Markets Surge, Apple's Tariff Strategy, Tracy Alloway, Justin Lopas, Paul Klein, Akshay Krishnaswamy

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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 is Wednesday, April 9th, 2025. We are live from the

• 0:06Jordi Hays?

  Temple of Technology, the Fortress of Finance, the Capital of Capital.

• 0:11John Coogan?

  And the Fortress of Finance has never been stronger. The market's ripping. We're back, baby. I, I for one, I never doubted for a second. I, I never doubted for a second.

• 0:21Jordi Hays?

  Yeah.

• 0:22John Coogan?

  I never said it was so over, but yet we are so back.

• 0:24Jordi Hays?

  Always knew we'd be back.

• 0:26John Coogan?

  I always knew. I always knew. Yes.

• 0:28Jordi Hays?

  It's a perpetual cycle.

• 0:30John Coogan?

  It is.

• 0:31Jordi Hays?

  It's so over. We're so back.

• 0:32John Coogan?

  If you, if you haven't been tracking, uh, the breaking news is that the markets weigh up on, on, uh, the announcement from, uh, President Don, Donald Trump, that, uh, there will be, some of the tariffs will be put on hold specifically for countries that do not retaliate.

• 0:47Jordi Hays?

  The main thing here is Walter Bloomberg wasn't wrong.

• 0:50John Coogan?

  Yes.

• 0:50Jordi Hays?

  It was just a little bit early. And this is a lesson that, you know, founders, investors often learn. Being early is often, being too early can be equivalent to just being wrong.

• 1:01John Coogan?

  Yes.

• 1:01Jordi Hays?

  But, uh, we're gonna give Bloomberg, we're gonna give Mr. Bloomberg a little bit of-

• 1:05John Coogan?

  You're joking, but like, maybe he did know something?

• 1:08Jordi Hays?

  No, no, no. He watched, he watched an interview, like the Monday move was, he watched a live interview, kind of misinterpreted what the person said, and then nobody could verify it.

• 1:18John Coogan?

  The front of the Wall Street Journal says, "Stocks surge as Trump authorizes a 90-day pause on some tariffs." Meanwhile, he is raising the China tariff to 125%. So I think that that's probably what's being under discussed in the midst of this crazy, uh, 10% jump in the NASDAQ. That is insane.

• 1:38John Coogan?

  Is that, like, this is turning into, it, it, it originally was like, we are renegotiating the global order of tariffs. We're, we're, we're going back to Bretton Woods, baby. We're talking about, you know, the Knicks in shock. We're talking about major geopolitical, global world order, who, dollar reserve currency stories. And now I think we are going to be more in the era of like, this is truly just a US-China trade war. And that's where the pressure's gonna be. And, um, we have a lot to break down from that. There's a, I mean, Ben Thompson is back, baby. He's off of vacation and he's been posting every single day, dropping some great analysis. We'll take you through that. We'll go through, uh, some OpenAI news about the device that they're potentially building and some other stuff

• 2:21John Coogan?

  before we jump over to the timeline and our guests. Um, let's kick it off with- What Ben Thompson had to say about Apple because this Apple is like the company to watch.

• 2:30Jordi Hays?

  Wait, you didn't want to kick it off with this other post that you have there? Why don't we start there, John?

• 2:34John Coogan?

  Yeah, this is, this is some really important news.

• 2:36Jordi Hays?

  Breaking news.

• 2:37John Coogan?

  This is from Landshark. Landshark writes, not sure if everyone already knows this already, but there is a guy on Instagram who behind the back deadlifts 30 kilograms more than the deadlift world record in his backyard. And I just thought this was important to share because like, obviously you knew this, obviously I knew this, obviously most of the people on the show will know this, but if there's people that have been living under a rock and maybe like distant family members, people have been traveling for a long time, you know, maybe they're doing one of those like Deadliest Catch things and they just haven't had access to the internet. You gotta let them know because this is important news.

• 3:11Jordi Hays?

  And the fact that this is not moving protein futures.

• 3:14John Coogan?

  Yes, this really should move markets.

• 3:16Jordi Hays?

  This should be market moving.

• 3:18John Coogan?

  This should be right up there with the Trump tariff story. Uh, yes. So, uh, there's a man on Instagram who is deadlifting 1,168 pounds, uh, which puts him in the thousand pound club.

• 3:32Jordi Hays?

  I have never.

• 3:33John Coogan?

  Just on this one lift alone.

• 3:34Jordi Hays?

  Have you ever attempted a behind the back deadlift?

• 3:37John Coogan?

  I've never attempted a behind the back deadlift.

• 3:39Jordi Hays?

  Now I'm super curious.

• 3:40John Coogan?

  Yes, I do wonder if this is just innovation and it's easier somehow and no one ever realized.

• 3:44Jordi Hays?

  No human had ever said, what if we put it behind?

• 3:46John Coogan?

  The throwing the basketball like underhand Greenwich style. People thought that might be easier, but it's like embarrassing. So no one would do it. And so, but you actually could get a higher shot percentage, uh, but it became like a meme thing. 530 kilograms. That's so much weight. Wow.

• 4:01Jordi Hays?

  Think throughout history, there were probably just random dudes out there breaking strength records all the time and just never, they just were in their village, just going through their regular workout routine, having a good day, breaking a world record.

• 4:16John Coogan?

  You look at the bar and it's like so many plates. It's like 10 plates or something.

• 4:22Jordi Hays?

  Yeah.

• 4:23John Coogan?

  It's crazy. Uh, anyway, very important story.

• 4:25Jordi Hays?

  Anyways, well, we just wanted to make sure that we highlighted that to start the show.

• 4:29John Coogan?

  It's very important.

• 4:30Jordi Hays?

  Back to.

• 4:31John Coogan?

  Back to Ben Thompson and what's going on with Apple in China. Uh, he starts the quote from the Wall Street Journal, Beijing lashed back at President Trump's threat of even higher tariffs on China, raising the specter of an all out trade war between the world's two biggest economies. If the US insists on its own way, China will fight to the end, the country's commerce minister ministry said Tuesday. Trump had said he would slap an extra 50% tariff on China if Beijing didn't drop plans to retaliate against extra levies he announced last week. In a sign Beijing is digging in for a protracted battle, the government threw its weight behind the stock market and devalued the yuan against the dollar, pulling a reference rate below a key threshold for the first time since the fall of 2023. In spite of the spiraling tensions,

• 5:16John Coogan?

  global markets broadly rose Tuesday, pairing some losses after a bruising three-day sell-off. US stock futures pointed higher after market whiplash Monday, ultimately left major indexes largely unchanged, giving investors some hope. The Trump administration signaled that it was open to discussing lower tariffs with Japan, Israel, and some other countries. Japanese stocks jumped after Tokyo claimed named chief tariff negotiator and Treasury Secretary Scott Bassant said the country would be prioritized in trade talks. And so we are now in the, we're not quite at the Mar-a-Lago Accords, but we are certainly

• 5:52John Coogan?

  seeing some differential pressure. And the blanket tariffs, they did seem aggressive. Because of course, like, there are lots of companies that I think have been taking tariffs with China seriously. Like, the first Chinese tariffs came into effect during the Trump one. And I was thinking about that discussion with Keith Roy. Keith, there was this question about, like, you know, you're obviously aligned with the administration, and you're a good enough conversationalist, or you're good enough at arguing this stuff, that potentially,

• 6:35John Coogan?

  no matter what happens to any economic indicator, you can say it's good? He's like, oh, like, you know, interest rates went down. It's easier to buy a house. Interest rates went up. Well, you're earning more money when you give the government money. That's great. Oh, the stock market went down. Yeah, we're just, the stocks are cheaper. It's more encouragement to grind harder. Oh, the stocks go up, we're all richer. Yeah, it's like, if you can just justify anything, it's like, how do we know if it's actually working? And my, my takeaway from the Trump won Chinese tariffs and the re, the reevaluation of the US-China relationship was that the changes that Trump made to the US-China relationship, they stuck around during the Biden admin. And so I would call this, like, to coin a phrase, Kugan's law, I would call this eventually bipartisan.

• 7:18John Coogan?

  So when Trump does something, there is this natural reaction from the left wing to say it's bad, even if they don't know or they haven't really dug into it or we, or no one could know. And the same thing happens on the other side, where the Democrats do something and the Republicans, this is the worst thing ever, right?

• 7:34Jordi Hays?

  Yep.

• 7:34John Coogan?

  The real test is when the next administration comes in and is from the opposite side, if they're like, you know what, now that we've, you know, seen what happened with the China tariffs, like, we're good with them. And that's exactly what the Biden administration did. And they eventually went further with the chip bans and, and the CHIPS Act. And so when I think about like, like, whatever you think about the first Trump administration, there were probably lots of things that everyone agrees with and some things that people disagree with. The, the reevaluation of the China relationship, that did, just technically, regardless of what you think about it, it, it did technically become eventually bipartisan. And so my question is, is will these tariffs?

• 8:13Jordi Hays?

  To give Obama some credit, he was one of the first people to really start bringing up China as being a problem.

• 8:20John Coogan?

  Totally. Yeah.

• 8:21Jordi Hays?

  So it, it, it's not like, you know, Democrats historically just said China is a perfect sort of benevolent actor.

• 8:28John Coogan?

  Yeah, yeah, yeah. Yeah, there was this book Hundred Year Marathon. Marathon by Michael Pillsbury and he wrote, he kind of wrote the defining book on like China's strategy to become a global hegemon, that they're not moving quickly, they're thinking very slowly, they're, they think about warfare not in the purely kinetic terms and there's economic warfare, they're willing to invest in these industries like we've talked about with DJI and, and robotics for a very long time, lose a lot of money, but eventually be, be the, be the winner. And I think this woke a lot of people up in Washington and this eventually became kind of the backbone of China policy on both the left and the right, which is interesting. And I'm, and I'm, and I do wonder, you know, with, with,

• 9:11John Coogan?

  with time, a lot of these, like the Nixon, the Nixon shock, for example, like, like the, the partisanship kind of evaporates over the years and everyone kind of comes to a more like cohesive understanding of history because you have more economic indicators because you can see, oh, well, like what did the economy do over the next 10 years? Was that a good idea or not? And of course there's debate, but in general you can tell. And so it'll be very interesting to see how this evolves. Obviously things are changing very quickly, but that's why it's fun to do a daily show. And that's why I'm happy that we've positioned this, this show the way we have. Anyway, let's dig into Apple's China problem from Ben Thompson's, he published this yesterday, Tuesday, April 8th. And he

• 9:56John Coogan?

  says, it's obviously time to talk about Apple. This is not, as I highlighted, the worst case scenario, that would be war in Taiwan, which would not only abruptly end Apple's China supply chain, but also its Taiwanese one and potentially Japan and South Korean ones as well. That is an existential risk.

• 10:13Jordi Hays?

  Yeah, I wonder how, you know, there's this concept of 20, it's 2028, right? The, the sort of year that, that our military leadership generally predict, it's 2027 or 2028, I believe it's 2028. I wonder what Apple's internal forecast is for a conflict in Taiwan because they are the single entity with the most riding on that conflict.

• 10:42John Coogan?

  So, polymarket has it at 16%. Will China invade Taiwan in 2025? I hope that that goes to zero. Like, it would be very bad for everyone. But there's a lot of cutting your nose to spite your face going on in the global economy these days, so anything is possible. But fortunately, you know, that's not at 80%, which is great. A trade war with China is somewhat more manageable, although still very bad. He's, Ben Thompson then goes through a report in the Wall Street Journal, line by line. Apple plans to send more iPhones to the US from India to offset the high cost of China tariffs. People familiar with the matter said the adjustments are a short-term stopgap while Apple attempts to win an exemption from President Trump's tariffs, which has

• 11:25John Coogan?

  happened before. And Tim Cook has, even though he has positioned the company not as like a right-wing company in any way, he went to the original Trump One tech summit. He sat next to him. That was where the Tim Apple quote came from. And, and Tim Cook has been good about not aligning the company, not saying like, "We are ride or die Biden." Like, we're, we're coconut-pilled here. He's said, you know, "We're an American company. We, you know, we'll, we'll work with any administration." And I think the fact that Tim Cook is willing to do deals, and he did that thing with, where they reshored, they quote-unquote like reshored the production of the Mac. I don't know if you remember this, but they, they

• 12:07John Coogan?

  opened, like, it was a plant in Texas that was like kind of already working for Apple, and then they kind of like reclassified some of the R&D and CapEx as like, "We're really betting on America." But they let Trump come and like cut a ribbon in front of this factory that was like kind of already working, but it was like a moment for the Trump administration.

• 12:23Jordi Hays?

  I don't remember that.

• 12:24John Coogan?

  So, so, so it was very much like an olive branch.

• 12:27Jordi Hays?

  We need to get some of those.

• 12:28John Coogan?

  For sure.

• 12:28Jordi Hays?

  Those American-made Macs.

• 12:29John Coogan?

  Yeah, for sure.

• 12:30Jordi Hays?

  I need an American-made Mac.

• 12:33John Coogan?

  And so, yeah, so I think, I think Tim Cook... He's very like quiet about politics, but I think he does understand how the game's played. He does understand how to do deals. He is a deals guy.

• 12:42Jordi Hays?

  Yeah.

• 12:42John Coogan?

  And so is Trump.

• 12:43Jordi Hays?

  Should we play the video?

• 12:44John Coogan?

  Uh, yeah.

• 12:45Jordi Hays?

  Of the, the zen and art.

• 12:46John Coogan?

  If we're, if we're ready to go, I want to hear, uh, from Tim Cook about why he loves supply chain manufacturing and then we'll dig into his strategy in China and how Apple is, uh, retooling things going forward.

• 12:58Speaker 02

  Manufacturing has always interested me because I'm very curious about how things are made. I like to go to factories and see how things are put together, how they're created. My degree is in industrial engineering, my undergraduate degree. And industrial engineering is essentially the study of people and machines and how the two working together can create things that they couldn't create on their own. And I've always viewed it, the supply chain piece of it to be a bit of a piece of art when it was done correctly, because it's a symphony of things of coming together of thousands of different components and, and parts coming together to create something.

• 13:42John Coogan?

  It really is probably the most complicated organism, or just like a collection of human progress. Like the phone really distills everything from like, the semiconductor is extremely complicated. You need the best and smallest and fastest and most energy efficient chips in the phone. The screens are the most advanced screens and the smallest, the batteries, like it really brings together everything and you can see, uh, that I think the symphony analogy is fun, but he's clearly, I mean, I think he's really is being genuine there, even though it is kind of a, uh, it's kind of a dry quote because it's talking about supply chain, but I think he really does feel that way. And, and it's his, like, he, Tim Cook is the reason that Apple is dominant in China

• 14:27John Coogan?

  and, and the reason that Foxconn exists to the degree it does, and the reason that Apple has been able to grow and scale so much. He was the guy that, that, uh, that Jobs brought in to fix the supply chain. He went over there, figured it out and then scaled the business incredibly. And now he has a potential crisis on his hands, but I'm sure he's been tracking this for a decade now. And they've done some

• 14:52Jordi Hays?

