't see any indication of that actually being what's played out. And I would argue that, again, that was the same story Google had. Didn't play out that way. It ended up being a commerce engine, you know, and a bunch of like, you know, dead internet theory stuff. Unfortunately, it's not the way that social played out either because social is just like a dopamine feed. Unfortunately, it's not an information machine. So that's really the question of how you get there. And I will see. I am very skeptical that the mid-market players who are saying LLMs are a compounding economy actually have anything right now. I think they have technology that's pretty fun and it's all pretty undifferentiated. But we'll see.

• 2:14:33Jordi Hays?

  Where do you think XAI would trade if it were to IPO tomorrow?

• 2:14:38Sam Lessin?

  Well, so this is a really interesting question, right? Because basically you have two dynamics at play. Either it's traded as a meme coin, right? If it's traded as a meme coin, it might be huge, right? It's the same thing with like, you know, Mr. Beast wants to go public. We talked about him, you know, the last time I was on. It's like if Mr. Beast's, you know, public company trades like a meme coin, it turns like GME, then it might be a very, very large number. If it trades on a discounted cash flow basis or as like a traditional accepted business, the way like, not very well, right? And so I think that's really just the question, you know, as the retail versus, you know, enterprise versus like effectively real, serious business world compete. How do these things trade is all about the marginal buyer, right? And what that marginal buyer's belief system is as much as anything else.

• 2:15:24John Coogan?

  Yeah, got it. Well, we got to move on to the next interview.

• 2:15:26Sam Lessin?

  Bye friends.

• 2:15:28Jordi Hays?

  Talk to you soon. He said, bye friends. Great to have you, Sam. Thanks for coming on. We got a, is it Chris?

• 2:15:36John Coogan?

  Oh, wait, no.

• 2:15:37Jordi Hays?

  Oh, we got David. Is he in the waiting room?

• 2:15:41John Coogan?

  That's right, from Poseidon. Let's do it. I'm gonna let you take this intro.

• 2:15:46Jordi Hays?

  Poseidon himself, can you grab me a uramate? Thank you. David, what's going on? Big day for you and a big flag.

• 2:15:54Speaker 06

  Hey, yeah, no, it's been a great day here. We finally launched in public. We've been in stealth for a bit over a year now, so it's really exciting to show the world what we've been working on.

• 2:16:04Jordi Hays?

  It's amazing. And if I remember correctly, some of the very first posts we featured on the show at the beginning of last year, weren't they yours? I feel like you came up.

• 2:16:14Speaker 06

  There was one, yeah, way back.

• 2:16:16Jordi Hays?

  So, thank you for contributing to us getting this off the ground. But talk about, talk about the Poseidon Seagull, kind of the genesis of the company. Would love to hear kind of like, you know, your backstory and then, and then the first, you know, has it been a year and a half of the business? How long have you even been in market?

• 2:16:36Speaker 06

  Yeah, so we, I can go way back to the beginning. We started right around like December 23, January of 24, raised our initial pre-seed. And the way that the company got together was, it's me and two of my co-founders, Isaac Zeke Up and Parker. And so, we were, I think, ideating about like logistics and aerospace. And I think like logistics especially has been a market that's been largely unchanged for the past 100 years. The types of planes that we're flying are like largely the same, same 737, same like Cessnas. And on the ship cargo side, it's been pretty much like containerized cargo with very much like spoken hub model.

• 2:17:18Speaker 06

  And so, we were going through a bunch of ideas of like what we could build to disrupt this, thought about airships for a while. And those are very interesting, but have their own set of problems. A couple other things. But then, I think, one night, a random party in San Francisco, a girl walked up to Isaac and was like, hey, you should look at into like a Cronopons. And we're like, oh, like, what are a chronoplane? So we spent the next night just like binging YouTube videos and like documentary series. So chronoplane were these like types of vehicles that were built in the Soviet Union in the sixties and seventies. And at the time, they were like the highest cargo capacity, uh, like planes ever built, like they're like flying ships essentially. And so they're constrained to fly in ground effect, which is a regime when you're flying extremely close to the surface of the ground.

• 2:18:01Speaker 06

  And this cake water, because water is extremely flat, um, where you have an aerodynamic boost, it does two things. Um, A largely reduces your drag and it increases your lift. So you can carry a lot more and spend a lot less fuel. So it's like increase of your lift drag ratio by thirty to fifty percent. There's a huge deal. Um, and so we started looking at those and the really crazy thing about ground effect vehicles. Um, it's modern age is like a lot of the problems that the Soviet side uh are solved for the most part. So it's, it's really done a, a controls issue and a material science problem. Um, and composites are incredible material science. So like carbon fiber, um, and controls is like much like.

• 2:18:42Speaker 06

  I think we, we've solved those forms pretty well now. Um, and so, but the, the really cool thing is like the ground pick vehicles are not regulated by the FAA. Uh, they're regulated by the Coast Guard. And so, um. Coast Guard certification is significantly easier than FAA. And so you have like. Really great companies that have built a cool like EV toll stuff and like they've IPO'd or SPAC'd or whatever. Um, for billions of dollars, but they've never actually had a commercial flight because the FAA regulatory process is so long. Uh, so it's like a decade plus to get certified. Um, but if you're going through the Coast Guard and so it's if you're flying. Sub one hundred fifty meters and it's the same thing internationally, Europe, under the IMO. You get certified as like what is technically a boat. Uh, so what we're building are flying boats.

• 2:19:25John Coogan?

  Yeah, we talked to Billy Thaler at Regent. He's doing personnel carriers, but uh, that, that regulatory arbitrage is just like amazing.

• 2:19:34Jordi Hays?

  John, even off air, after we had Billy on, you were just like.

• 2:19:37John Coogan?

  I'm so excited about this. I love, I love that.

• 2:19:39Jordi Hays?

  A good regarb just gets you going.

• 2:19:42John Coogan?

  It's previously the domain of crypto stuff, but now in hard tech, we're taking advantage of regarb as well.

• 2:19:47Jordi Hays?

  So we have the video. I want to pull up the video and I want you to just kind of like talk over it. Uh, Ben, can you pull it up quickly?

• 2:19:54John Coogan?

  And, and while we're waiting for that, I'd love to know a little bit more. Oh, here we go.

• 2:19:58Jordi Hays?

  You can mute it, Ben.

• 2:20:01Speaker 06

  I don't see it.

• 2:20:02John Coogan?

  Okay.

• 2:20:03Jordi Hays?

  Okay, uh, maybe try to watch, I mean.

• 2:20:06John Coogan?

  Well, we'll just, uh, seagull.

• 2:20:17Speaker 06

  So this is, uh.

• 2:20:18John Coogan?

  Oh, you put Starlink on it?

• 2:20:19Speaker 06

  My heart. Um, so this is it taking off. Um.

• 2:20:22John Coogan?

  Yeah.

• 2:20:23Speaker 06

  Like flying at about eight to 10 feet is, uh, peak. And so.

• 2:20:27John Coogan?

  How fast is this?

• 2:20:29Speaker 06

  Uh, it cruises 65 miles an hour. We hit 115 miles an hour.

• 2:20:34John Coogan?

  115, let's go.

• 2:20:36Speaker 06

  Yeah. Some prop changes. I think we'll hit 160 on our next set of tests.

• 2:20:39John Coogan?

  You gotta get the sports car numbers. I want to see 200 Bugatti Veyron goes what 250?

• 2:20:45Speaker 06

  Yeah, we gotta race one.

• 2:20:46John Coogan?

  You gotta, you gotta.

• 2:20:46Speaker 06

  We'll race the Porsche.

• 2:20:48John Coogan?

  Yeah, do the Nürburgring in this thing.

• 2:20:50Jordi Hays?

  I love, I mean, the, the design looks fantastic.

• 2:20:54John Coogan?

  So when, when you say ground effect, does it have to fly over water or, or, I mean, this looks just like a plane. Can you just fly it over land too?

• 2:21:01Speaker 06

  Yeah. So, so like, if you're flying in ground effect, you generally want to fly over water because water is like extremely flat. And so like, you'll have waves. And even in waves, you'll fly slightly higher and it'll average out. Um, but you can find ground effect in like the, like. I don't know, like the, the salt flats or something, but, um, ours is what's considered to be like a class B, class C ground effect vehicle. And so we're not restricted to ground effect. We've just optimized. Uh, aerodynamically to take advantage of ground effect.

• 2:21:29John Coogan?

  Got it.

• 2:21:29Speaker 06

  But we could fly out of it, um, up to 150 meters.

• 2:21:32John Coogan?

  Can you talk about? What were you? Yeah. Can you talk a little bit more about the tech tree that enables this? It sounded like there's some material science stuff like. Carbon fiber is cheaper. Then there's also like the miniaturization of electronics. Like you have Starlink on that thing. That's not possible a couple of years ago. The question's really just like, why now? But I want like more of a breakdown of like, of like all the different things from the regulatory to the tech tree. That's enabled this to happen now and not earlier because at the same time, like this feels like something that could have happened decades ago. But why are we just, why, why are we just breaking through with this now?

• 2:22:07Speaker 06

  Yeah, so I think like, starting on like the material science side, I think is really interesting. Like composites are really coming to their own in about like 10, 15 years. And so in terms of like being having like, actually like very like good mini, like there's very good manufacturing here. So like APD composites is where we get all ours and that's in Livermore. It's like an hour drive.

• 2:22:25John Coogan?

  Oh, cool.

• 2:22:26Speaker 06

  It's kind of awesome.

• 2:22:27John Coogan?

  And that's both like the science of those composites, but also the cost? Or is it just the cost that's come down?

• 2:22:33Speaker 06

  Both and like the amount to which they're being used. And so like, you're having, you're like, large planes like your airbuses are being built with like composite wings. And so like aerospace as a whole has like really moved into composites as opposed to just like aluminum. And so then like on the electronic side, I think like there's in the same way that like GPUs for like gamers like enabled machine learning. There's just like the hobbyist grade RC stuff has gotten extremely good. And so just like really move forward, like the quality motors available, the quality of like electronic systems, sensors. The types of sensors that are available right now have gone small enough that we can fit them on here.

• 2:23:14John Coogan?

  Yep.

• 2:23:16Speaker 06

  And really the, the sequel is started as like a quarter scale prototype of our full scale vehicle, which is going to be a 50 foot, two ton capacity vehicle.

• 2:23:24Jordi Hays?

  Yeah, that's what I was gonna ask. I was gonna talk about, you know, sort of long-term capacity, scale, and then like the applications of this. Cause at that size, to me, it looks like something you'd use for like potentially defense applications is a big one, but then.

• 2:23:39John Coogan?

  I thought you were gonna say pleasure craft and like going out and.

• 2:23:41Jordi Hays?

  Just getting on, getting on the boat with your boys.

• 2:23:44John Coogan?

  On the ground effect vehicle with your boys, having a glass of champagne.

• 2:23:49Jordi Hays?

  But yeah, so is, is your guys' first focus like logistics and, and sort of like long, sort of longer term.

• 2:23:56John Coogan?

  Yeah, who's the customer?

• 2:23:57Jordi Hays?

  Longer distance transport, that kind of thing?

• 2:24:00Speaker 06

  Yeah, so um I think like as I was saying, this like started as just like a poor skill like prototype demonstrator, figure out the air body design, validate a bunch of stuff. Uh but as we were building it, um it became aware that like it was like a pretty capable vehicle in and of itself and like we designed it for manufacturing. Uh so it reached out to uh the DOD specifically like the Naples Surface Warfare Center people and SOCOM. Uh and they all had their own specific like mission profiles that they were interested in with uh the Segal and so it's like pretty large payload capacity relative to size uh and being able to operate in like marine uh domains and so doing stuff like anti-submarine warfare, like EV detection, uh very like urgent and like high priority logistics and goods.

• 2:24:44Speaker 06

  Is on the on the defense side for the Segal and then we're starting operations commercially with it uh for doing like very like mo- mostly like medical deliveries to remote islands. Um and then at the the full scale carrying two tons, the idea is to be able to compete um with air freight for coastal and island uh logistics and cargo. Um and through a bunch of things, we are gonna be able to get to roughly a quarter or third of the price per kilogram per mile.

• 2:25:12John Coogan?

  It seems like ZipLine's done pretty well with the medical deliveries stuff. Uh I was I was surprised to see how how long that company's been around and how much they've grown. Um so clearly there's like these niche markets that are really important in logistics and trans- uh in transportation. Um

• 2:25:27Jordi Hays?

  Yep.

• 2:25:28John Coogan?

  Jordan, you got another question or?

• 2:25:29Jordi Hays?

  No, I mean, that was it. I just wanted to bring you on to say uh thank you for the early, I was saying you you missed it earlier.

• 2:25:35John Coogan?

  Oh, yeah.

• 2:25:35Jordi Hays?

  Uh I just remember, I don't I don't remember much of what you posted, but I do remember covering uh covering your fantastic post.

• 2:25:42John Coogan?

  Uh in in terms of military applications, it sounds like uh logistics first, then maybe ISR, but is there gonna you gonna put a bomb on this thing at some point?

• 2:25:51Speaker 06

  I'm not sure what they stick in it, but there are discussions about a wide range of different payload options.

• 2:25:57John Coogan?

  But I mean, just, just like stepping away from like the business applications, like, isn't that something even like we even need, like we hear about the hypersonic missiles being able to kind of bob and weave and they don't fly on a traditional like parabolic ICBM trajectory. So they're harder to shoot down. This thing seems obviously maneuverable. Is there military value on a weapons platform for this thing? Or is it just like too slow and too small to, to really like matter?

• 2:26:23Speaker 06

  Yeah, the, it's definitely faster than like torpedo per se, but the unique advantage of it is when you're flying at such a low elevation, you're flying below radar. It's a like very stealthy platform.

• 2:26:34John Coogan?

  Oh, interesting.