  We put up a poly market around the cost of the next iPhone.

• 14:55John Coogan?

  Oh, yeah.

• 14:55Jordi Hays?

  And seeing basically whether they're going to pass

• 14:58John Coogan?

  That's a very interesting one to track.

• 14:59Jordi Hays?

  Cost on to consumers.

• 15:01John Coogan?

  Yeah.

• 15:01Jordi Hays?

  Or eat the cost. Knowing Apple, they'll pass the cost on to consumers.

• 15:06John Coogan?

  Maybe, but I, again, we talked about this with the, with the shift to services revenue.

• 15:11Jordi Hays?

  Yeah.

• 15:12John Coogan?

  Increasingly, and we'll get into this with some of the Ben Thompson analysis, increasingly, the amount of money that, that every year, Apple makes more money from services than devices, like that mix is shifting. And so you could see a world where you're, I mean, already you can subscribe to an iPhone.

• 15:30Jordi Hays?

  Yeah.

• 15:30John Coogan?

  You can pay something like a couple hundred dollars a month or something and get a new one every

• 15:34Jordi Hays?

  Yeah, but isn't that more, you're effectively financing it or leasing it?

• 15:38John Coogan?

  Yes, but, but, but you could imagine it's like, okay, yeah, if you, if you have an Apple phone plan and you have Apple TV and Apple News and Apple Health and Game Center. And you're spending, you know, tons of money on, you know, Roblox credits or something that are paid.

• 15:54Jordi Hays?

  Candy Crush.

• 15:55John Coogan?

  Candy Crush, yeah. Yeah, you're Candy Crush whale. It's like, yeah, we're making $10,000 off of you. We'll just give you a new phone, whatever. It doesn't matter. I don't know that they're actually there, but it is interesting to think about. So for all the criticism of Tim Cook, writes Ben Thompson, which has been mounting for years. Recent, including from yours truly, he's been throwing some shade.

• 16:16John Coogan?

  This is truly the opportunity for him to earn every dime from his paycheck in an attempt to preserve the viability of the Chinese supply chain that he built. He will certainly call back to his previous arguments. Massive tariffs on Apple products will do a lot of damage to an, an American company and give a big advantage to foreign ones, particularly Samsung. That worked during the first Trump term. The problem is, is that the other bullet point in Cook's tenure, one can certainly make the argument that Apple, more than any other country, any other company, is responsible for China's dominance in manufacturing. Like, if, if China did not have Apple to ride the learning curve down.

• 16:57John Coogan?

  China would not be as dominant as they are, particularly when it comes to a high tech componentry that the US is so far behind it. Apple's response might be that, well, that's true. At least the company has been trying to diversify. And so

• 17:11Jordi Hays?

  Yeah, they're trying to shift.

• 17:12John Coogan?

  Other markets.

• 17:13Jordi Hays?

  They're trying to shift to India, Vietnam.

• 17:15John Coogan?

  Yep.

• 17:16Jordi Hays?

  And I'm sure out of this will come a US iPhone factory.

• 17:22John Coogan?

  Yes, but

• 17:23Jordi Hays?

  I don't.

• 17:24John Coogan?

  Most importantly, when you hear, oh, the iPhone has shifted from China to India, that's the last stage manufacturing process. That's not the componentry.

• 17:35Jordi Hays?

  Yeah.

• 17:35John Coogan?

  So, Apple makes many iPhone components in China, but in recent years has assembled more of the devices in India. And they're not, and it's such a huge scale that they manufacture or they assemble in both. That allows the company to stamp India as the country of origin for those devices because they undergo substantial transformation there from a pile of parts to a functioning smartphone.

• 17:56Jordi Hays?

  Yeah.

• 17:56John Coogan?

  Since 2017, Apple has worked with partners to assemble iPhones in India, starting with older models and gradually expanding to include the latest ones. The policy both addresses China's risks and avoids important tariffs when selling in India, one of the world's fastest growing smartphone markets. The fact that India does little more than assemble Chinese sourced components gets at one of the reason for blanket tariffs. Chinese imports to the US have actually fallen over the last several years, but a lot of that is because of similar schemes to do final assembly in countries like Vietnam, Thailand, Mexico, or in this case, India. And that's the whole thing with like the what China does so well in places like Shenzhen, where you walk across the street and there's like the world's

• 18:36John Coogan?

  largest, you know, like button manufacturer. And then there's like an insanely scaled factory for just

• 18:44Jordi Hays?

  For just camera lenses.

• 18:45John Coogan?

  Camera lenses, exactly.

• 18:46Jordi Hays?

  Phone camera lenses.

• 18:47John Coogan?

  And so, so it's not enough to say, oh yeah, there's some cheap labor. Like, let's just put it together in India. Like, that's not really solving the problem, even though you get to, you get to write something different on the box.

• 18:57Jordi Hays?

  Yeah, I mean, Apple has two problems.

• 18:59John Coogan?

  Yeah.

• 19:00Jordi Hays?

  They have a China problem and they have a Trump problem.

• 19:03John Coogan?

  Yeah.

• 19:03Jordi Hays?

  Right? And they're going to need a really, solving just the immediate Trump tariff problem

• 19:10John Coogan?

  Yep.

• 19:11Jordi Hays?

  Is not fix. Does not fix their kind of collective issues, right?

• 19:16John Coogan?

  Yep, yep.

• 19:16Jordi Hays?

  This dependency on China. That, that again, it could end up being if they do do some type of like operation Warp Speed to, to, you know, move production out of China and including the individual parts production. That could end up saving them if there's an eventual Taiwan conflict.

• 19:36John Coogan?

  So Ben Thompson goes on to say, building on the blanket tariff point, probably the biggest question right now is if the goal is to fundamentally reshape the global economic order or to simply cut off China, we have more, uh, we have more information here. I, I, I think it really, it does seem more targeted at China now. We're seeing that Trump's pulling back from this idea of reshaping the global economic order, but we will have to see where it all pencils out. Uh, if it's the former, then there is arguably less incentive for Apple to change anything because if they go anywhere, they're going to feel the pain everywhere. And so that probably makes the most sense to keep the supply chain based in China with final assembly elsewhere. If it's the latter, however, then these final assembly shifts to other countries could be viewed as positive.

• 20:19John Coogan?

  Uh, a company of Apple's scale doesn't shift its entire supply chain overnight. It shifts and shifts parts that are easier to shift like final assembly. And that forms its own gravity of, for high value components. Indeed, this is exactly what happened in China. And so that idea of like economic gravity, like even if you just say, hey, we're going to do all the components in China and we're going to do final assembly in India. Eventually you're going to be like, ah, we ran out of buttons today. Is there, like, we would pay twice as much for a button that was just manufactured across the street. And then the natural market is going to just figure out that some entrepreneur in India is going to say, wait a minute, if I don't have to pay shipping costs and tariffs and all this other stuff, I should just set up a button manufacturer right here.

• 21:02Jordi Hays?

  I would.

• 21:03John Coogan?

  And they'll do that for everything. Eventually, but it takes a long time.

• 21:05Jordi Hays?

  Pay the equivalent of 10 UFC pay-per-views to get Tim Cook to break down why making an iPhone in America makes no sense. Long-term, right? Like basically saying like, okay, obviously sort of reorienting supply chains is like decade plus long initiative. But why wouldn't you be able to make an Apple, you know, top of the line Apple mobile device with, you know? Great margins in the year 2040, right?

• 21:35John Coogan?

  Yeah.

• 21:36Jordi Hays?

  Assuming massive technological

• 21:38John Coogan?

  Yeah, it's interesting.

• 21:38Jordi Hays?

  advancements in automation.

• 21:40John Coogan?

  I think the, the, the previous answer has been that even though Apple is absolutely massive, they just haven't had the money to, they would effect, they would effectively have to build everything vertically integrated, right? So they would need to build every component. They would need to make that company happen because it doesn't exist in America. So they'd have to say, okay, now we are not just assembling iPhones with Foxconn or an Indian contractor. We are building our own Foxconn for assembly. And then we are also building our own camera lens manufacturer. And so how do we staff those? Well, we need to train people. So there's this massive investment there.

• 22:21John Coogan?

  The question is, Apple has produced over a trillion dollars in cash over the last decade, right?

• 22:26Jordi Hays?

  Yeah.

• 22:26John Coogan?

  Could they, how much has China invested in this? Probably more, honestly. If you think about the investments that have gone in from the free market and from all the different economic incentives, because it's not just Apple that's pushing China to develop capacity around a high end technological componentry, right? It's also Huawei. It's also, uh, you know, every Xiaomi. Like every single company needs something that overlaps a little bit. So these companies that are built on the back of, of Apple and Apple's maybe the biggest client. Well, even if there's a company that doesn't do anything with Apple, their employees might slide over to an Apple related supplier one day.

• 23:08John Coogan?

  So I think that that, that gets back to that heart of that debate between Obama and Jobs about, hey, if we need 30,000, uh, you know, engineers, where, is that the job of Apple? Or is that the job of the government? And the government couldn't do it. But could Apple have even done it if they tried? I have to imagine for a trillion dollars, you could do that, right? Like, that's so much money per thirty, per thirty thousand people.

• 23:32Jordi Hays?

  But it cuts Apple's market cap.

• 23:37John Coogan?

  Oh, totally. It'd be extremely expensive.

• 23:39Jordi Hays?

  Who knows? It'd be, um...

• 23:41John Coogan?

  Yeah, it's basically like saying, hey, it's nationalization at that point, almost. It's like, hey, you know, this makes no, no, no, no sense to the shareholders. It does not maximize shareholder value. Instead, it, it is just something that like, we think is generally good for America, but they haven't had an incentive for that because their, Apple is not responsible to America. They're responsible to their shareholders and their shareholders are some Americans, but some international folks. That's the nature of being a global company. While the iPhone got less attention than usual at its launch event, by far, the greatest amount of time was spent on its camera and for good reason. Review after review has lauded the iPhone six camera as possibly the best iPhone camera ever. As it turns out, though, there are a couple of companies in the world

• 24:26John Coogan?

  that are capable of producing such a camera and Largan Precision is one of them. That's why they provide the camera for the iPhone six. So this was like one of the first stories of major outsourcing in the, uh, in, in the iPhone supply chain. They had a $9.6 billion market cap, barely registers when compared to Apple's 623 billion number at the time. Now it's in the trillions. But when you consider that Largan Precision is a relatively tiny company, that's pretty darn impressive. And I can assure you, the founders are living much more comfortably than all but the most senior Apple managers. Moreover, that, that it's not far off from Foxconn, who actually builds the iPhone. Their market cap is only 5X greater than the maker of a single component.

• 25:06John Coogan?

  And so really owning a single piece of the supply chain and the iPhone supply chain, incredibly lucrative. So seven years later, Largan Precision was under threat, along with a host of other non-Chinese suppliers. With the iPhone 13 model, Chinese outfit Sunny Optical has finally broken into Apple's supply chain, marking the first occasion upon which a PRC-based supplier has entered the iPhone's optical parts realm to capture supply of one of the model's three main lenses, namely the 7P, seven-stack wide-angle lens.

• 25:38John Coogan?

  Largan Precision is probably a bad example, writes Ben Thompson. They are the best in the world and have bounced back to take more iPhone share while Sunny Optical fell off, although they may be back later this year. What is more pertinent-

• 25:50Jordi Hays?

  By the way, Largan Precision, by the way, is a $240 billion market cap-

• 25:54John Coogan?

  Now?

• 25:55Jordi Hays?

  Company.

• 25:55John Coogan?

  Wow. I mean, there's, everyone has three cameras now, you know?

• 26:01Jordi Hays?

  Yeah.

• 26:02John Coogan?

  It's not just everyone has a camera.

• 26:04Jordi Hays?

  And I'm sure they make, um-

• 26:07John Coogan?

  Yeah, all sorts of stuff, I'm sure.

• 26:08Jordi Hays?

  They make a bunch of other components for other cellphone manufacturers and other device manufacturers.

• 26:14John Coogan?

  Uh, Ben Thompson writes, uh, "There's one fly in this ointment that is worth noting. A big reason why those Chinese component suppliers got off the ground is because of Apple not just giving them a buyer, but also investing heavily in R and D on their behalf in an attempt to over, to undercut the power of companies like Largan Precision." That's controversial.

• 26:35Jordi Hays?

  Absolute dog.

• 26:36John Coogan?

  I'll, I'll throw you some bones on the R and D side. Let's get it going. Anyway, um, so, Apple in the short term, uh, there is news from the Times of India that Apple transported five planes full of iPhones and other products from, from India to the US in just three days during the final week of March. Um, the urgent shipments, which were made to avoid a new 10% reciprocal tariff imposed by President Donald Trump, uh, took effect on April 5th. Sources told, said that Apple currently has no plans to increase retail prices in India or other markets, despite the tariffs. Uh, to mitigate the impact, the company rapidly moved inventory from manufacturing centers in India and China to the US. And this was something that happened like all over the place.

• 27:17John Coogan?

  There was reports of car companies, just Lamborghini, put every Lamborghini on a boat, get it to America, we don't want to pay a tariff. I imagine there were even more planes flying from China over the last few days, and I wouldn't be surprised.

• 27:30Jordi Hays?

  To be clear, a lot of these companies were predicting the tariffs and had still been trying to get in front of them, right? Just, you know, basically over, over ordering against what they would normally do.

• 27:42John Coogan?

  To that end, I would imagine that Apple is going to try to hold the line on pricing in the US for as long as it can for the iPhone specifically. I wouldn't expect any changes until the next iPhone launch in September. While Apple has changed prices mid-cycle in countries facing significant currency changes, they have studiously tried to avoid that in the US market, which has the added risk of angering President Trump, even as the company will be seeking some sort of exemption. Obviously, if people are complaining about the prices of iPhones, Trump's not going to like that. And so, he's been documenting for several years now how Apple has actually been cutting iPhone prices in real terms, in inflation-adjusted terms.

• 28:22John Coogan?

  And we've seen the two-year-old iPhone gone, went from $499 to $411. And the iPhone Pro Max, the top-of-the-line one, went from $1,100 down to $900. And so, they have been reducing prices. And again, I think that's driven by the increased value that they get from software.

• 28:43Jordi Hays?

  And from people losing their AirPods.

• 28:47John Coogan?

  I mean, they are monetizing in so many other ways of the Apple ecosystem.

• 28:52Jordi Hays?

  My average, my average Apple order is so funny. I walk in and I go, "Yeah, I just want five sets of your wired, wired earphones." They're like, they bring them out and they're like, "You're sure you want these?" I'm like, "Yes."

• 29:08John Coogan?

  That's ridiculous.

• 29:09Jordi Hays?

  One for every, one for the car, bag, desk, you know, et cetera, et cetera.

• 29:15John Coogan?

  Yeah, I'm getting extremely close to just throwing away every Sonos product and going with the Apple speakers, because I just know that they will, I don't know if they'll sound better, I don't know if they'll work it better, but they can't work worse than Sonos. Sonos is truly terrible.

• 29:32Jordi Hays?

  Yeah, Sonos, you may as well just hire live musicians, schedule them to come, they'll be more reliable.

• 29:37John Coogan?