• 2:26:35Speaker 06

  Like a ship. So you can get pretty close to the enemy lines without being spotted.

• 2:26:39John Coogan?

  That's cool. Back on the tech tree, are you, are you doing any AI onboard, even like OpenCV to do collision detection like you'd get on like a DJI drone? Or is everything kind of remote controlled right now, teleoperated? How are you thinking about the evolution of that tech?

• 2:26:58Speaker 06

  Yes. So the, the way that we built it out is that it starts with being teleoperated because you need to like train the systems. And so running it's like the, on a hardware level, it's like Pixhawk with Artipilot that we've like modified it and Artipilot's like an open source platform.

• 2:27:11John Coogan?

  Cool.

• 2:27:12Speaker 06

  I know guys at Anderal use it as well. And so there's a few sensors that we have onboard. We have sonar, we have a radar and just like a visual camera sensor. So yeah, taking stuff in terms of like collision detection, like elevation detection, maintaining stable flight. And so yeah, we're building some of our own models.

• 2:27:28John Coogan?

  So when you're flying it, are you doing FPV or is it just at a computer screen? Like what, what does that actually look like for the pilot?

• 2:27:35Speaker 06

  Yeah. For, for the pilot, when you're like flying it and just like remotely, we have the, the computer screen with all the different like signals on it. You get all your stats.

• 2:27:48John Coogan?

  Flight simulator.

• 2:27:49Speaker 06

  Yeah, basically. And then then you have the camera onboard. So you could actually see where you're going.

• 2:27:53John Coogan?

  That makes sense. Cool.

• 2:27:54Jordi Hays?

  Super cool.

• 2:27:55John Coogan?

  That's amazing. Well, good luck.

• 2:27:56Jordi Hays?

  Really impressive what you've built in so little time with, in a very efficient way. So congrats again. Congrats to the whole team.

• 2:28:03Speaker 06

  Appreciate it.

• 2:28:04Jordi Hays?

  Looking forward to the next update.

• 2:28:05John Coogan?

  Yeah, we'll talk to you soon.

• 2:28:06Speaker 06

  Thank you, guys.

• 2:28:07Jordi Hays?

  Cheers.

• 2:28:09John Coogan?

  And we're going deeper on AI image generation. We got the CEO of Runway ML coming in the Temple of Technology, Cristobal Alonsoela from Runway. I'm a huge fan of Runway. I used it years ago. They had a fantastic feature that would allow you to basically create a green screen even if you didn't have, even if you didn't record the footage on a green screen. And so you could do all these funny things. Remember Zuck using the flag when he was like surfing, like on Lake Tahoe? I was able to use Runway to select just the flag and then I could put a different flag there. And it would have been so hard to do in After Effects, which is a software I

• 2:28:53John Coogan?

  I kind of know pretty well, but it takes a ton of time to do rotoscoping. And that was the moment when I was like, oh, this company is doing really cool stuff. Now they've gotten into image generation, video generation, and a whole lot more. And today, they launched a new Gen 4 video model, and I want to hear all about it. So, welcome to the stream, Cristobal.

• 2:29:14Cristóbal Valenzuela?

  Yeah, thank you for having me here.

• 2:29:16John Coogan?

  Thanks so much for joining. I have a million questions, but let's just start with can you introduce yourself, the company, and what you launched today?

• 2:29:23Cristóbal Valenzuela?

  Yeah, I mean, you did kind of a pretty great job. Oh gee, you've been using Runway since a couple of years. That's great. Yeah, so we just introduced a Runway just a couple of hours ago, sorry, Gen 4, just a couple of hours ago. It's our latest like video model. It's basically a new frontier, I would say, of not only video generation, but it's storytelling. It's it's solved one of the most pressing things of AI video these days, which is consistency. So you can create really consistent worlds. And the way we wanted to like emphasize this idea of consistency that, besides of releasing a model, and I think it's kind of the model part is like the first stage, we put together a collection of like different shorts and films that if you watch them, if you guys haven't watched them, like definitely try watching them. It's just like a few minutes, they're short films.

• 2:30:06Jordi Hays?

  It's crazy. It's such a trip because you're looking at it and you know it's AI and it's

• 2:30:12John Coogan?

  Yeah, we're passing the uncanny valley for sure. And faster than the VFX stuff did. I mean, we that took 20 years and it feels like AI video generation, it's been like a few years. There wasn't uncanny valley for a while, but we're getting the other side really fast.

• 2:30:27Cristóbal Valenzuela?

  Yeah, I mean, we're working on Runway for almost seven years. So it's definitely been like more than like a couple, like two or three years. But, uh, but yeah, I would say the last two or three years have been like really fast. And, uh, I don't think we're even close to like the final stage of her media will come. Yeah, I think there's still a long way to go, but, but the point is really to point that, uh, once you start like seeing how good the stuff that you can do at Runway is and you layer in a really good creative mind, you can make stuff that you just like forget how you're watching something that's completely generated.

• 2:30:53John Coogan?

  Yeah, we need a new eval. We had, uh, the Will Smith eating spaghetti. We blew past that. That's photo real. The next one I think should be, uh, Bourne Identity style shaky cam, you know that? Because I think AI could not do that today.

• 2:31:09Cristóbal Valenzuela?

  I think the next eval should be just like how good the movie is, how well assured it is. Like, you know, like how many awards, how many people are watching it? That's the, that's evil. Like, I think that's the, that's our internal goal is basically to make sure that you judge by the quality of the story more than anything else.

• 2:31:24Jordi Hays?

  Uh, I'm sure last Wednesday, whenever the Ghibli meme started ripping, I'm sure some of your investors, big and small, reached out, hey, did you see this? I'm curious what, uh, if you had to answer that question, like, you know, what, what was your immediate reaction to it? Uh, it's amazing that you guys so quickly followed it up with something that is, you know, uh,

• 2:31:46John Coogan?

  Yeah, so you come on the show, we ask you the stupid questions and then you don't have to answer the stupid questions from your investors.

• 2:31:52Jordi Hays?

  Yeah, yeah, you just have to answer it one time.

• 2:31:54John Coogan?

  You share the clip.

• 2:31:55Cristóbal Valenzuela?

  So, so I, I have to be honest, uh, no one reached out to be honest. Like, I don't think no, like, yeah, it wasn't like a, like a thing. Uh, I think it was, it, I think there's a separation between like memes and like more of the casual, like fun stuff that I think it's great. You can just kind of like have fun. It's like a trend. But I think if you're making like good professional content, if you make a living out of making content, like making a meme or like one image, it's not going to get you far. It's like you need a suite of different tools.

• 2:32:20John Coogan?

  Yep.

• 2:32:20Cristóbal Valenzuela?

  Um, and I, so it, I don't think we've, I, I, I saw the trend and I saw the images and I think they're great, but I don't think there, uh, no one really thought about us to, to be honest.

• 2:32:29Jordi Hays?

  Yeah, the thing that, the thing that I think was what, what part of what made that so viral is that it didn't require sophisticated prompt engineering.

• 2:32:39Cristóbal Valenzuela?

  Right.