  I think of the Sonos app as like a meditation app, because you click it and it's just blank screen for like five minutes, and it just gives you a second to like reset and be like, "Okay, clearing my mind." Nothing, nothing's coming in, because it's just a blank screen for five minutes before you put on a single song.

• 29:52Jordi Hays?

  Good reminder.

• 29:53John Coogan?

  It's getting worse by the day. I was expecting it to get better, I thought they'd just roll it back. Anyway, let's go to tech's compliment, risk. This is Ben Thompson's big takeaway. He says, whatever a disaster this is for Apple or for tech generally, he wants to go back to what he wrote last fall. Apple could not only manufacture, could not only not manufacture an iPhone in the US because of cost. It also can't do so because of capability. The capability is downstream of an ecosystem that has developed in Asia and a long learning curve that China has traveled that and that the US has abandoned. Ultimately, though, the benefit to Apple has been profound. The company has the best supply chain in the world centered in China.

• 30:33John Coogan?

  That gives it the capability to build computers on an unimaginable scale with maximum quality and for not that much money at all. It is crazy.

• 30:41Jordi Hays?

  China doesn't really.

• 30:42John Coogan?

  Apple, it's fantastic computer.

• 30:44Jordi Hays?

  Yeah.

• 30:45John Coogan?

  Yeah, works great and it was dirt cheap.

• 30:47Jordi Hays?

  They don't get much credit for being the backbone of what people love about Apple.

• 30:54John Coogan?

  Oh, yeah.

• 30:54Jordi Hays?

  It's just fantastic.

• 30:56John Coogan?

  Reliability.

• 30:57Jordi Hays?

  Devices.

• 30:58John Coogan?

  Like, I mean, you buy a car and it's like, there's a lemon law, you know?

• 31:02Jordi Hays?

  Yeah.

• 31:02John Coogan?

  Like, you could just get a car where it's like, oh, the engine doesn't work and that's a thing. Like, I've never even talked to someone who's like, oh, yeah, my Apple, like the, my, my Mac, like, the hard drive didn't work when I got it. Like, it just doesn't happen. It's always 100% perfect every time. It's crazy. The benefit has extended to every tech company. He, he has cooked. He has cooked over several decades. Whether they make their own hardware or not.

• 31:26Jordi Hays?

  It is fascinating, though, so when Buffett really started dumping.

• 31:30John Coogan?

  Yeah.

• 31:30Jordi Hays?

  Apple.

• 31:31John Coogan?

  Yeah.

• 31:32Jordi Hays?

  Tim Cook. Like, that, that was like, that, that one must have hurt for Tim because Tim was starting to realize that he was a little bit cooked. Buffett, Buffett knew too, right? He was just like, you know, he could kind of see the writing on the wall. Trump presidency, you know, loves tariffs. Apple.

• 31:51John Coogan?

  It's not good.

• 31:52Jordi Hays?

  You know, Apple not being able to move their supply chain without trillions of dollars of investment.

• 31:58John Coogan?

  Yep.

• 31:58Jordi Hays?

  Tim just sitting there being like. Well, I'm gonna give Apple Intelligence a good shot here.

• 32:06John Coogan?

  So he concludes, "To that end, the risk for tech is that tariffs specifically and Trump's approach to trade generally do not do more damage to the golden goose than expected. More expensive hardware ultimately constricts the market for software. Tariffs in violation of agreements like the ITA give the opening for other countries to impose levies on their own, and the US tech companies could very well be popular targets." Yeah, I mean, I was thinking about, so there's this whole idea that like, if you bring down the cost of hardware, all software needs to run on hardware, every app company, every software company that we know and love, like Uber only exists because everyone, the iPhone got so cheap that everyone got one, right?

• 32:47John Coogan?

  And you think about, it's very easy to say like, oh, well, like, everyone kind of has an iPhone, they don't really need to upgrade. If prices go up by 30%, you just upgrade every four years instead of three years, it's not that big of a deal. But what about for the next platforms? We've talked about drones and humanoid robotics, but even VR, like, the current, the current Apple Vision Pro, great product, super expensive. I think like, I bought like a max spec one, and it was like, almost five grand.

• 33:14Jordi Hays?

  Yeah.

• 33:15John Coogan?

  And you add tariffs on top of that, you're just gonna be fighting tooth and nail to drive that down. John Carmack, when he was at Meta, said that he wanted to get to a hardware device for VR that was 100 grams, so extremely light, like the big screen beyond. The big screen beyond, that's 100 grams, but it's like $1,000. The Meta Quest has been down in like, the 300 to 400 range, but still, nowhere near $100. Carmack wants to get 100 grams, $100. Because at that price, like, everyone has one.

• 33:49Jordi Hays?

  It's like glasses.

• 33:50John Coogan?

  It's like glasses.

• 33:51Jordi Hays?

  Sunglasses.

• 33:52John Coogan?

  Yeah, the sunglasses, the install base gets so big, that developers can say, yeah, you know, there are...

• 33:58John Coogan?

  100 million Americans with these out there and if I can make a breakthrough app, I'll make a lot of money. Whereas that's just not the case. And that does get very, very difficult if you see that there's just no way to manufacture new hardware devices cheaply. So it's a complicated, it's a complicated problem. US tech exports are primarily software and services, which aren't calculated in things like trade deficits. One suspects that that means that the Trump administration isn't very concerned about them, although countries looking for retaliation targets surely will be. That, though, pales in comparison to the costs of blowing up the hardware supply chain, tech's most essential complement. This isn't the end, it's just an Apple story.

• 34:42John Coogan?

  This isn't in the end, just an Apple story. So yes, this idea that like if, if all the hardware devices get more expensive because the supply chain blows up, you could actually see like Google suffer and Meta suffer is a very interesting take. Anyway, should we move on to some ads? Everyone wants to hear ads. Let's talk about public investing for those who take it seriously. Multi asset investing, industry leading yields, trusted by millions. If you're looking to get in on the action, you know, we had LeFond, a lot of people were buying yesterday. They did great, I guess, because the market's way up. I won't give you any financial advice.

• 35:18Jordi Hays?

  Anytime there's news, people buy, good or bad.

• 35:21John Coogan?

  It is, it is crazy. I mean, look at this.

• 35:23Jordi Hays?

  No, but we are the generation, we are the generation that is, we're the buy the dip generation.

• 35:29John Coogan?

  We are the buy the dip generation, yeah.

• 35:31Jordi Hays?

  We're someday all going to be, you know, 90 years old and our, our younger members of our family will be like, grandpa, like, don't buy the dip. Like, I think you're really built for T-bills at this point. I'm buying the dips.

• 35:48John Coogan?

  No, you know how they used to say like, you should have a mix of stock and bonds and the percentage of bonds should be your age. So if you're 30, you should be 30% bonds, 70% stocks. And then if you're like 80, you should be 80% bonds, 20% stocks. Like, our version of that is going to be like, you should be, you know, if you're 80, you should be 80% like levered long Bitcoin and 20% NFTs.

• 36:15Jordi Hays?

  Packy had a, Packy had a good line, a post from earlier. He said, like, the proper hedge right now is just to buy, like, just basically go for Democrats.

• 36:26John Coogan?

  Democrats on Polly Market. The markets aren't even up, Packy. Polymarket doesn't do midterms yet, but they will in a year.

• 36:35Jordi Hays?

  Probably do like county level stuff.

• 36:38John Coogan?

  County level stuff, just people are like, I can't take these tariffs. Like, I'll vote for anyone. Like, I'll vote for a Democrat in my city council. It's hilarious. Anyway, Ben Thompson is clearly reflecting on this a lot. This is his third post of the week. He also did this interesting thing where he, he thought that his Monday post was a little bit too casual. So he made that more of an, of an update, put it, I think he put it behind a paywall. Then he posted a new front page article, breaking a bunch of his rules. He says, don't post more than one front page article a week. Well, it's a special week, so he's posting two. And he starts with-

• 37:13Jordi Hays?

  And he's fired up. He was on vacation.

• 37:15John Coogan?

  And it's super, it's super important to him. I mean, it affects tech super deeply. It affects China, Taiwan, America, all the places that he's involved with. It's, it's fascinating. So he, he starts by kicking off with Professor Clayton Christensen, who coined the term disruption, a little minor coinage, I love it, in a seminal paper called Disruptive Technologies Catching the Wave. And of course, The Innovator's Dilemma, which we've talked about a lot. His most concise summary comes from this, and we'll give you a little refresher on disruption.

• 37:44Jordi Hays?

  So disruption describes a process whereby a smaller company with fewer resources is able to successfully challenge established incumbent businesses. Specifically, as incumbents focus on improving their products and services for their most demanding and usually most profitable customers, they exceed the needs of some segments and ignore the needs of others. Entrants that prove disruptive begin by successfully targeting those overlooked segments, gaining a foothold by delivering more suitable functionality, frequently at a lower price. Incumbents chasing higher profitability in more demanding segments tend to not, not to respond vigorously. Entrants then move up market, delivering the performance that incumbents mainstream customers require,

• 38:27Jordi Hays?

  while preserving the advantages that drove their early success. When mainstream customers start adopting the entrants' offerings in volume, disruption has occurred. So when CNBC starts posting unhinged, you know, sort of highlighting unhinged posts from the timeline, we'll know that it's working.

• 38:46John Coogan?

  Yep, totally.

• 38:47Jordi Hays?

  But-

• 38:48John Coogan?

  But we're counter positioned. They can't do it.

• 38:50Jordi Hays?

  Yeah.

• 38:50John Coogan?

  Built different. So it's over for them. Notice what did still happen in the United States, at least back then. Actual chip fabrication, this was the main driver of innovation. It's kind of Silicon Valley 1.0. That was where innovation happened and where margins were captured. So of course, US chip companies kept that for themselves. So when when chips started to boom, US companies kept the innovation and the fabrication. It was tedious and labor-intensive assembly and testing that was available to poor Asian economies led by authoritarian governments eager to provide some sort of alternative to communism. And so that's why the, you know, like chip manufacturing went abroad.

• 39:34John Coogan?

  One important point about new market disruption, which Asian manufacturing was, is that it is downstream of a technological change that fundamentally changes cost structures. In the case of Asian manufacturing market, there were actually three. Number one, in 1963, Boeing produced the 707, the first jet airliner capable of nonstop service from the United States to Asia. In 1970, the 747 made this routine. In 1964, the first trans-Pacific telephone cable between the United States and Japan was completed. Over the next several years, it would be extended throughout Asia. So you could fly there with nonstop service. So you wouldn't need to stop in Hawaii anymore. So you could get there like in a day instead of two.

• 40:18John Coogan?

  You could also call. And then ISO 668 dropped in 1968. Good timing, I guess, that one. Standardized shipping containers. And that dramatically increased the efficiency with which goods could be shipped over the ocean in particular. These three factors in combination, for the first time, enabled a new kind of trade instead of manufacturing products in the United States and trading them to other countries. Multinational corporations could invert themselves, focus on design products in their home markets, then communicate those designs to factories in other countries and ship finished products back to their domestic market. And thanks to the dramatically lower wages in Asia, supercharged by China's opening in 1978, it was immensely profitable to do just that. So it was just basic economics.

• 41:03John Coogan?

  And so, yeah, we can, we can go through some more of this. But he talks, he goes back to iPhone.

• 41:09Jordi Hays?

  Yeah, it is fascinating how there's this narrative in Silicon Valley startups venture broadly that, you know, we used to do hardware, like we were this sort of like, you know, hardware culture. It's called Silicon Valley for a reason, yet all that silicone was actually scaled from a manufacturing standpoint, pretty quickly from Asia.

• 41:30John Coogan?

  Mm hmm. Yeah. I think it's silicon, not silicone.

• 41:34Jordi Hays?

  Silicone. Is that, is that what goes in?

• 41:37John Coogan?

  Wait, are they different? I actually don't know. Anyway.

• 41:41Jordi Hays?

  Silicon.

• 41:42John Coogan?

  I think there are, I think they must be related, but just slightly different pronunciations or something.

• 41:46Jordi Hays?

  Yeah.

• 41:47John Coogan?

  I don't know.

• 41:48Jordi Hays?

  Wouldn't be the first time I botched a pronunciation.

• 41:49John Coogan?

  Me, me too. Especially a person's name. I'm terrible at that. Anyway, let's move on to iPhone stuff again. Ben Thompson writes, there is one other very important takeaway from disruption. Companies that go up market find it impossible to go back down, and I think this applies to countries too. Start with a theory. Christensen had a chapter in the Innovator's Dilemma, Dilemma, entitled, What Goes Up Can't Go Down. Three factors: the promise of upmarket margins, the simultaneous upmarket movement of many of a customer's, companies' customers, and the difficulty of cutting costs to move down market profitably. Together, create powerful barriers to downward mobility.

• 42:31John Coogan?

  In the internal debates about resource allocation for new product development, therefore, proposals to pursue disruptive technologies generally lose out to proposals to move upmarket. In fact, cultivating a systemic approach to weeding out new product development initiatives that would likely lower profits is one of the most important achievements of any well-managed company. You've got to keep your profits high. Now, consider this in the context of the United States. Every single job in this country, even at the obsolete federal minimum wage of 7.25 an hour, makes much more money than an iPhone factory line worker. And critically, we basically have full unemployment, full employment. That is what, full unemployment. No, we have full employment.

• 43:10Jordi Hays?

  A vibe-based economy.

• 43:11John Coogan?

  And, and, and we do, we do. Even, even post-COVID, we bounced back very quickly to like 3% or 4% unemployment.

• 43:17Jordi Hays?

  By the way, Ben shares, now seems obvious, silicon. Silicone is a synthetic polymer.

• 43:24John Coogan?

  It's different.

• 43:25Jordi Hays?

  Made from silicone. Silicon.

• 43:27John Coogan?

  Silicon.

• 43:30John Coogan?

  Let us know in the chat how you pronounce it.

• 43:32Jordi Hays?

  Made from silicone.

• 43:34John Coogan?

  Uh, we're working. It's kind of.

• 43:36Jordi Hays?

  Anyways, yeah, but silicon is just silicon, element, symbol, S I. All right, we got it now.

• 43:44John Coogan?

  And so he points to White House Press Secretary Carolyn Leavitt, making a what he calls ridiculous statement in response to a question from Maggie Haberman of the New York Times about the types of jobs Trump hopes to create in the U.S. with these tariffs. Leavitt said, "The president wants to increase manufacturing jobs here in the United States of America, but he's also looking at advanced technologies. He's looking at A I. and emerging fields that are growing around the world that the United States needs to be a leader in as well. There's an array of diverse jobs, more traditional manufacturing jobs and also jobs in advanced technologies. The president is looking at all of those. He wants them to come back home." Haberman followed up with a question about iPhone manufacturing specifically, asking whether Trump thinks that this is the kind of technology that could move to

• 44:29John Coogan?

  the U.S. Leavitt responded, "Trump believes we have the labor, we have the workforce, we have the resources to do it. As you know, Apple has invested 500 billion here in the United States. We covered that and it was kind of like money that they were maybe already spending, but still like a move in the right direction, I guess. So if Apple didn't think the United States could do it, they probably wouldn't have put up that big of a chunk of change. So could Apple pay more to get more U.S. workers? I suppose so, says Ben Thompson, leaving aside the question of skills and whatnot, but there is also the question of desirability. The iPhone assembly work that is not automated is highly drudgery, sitting in a factory for hours a day delicately assembling the same components over and over

• 45:11John Coogan?

  again. And again, it's like, I hear all this, but when I think about what's happening in humanoid robotics, A I.