• 2:32:39Jordi Hays?

  You image one line Studio Ghibli, you can misspell.

• 2:32:42John Coogan?

  I actually have like a text replacement on my iPhone, a shortcut now. I just upload a photo. SJS and it automatically expands to Studio Ghibli style and then it just does it.

• 2:32:53Jordi Hays?

  Yeah, but, but so, so more importantly, as it, as it comes to using runway and video, how important do you think prompt engineering is? In the context of runway long term?

• 2:33:05Cristóbal Valenzuela?

  Yeah.

• 2:33:05Jordi Hays?

  I'm assuming it's just not going to be a thing. You just sort of describe exactly what you're kind of feeling off the cuff.

• 2:33:11Cristóbal Valenzuela?

  Yeah.

• 2:33:12Jordi Hays?

  And it just creates something beautiful.

• 2:33:13John Coogan?

  Yeah.

• 2:33:13Cristóbal Valenzuela?

  Exactly. No, I, I, so prompting is a way of like sampling something out of a model, like basically getting what you need. But there's many other ways of getting what you need with much more control because language doesn't really like have all the nuances of like describing a composition or the style, the mood or the feel of something. So the idea, for example, with Gen four is that I don't really saw like the demo, but you can combine images of real things. You can take a photo of something you've actually like have, you can take a color grade and a kind of like a moody scene and you can take a location. You can, you, there's no prompting, just like put them in and like create like the composition that you like. Um, and, and you, you, you can get a much more like a specific detail thing rather than just like trying to use the words correctly to like get to where you need to go.

• 2:33:57Cristóbal Valenzuela?

  So it really depends on like what you need, but I think prompting, I think prompting is overrated. Like just language as a unique interface will not get you too far because like storytelling and films in particular in video is just so hard to just describe it with words, you know?

• 2:34:11John Coogan?

  Yeah.

• 2:34:12Jordi Hays?

  How, how, uh, how many years away do you think we are from being able to one-shot? A, a movie that could, you know, win, uh, you know, an award-winning movie, right? It feels like so many movies in Hollywood's are sort of derivative heroes, journey, it's set of sort of characters.

• 2:34:32Cristóbal Valenzuela?

  Yeah.

• 2:34:32Jordi Hays?

  Somewhat predictable. You could imagine that like. From a storytelling standpoint, a lot of models could already deliver something that's like pretty good from a story standpoint. And so to catch up, you need the

• 2:34:45John Coogan?

  I mean, from what we're hearing, like the GPU cost alone, it would be like hundreds of thousands of dollars right now.

• 2:34:51Jordi Hays?

  Sure, sure. But, but, you know, if you're a movie theater today, I mean, we were so we're here in LA. We've been actually touring studio spaces and almost every single studio space is completely empty because like it's just too expensive to film in LA. So I, I can see a world in the future where a big studio is just like run, does these expensive, you know, sort of prompts that then they get something and maybe they remix it or whatever. But, you know, I'm curious what your take is.

• 2:35:22Cristóbal Valenzuela?

  Yeah. I mean, if you look at the Lonely Little Flame, the shirt I was just mentioning before, that's production value before Gen 4, we're talking about hundreds of thousands of dollars. That's a very expensive thing to make. It took us like two to three days to make like the first rough sketch of that. And then like another few days to just like get the final comp. So you can enter by version of one, the whole thing was done with one person.

• 2:35:42Jordi Hays?

  Wow.

• 2:35:42Cristóbal Valenzuela?

  And so I think you are there, you can technically just take that same process and it's something we're doing already and do it like for longer future films. It's more of like, you're going to sustain the attention of your viewer, not by the how fancy or how expensive the thing is like, but just how good the story is. And just iterating on the shots takes you a lot of time. And so I think the issue with the way we've been traditionally making like very high end production things is that the budgets have like skyrocketed to the point, it's unsustainable. Like, I mean, to your point, like you're spending hundreds of millions of dollars trying to make something. And then if you need to make something, you're going to bet for the thing that the safest, the safest, which is like superheroes and franchises that you know will return.

• 2:36:23Cristóbal Valenzuela?

  Which I think from a, from a, from like filmmaking perspective has kind of like. Prevented like new independent stories from actually like being made because it's more much more risking actually. Um. And I think part of uh part of this new wave of models is that it will kind of like flip that a little bit. And I know this like independence that of people actually don't don't use those studios, just like use runway and like make the films to yourself. There's no excuses like you can just do it yourself, you know?

• 2:36:50Jordi Hays?

  Do you think uh the big Hollywood studios are reacting quickly enough to the advancements of runway and other, you know, are that? Do you feel like they're sort of properly planning around the sort of the biggest change to filmmaking in our lifetimes?

• 2:37:07Cristóbal Valenzuela?

  Yeah, I mean, I I think so. Many are. I mean, Bob Iger said it was the most important analogy for company uh just a couple of days ago. I think many more that we work with are pretty much on that same vein. I think some are more advanced than others. I think for a long time, it wasn't clear to many what this meant. And and to be clear, I think that's fair because if you look at like video generation four years ago, know what to get seriously like no one cared. It was so, I mean, maybe you were like using runway for like rotoscoping and green screen, but like that was a small amount of people, right? And I think now I can show you a film, the mix you fill something and it was done like in two to three days, all generated. And that's when you wake up. And I think some have woken up before, but some are still like dormant. Uh. But I think, yeah, everyone's really paying attention to that.

• 2:37:52John Coogan?

  Can you talk a little bit about uh just like a style transfer, animatics and the importance of like generating the first image in something like? Images and chat G P T. Uh. I could imagine a world where it's a lot easier and maybe even more efficient to block out a story in Minecraft or in Roblox and really direct it and be very, very solid on. I kind of program the camera move. I know the shots. I know the layout, but then I just want to take it to photo real. And that style transfer is what you guys are great at versus. I'm gonna be purely prompting and really hands off. How do these things evolve? What's most important?

• 2:38:36John Coogan?

  Is there an important like step function where we work through one to get to the next?

• 2:38:41Cristóbal Valenzuela?

  No, I think you're right. There's many people who've been using Runway to do exactly what you're saying. You block the scenes by using either like 3D software or just like props. We have a way of rendering content using existing videos. So I don't know if you guys have seen it, but you use our performance of yourself. It's like advanced motion tracking. And then that drives the performance of the generation that you're creating. And that's great because it allows you basically to like you become your storyboard. You are defining the shots in the way you want it. And I think the essence also is that um, once you create like a mood, there's a few. For example, it's another short film that we released called The Hurt. It's like the story of like two guys like hiding from each other and like this dark moody scene.

• 2:39:22Cristóbal Valenzuela?

  We start with one image and then you can use Gen 4 to kind of position the camera in different parts of the scene. And you kind of like, it's interesting because the the model becomes like a cinematographer. It's kind of helping you understand or provoking provoking you with ideas of how you want to do it, which is different from how you do filmmaking traditionally, because you can't afford to do that in traditional filmmaking. You have a kind of like a set list of shots that you need to make and it's very expensive to like not do those. Here you can just like wander around and kind of like find your angle. And I think that's also interesting. It changes the nature of how you make things in the first place. It's a much more experimental, like you're kind of finding ways and you're getting to stories that you never thought you could.

• 2:39:59Jordi Hays?

  That that to me is the most exciting thing because historically, if you're a director and you're like, I'm gonna bring, you know, these, you know, superstars out to this like desert and we have one day to get this shot. And then we gotta go to this other location, do this other shot.

• 2:40:15John Coogan?

  Storyboarding has been huge forever.

• 2:40:17Jordi Hays?

  You're basically like, you could have a better idea midway through the shoot and not actually be able to do it necessarily without calling the producer and being like, hey, I need another 20 million bucks because.

• 2:40:28Cristóbal Valenzuela?

  Yeah, exactly.

• 2:40:30Jordi Hays?

  One person sort of deciding in the moment. It's that, and if you think about how different startups have been historically, where startups are this sort of like daily iteration and you can adapt the strategy and you can adapt the product versus filmmaking, which is like, well, you write the script. And yeah, you can change it along the way and you can change it in post, but then every decision is just so much more expensive.

• 2:40:51Cristóbal Valenzuela?

  Yeah, I've been, I've been thinking about it as like you're playing in a jazz band and you're improvising. And so you're, you get a shot, you see something and then you can go anywhere you want. It's like whatever you want to film and like take it there. It's very fun. It's something I haven't filmed for in a, in a really a while.

• 2:41:08John Coogan?

  How, how do you think about the, the, the kind of shift in, or the ratio or breakdown of creative video content as it relates to fiction versus nonfiction? Like YouTube and the iPhone has exploded the amount of creativity.

• 2:41:25Cristóbal Valenzuela?

  Yeah.

• 2:41:25John Coogan?

  And we've gotten hours and hours of like nonfiction content, everything from like Mr. Beast videos to video essays, histories, podcasts, all this stuff that's nonfiction. Fiction stuff hasn't really taken off on YouTube in the same way. That's still kind of the domain of Hollywood. Of course, Tangerine won Academy Awards. It was shot on iPhone. It took a number of years to get there from, you know, the iPhone being introduced, but it, but it did eventually democratize filmmaking to the point where an iPhone filmmaker could win awards. Do you think runway is more of a, of a benefit to people that want to tell fiction stories? Or do you think we'll see kind of the same breakdown where there'll just be a ton of nonfiction content that goes through runway?

• 2:42:10John Coogan?

  And you're seeing like illustrated video essays, or I can just pull up history of, you know, Yoromate. And all of a sudden I just get this beautiful story that's visually intriguing, but it's still nonfiction.

• 2:42:21Cristóbal Valenzuela?

  I think runway is made for stories. That's what the ethos of the company is. And I think fictional or nonfictional like stories are just stories. And I think we're, humans are like obsessed with stories and will consume anything that tells a story. And so I think, I think you're right. YouTube hasn't been like yet good at perhaps like AAA content or like professional like fictional content. And it's better to do like more informal like blog type of things because it's just cheaper. But I think this is particularly interesting because like what gen models like gen four do is break that barrier. Now you, anyone, basically anyone out there who has a YouTube channel right now can create a type of content that looks like someone made it in a studio with 50, a hundred million dollars.

• 2:43:07Cristóbal Valenzuela?

  And I think that's the. That's like the last unlock, I would say media wise. The first one was like, everyone can do like this, everyone can just like tell, like create their own like channels and tell their own stories. But then professional grade content has been for the, for the last couple of years, the last kind of like stage. And it's only been accessible to this very sort of companies. And now it should be everyone, it should be basically anyone who has great stories, like creative meritocracy, whoever has the best story will win.

• 2:43:33Jordi Hays?

  What happens to movie stars, right? You can imagine, uh, early on with some of these AI generated films. Somebody's planning to generate a film using entirely AI. They don't plan to have any onsite shoots or anything like that, but they want to go, they go to Brad Pitt and they say, we're going to give you 10 million bucks. To star in this film, because Brad Pitt, if they just completely use his likeness and his voice and whatever. Uh, but then over time, people start realizing like, hey, it's actually much more valuable if I kind of create my own. Essentially like IP or own superstars from the ground up, because I can, instead of paying Brad. 10 million for one movie, I could invest a lot of money in this sort of, yeah, I can make my own Giga Chad.

• 2:44:15Cristóbal Valenzuela?

  Yeah.

• 2:44:16Jordi Hays?

  And, uh, I don't have to pay any of the fees and maybe there's some R and D ish to the sort of generate that character. But what happens to our, our, our stars?

• 2:44:25Cristóbal Valenzuela?

  Yeah, uh, well, I think that changes that much to be honest, I think we, we had the capacity of doing that for a long time. I mean, animation and like CGI and anything that's not like live action has, uh, we've been able to do that for quite a long time. It's more the cost of it is really expensive. I think you can still have a space in a world where you can have both, you can have. Characters and actors performing the way they do. And you can have this new medium, it's a new format, it's like a video game that allows you to create infinite worlds. Maybe the two might overlap, you may bring some elements of the real world into this, you may create some elements generated into. And it will stop, I, I, I don't see them as a replacement. I don't see them as like, oh, we're going to suddenly like stop hiring actors. Actually, for most of our shots, you actually require actors to do like act one or performances that you can transpose into the way you want.

• 2:45:10Cristóbal Valenzuela?

  And so, um, I think it's more of like a change more than like, oh, we're going to suddenly like. Stop doing everything we're doing and, and, and do this new thing now.

• 2:45:18Jordi Hays?

  That makes sense. Uh, do you have any type of sort of like long-term cost target for a 90 minute?

• 2:45:27Jordi Hays?

  Movie in 4K is it something that in a decade it's a dollar or is you know? How low?

• 2:45:35Cristóbal Valenzuela?

  Just compute wise or like?

• 2:45:36Jordi Hays?

  Yeah, yeah, yeah. Yeah, yeah, ignore, ignore the sort of like.

• 2:45:41John Coogan?

  Prompting.

• 2:45:41Jordi Hays?

  Yeah.

• 2:45:42Cristóbal Valenzuela?

  Well, we're.

• 2:45:45Jordi Hays?

  Opex of like.

• 2:45:45John Coogan?

  Like you used to have to pay by the foot for film.

• 2:45:48Cristóbal Valenzuela?

  Yeah.

• 2:45:48John Coogan?

  And it was very expensive to get it developed. Now anyone with a phone can record 200 hours of footage for, you know, a couple hundred dollar used phone.

• 2:45:57Cristóbal Valenzuela?

  So, so I think that maybe it was the need to think about costs is to think also to the point, to understand how like the models and the optimization of this model. So it's like progressing, you're going to get really soon to a point where you can run these models in real time. And so by the time you run them in real time, you're streaming the pixels as you're watching them, interacting with them. And so if you do so, then like the story, first of all, never ends. There's no 16, 90 minutes, it can be days that you can just like start generating. And it's a cost of inference, it could be just be as cheap as however Nvidia wants to optimize or like G PUs to make their faster for everyone and cheaper for everyone. So I think it's just a couple of dollars if you want to make like.