• 45:18Jordi Hays?

  And not even humanoid, it's just.

• 45:20John Coogan?

  Yeah.

• 45:20Jordi Hays?

  Just.

• 45:21John Coogan?

  Just, just one robotic arm or, or just a six axis. Like, I mean, you look at what Hadrian's done with, I mean, they've raised, Chris has raised a lot of money, but it's not that much money. And, and he's been able to build, you know, he has a couple robotic arms.

• 45:35Jordi Hays?

  And this is what Sam said yesterday.

• 45:36John Coogan?

  And he has a couple CNCs and stuff.

• 45:36Jordi Hays?

  Onshoring, reshoring is not a jobs program.

• 45:39John Coogan?

  Yes. I think, I, I think there will be jobs created, but we're not going back to this idea that, you know, 50% of Americans will be assembling iPhones. It's like. America will do the iPhone assembly, but at a more efficient rate. It's a huge challenge, but I just, people say it's impossible because we're not down the learning curve and it's so hard. But when I think about like, in the same way that China took R and D's, you know, materials from Apple willingly and sometimes unwillingly, um, a lot of the, a lot of that, uh, strategy should be able to be ported back. Like, Apple probably knows at a very, very high level of detail how Foxconn assembles

• 46:24John Coogan?

  an iPhone, right?

• 46:25Jordi Hays?

  Yeah.

• 46:25John Coogan?

  They've, they can tour the floor, they probably have badges, they can walk around, they can just see the stuff, they probably have plans, they probably have all this stuff. So if, if they really wanted to build a Foxconn clone-

• 46:35Jordi Hays?

  Foxconn also knows how to make an iPhone.

• 46:37John Coogan?

  Yeah, yeah, yeah, true, true. And they do for other companies.

• 46:41Jordi Hays?

  It's a quite a standout.

• 46:42John Coogan?

  Yes, yes, yes, but, but like, just this idea of like, of like, Foxconn is an amazing lights out factory, so many interesting, amazing things that are really hard to copy. But at the end of the day, it is just a building with a bunch of machines and people inside. And if you get the right machines and you tell them the right to do, and you have the right code, like, you should be able to copy it. And then there's the question of, you know, at what point does the labor ratio to automation ratio flip where it is competitive at all in the United States and is a 45% or 100% tariff or a 200% tariff or 400% tariff enough to offset that?

• 47:19Jordi Hays?

  Yeah.

• 47:19John Coogan?

  It doesn't, it doesn't seem impossible to me. It doesn't seem impossible that America could wind up developing automated manufacturing capacity that could assemble an iPhone with robotic arms and three axes, you know, different pick and place things.

• 47:34Jordi Hays?

  Yeah, the question is-

• 47:34John Coogan?

  Really, really hard, but it seems possible. I don't know.

• 47:37Jordi Hays?

  Clearly, it's one of those things, clearly, Apple doesn't want to do it.

• 47:41John Coogan?

  Yep.

• 47:43Jordi Hays?

  Clearly, it's not in the immediate and direct benefit of the shareholders to do it.

• 47:47John Coogan?

  Yep.

• 47:47Jordi Hays?

  At the same time, the China supply chain is a, is this massive, massive, massive risk to the business-

• 47:53John Coogan?

  Yep.

• 47:54Jordi Hays?

  -that will also impact their market cap over time if they just don't actually address it and don't try to, and, and the question just becomes like, how, you know, how hard can they lean on India, right? How hard can they lean on Vietnam if they spend hundreds of billions or trillions of dollars to sort of rebuild these supply chains elsewhere? Is there a world where in 2040, suddenly we have, you know, problems with another country?

• 48:22John Coogan?

  Yeah, and this is the question of like that center of gravity. And this is, this is what's so interesting is that right now, if, let's read from Ben Thompson again, and then I'll, I'll give some extra context. At the same time, it is important to note that this drudgery's final assembly work, the stuff that can't be done for $7 an hour, it's a $3 an hour job or something like that, is a center of gravity for the components that actually need to be assembled. And these parts are all of significantly higher value and far more likely to be produced through automation. And so there's this question of like, if Apple goes to India, you might get the component manufacturers popping up in India. And then we haven't reshored that stuff, even though that's higher value and more automatable.

• 49:07John Coogan?

  And so there's this weird scenario where I don't know exactly what you could do to stimulate this, but maybe iPhone assembly in the United States is what you need to do to get to kickstart all of this. And so any economic policy that you can put in place that gets the iPhone assembled, even if it really is, yeah, we're paying people $20 an hour and like college kids are doing it. And, and it's just the best, best option. It is grueling, but you know, it, but we know that we're going to automate that. And, and you don't go into the career of iPhone assembly knowing I'm going to be doing this for my entire life. You go in knowing I'm here to do this really hard work under, under American, you know, human rights rules.

• 49:51John Coogan?

  And so it won't be as brutal, but it'll be rough. I'll do that for a couple of years and then I'll move up and become a manager of robots. Or I'll become an engineer, or I'll become someone who works in componentry and it's higher value. That's not that crazy of a trade. It's not great, but it, but it is possible. I always have this riff about like, maybe what we need to do to reshore manufacturing is make Happy Meal toys here. Like, like everyone's talking about, oh, we need aerospace and defense parts made in America. And it's like, yeah, those are really, really key. We gotta make our drones and we need our Andorl stuff here. But maybe, maybe part of the reason why DJI exists in China is because they have.

• 50:26Jordi Hays?

  Yeah, that's a big, that's a big, to be clear, that's a big issue with the China tariffs is just how, how much of the, the supply chain for the toys. That our incredible young American children depend on for joy and happiness.

• 50:43John Coogan?

  Yeah, we were talking about this, the American toy manufacturer.

• 50:46Jordi Hays?

  Yeah.

• 50:46John Coogan?

  I got a pitch just the other day for one.

• 50:48Jordi Hays?

  Really?

• 50:48John Coogan?

  Yeah, people are starting to think about it. I thought it was cool.

• 50:50Jordi Hays?

  The advanced toy manufacturing company of America.

• 50:53John Coogan?

  I mean, you, you, you've, you've used these toys. Like, some of them were like so rough.

• 50:57Jordi Hays?

  No, I hate it.

• 50:57John Coogan?

  It's so sloppy and you're just like, this thing is gonna last three months and it's gonna be in the landfill.

• 51:01Jordi Hays?

  They don't, they, they don't last three months.

• 51:04John Coogan?

  Yeah.

• 51:05Jordi Hays?

  A lot of these things last 24 hours, 12 hours.

• 51:08John Coogan?

  Yeah, and it's not even like-

• 51:09Jordi Hays?

  Like I have like a toy a day breaking in my house and I feel grateful.

• 51:12John Coogan?

  And I'm not even that panicking about like, oh, we're gonna run out of landfill. It's more just like, the aesthetics of it are just like, like, the emotion of like, like, I was, I was reading a book last night and the inscription was like, to John, like, to me.

• 51:24Jordi Hays?

  Yeah.

• 51:24John Coogan?

  Cause like, we passed that down. It was a big 25 year old book or something, a 35 year old book, something like that.

• 51:30Jordi Hays?

  My, my son plays with my Legos.

• 51:31John Coogan?

  Exactly.

• 51:32Jordi Hays?

  That I had when I was a kid.

• 51:33John Coogan?

  Exactly.

• 51:33Jordi Hays?

  But my, my dad had-

• 51:35John Coogan?

  Yeah, and it's like, what, what are the new toys that you're gonna pass down? Certainly not some, some sloppy injection molded like robot that's gonna,

• 51:42Jordi Hays?

  Yeah.

• 51:42John Coogan?

  you know, completely explode in,

• 51:44Jordi Hays?

  Yeah.

• 51:44John Coogan?

  three months or 24 hours, as you put it. And so, uh, let's close out with a little bit of, uh, Ben Thompson's, uh, takeaway. He is defining a better plan. Uh, a key distinguishing feature of a better plan is not that it doesn't seek to own supply, but rather than, but, but rather control it in a way that US does not today. So, the question is, do we actually need to own the supply chain? Or do we just need to have really confident control over it? And so, he says, first, blanket tariffs are a mistake. I understand the motivation. A big reason why Chinese imports to the US have actually shrunk over the last few years is because a lot of final assembly is being moved to countries like Vietnam, Thailand, Mexico.

• 52:25John Coogan?

  Blanket tariffs stop this from happening, at least in theory. And so, that's a reasonable argument, but it could be risky.

• 52:33Jordi Hays?

  Yeah.

• 52:34John Coogan?

  The problem, he argues, is that those final assembly jobs are the least desirable jobs in the value chain, at least for the American worker, assuming the Trump administration doesn't want to import millions of workers. That seems kind of counter to the foundation of his candidacy. Still needs to find an alternative trustworthy country for final assembly. This can be accomplished through selective tariffs, which is exactly what happened in the first Trump administration. And today it seems like that's maybe where we're going with these selective tariffs. Secondly, using trade flows to measure the health of an economic relationship with these countries, really any country, really, but particularly final assembly countries is legitimately stupid. And this is what you were talking about with like Switzerland, right?

• 53:16Jordi Hays?

  Yeah.

• 53:16John Coogan?

  It's like

• 53:16Jordi Hays?

  Well, Switzerland's another example.

• 53:18John Coogan?

  Really make a great sense. Yeah.

• 53:19Jordi Hays?

  But it's like, yes, we buy a lot of Swiss watches.

• 53:21John Coogan?

  Yes.

• 53:22Jordi Hays?

  But yes, they also buy a lot of digital services.

• 53:25John Coogan?

  Yes, of course, our movies and our Netflix's is a good point. Yeah, it makes a ton of sense.

• 53:30Jordi Hays?

  Those are, we're not getting factored into the calculus.

• 53:34John Coogan?

  And so simply looking at trade flows where an imported iPhone is calculated as a trade deficit of several hundred dollars, completely obscures this reality. Go back to the iPhone, the value add, the value add of final assembly is in the single digit dollar range. It's all the components that are expensive, the glass and the chip and stuff. You put it together, that's a couple bucks. The value add of Apple's software, marketing, distribution is in the hundreds of dollars. And that's where they extract their actual profits from. And so moreover, the criteria for final assembly country is that they have low wages, which by definition can't pay for an equivalent amount of US goods to said iPhone. And so they're making the iPhone, we're bringing it over here. It feels like we have a trade deficit of hundreds of dollars, but really we only got $5 of value per iPhone out of this country.

• 54:19John Coogan?

  And of course, because we're paying them a dollar an hour, they're not going to be able to buy, you know, $200 worth of Netflix.

• 54:24Jordi Hays?

  It would be, it would be interesting for Apple to do effectively a request for startups. And I know they highlight like a lot of their top vendors and say, hey, these are the companies that we're spending the most money with that do various things. But you have to imagine if if Apple put out the challenge to bright, young, or mature technologists and said, hey, we need to make this button. The cost needs to be half a penny and you need to be able to hit, you know.

• 54:57John Coogan?

  Well, that's interesting, kind of like an Apple driven warp speed where it's like, if you can produce this, we will buy it and then VCs can underwrite it and everything.

• 55:04Jordi Hays?

  Yeah.

• 55:04John Coogan?

  That's kind of interesting. I like that.

• 55:06Jordi Hays?

  Yeah.

• 55:06John Coogan?

  Yeah, that's really cool. I bet you that the problem with that is that if they open source their supply chain economics, that opens them up to a bunch of different attacks from other companies, from other countries and stuff, or companies. Let's, let's continue with Ben Thompson. At the same time, the overall value of final assembly does exceed its economic value. For the reasons noted above, final assembly is gravity for those higher value components and it's those components that are the biggest national security problem. This is where component tariffs might actually be a useful tool. The US could use a scalpel instead of a sledgehammer to incentivize buying components from trusted allies or from the US itself, or to build new capacity in trusted locations. And so, yeah, if the US could sell the higher value components, that makes sense. Like, like,

• 55:50John Coogan?

  it's much, it's much easier to imagine, oh, yeah, we have a, we have a amazing, like, even, even Intel reshoring chip manufacturing, TSMC is going to Arizona, right? Like, you can imagine that, oh, yeah, iPhone lenses for the really crazy seven layer pancake wide angle lens, like, yeah, there's some amazing company in like San Jose that's doing that, right?

• 56:09Jordi Hays?

  Yeah, and people realize, so, so when you look at the Apple supply chain problem and you say, okay, Apple might have to invest, or somebody would have to invest trillions of dollars to bring it to America.

• 56:20John Coogan?

  Yeah.

• 56:21Jordi Hays?

  That looks insane, right? Because it's basically like saying, take all of Apple's profits for the last, you know, 10 years and don't distribute that out to shareholders who do buybacks or anything like that and just invest it in this sort of new ground up supply chain. But then you look at how much money Foxconn makes a year and their revenue, which is in the hundreds of billions just on mobile devices, right? And so, there is probably an economic equation where some combination of Apple.

• 56:52Jordi Hays?

  Apple, you know, its own sort of off balance sheet investment and other private capital that could, could over time, we could make it in America.

• 57:03John Coogan?

  Yeah.

• 57:04Jordi Hays?

  It's just not, it's just not as easy as Trump asking nicely or slapping tariffs around and expecting things to happen immediately.

• 57:13John Coogan?

  What a chaotic week. What an interesting week. I'm excited for our guests. We're going to be asking more folks about their tariff takes, how they're processing all the market turmoil. We have Tracy Alloway from Bloomberg Odd Lots coming on the show, which would be great. But you know what isn't tariffed?

• 57:29Jordi Hays?

  Time.

• 57:31John Coogan?

  And what is time?

• 57:32Jordi Hays?

  Money.

• 57:33John Coogan?

  And how would you save both?

• 57:35Jordi Hays?

  I'd go to ramp.com, John.

• 57:36John Coogan?

  Why?

• 57:39Jordi Hays?

  Easy to use corporate cards, bill payments, accounting, and a whole lot more.

• 57:41John Coogan?

  I couldn't have said it better myself. Go to ramp.com. Sign up for ramp.com.

• 57:47Jordi Hays?

  Go to ramp.com.

• 57:48John Coogan?

  It really is.

• 57:49Jordi Hays?

  There's never been a more important time to save time and money.

• 57:53John Coogan?

  Yeah.

• 57:53Jordi Hays?

  It's always been important, but now more than ever.

• 57:55John Coogan?

  Yeah. I mean, when these market shocks happen, like, you know, all the VCs get on their podium and say, hey, you know, here's my memo. There's economic turmoil. You need to, you know, buckle down. We don't know what's going to happen in the funding rounds and the funding markets. But never a bad time to save money and never a bad time to understand what's going on in your business. So that's why you should sign up for ramp. Get clarity into what's happening in your business on the expense side. And we have Paul from Browser Base coming in the studio, breaking down computer use, the next generation of large language models and artificial intelligence. Very excited to talk to him. And he's here. Let's bring him in.

• 58:33Jordi Hays?

  He's ready.

• 58:34John Coogan?

  Welcome to the studio. How you doing?

• 58:35Jordi Hays?

  The basement. Hey, guys.

• 58:37John Coogan?

  The basement.

• 58:38Jordi Hays?

  What's up? Looking good. Came prepared.

• 58:41John Coogan?

  Looking fantastic.

• 58:42Jordi Hays?

  Looking sharp.

• 58:43John Coogan?

  You know.

• 58:43Jordi Hays?

  Do you wear that every day? You know, you gotta, you gotta dress up to impress. So.

• 58:47John Coogan?

  Yeah.

• 58:47Jordi Hays?

  Dude, I love, I love this. Is this a green screen background? Whatever? This is a lot, this is a lot of you. No, I'm kidding.

• 58:53John Coogan?

  People are working. People are grinding. I like it.

• 58:56Jordi Hays?

  I love the whiteboard. I love the whiteboard action in the back.

• 58:59John Coogan?

  It's fantastic. Somebody's actively whiteboarding something.

• 59:02Jordi Hays?

  Some integrals. Yeah. It's math.

• 59:04John Coogan?

  Yeah. Why, why, why, why do you got a human doing that? Can't you just wire up one of these computer use tools to do it for you?

• 59:13Speaker 03

  That's, that's, that's all in the cloud.

• 59:14John Coogan?

  It's all in the cloud.

• 59:15Speaker 03

  This is in real life.

• 59:16John Coogan?

  Yeah, yeah.

• 59:16Speaker 03

  You need the analog stuff every once in a while. Hundreds of engineers running in the cloud right now.

• 59:20John Coogan?

  Fantastic.

• 59:20Speaker 03

  Yeah, those are just paid actors.

• 59:21John Coogan?

  Yeah.

• 59:24John Coogan?

  Anyway, can you introduce yourself, the company, kind of what you do for everyone?

• 59:28Speaker 03

  Yeah. Hey, everybody, I'm Paul, founder of Browserbase. We power web browsing capabilities for AI agents and AI apps. So we're kind of building like a web browser for AI. Basically, we think the future of software is software going to have to go out and do work on your behalf. But a lot of the work that we do is in a web browser on a website. So if we want AI to do work on our behalf, we're going to have to have a AI use a web browser and we provide that web browser. Now, we mostly sell to developers, people who are building these cutting edge AI features and applications. And they integrate our AI web browser into their applications to give them superpowers. What that might be is like going out to a thousand websites and finding the right screw for your procurement team. Or maybe it's going out and booking demos to help, you know, figure out what your customers are doing or, you know,

• 1:00:09Speaker 03

  trying to automate all the tedious work that people have to do every single day. We do that with Browserbase.

• 1:00:15John Coogan?

  I want to talk about MCP APIs and kind of the future of how agents and LLMs will interface with the internet. There was a meme for a while that was just like the, the front end is the API. Just get good at web scraping because the, the API might change, but the front end is going to stick around for much longer. And so if you can be really dynamic there. And I, and I always wondered about, you know, are APIs just kind of going to go away as, as LLMs get better and agents get better at computer use? What's your take on where, how we will see companies make their content or their websites available to LLMs going forward?

• 1:00:58Speaker 03

  Yeah, we really believe that computers are gonna be just as good at people at browsing the web. And for a very long time, there's still gonna be humans using the web, doing the same task they do every single day. So why do we have to rebuild the internet for AI when AI can use the web the same way people do? So there's certainly gonna still be APIs and MCP servers, especially for high-volume stuff. You know, if you're booking a flight, you probably should do that through the Delta MCP server, not through a website, because that's just not the efficient way to do it. But when we talk to companies that are not the cutting-edge companies like our customers like Perplexity, but more cutting-edge companies that are old-school, been around for a long time, there's a lot of websites that aren't gonna have MCP servers. The Nigerian immigration form won't have an MCP server for a long time.

• 1:01:40Speaker 03

  And AI needs to automate that just as much as automate kind of the more high-volume tasks. So we view the browser as kind of really the most primitive MCP server that can work on every single website without having to have, you know, first-party integrations.

• 1:01:53Jordi Hays?

  Can you talk about how you thought about the opportunity early on? Because I imagine you, you know, you've made a tremendous amount of progress, raised a bunch of money, working with some of the most, you know, important companies in the space. But early on, I imagine some people would have said, hey, like browser automation software has existed before. Like, we don't think the market's that big, and clearly you didn't agree with them. And I'd love to hear you kind of speak to, you know, why you understood the opportunity is so much bigger than than people might have originally thought.

• 1:02:31Speaker 03

  Well, yeah, there's a lot there. I mean, frankly, I just love this browser automation stuff. If it wasn't, you know, as popular as it is, I still would be doing it because I just love the stack. I love the problem. It's really interesting to me. Kind of it touches on the programming I did when I was a developer starting out, which was, you know, how can I automate something and help my life and make things easier for me? And that often was, you know, interacting with websites on my behalf. So there's a bit of luck there because I just love the space. Now, I'll reference one of our angel investors, Jeff Lawson, the founder of Twilio. When he was starting Twilio, people were saying, well, SMS is going to go away. Like, why would you build a company on SMS? And his point was that it's a very long bridge. I think it's the same thing here with browser automation is that, sure, when we have Neuralink and all of our brains are talking to each other, software is going to be a lot different.

• 1:03:14Speaker 03

  But I think we have a really long time until software, especially software on the web goes away. And taking that perspective where BrowserBase is going to build for that short, medium term future, and really build great technology to help agents run and do tasks on the web. That felt like an opportunity that was a bit contrarian. And, you know, when you're contrarian, you find alpha, and that's what we've done at BrowserBase. And as you can see today, the public markets are reacting, you know, after our Q1 results.

• 1:03:38John Coogan?

  Yeah.

• 1:03:38Speaker 03

  Triple Q up 10%. I don't know.

• 1:03:42Speaker 03

  I think they may have gotten wind of what's happening at BrowserBase and have really corrected accordingly.

• 1:03:46John Coogan?

  I love it. I love it. Can you talk about, you said you sell to developers, obviously perplexity. It sounds like as a client and a very large company. Do you have kind of self-serve offering where someone can just kind of start import this in one line and start to get hacking? And kind of how do you see the market developing from like prosumer? You know, just some no-code developer is going to be using a BrowserBase-like product, or you're going to be under the hood maybe, to someone who's, you know, building a business on top of BrowserBase?

• 1:04:21Speaker 03

  Yeah, for us, you know, you could get started self-serve. You can sign up. There's a free plan. You can upgrade accordingly. And then, you know, as you get to a certain volume, we want to give you pricing that's right for your use case. So there is more of a contact sales option longer term.

• 1:04:32John Coogan?

  Yeah.

• 1:04:32Speaker 03

  But, you know, what we think about most is our business model. We're a consumption-based business model, which means that we only win if you build something that's successful. So our incentives are very much aligned with helping our customers actually build applications that use browsers a lot, that are used by lots of customers. And a lot of my job as founder and CEO is going out and helping our customers really think about, how can they use AI in the best way to help impact their users? Because you can kind of map one-to-one, the browser hours using on BrowserBase to the time that they're saving for people. And we get really excited seeing that number chart up every single month because that means there's hundreds of thousands of hours that are being saved by people instead using BrowserBase.

• 1:05:09Jordi Hays?

  How do you, was deep research the Studio Ghibli moment for agents? Or is there one on the horizon in your view? It feels like, you know, we've talked about this on the show over the last year. There's been a lot of, you know, we were at YC Demo Day. There was a lot of like AI agent infrastructure companies. I don't remember getting pitched that many individual AI agents, but it does feel like as the underlying tech gets better and people figure out how to actually build quality agents, that that will flip at some point. But I'm curious, like, you know, do you think that agents are even priced into the market yet? I imagine you're seeing a lot of stuff like, you know, in, in, you know, using browser base that like hasn't, isn't really in the public domain yet.

• 1:05:55Speaker 03

  Yeah, it's, it's interesting because I really like to think about the vastness of our customers. Like, sure, we have cutting edge companies, but we also have a 55 year old dairy trucking company in the middle of America. And they hadn't hired a single engineer in all 55 years, but then they hired one and the first thing they got was browser base to automate. Hey, how do we know what the gas prices are along this route? Previously, like an ops person calculating all the gas prices. And they're like, oh, maybe we can hire an engineer to make this easier with AI. So it's certainly, AI has escaped Silicon Valley and every company in the world is thinking about how to use it. And thankfully, browser base, since it's pretty easy to get integrated and get started with, we have a framework called Stagehand, which makes it easy to tell AI how to control a browser. Stagehand team behind me.

• 1:06:38Speaker 03

  Those, those guys, it's much easier to on-ramp to use AI. So we really try and think about like, you don't have to know what the cutting edge models are. You have to keep up with the research. If you're using browser base, we try and bring it all to you. In terms of it being priced in, I think there's a lot of people who maybe moved a little too early to AI agents. I think the Klarna study, this story is a really good use case here where they went all in on AI agents. They threw away all the software and then I think they had to walk that back a little bit. So it's still early days for agents and a lot of that's limited by great infrastructure. And we think that if we can build good infrastructure that works best with the models, it can really help ease adoption.

• 1:07:12Jordi Hays?

  How do you?

• 1:07:14Jordi Hays?

  Everybody's been really worried about AI agents and their sort of potential to be used in nefarious ways. So like, you know, releasing agents across the web that are just like, you know, effectively spamming people. Is that like where you at all? I'm sure you can see if somebody's using browser base in a nefarious way, you can kind of identify it quickly and eliminate access. But I feel like people have been just like worried about this idea of AI spam, but it hasn't seemingly had. It isn't so prevalent yet that it's that we're in like a crisis.

• 1:07:48Speaker 03

  Yeah, the only place that I've seen it is LinkedIn and we just disable LinkedIn on browser base. It's just not a business that we work with and we think the LinkedIn, you know, everyone at my LinkedIn inbox is crazy. It's just something we don't want to contribute to. For us, we really, we really want to think about like, how can browser base be an arbiter of good bots long term? I think there's this cat and mouse game and anti bot blocks all bots, but there are good bots and bad bots. And we're in this really great position where we can actually be advocates for our customers that can talk about how so and so customer has 20,000 employees on workday and the workday APIs aren't really cutting it for them. And this is why they're using browser base to automate it and build that relationship. That's why in our last round, we brought on Okta Ventures as an investor, the founders of Clerk, the founders of Stitch, the founders

• 1:08:30Speaker 03

  of WorkOS. You know, these are people who are really thinking about authentication. And my view is that the anti bot problems probably solved at the authentication layer. Anti bot is just proof of personhood, right? So if an agent can log in on your behalf, that's going to be really good to match their actions to the person that they're saying they're acting on behalf of and hopefully match the rate limits there accordingly.

• 1:08:50John Coogan?

  Can you talk a little bit about the Llama evals for Llama 4? I saw that I believe someone from your team posted that they had done some kind of, I don't know, I don't even know how you describe it, like private evals, stuff that you guys just look at directly. And how do you build that stack up? What are you actually testing for? And then what are your vibes around Llama 4?

• 1:09:12Speaker 03

  Yeah, so what we did over the weekend, of course, whenever something comes out, we want to move quick and try it out. We're all engineers here. I'm an engineer and I love to try and play with new models. And with Stagehand, you can kind of imagine it like a Bursail A I S D K just for building what's called a web agent or an agent that browsed the web. So we can slot in any sort of model into that. And we have a standard eval set that we run stage and against common tasks on the web that we've kind of built up to evaluate different performance like websites with dropdowns, website with date pickers, you know, the many different types of elements you see on the web. We want to see how our automation framework can stack up against that. We spent a bunch of money this weekend evaluating every single model that we could get our hands on against that eval framework. And we actually found that Gemini was one of the best performing models. I think it was Gemini two oh flash.

• 1:09:56Speaker 03

  And Lama four, a little bit more disappointing. Now Lama four, we used it with an inference provider and we know the different inference providers can have different performance based on these different open source models. So I think it's still too early to call on Lama four, but we're definitely excited about the stuff that Gemini is cooking up and they seem to have really figured out some of this interesting stuff with long context models.

• 1:10:15John Coogan?

  Yeah. And also Lama four, they haven't released the behemoth model like their biggest and best. So maybe that changes the conversation when that happens. And then there was also a discussion about they might've used a different one on L M arena is getting getting a little spicy on the timeline.

• 1:10:30Jordi Hays?

  What's your, uh, what's your Paul doom? What's your P doom?

• 1:10:34Speaker 03

  P doom.

• 1:10:36Jordi Hays?

  And specifically, I'm curious how you reacted to A I twenty twenty seven. Because I just want to go out and say like, if any of A I twenty twenty seven comes, uh, you know, becomes true, I hope that you'll turn into a defense tech company really quickly and, you know, help unleash an army of good agents to protect.

• 1:10:56John Coogan?

  Fighting on our behalf.

• 1:10:58Speaker 03

  No, but I Fight the good fight. Yeah, exactly. In terms of P doom, my Paul doom right now, very low. It still feels like there's a lot of, you know, capabilities that need to improve infrastructure needs to be built. And everyone seems really willing to work together, which is positive. I think I see a lot of partnerships happening in the ecosystem. For us, browser base will be a partnerships company, you know, we need to work with the cloud players of the world, but also the open A I's labs. When computers came out, we were able to launch alongside open A I and kind of get early access to that model and give them feedback. So it certainly seems like everyone is being collaborative to solve these problems. I mean, we'll see what tariffs do to model prices. I don't know if that comes down one of these days, right? In in terms of what's going to happen in the future, it's still too early to really tell, but I'm feeling pretty confident.

• 1:11:43Jordi Hays?

  Can what? I was gonna say, what are what are use cases that you want to see more of? Like, maybe you see it happening on browser base today, like the the example of a dairy company, like trying to more strategically route their, you know, basically like manage their logistics to drive down costs is cool and sort of random. But I'm curious if there's other areas where you think there should be more people building these sort of browser use type experiences.

• 1:12:12Speaker 03

  Yeah, for us, we really look to like all these these shoes cases that probably don't need to be standalone products on their own, but really help individual businesses. We get really excited about companies that are kind of building things in house. One insight that I've had is that as code creation has become easier, more and more companies are kind of opting to kind of semi build a house where they're pulling some primitives off the shelf, like some infrastructure like browser base or maybe super base for the database, but then still building their own agent internally. And it's kind of interesting. It's like, if you have all the primitives available, can you just stitch those together using cursor and actually build something that's more bespoke to you? What we found from some customers is when they buy black box solutions, they aren't able to really tune it to their specific use case and agents still need a lot of tuning for each individual use case.

• 1:12:56Speaker 03

  On the wider side of use cases, I want to see, I really love seeing stuff around like every CEO should be looking at what do they have an operations team doing? Is it going to an insurance website and doing a credential check on a provider or insurance verification? Is it doing some interesting procurement tasks? Is it doing some manual research? And how can they automate that? There's a lot more tools out there than there were before, and it's easier to integrate than ever.