• 2:46:33John Coogan?

  Yeah, it's like a LUT file that you just like import and.

• 2:46:36Cristóbal Valenzuela?

  Yeah.

• 2:46:36John Coogan?

  You got it.

• 2:46:37Cristóbal Valenzuela?

  And you're just like sort of wandering around, it's amazing.

• 2:46:40John Coogan?

  Well, I mean, what does the business of runway look like at that point? And how, how are you thinking about the importance of like value accrual in the application layer? Are you thinking you go more B to B and try and get big contracts? You want to go B to C and just get every consumer on, you know, some, you know, 10, $100 a month plan. How are you thinking about pricing and customer base?

• 2:47:04Cristóbal Valenzuela?

  So far for now, our focus is being professionals mostly and making sure that like those who make a living out of telling stories can use runway to accelerate like their work. I think there's still a lot of like creators and individuals that will like start becoming professionals because of this. Like, I mean, I've, I've, I now could do things that will require like an army of D F X artists. And there are many other people who can feel the same right now. Our plan is mostly to make sure that those who want to tell something can actually like tell a story. And that's a wide spectrum of folks. So we work with like Lionsgate, major production studios to like independent studios, indie studios, like filmmakers themselves, just groups of like two, three people making amazing stuff. And then we have an iPhone app, so consumers can also make stuff.

• 2:47:46Cristóbal Valenzuela?

  I think like the mission of the company is like, look, this is the most important technology for like art. Like I, I've started working on this because I had the idea that. Neural network supply to art will like eventually become any form of art. And I want to be part of that. And I think the consequences of that go beyond just B to B and B to C. It's like everyone out there should be making great stuff.

• 2:48:07John Coogan?

  Are you optimistic about any of the hardware developments kind of speeding up runway rendering or generation? Obviously, there's like new Nvidia chips coming, but then there's also startups that are focused on transformer models baked into silicon like Etched, there's Cerebras, there's Grok, not the AI, XAI thing, but the chip company. And then there's like the deep seek approach, which was like, it seemed like they mostly just worked on algorithmic improvements to speed up inference. Where are you most optimistic about getting the next 10x improvement in your models and your systems?

• 2:48:46Cristóbal Valenzuela?

  I think those are all like interesting developments. We've been watching some of them really closely. I think right now, cost is mostly for us at the scale of what the business is and then like the research that we do, the main factor is if you give me like X performance, but it's unproven or like I will need to spend like six months trying to like debug into like much performance and whatever I already know. That makes it really hard to switch. And so I think it's it's it's cost mostly what costing the sense of like how cheap can I get just like my computer and for how long can you guarantee me that that price? And maybe a price better after. And then performance improvements, if they're like significant will matter a lot, but I think we've seen something so significant yet that will make us like either switch

• 2:49:31Cristóbal Valenzuela?

  or move to other like hardware. I do think it's important. Like I do feel like all of the chips are being made to to compete with Nvidia are relevant, but for us, it's still like very hard to to see where we can switch, to be honest.

• 2:49:44John Coogan?

  Makes sense. Last question.

• 2:49:46Jordi Hays?

  This has been great.

• 2:49:46John Coogan?

  This has been awesome. We'd love to have you back. This is really informative. Thanks so much. I've been a fan for so long. I wanted to talk to you. I'm really glad.

• 2:49:53Jordi Hays?

  Thank you. We make, we make some pretty cinematic videos.

• 2:49:58John Coogan?

  Yeah. And I want, I really want to do the style transfer thing on some of our older content.

• 2:50:04Cristóbal Valenzuela?

  You can, now you can, now you can just create.

• 2:50:06John Coogan?

  Now it's animated. So yeah, we'll definitely be. Racking up those runway bills and we get to hitting render it all. I want every piece of B-roll we've ever filmed in Studio Ghibli style. I don't care what it costs. I want to fold it all. It's worth it. It's worth it. Yeah, it's awesome. It's such a fun time and there's so much that you can do with this stuff. So thanks for powering it and thanks for stopping by the show.

• 2:50:28Jordi Hays?

  Yeah, and congratulations to the whole team.

• 2:50:29John Coogan?

  Congratulations on the new model. Perfectly timed. Thank you, guys.

• 2:50:35Jordi Hays?

  All right, we can do some timeline and then OpenAI drops some news about a new Openweight model with reasoning in the coming months.

• 2:50:42John Coogan?

  That's fun.

• 2:50:43Jordi Hays?

  And I'm gonna use the restroom.

• 2:50:44John Coogan?

  Okay, well, while Jordy is doing that, I want to take a look at this video from ISAR Aerospace, which is a company I hadn't heard of before, but they had the most cinematic rocket crash I've ever seen. From NASA Spaceflight.com, drone and pad footage from ISAR Aerospace Spectrum launch. You can see it avoided the pad when it came down. Andrew McCall, friend of the show, says insane footage quality. Sorry about the loss, but serious credit to your media team. Top tier work. I couldn't agree more. We'll have to pull it up because it's the most cinematic just footage ever from this drone. It looks like they color graded it. It looks amazing.

• 2:51:27John Coogan?

  And Ashley Vance also chimed in and said, this site, this launch site slaps because it was great. And it's just a beautiful, beautiful website. But speaking of beautiful things, go to bezel.com, shop over 23,500 luxury watches, fully authenticated in-house by Bezzles team of experts. Get a luxury watch, folks. Anyway, how are we doing on the footage of ISAR Aerospace's Spectrum launch? I'd love to have the founder on the show. We did Defense Week or Defense Day. We're thinking about splitting that up because we kind of did manufacturing in there and then also weapons, systems. I think we need to break it up further. Do Space Launch

• 2:52:11John Coogan?

  Day specifically. Maybe we'll do Space Satellite Day specifically. But ISAR Aerospace would be a fantastic company to include in the Space Day if we do it because I want to talk to these folks and I want to see what cameras are they using to film this stuff because it looks great. And we have the video here. So check it out, folks. ISAR Aerospace.

• 2:52:34Jordi Hays?

  I think you got to pan down more, Ben.

• 2:52:38John Coogan?

  Oh, here we go.

• 2:52:38Jordi Hays?

  Oh, we're good now.

• 2:52:39John Coogan?

  So, look at this. This is so beautiful. I can't get enough of this. Look at this. The rocket takes off. Very sad that it didn't make it to orbit, but very cool video. And look at this. The drone just going higher and higher. This is why you gotta watch the video, folks. Sorry for everyone on the RSS feed. But the rocket's going up, up, up, and then starts flipping over and winds up crashing. I actually don't know where this was. It looks like it's in Antarctica or something, but I think it might be in Europe. I'm not sure. But beautiful glaciers.

• 2:53:10Jordi Hays?

  They gotta get Harry Stebbings over to the launch site, have him figure out what's going on.

• 2:53:14John Coogan?

  But this, this post came, look at that. Wow, big. Like, like, look, look at the teal and orange. It's just the classic Hollywood color grade. Looks like a Transformer movie. Fantastic. And so if you're doing something cool, like the, the takeaway is just like, spend the money on the nice camera.

• 2:53:32Jordi Hays?

  Yep.

• 2:53:32John Coogan?

  Because you're gonna get a lot of attention and attention is all you need. Rad backwards. This one, it was unrelated, but it felt related. And he says, caring is cool. You should care a lot and work really hard. That's the coolest stuff ever. And I saw those folks blowing up that rocket. And I was like, you know what? It didn't go well.

• 2:53:52Jordi Hays?

  Do it again.

• 2:53:53John Coogan?

  But they care. They care. And I love that.

• 2:53:55Jordi Hays?

  Try again.

• 2:53:57John Coogan?

  And should we go to Gokul Rajaram? He says, AI shrinks the skill premium. A year ago, Portfolio Co. would ask me every week on tips to hire senior engineers. They found it really hard to attract seasoned builders. For the past couple of months, they have stayed conspicuously silent on this topic. Today, I asked them why. Had they finally found their dream senior engineer hire? They said, we don't need senior engineers. Our junior and mid-level engineers are able to use AI to solve every logic and system design problem. This is what we were talking to Patty about. ChatGPT is his kernel and Cursor is his army or something like that. I like that model. But really, it's like, yeah, you know, you have these tools and systems that plug in that help speed up the autocomplete

• 2:54:39John Coogan?

  and the implementation of your ideas. But how do you, how do you reality check? And, and it's the rubber duck test. Can you explain what you're building, what your architecture is? And the, these reasoning models are fantastic at that.

• 2:54:54John Coogan?

  So Gokul goes on and says, this will be one of the pervasive effects of AI. AI will massively erode the premium charged by senior professionals in any white collar role. You might still need the 0.01% of talent to build world scale systems, but the top 1 to 10% are going to see massive competition from the middle 50% as AI up levels the latter skilled group. I don't know if you had to take Jordy, but I thought it was interesting.

• 2:55:21Jordi Hays?

  Yeah, I mean, it's interesting. Last night I had a question that I wanted to ask a friend of mine, who is a very much an expert in the subject. And I felt like, and I reached out to him, I said, hey, can you chat about this thing? But I also asked the same question to a language model.

• 2:55:43John Coogan?

  Yeah.

• 2:55:44Jordi Hays?

  And like hours before my buddy responded, I got a like satisfactory or potentially even better answer than my friend would have given me.

• 2:55:52John Coogan?

  Yep.

• 2:55:53Jordi Hays?

  And I think that that scenario is basically similar to what what Gokul is describing here.

• 2:55:58John Coogan?

  Yeah.

• 2:56:00Jordi Hays?

  Which is good. It's sort of, I mean, again, it's sort of leveling the playing field in many ways.

• 2:56:07Jordi Hays?

  The internet as a technology leveled the playing field globally. Where like you didn't have to be in the United States to compete with US workers for jobs. You could be a web developer in UK or India or whatever, competing for work in the US. So.

• 2:56:21John Coogan?

  Yeah. I want to go to this post by Dylan Patel. He says, data center capex is going to zero. Grok struggling deploying. Anthropic extremely low limits for paid plus cursor. Google not offering 2.5 on API. OpenAI not serving 03, struggling to serve 40 image. Azure still not serving many models, including 01, 03, deep research 4.5. And this is so funny because he's the most respected analyst in semiconductors. Dylan Patel, obviously the founder of Semi Analysis. But the first line is a joke. And if you don't have a good irony detector, you would just read this completely wrong.

• 2:57:04John Coogan?

  And unfortunately Brad Gersner chimes in and says bizarre how the GPU doomers all somehow understand true demand better than the companies who all have massive compute shortage and are melting down their GPUs and scrambling to find supply. And so, I mean, yeah, if you look at the. How long it takes to inference some of these models, it's all very slow. It does seem like demand is very high. Just anecdotally, I think we saw that everyone is using all of these models all the time. And they are intense from a GPU demand perspective.

• 2:57:34Jordi Hays?

  And Gary, Gary Basin actually has a good point here in saying they're looking at two different time scales. The short term squeeze is priced in.

• 2:57:42John Coogan?

  Yeah.

• 2:57:43Jordi Hays?

  But like that capacity for the short term squeeze is in many ways.

• 2:57:47John Coogan?

  Yeah.

• 2:57:47Jordi Hays?

  Being, coming online or, or being built out.

• 2:57:50John Coogan?

  Yeah, there's also this, this interesting dynamic where some of the founder mode companies do have an incentive to overstate the, the, the level to which they are overstrained. You know, it's like the classic stage founders, like, I can't sleep. I, my phone's ringing constantly. I'm the most popular startup. We're growing too fast. Like you kind of know that if you signal that to the market, you're going to get more term sheets and stuff. But I don't believe Google is in that mindset with like, oh yeah, like if we don't offer 2.5 on API, like the market's going to see that and price us higher. It would be very odd if all of these dynamics were fake. It would be, it would be reasonable if it was like just one was, oh, that person's kind of overstating or they're a challenger.

• 2:58:34John Coogan?

  And so they're saying, oh, we're so popular. But when they're all struggling, clearly there's, there would be an economic incentive for one of them to break rank and say, actually, we have, we have plenty of GPUs. So come over to us. We would love to have your business. When they're all struggling, it's definitely a sign that data center capex is not going to zero. In fact, and speaking of 4O images and chat GPT, there was an interesting post by Technium saying 4O image generation can do calculations during its image generation somehow. This was community noted because the first LLM prompt, so it's a picture of a calculator.

• 2:59:14John Coogan?

  And the prompt is make an image of a calculator app for the calculation 53 times 88. And the result of that calculation is 4,664. And this would be shocking if the LLM had just been able to, or the, the, the, the image model had just been able to do this at image generation time. But in fact, it appears that in the prompt reasoning step.

• 2:59:39John Coogan?

  Before the image is generated, the, uh, there is an internal, uh, prompt interpret- interpretation that runs, that, that basically hydrates the prompt and adds extra context. And so, um, someone else shared that and said that when you, if you give the exact same prompt in the screenshot, you can see that they pre-process the prompt and that, that prompt actually, uh, does the math, which is still impressive that it can get it right. Uh, let's not be wrong about that. Um, but it is, it is interesting and this is a, this is obviously just like a huge unlock and, and obviously pairing L L Ms with image generation.

• 3:00:21John Coogan?

  This is the future and this is, I think, why, um, this new image generation, the Studio Ghibli vacation of Chat G P T. It didn't happen in Dolly three or Dolly four, like a separate app. It just happened in Chat G P T and it takes advantage of all the other Chat G P T features. And eventually you're going to see consolidation. So you can upload a PDF, have it search the internet, do some deep research, generate an image with images in Chat G P T. It's all going to happen in the same app and same window, which is great. Um, but, but interesting, like kind of technical deep dive here. Um, is there anything else you want to run through on the timeline? Because we are past two P M. We've been streaming for three hours.