• 1:13:19John Coogan?

  Can you talk a little bit about the actual tech decisions you've made? I could imagine one version of computer use on the tech tree is like, take a screenshot, use a diffusion model to understand this. We're seeing this with images and chat GPT. It's getting very good at recognizing text. It can recognize people within the images. You could imagine taking a screenshot and just asking the the vision model, where is the call to action? What like like define that in pixel terms so I can click that button. At the same time, you could imagine just passing the entire, you know, view source, like the entire DOM to to an LLM and just saying, hey, write some J query that clicks on the call to action and make an educated guess based on that. You could imagine hybrid approach. What has been most successful?

• 1:14:02John Coogan?

  What are the paths that you are not looking at these days?

• 1:14:06Speaker 03

  Yeah, for our framework, which really kind of abstracts all of this, we use everything. And I think that's the important thing is it's not one size fits all. If it's just screenshots or just DOM or hybrid, you really need to kind of think about what's the context size of the website. It's a very long, complex website with a lot of HTML. You probably want to go a vision approach. If it's Craigslist.org, DOM is probably sufficient. So I think every single website has different configurations that work well for it. And with our products, we really try and help developers make those right choices or not have to even think about that. And just give us all of the models they have access to. We can, you know, route between that model based on the type of website that's important and help them build the reliable web automation. For us internally, we do really love the DOM-based approach or the HTML-based approach, just because it's frankly more cacheable.

• 1:14:51Speaker 03

  Such that instead of having to send a screenshot to an LM every single time, if the website doesn't change, you could probably reuse the same button you used last time to perform a workflow. So that DOM-based approach seems to be like the more performant and cacheable longer term, but also a little bit cheaper. But we'll see as computer response models keep getting better. Maybe there's going to be some, you know, model level caching on screenshots where they can say this screenshot we've seen before. This is the prompt we've seen before. We can say this is the same button. So as computers models get a little bit better, it might be on more equal footing with the DOM-based approach in terms of costs. But it's going to be up to the labs to really do some innovation there.

• 1:15:23Jordi Hays?

  Yeah. What's the team's take on vibe coding right now? Is it not a fit when you're needing to build reliable products that customers depend on for business processes? Or are you guys making it work internally?

• 1:15:35Speaker 03

  Yeah. So I mean, the team doesn't vibe code very much on critical infrastructure, you know, that goes under a lot of review. But it's made shipping integrations with browser base and stagehand easier than ever. And we've been able to integrate, you know, with Lightning Chain or Llama Index or Crew AI. And those kind of come out a lot faster. So this interconnected world that you're seeing with every tool, integrating with every other tool, that's a lot easier. Vibes wise, you know, something happened one day where the whole team switched from cursor to windsurf overnight. I'm the only cursor user left. Maybe that means I'm slow to adopt. But it seems like people are moving between these IDEs pretty damn fast. And the next tool that comes out maybe could, it's like the great flipping, you know, between cursor to windsurf. It just kind of happened at browser base.

• 1:16:16John Coogan?

  Yeah, it feels like there's this Cambrian explosion in like AI tooling and there's a lot of businesses that have built pretty solid businesses. We've seen like the crazy charts and the revenue ramp. And in the past, like cloud era, a lot of the companies actually went public, you know, like Twilio and MongoDB, you know, are very point solution companies, in my opinion, but they both built fantastic businesses eventually. But you could imagine a future where there's more competition and you're building into adjacencies or there's mergers or acquisitions and you kind of get some sort of like new age roll up of all the different AWS style tools in this infrastructure. Like, how do you see the market evolving?

• 1:16:58John Coogan?

  Because at the same time, I imagine the hyperscalers are thinking about, could browser base be an option in AWS? With the other 25,000 tools that they have up there.

• 1:17:10Speaker 03

  Yeah.

• 1:17:11John Coogan?

  But, but yeah, I mean, obviously you're very partnerships driven right now. How does that evolve over the next couple of years?

• 1:17:15Speaker 03

  Yeah, you know, we are seeing hyperscale interest for sure. Amazon just launched Nova and the Nova SDK took a lot of inspiration from what we've done at SageChant, right? And we really appreciate that. That's the DX that we're all settling on. It's the right way to do things. Now, the model performance is a little bit subpar and I think trying to build a model while also building a great framework is just a really impossible mission. For browser base, we think about how do we build best in class infrastructure? And are able to go super deep on a single vertical in a way that a hyperscaler might not be able to do. If you've used, you know, Amazon RDS versus maybe a more focused database provider like Planet Scale or Superbase. I think you'll find that the product just, it's not as exciting for developers to use. I think Stripe is a good example of a company that's gone very focused on something like payment infrastructure, but then layered on this product platform on top of that.

• 1:17:58Speaker 03

  When we look at the expansion opportunities for browser base, I think it's a lot of interesting stuff, you know? Think of every Chrome extension you have. You have your password manager. You have your payment information saved in there. You have your browser history, which is like memory for an agent. So we can think about more areas within the browser to offer as agent primitives longer term. But we're really focused on just building best in class infrastructure that developers love, building a framework that really works well for everyone. And just continue to move up the stack and find things that we can do to help developers build browser automations easier than ever before.

• 1:18:25John Coogan?

  Can you talk a little bit about some of the optimization vectors that the various foundation model companies are kind of sprinting towards? We saw this with Lama 4, they were claiming, hey, we got a 10 million token context window. I think that was 10 times bigger than what Google was touting a year ago, or even a couple of months ago. There's obviously the length of time a reasoning model can stay consistent, and that's like doubling every couple of months now. There's different things about just, maybe it's not the highest IQ model, but it doesn't make stuff up because it's got a RAG integration or something, and it's actually pulling real facts instead of just hallucinating constantly. And you can imagine that if I'm just thinking about like, what does a computer user need?

• 1:19:09John Coogan?

  Well, I don't want them to lie, but I also don't necessarily need like a chess grandmaster. So maybe I'm not optimizing for IQ. But where are you most optimistic about where the foundation model companies will go and what kind of problems or vectors or the shape of that progress looks like? What does the shape of the progress need to look like for you to really succeed?

• 1:19:30Speaker 03

  Yeah, for us, I really like this paradigm of splitting up reasoning models to other types of models. I think trying to make a generalistic model that's great at everything is going to be really, really hard. And you can fine tune different types of models and different types of tasks, if it's code gen or reasoning, or even UI automation, like a computer use model. So more models means more choice for our customers. In the end, you know, our customers are trying to choose the best model for their task, and that varies because the internet is so big. You know, there's billions of websites and billions of choices on what, you know, you can use and or should and shouldn't use. For us, like, we do see the reasoning models being closer to the agent loop, whereas more like a 4.0 or Gemini 2.0 Flash being more close to the tool calling makes a lot of sense.

• 1:20:13Speaker 03

  You want the expensive model making the decisions and the cheaper, faster model maybe making the individual tool calls. That's been a great paradigm split, and more of our customers than ever are actually using models from different providers. So it does seem like more choice means more innovation and more ways to kind of mix and match the best of every sort of eval.

• 1:20:31Jordi Hays?

  Very interesting.

• 1:20:31John Coogan?

  I want to get your take on the latest from Microsoft today. They just, this just leaked out or something that Microsoft said it would no longer move forward with its plans to build data centers in Licking County. The company had planned to invest a billion dollars initially towards three data center campuses in New Albany, Heath and Hibron. Microsoft plans to ensure the land at two of the three sites will be available to be used for farming. And Nick on X says, "Yep, it's over." So how are you feeling? I mean, obviously, there's a lot of turmoil in the markets around tariffs, but I feel like the whole narrative of like, maybe we're getting over our skis on capex and hyperscaling. Does, is all this just noise to you because you're just focused

• 1:21:15John Coogan?

  on product experience and you don't really need a 10x improvement in the foundation model performance that might come from a bigger data center build out? Or are you still like inference bound and you're like, "Yeah, it'd actually be great if they move forward with that." What's your take?

• 1:21:28Speaker 03

  Yeah, from what I've seen, the labs are still innovating and I don't know if Microsoft is a lab that I really think is going to be an innovator as much, you know? So I don't think OpenAI or Anthropic are holding back on investment. Now, does that mean they're signing massive data center contracts right now? I think people are kind of waiting to see what happens in the macro sense. For us, I'm very downstream of that, right? And of course, we're, you know, a private company, venture backed. Things that happen in public markets tend to trickle down to private companies. So being aware of it, but, you know, with browser base, you know, with the traction momentum so far, we've had no shortage of inbound and it feels like there's a lot of room to run for us, so not really concerned.

• 1:22:06Jordi Hays?

  My last question, and you've covered some of it before, but can you talk about just general capability overhang? There's this like, you know, with all the evals and the sort of pressure for the labs to constantly be number one, or at least be, you know, at the top, it feels like that's almost like a distraction at times from just like delivering all of the capability that is now possible. But I'm curious what your take is on that.

• 1:22:33Speaker 03

  Yeah, maybe answering this in another way and we can go deeper, but for browser base to exist, there needs to be healthy competition at the model layer. And we see that models are more fungible than ever. People are switching between models all the time. And people don't want to switch your infrastructure. They want to have a piece of infrastructure that works. They can kind of integrate with a little more deeper. And if that means plugging in different models, that's just going to help them long term. I think there's a lot of innovation that needs to happen at the model level, you know, some stuff like multimodal tool calling being supported by all model providers and not just Anthropic. This is like a lack of capability, but it seems like every time someone innovates, it does trickle down to the other labs. So it doesn't seem like there's going to be a shortage of choice from customers and there's still a lot of innovation happening, especially long context. Like we think that long context is going to do a lot for DOM based web agents.

• 1:23:18Speaker 03

  And there's still a lack of true performance there, but we think with time, all this stuff does just get better, cheaper, faster, and it's inevitable.

• 1:23:26John Coogan?

  I want to ask you about this, this other story that kind of broke recently that OpenAI is considering acquiring a hardware device manufacturer that was started by Sam Altman and Johnny Ive, the ex Apple designer. Potential and designed includes a phone without a screen and an AI enabled house household devices. And I'm curious to know your take about like, generally, we saw like the first wave of this with like the Rabbit R1, the Friend, the Humane, and some of those didn't go so well. Some of them are plugging along, but I could imagine that maybe the Studio Ghibli moment or the Turing test moment is when, yeah, I don't need a screen because

• 1:24:06John Coogan?

  I trust that I'm not just using this pin or this device without a screen as a knowledge engine. But I'm actually, it's actually able to go use a web browser on the backend and just talk to me in conversational. I know that's a little like sci fi and maybe like, I don't know, maybe it's like three months out, who knows? But I want, I want to know your take on kind of devices and, and how you could see browser base plugging into all that ecosystem.

• 1:24:30Speaker 03

  Yeah, you know, for us, like, consumer web automation isn't really a focus, just because that I think that is one on the device level. And I think that Google, the Apple, I mean, Apple Intelligence, not really something I use every single day. And oh, I hope it gets better, right? But you can imagine the amount of data they have access to, the integrations with your existing life. They're really well positioned to offer more consumer web automation. You can tell Siri, hey, go book that restaurant, and it's going to have a lot more capabilities to do that, maybe even on your device, right? But for our customers, customers who are kind of building, like I said, these more traditional RPA, or maybe using BPO, or maybe they're a company that's building something more verticalized to go sell to someone who uses RPA or BPO. Those people are still going to need infrastructure, the way that they, because they're building applications, and that's who we focus on.

• 1:25:15John Coogan?

  Yeah.

• 1:25:15Speaker 03

  I I wish OpenAI the best with that, and I hope it works. I want more cool devices. I wanted

• 1:25:20John Coogan?

  Yeah, me too.

• 1:25:20Speaker 03

  Rabbit to work and Humane to work. And I I don't have a friend, Avi, hook me up. I'd love to get one, you know? I I want all these things to work because I want this cool sci fi future. So I I try and stay super optimistic about that and

• 1:25:32John Coogan?

  Yeah.

• 1:25:33Speaker 03

  hope it into existence.

• 1:25:34John Coogan?

  Yeah, it it doesn't feel like it's super in Apple's DNA. Like, if they, even if they just had, you know, an Apple Intelligence query, oh, like, summarize the news for me, you know that they're going to do a bunch of partnerships, and then they're going to pull that in from an API, and it's going to be as as deterministic as possible. Like, I I feel like Apple does not have probabilistic computing in their DNA. And I'm sure you have to deal with a lot of, a lot more rough edges. Are you, are you, are you seeing, the thing that we're seeing with, like, agents, and we heard about a little bit of this with, like, the dust up with, like, AI SDRs, is just that the, like, a hallucination rate of 1% is unacceptable.

• 1:26:13John Coogan?

  How are you thinking about, like, keeping a human in the loop? And just kind of like, even how do you message to a client the reliability of your model? Obviously, you have benchmarks for all the LLMs that you're using, but what do you, what kind of claims are you making? Because I think we all understand that, like, hey, this stuff's new, it's moving fast, it's improving, like, you got to go, you know, fast and and and and just, you know, test this model and not put it in like a life critical situation yet? And you can still get a lot of value out of it. But how are you pitching browser-based to folks?

• 1:26:42Speaker 03

  Yeah, you short term, you are going to need some human supervision at some point, right? And the way that we allow this with browser base, we have this thing called the live view where you can actually embed an iframe that shows the browser working. And with the browser working, a human can take over if the agent gets stuck.

• 1:26:57John Coogan?

  Yeah.

• 1:26:58Speaker 03

  And you can imagine maybe the future that's like very immediate is not a browser doing all your work for you, but maybe more of like a dev and experience where the browser is doing 90% of the work for you and maybe you have to come and do the last 10% once in a while.

• 1:27:09John Coogan?

  Yeah.

• 1:27:10Speaker 03

  And when we talk about with our customers, like, how do we build a human into the loop into the designs that you currently have in your application?

• 1:27:15John Coogan?

  Yeah.

• 1:27:15Speaker 03

  To make it just super easy to have that escape hatch into the human operator if something isn't working.

• 1:27:21John Coogan?

  Yeah, yeah, that makes so much sense. Well, thanks so much for stopping by.

• 1:27:23Jordi Hays?

  This is awesome, Paul.

• 1:27:24John Coogan?

  This is great.

• 1:27:25Speaker 03

  Thanks, guys.

• 1:27:25Jordi Hays?

  Congrats to the whole team. Would love to have you back on next time there's news.

• 1:27:29John Coogan?

  Yeah, this will be great.

• 1:27:29Speaker 03

  Appreciate it, guys.

• 1:27:30John Coogan?

  We'll talk to you soon. Bye. Next up, we have Tracy Alloway coming into the studio. But first, let me tell you about Bezel. Shop over 24,500 luxury watches, fully authenticated in-house by Bezel's team of experts. The market's up, baby. Take, what do they call it? Take some gains or whatever? Realize some gains, right? And convert it into a watch.

• 1:27:53Jordi Hays?

  If you bought yesterday, you're doing pretty well right now.

• 1:27:55John Coogan?

  If you bought the dip and you and you're up, you know, treat yourself. You've been working hard. You've been working hard. You deserve it. You deserve it. Go to go to Bezel. Download the app as well. And we have Tracy in the studio, I believe. Not yet. She's coming in in just a minute. She's been covering the chaos in the markets very closely. Odd Lots has been an absolute tear. They had Ryan Peterson on. They've had a bunch of people dig into reactions to the tariffs. She also just put up a everything about the basis trade, which I want to dig into with her. She writes, "It's worth taking a detour to explain just what the basis trade is and why it became so popular. To do that, we need to go back even further into the dark days of 2020, all the way back to the..."

• 1:28:38John Coogan?

  The aftermath of the 2008 financial crisis scarred by the near collapse of the financial system policymakers moved to make bank safer. And here she is. She's in the studio. Welcome to the show, Tracy.

• 1:28:49Speaker 04

  Thank you so much for having me. It's been a wild week. It's hard to imagine. It's just been seven days since liberation day.

• 1:28:58John Coogan?

  Yeah, it's crazy. And I was messaging you about this. I really appreciate you coming on in the midst of the chaos because I think it makes for a better conversation. But also, is your, when the markets are crazy, is your job crazier? Are you doing more episodes, more research, more blog posting?

• 1:29:14Jordi Hays?

  Or in some ways, the job easier because there's just so much attention.

• 1:29:18John Coogan?

  Yeah, you don't have to come up with a wild story. Hey, let me take you on this really obscure deep dive that you've never heard about. What's it been like on the work front?

• 1:29:25Speaker 04

  Yeah, we definitely don't have to scramble for content at the moment. It's been a fire hose of content. We've been rushing out episodes. The great thing about Odd Lots is, you know, as you mentioned, we span this wide range of finance, markets, and economic subjects. We did a lot of supply chain and trade episodes back in the 2020 pandemic when there were all these disruptions. Now, we can just tap our previous guests, you know, all the logistics experts, the truck drivers, shipping companies, small and big companies, and ask them like, what's going on and what impact is this actually going to have on your business?

• 1:30:04Jordi Hays?

  Yeah. I want to start by asking you to explain the basis trade to me, but like I'm a VC. Similar to explaining, you know, maybe like a child, like I'm five years old. But to a VC that, you know, considers themselves a macro expert, but maybe isn't.

• 1:30:22John Coogan?

  Yeah. What will this look like in the form of a X thread in three months or a memo that's hastily written to every entrepreneur in the portfolio in two weeks from now?

• 1:30:31Speaker 04

  Oh, man. It's going to be hard putting it in language for a VC. What I would say... Most simply, basically, the basis trade is arbitraging the difference between a cash treasury and a futures contract on that treasury. And historically, this has been a really safe trade. The spread or the difference between them has been pretty range bound, very, very tiny. Because it's been tiny, investors like hedge funds and active funds, what they do is they go out in the market in something called the repo market, the overnight funding markets, wholesale markets, whatever you want to call it, and they borrow from banks, from broker dealers.

• 1:31:15Speaker 04

  And this leverage allows them to amplify the returns they're getting from this arbitrage between the cash and the futures. Now, the problem, and we've seen this a couple of times now, is when the entire financial system starts de-risking all at once, suddenly investors can't really roll over these trades. They can't necessarily sell the cash treasury bond in order to close out the trade because the broker dealers, they do not have the space on their balance sheets to actually absorb those extra bonds. That's the big difference. We saw it in the pandemic, and we're seeing it now in 2025.

• 1:31:57Speaker 04

  The thing to remember is really, you know, the financial system isn't built to handle like a 10% decline in the S and P 500 and a simultaneous surge in bond yields. It just isn't. There are supposed to be hedges that banks can tap to manage their risk, their capital. Instead, they're de-risking all at once, and that has consequences.

• 1:32:21John Coogan?

  So who's hurting the most? I've been joking that this is a bull market for short sellers. It's a golden age in the VIX. But with regard specifically to the basis trade, is this putting more pressure on banks, hedge funds? Will this actually affect the VCs that we were joking about? Or can they just kind of ride it out because they have LP agreements that date out like 12 years?

• 1:32:44Speaker 04

  Yeah, definitely a good question. Who's hurting most? I mean, obviously hedge funds that had the basis trade on. Active fund managers, by the way, are really big players in all of this. And we've heard anecdotally in the markets that they've been selling quite a lot, too. Banks probably are not having a fun time at the moment. But on the topic of VCs, I mean, I think we have to step back a little bit from the basis trade and talk about just those surging bond yields in general. So, you know, bonds are supposed to be boring. They're not supposed to be moving around that much. They're not supposed to be talked about as much as they are in general news over the past couple of days.

• 1:33:28Speaker 04

  And the reason is, bonds are the benchmark borrowing cost against which all other loans are basically judged and measured. You know, refinancing for mortgages, refinancing for corporates and companies. And this is where it comes in for VCs, right? Over the past few years, VCs have been showered in money. I know there have been breaks in that trend, but in general, showered with money. Cost of financing has been going up. That would seem to be an issue, at least for a lot of VCs. And then the one other thing I would add here is, uncertainty in the market doesn't look like it's going to go away. So yes, we

• 1:34:10Speaker 04

  had the pause on tariffs just announced today. We still don't know what's going to happen with China and the US. Trump has basically destabilized every form of capital out there. Stocks, bonds, domestic, international. It's not clear whether or not he's going to be able to put the tariff threat toothpaste back in the tube now. So I think that uncertainty is going to stick around. And what that means is, less capital willing and available, potentially, to actually fund a lot of risky activities like VC, like tech.

• 1:34:47John Coogan?

  I have this narrative and I want you to tell me if it's cope or not. Somebody was, I was talking to a friend and they were saying like, this feels as bad as the COVID drawdown or the SVB crisis and the interest rate hike that caused a lot of turmoil in markets. And I was saying like, yes, the magnitude of the move is significant and the economic indicators are significant, but this is fundamentally different, potentially because that toothpaste can kind of go back in the tube because it's within the president's like remit to just say, hey, everything's going back to exactly the day before liberation day. That was a weird, you know, fever dream. We're back to what it was before and markets might respond to that.

• 1:35:32John Coogan?

  Whereas during, in 2020, no one could ever say, oh, actually like COVID cases are non-existent now. It was not within the, within the purview of the president. Is that a ridiculous narrative or is there something there?

• 1:35:44Speaker 04

  I mean, I think some investors would probably say in, in certain ways, it's scarier right now. And I think you need to remember, you know, the experience of Monday. So we have one person, the president, who's effectively controlling this entire narrative, this entire story. As you mentioned, at any one time, he could have issued a statement announcing a softening in the position or maybe just saying something other than be cool to markets, something, something comforting and realistic for them. He chose not to do that. And in fact, whenever there seemed to be a positive headline on the horizon, whenever people seemed to be talking about like, maybe things are going to start to calm down, the

• 1:36:29Speaker 04

  administration really seemed to rush out to bat those away. And the big example was, we saw that mistaken headline on Monday about a potential pause and the, the White House was out, you know.

• 1:36:42Jordi Hays?

  From the other Bloomberg.

• 1:36:43Speaker 04

  Yeah. That's right.

• 1:36:45Jordi Hays?

  From Mr. Bloomberg.

• 1:36:46Speaker 04

  They were out within minutes to slap that down. And this is the difference, right? In previous crises, 2008 being a really good example of this, we knew that policymakers were basically all pulling in the same direction. They were trying to rescue the financial system and as part of that, they were probably wanting asset prices to go up. I don't think that's been certain at all over the past seven days.

• 1:37:15John Coogan?

  Yeah, three.

• 1:37:16Jordi Hays?

  Yeah, what, how do you rate the admin's spin on the announcement today? Like, you know, you had said earlier that they just, they blinked, right? A lot of people, you know, Trump supporters historically have just said like, oh, it's 7D chess. Like, this was the plan all along, right? And so your position generally was like, no, he blinked. You know, the tenure was like ripping in the wrong direction and like they basically needed to do something. Is that, is that correct?

• 1:37:54Speaker 04

  I think that's right. The thing to remember here is, okay, the great thing about 4D chess, 14D chess, whatever.

• 1:38:02John Coogan?

  We're so past 3D chess, which I think is the original metaphor.

• 1:38:06Speaker 04

  It's like those Gillette razors, right? We just keep adding blades.

• 1:38:10John Coogan?

  I saw someone posted a picture of one dimensional chess. It's just one line. I thought that was pretty funny.

• 1:38:16Speaker 04

  Right, okay, so when you have this 14 dimensional chess or whatever, you have a great tool to basically spin whatever happens the way you want it. And, you know, I think it's very clear that Trump supporters are seeing this in a different way and Trump critics are seeing it in a different way. I would say the one thing to look at is the administration's own scorecard. They've been pretty explicit that part of what they wanted to do on the US economy was to bring rates down, bring bond yields down. They want to make it cheaper for people to get mortgages. They want to make it easier for companies to refinance their debt.

• 1:38:58Speaker 04

  They want that booming market in the US, a booming economy, all that manufacturing to be built, which necessitates quite a lot of capital. And that has to be secured and financed as well. And instead, we saw bond yields ripping, right? Like touching 4.5% this morning. So I think by that measure, by the administration's own scorecard, this has been a miss.

• 1:39:25John Coogan?

  Are there any other levers that the administration could potentially pull to bring down bond yields? What do you think's at the top of their tool chest right now?

• 1:39:36Speaker 04

  Yeah, I mean, the 90-day pause alone is having a pretty big effect. And this has been the story of certainly today, probably the past three days, is the whiplash in markets. So, you know, stocks plunge, stocks rise. I think the last time I looked at the S and P 500, it was up like 8 or 9%. You have to keep your eye on it at all times on this day because it moves around so much. Same thing for bond yields. So after the announcement, we saw the 10-year, I think it went down to like 4.36%, something like that. That's a pretty big drop. And then just to give you an idea of what the mood has been like

• 1:40:18Speaker 04

  on Wall Street and how whiplashy everything has been. Goldman Sachs actually put out a note this morning saying that their baseline forecast for the US economy was now a recession because of tariffs. About an hour later, we had the tariff pause announcement, and they had to send out another note saying that they were rescinding their forecast and no US recession was on the table.

• 1:40:43Jordi Hays?

  What percentage of Truth Social's users do you think are finance bros, like trying not to miss the next trade? Like, I have to imagine, there has to be some edge in being, you know, in the first 100 people to see one of these posts.

• 1:40:58John Coogan?

  Now is a great time to buy.

• 1:40:59Jordi Hays?

  Is there, is there, do you think there's high-frequency truthing where, you know, people are trying to get near the...

• 1:41:05John Coogan?

  I'm sure the feed's going in somewhere.

• 1:41:07Jordi Hays?

  But yeah, how do you, what's your, I mean, I don't, I don't even know. I was gonna, I was gonna ask, like, we don't even need to go there. It's gonna get too political. What do you, what do you got, John?

• 1:41:24John Coogan?

  I mean, I guess I want to know, I was kicking around this idea with Jordy earlier on the show that...

• 1:41:32John Coogan?

  There are a lot of ways to evaluate these new policies and new regimes. And there's been a lot of discussion of like, this isn't just a slight change in trade policy. This is like a complete flipping of the board, a complete reevaluation. And it seems like the most cautiously optimistic folks are like, maybe this is short term pain for long term gain. But there's been a little bit of squirminess amongst supporters to say, oh, well, I was joking earlier that, you know, well, you know, the 10 year is yielding more, so it's the best, it's a better time than ever to give your money to America and you'll earn more money on that money. And so maybe that's good for that type of person.

• 1:42:12John Coogan?

  And you can kind of spin any of these economic indicators in a positive sense if you try hard enough. But the, the measure that I use is one that I go back to the Trump one presidency and I look at the original tariffs on China and those were not rolled back by the Biden administration. And so it's, it's what I'm calling like eventually bipartisan. And so I'm, I'm wondering if it's like, I don't know if I can really withhold judgment for, I don't know, it might be eight years or four years or however long it's going to take. But if, if this policy, if we look back on it and we say, okay, yes, like it's stuck around, it eventually became bipartisan. Is that a win? Or do we need to just look at it through an economic lens in the short, medium and

• 1:42:57John Coogan?

  long term?

• 1:42:59Speaker 04

  I mean, that's a really good question. I don't know if you watched the, the Trump press conference that was just on a few minutes ago, but he was talking about how Biden left the US economy in a terrible position and wasn't able to strike good deals with China. That, I mean, I would say the Biden administration kept a lot of the restrictions on strategic exports to China over the past four years. And in some ways actually went harder on China technology as well. So I just don't know how a bipartisan deal would actually be interpreted and viewed by not just politicians, but the general public. It's really hard to tell. Everyone seems to be on their own little plane of reality at the moment.

• 1:43:44Speaker 04

  So who knows?

• 1:43:45John Coogan?

  Who are you tracking? I mean, you mentioned that you went through the logistics and the shipping folks and the ones that are most impacted, like they have iPhones on planes right now. That's the most immediate impact. What do you think the second and third order industries that are most important to track in order to understand the impact of the tariffs as they evolve?

• 1:44:06Speaker 04

  Yeah, I mean, oil is a really big one. And in fact, we had a really interesting survey from the Dallas Fed, I think it was last week or two weeks. I can't remember because so much is happening. But they're basically in charge of the oil patch, right? They're down in Texas, monitoring what's going on with energy businesses. And they put out this survey where they basically go to a bunch of oil companies, you know, drillers, suppliers, and they ask them, hey, what's going on? How do you feel about things at the moment? And the replies are all anecdotal. But, you know, the respondents, they talk about how they feel and they put like little numbers on it. They grade the vibes, as you

• 1:44:49Speaker 04

  might put it. But they also get to write written comments. And again, they're anonymous. But if you look at what was in the survey one or two weeks ago, those written comments were dire. I mean, people, people were talking about how the threat of tariffs, and again, this was before the tariffs were actually unveiled, how bad the threat of tariffs actually was for their business. And I remember there was one quote in there. It was a supplier for energy companies saying that he had gotten a call from a customer in Canada, asking them if they could move production to Canada because they were worried about the tariffs.

• 1:45:31Speaker 04

  That is the opposite of the, you know, presumably intended effect of all of this.

• 1:45:39John Coogan?

  Yeah, I saw actually Mr. Beast of all people commenting on the tariffs. He said, ironically, because of all the new tariffs, it is now way cheaper to make our chocolate bars that we sell globally, not in America, because other countries don't have a 20% tariff on our cogs, which I never thought I'd see Mr. Beast use the word cogs, but he's in the business now.

• 1:45:59Speaker 04

  You know, things are wild when Mr. Beast is making coherent tariff commentary.

• 1:46:04John Coogan?

  Yeah, no, and it makes sense. Like, he does sell globally. He has a massive global audience, and he makes everything in America now, and then he sells it all over the world. But it makes sense that he would take some other stuff offshore.

• 1:46:14Jordi Hays?