• 3:01:03Jordi Hays?

  I wanted to take an opportunity to talk about another new partner, which some people have called out in the ticker, which is Polly Market.

• 3:01:09John Coogan?

  That's right.

• 3:01:09Jordi Hays?

  And, uh, we're very, uh, excited to be partnering with Shane and Matt.

• 3:01:14John Coogan?

  Yes, thank you to Polly Market. We've been very happy to have them as partner. Thank you.

• 3:01:20Jordi Hays?

  And the reason that we were so excited to partner with them is that the Polly Market platform is news, right? Like it is a way to understand the world and understand news. And, um, so it's a natural fit to integrate into the ticker. It's like everything that's happening in tech, like here's how to get an understanding of it. Uh, we're going to be sort of updating the ticker, making it, um,

• 3:01:47John Coogan?

  Yeah, we're gonna be improving it iteratively over the next few weeks.

• 3:01:49Jordi Hays?

  Improving it day by day like we do. And we're also gonna be creating some of our own models.

• 3:01:55John Coogan?

  Yep.

• 3:01:55Jordi Hays?

  And they already just have like, one of my favorites that's going right now is AI wins IMO gold medal in 2025 at 61%.

• 3:02:04John Coogan?

  That's really high.

• 3:02:05Jordi Hays?

  Which is really high. And what that would mean is that everybody basically gets the average ramp employee.

• 3:02:11John Coogan?

  Yep.

• 3:02:11Jordi Hays?

  Or average cognition employee on their team.

• 3:02:15John Coogan?

  Yeah.

• 3:02:16Jordi Hays?

  And so, yeah, there's a bunch of other stuff. Some of this stuff feels like, I probably can't say this, so this is not an ad, but it's just commentary. Some of this stuff feels like free money, just because it's like, you know, you look at the probabilities on some of this stuff.

• 3:02:31John Coogan?

  But. And I think it'll be cool because Polymarket's been known for political prediction markets, but we never talk about politics. And genuinely, this is not a political show. And so I'm just excited to build markets around tech predictions. I love, you know, will the next starship make orbit? How many starship launches will there be in 2025? Like, these are the markets that I've always cared more about, and I'm excited to highlight on this show and kind of. There are plenty of other shows that are partnered with Polymarket that can highlight the important political markets. I want to drive the tech markets forward, for sure. So that's what I'm excited about.

• 3:03:08Jordi Hays?

  Yeah, there's so much other stuff. I mean, which company has the best AI model by end of April? Google's sitting at 51%, which again is not what I think the average person on X would even tell you.

• 3:03:23John Coogan?

  Dangerous. It's forbidden knowledge.

• 3:03:24Jordi Hays?

  It's forbidden. It's forbidden knowledge.

• 3:03:26John Coogan?

  But look at this. I mean, Sundar Pichai posts 2.5 pro ship today to everyone. Find it in the dropdown here. Gemini.google.com. Still, he puts up 5K likes, a million views. Built different.

• 3:03:37Jordi Hays?

  Built different.

• 3:03:38John Coogan?

  He does it. He's so confident. He throws the link in there. He's got the hilarious image. I'm growing. Sundar's growing on me, man. I like the, I like that he's going direct here.

• 3:03:49Jordi Hays?

  Own links. Yeah, I am the internet.

• 3:03:50John Coogan?

  All post this, whatever. It's also hilarious. It's in this dropdown on a subdomain. Like, you're taking it seriously, Sundar, but like, how seriously are you taking it? Should this just be baked into the Google search box?

• 3:04:05Jordi Hays?

  Yeah.

• 3:04:06John Coogan?

  But hopefully soon. And I'm excited. I mean, it seems like they're, they are hearing the message. We need better productization. Google legendary team in terms of AI algorithm development. Attention is all you need. That's a Google paper. They created the transformer. Time to capitalize, guys. You got the TPUs. You got the team. You got the distribution.

• 3:04:26Jordi Hays?

  Polymarket has a polymarket for Google's Wiz acquisition being blocked before July. Sitting at a very six, only 6% chance, but.

• 3:04:36John Coogan?

  And that's an interesting one because you normally, if when a big acquisition is going on, you can actually determine, you can extract that market from the stock price movement. So like you can see how Activision is trading and understand, okay, the market expects that Activision will be acquired. This is what happened with the Twitter acquisition. Like it went right to 46 billion or 44 billion or whatever Elon was going to pay. And then it would, it would drop by a little bit based on the probability that it would not go through. But Wiz is a private company, so you don't have that, you don't have that real time data on how the share price is trading, which you can use to address whether or not the deal is going to go through. Polymarket comes in there. Very cool.

• 3:05:17Jordi Hays?

  We got it. We're also sitting at a 25% chance that X relaunches Vine before July.

• 3:05:23John Coogan?

  Do you think they need to do that? I feel like they have the video feed.

• 3:05:26Jordi Hays?

  They have their, they have their.

• 3:05:27John Coogan?

  Secondary apps are rough. You know, just stuff it all in one app. And they're, they're very good at getting you to open up one video that auto plays, then it scrolls you to the next one. Pretty soon it's just all slop, but you're watching it anyway. Those, those unregretted user seconds are dropping to zero.

• 3:05:46John Coogan?

  But we'll see. I mean, I, I'd love a Vine comeback. The Vine team, one of the, just legendary crew of entrepreneurs.

• 3:05:56Jordi Hays?

  Yeah. The other thing that we're going to be paying attention to as April starts is just what's happening with TikTok.

• 3:06:01John Coogan?

  Oh, yeah.

• 3:06:02Jordi Hays?

  Polymarket says today, there's a 30% chance that the TikTok acquisition is announced before May.

• 3:06:08John Coogan?

  Wow, that's pretty high. Yeah.

• 3:06:09Jordi Hays?

  I mean, it's high. But that's also what everybody's been orienting around this early April sort of deadline to get a deal done.

• 3:06:16John Coogan?

  So we'll see. And there we go. Oracle, Walmart. Ben Thompson says Walmart should buy them.

• 3:06:24Jordi Hays?

  You'll think there's only a 1% chance that Mr. Beast is the winning bidder. So no faith in the beast man.

• 3:06:30John Coogan?

  No faith in Jimmy. Oh, well. Well, that's a great show for you guys today. Folks, thanks for watching. Leave us five stars.

• 3:06:37Jordi Hays?

  Be back tomorrow.

• 3:06:39John Coogan?

  Stay tuned. Repost all of our clips. Like and fave everything. Do everything. Thanks a lot.

• 3:06:46Jordi Hays?

  Also, last shout out. Chris Amidon, we saw you got an eight sleep. We're competing with you now.

• 3:06:53John Coogan?

  Yep. I want to see you put out some good numbers, Chris.

• 3:06:55Jordi Hays?

  Let's see those scores, Chris.

• 3:06:56John Coogan?

  Let's see it.

• 3:06:57Jordi Hays?

  That's it. Thank you, folks. We will see you tomorrow. Have a fantastic rest of your day.