  Where do you look for signal, right? You obviously have your Bloomberg terminal. I feel like Joe shares more screenshots of that than you do, probably. But where do you look for signal in a world where everybody is conflicted in a different way, right? Like, some people are, you know, some of the loudest people of the last week are fund managers who have big positions on the line, and everybody's got some conflicts. But I'm curious how you try to sort of like see through all the noise.

• 1:46:43Speaker 04

  Both Joe and I are glued to the Bloomberg terminals and Twitter X interfaces at all times. One of the things I've kind of enjoyed doing over the past week is just basically looking at what the hosts of the All In podcast are saying online, and then assuming that the exact opposite is gonna happen. So, you know, we had David Sacks, for instance, talk about like, oh, the crash is over. Then we saw stocks plunge again. We saw Chamath, he was very much in favor of the tariffs. He was kind of cheering them on. And he was also criticizing stock investors who were complaining about their losses. I think he had a David

• 1:47:26Speaker 04

  LaChapelle quote, basically saying to, you know, shut up about those losses. And then at the same time, he starts talking about how he's buying credit risk, credit risk insurance through CDS. So effectively betting against corporate America at the same time he's talking about like how good these tariffs are gonna be.

• 1:47:47John Coogan?

  Yeah. How do you think about reading into the insider commentary that's happening? There's, there is that take that it's like, oh, like they're wrong and you do the opposite. But at the same time, like proximity to power is a valuable source of information. That you have to imagine that there's real information that's being disseminated, even if it's just like, oh, this is the vibe and I'm passing that along. How do you balance those two things?

• 1:48:13Speaker 04

  Yeah, I think you're absolutely right. Like VCs are very good at interpreting the vibes. And in fact, I remember we had Jason Kalikas on the show a few years ago. And one of the important things we learned from him is that the emphasis on the vibe shift. So, you know, back in 2020, a lot of technology companies made money hand over fist. But a lot of them didn't, right? And the criticism was if you cannot make money in this extraordinary time period when rates are really low and people are scrambling for all these different tech services because they're stuck at home, then there's a real problem with the business model. That was like, that was one of the narratives.

• 1:48:58Speaker 04

  But the point Jason made was that some of this made sense because investors at that time, they were not demanding that companies actually make money, right? They were very satisfied if companies were just spending to grow their market share. So I think that's really interesting and, you know, something to watch. Like, what are investors actually going to start asking for here?

• 1:49:24John Coogan?

  Um, sorry.

• 1:49:25Jordi Hays?

  No, I had a, I'm curious. So we spent the beginning of the show talking about Apple specifically and the position that, you know, Apple basically has like a China problem and that like, you know, if your supply chain is dependent on China and China invades Taiwan at some point, like you're probably not going to get, certainly not get as many iPhones or components out of there. But then they also have a Trump problem and that they're just sort of like probably also internally refreshing Truth Social, you know, wondering what Trump's going to do to their business next. But Bill Ackman had a post, this was right around when we started the call. He said, "Time is not China's friend. Every US company that sources products in China is in the process of finding alternative suppliers.

• 1:50:08Jordi Hays?

  Supply chains are time consuming and can be expensive and challenging to move. But once they're moved, they are sticky TikTok." I look at this and I'm like, if we have a three-month pause on tariffs and, you know, the Chinese tariffs are still happening, like, sure, you know, it's hard for me to see, you know, for these big multinational firms like Apple or Nike, it's not like, like, yes, they're starting to make moves, but I'm not sure that, of course, time isn't their friend, but I don't know, I'm not sure I'd sort of broadly agree with this take yet.

• 1:50:46Jordi Hays?

  I'm curious how you think Apple should just be like responding to this in general, because it feels like it's going to be this sort of like dark clouds, you know, over the sort of share price for basically potentially a decade, right, the sort of big China problem.

• 1:51:05Speaker 04

  Yeah, so a couple of things on the China problem. So number one, the 90-day pause on tariffs on pretty much every country except China opens up a pretty big window for companies to actually start arbitraging, you know, manufacturing costs between China and the rest of the world. We saw that in the first round of Trump tariffs back in 2018. A lot of Chinese production just moved across the border to Vietnam, or it moved to Mexico and effectively, you know, these were Chinese goods that were just being shipped somewhere else before they were shipped into America in order to avoid the tariffs. That's a real possibility now, especially if Trump sticks with those higher rates on

• 1:51:48Speaker 04

  tariffs, the ones he threatened earlier today. And then the other thing I would say on China, you know, the thing to remember is China is in a really interesting place right now, and obviously so is the US. The Chinese economy has been slowing, and as part of an effort to reverse that, policymakers are really trying to revamp the whole structure of the system and increase consumption domestically. They want people within China to be buying more goods. At the same time, The US seems to not want people to buy a lot of goods, or at least not foreign goods. And we're all about manufacturing.

• 1:52:32Speaker 04

  The roles have reversed, right? The US wants to be a manufacturing powerhouse and China wants to be a consumption powerhouse. It's very weird in many ways. But the big question is going to be like, how successful is China in transforming its economy? Because if it manages to do that, it never really has before. But if it manages to do that this time, that could be a pretty decent buffer for, you know, some of the economic impact.

• 1:53:02John Coogan?

  The grass is always greener on the other side, I guess. I want to talk about the penguins. You know, I saw that there are tariffs on the Penguin Island. Everyone was laughing at it. But it seems like, you know, entrepreneurs are so enterprising that if I needed to do final assembly on some Penguin inhabited island to avoid a 200% tariff on my Chinese good, like, there is an economic equation where I would actually do that? Was it that crazy? Or do you think there's some theory to the Penguin Island getting tariffed?

• 1:53:34Speaker 04

  You're going to ask the penguins to put together your iPhones?

• 1:53:38John Coogan?

  I mean, probably like bring in people and set up a basic assembly. I mean, it has a high cost because you got to get there and get back. But at a certain point, it maybe makes sense. I don't know. Is it completely crazy?

• 1:53:50Speaker 04

  I mean, look, I think moving production around is definitely a possibility. Are we going to move it to tiny islands? Somehow I doubt it. And this kind of like, this opens up the question about why the US is doing this in the first place. So for instance, one of the tariffs that Trump unveiled last week was, I think it was like a 30% reciprocal tariff on the island of Nehru. Like, this is a tiny island. It primarily exports like pig meat and sausages to the US, like a million dollars of pig meat a year. So what exactly do we want to get from, and you know, a place like Nehru?

• 1:54:34Speaker 04

  I don't think they're going to be buying Ford cars when they have like basically 12 miles worth of road.

• 1:54:40John Coogan?

  Yeah, I want to talk about TikTok a little bit. It's it's been odd to me that the tick, the progress on any, any news around TikTok has been so slow and yet the tariffs have been so fast and aggressive. Is there some underlying thesis there? Is TikTok one of the chips in a larger discussion? Or do you think it's just like, ah, it's just low priority relative to everything else?

• 1:55:05Speaker 04

  And I really don't know. It's it's very hard for me to tell what the administration is prioritizing at the moment. And I got to say, you know, on the same day we saw Trump make this huge announcement, Howard Lutnick said it was one of the most important Truth Social posts ever written. The same time he announced the 90 day pause, he also signed an executive order to increase water pressure in showers.

• 1:55:32John Coogan?

  Oh, yeah.

• 1:55:32Speaker 04

  Like, this actually happened. You know, he he signed the order. There are stories out there where he's saying no longer will American showers be be weak with low water pressure. I mean, I don't know. With everything going on in trade and markets, I I might not take the time to to fight against low water pressure, but you know, the president is idiosyncratic in that way.

• 1:55:57John Coogan?

  He loves a good headline. He loves starting a news cycle. I think if it doesn't happen in a single day, it's a failure.

• 1:56:03Jordi Hays?

  He's like, trying to distract the panic-ans by giving them, you know, you know, more water pressure. That's his strategy, maybe.

• 1:56:12John Coogan?

  Yeah, yeah. I mean, so, so, I mean, you've obviously been following this very closely. We'll let you go in like two minutes, but just general like predictions for where this goes or how people should be thinking about this more holistically. Because if this is what it's going to be like for the next four years, it's going to be a full employment for us, but a lot of chaos for everyone else that's maybe listening. Where do you think this goes? And what are your big takeaways from from the last week?

• 1:56:41Speaker 04

  Yeah, content for us, but bad news for a lot of other people, for sure. I mean, I think it goes back to that uncertainty element. So the first thing you learn in financial markets is investors hate uncertainty. What we've seen over the past week has been, in many ways, unprecedented. Like, a single man, the president, controlling this entire narrative around trade. We've seen fake headlines that have had a really big impact on markets. The reason they're able to have such a big impact on markets is because investors are hanging on every single word from the president. And so if they think the president has said, oh, there's a 90-day pause, they react to it, right?

• 1:57:23Speaker 04

  That is really weird, where we have this, like, single source of information that the market is focused on. And that's not going away. Like, the threat of the tariff, as I mentioned, like, the tariff threat toothpaste not going back in the tube. And I think even if we see countries really rush to strike some trade deals, which they might, they might actually do, the threat of tariffs is going to be hanging around in the background for the next four years. People are going to be wondering about what exactly America is trying to do here. It seems very clear that Trump thinks, you know, America's special status in the financial

• 1:58:05Speaker 04

  system, the dollar's status as a reserve currency, is a burden rather than exorbitant privilege. A lot of people would say, America benefits from this. Trump doesn't seem to see it that way. I doubt he's going to change that particular worldview over the next four years. But, you know, maybe he starts listening to some advisors and he tones things down a bit. But I really think the uncertainty is here to stay.

• 1:58:33John Coogan?

  For sure. Well, let's hope we get some certainty.

• 1:58:37Jordi Hays?

  Prediction: more uncertainty. I think that's a, we can lean on, we can lean on that, at least.

• 1:58:43John Coogan?

  That is certain.

• 1:58:44Jordi Hays?

  Yeah.

• 1:58:45John Coogan?

  Well, thanks so much for joining us.

• 1:58:46Jordi Hays?

  Thank you for joining.

• 1:58:47Speaker 04

  This was a really fun conversation. Thank you, it was fun.

• 1:58:49John Coogan?

  Really appreciate you hopping on. Have a great rest of your day.

• 1:58:51Jordi Hays?

  Good luck with everything. We'll be following along.

• 1:58:53John Coogan?

  We'll talk to you later. And next up, we have Base Power coming into the studio. We got Justin Lopas from Base

• 1:58:54Jordi Hays?

  Cheers.

• 1:58:59John Coogan?

  Power announcing a massive round.

• 1:59:01Jordi Hays?

  Get the size gun ready.

• 1:59:02John Coogan?

  I had no idea how big this round was. He told me he was announcing like a Series B, and I assumed, oh, a Series B. 20 million, 30 million. It's 200 million. It's 200 million. He's going to break it down for us, explaining what they're going to do. Let's read through their announcement while we wait for Justin to join. He says, "We're excited to announce that Base Power has raised $200 million in Series B funding, co-led by Edition Andresson, Lightspeed, Valor, with support from Thrive Capital, Altimeter, Trust Ventures, and Terrain Capital. Edition's Lee Fixel joins the board alongside Antonio Gracias of Valor Equity Partners." What a stacked board. And we'll have to ask Justin about it. He's here in the studio. Welcome to the show, Justin. How you doing?

• 1:59:49John Coogan?

  Congratulations, congratulations.

• 1:59:50Jordi Hays?

  What's going on?

• 1:59:51John Coogan?

  Absolutely phenomenal Series B announcement. How are you doing today?

• 1:59:57John Coogan?

  Can you hear us?

• 1:59:58Jordi Hays?

  He's locked in.

• 1:59:59John Coogan?

  He's locked in. He's building. He's putting the 200 million to work already. How you doing? Nothing? I'll keep reading. "Power demand is soaring, and the grid must evolve to meet the challenge. We're accelerating an energy abundant future through distributed battery storage and investing in American manufacturing capabilities needed to make it real." Another company that's focused on American manufacturing. We've talked to a few of them, all major beneficiaries of the tariff chaos to some degree, although I'm sure that there's deeper supply chain stuff that we'll get into.

• 2:00:29Jordi Hays?

  Yep.

• 2:00:29John Coogan?

  And try and understand where all that goes. "In under a year since launching Base has become the fastest growing, one of the fastest growing battery storage developers in the US. More importantly, we've assembled a talent-dense team of engineers and operators, all focused on modernizing the grid to make more power, more reliable, and affordable." And let's hear from Justin. I believe he's in the studio. How you doing, Justin?

• 2:00:50Speaker 05

  Good, good. Thanks for having me. Really appreciate it, guys.

• 2:00:52John Coogan?

  Yeah.

• 2:00:54Jordi Hays?

  No, it's great to have you on. Big day for you and the whole team.

• 2:00:57John Coogan?

  Congratulations.

• 2:00:58Jordi Hays?

  We've been, you know, following your journey for a while now, and seems like the momentum is just building.

• 2:01:04John Coogan?

  Yeah. Can you give us like a brief introduction on the company? I actually don't know the pre-history. I'd love to know kind of how you started the company, how you got to this moment. Seems like a quick ramp to a $200 million fundraise. Some stuff must be working really well, so break it down.

• 2:01:21Speaker 05

  Certainly, yeah. So I guess started the company about two years ago, launched the product just a little under a year ago now. Let me tell you what we do. So we are developing distributed energy storage for the grid with the ultimate mission to fix the grid in the US. I think if you look at the sort of modern energy industry and sort of power companies there within, you'll see that there's a lot of money and smart people and technology going into making more electricity generation. You guys report on in a lot, SMRs and solar and wind and oil and gas and such. And the same thing on the consumption side, more EVs,

• 2:02:02Speaker 05

  more heat pumps and better consumption and cleaner consumption all around. But the grid is the thing that connects those two. And that has been sort of woefully under invested in from a technology and operations standpoint. And so that's what we're really, we're here to do is to ultimately fix the grid. Where we're starting today, or about a year ago, with our first product, is distributed energy storage. So what that means is we install batteries on homes that we own and we operate and we use to support the power grid. We're based here in Austin, Texas, and we have operations in Austin, Houston, and Dallas, and San Antonio, the kind of the Texas triangle. And that's the business today. We're, today

• 2:02:42Speaker 05

  we're announcing the Series B fundraise, as you mentioned, and using that to sort of fuel the next, next stage of growth in and out of Texas.

• 2:02:51John Coogan?

  Can you talk to me a little bit about what this means for the grid long term? Is this something where like it reduces the variable load on the grid and we can train more AI models in the data center or something? Like, how does this play out? Like, like, how bad are the problems? Are we just, are we fighting like the basic fires? Or are we dreaming of like a utopia here?

• 2:03:12Speaker 05

  Yeah, so I'd say we're still in the, from the grid writ large, we're still in the fight, fight the basic fire. So here's why, here's why batteries and in particular distributed batteries are good for the grid and help add capacity. If you look at any sort of average, you know, wire going through the grid, whether it's on the transmission side, sort of think the stick-built steel structures on the side of the highway, or the distribution grid, think the wooden poles in your neighborhood, any one of those lines is heavily underutilized with respect to its capacity. So, let's say that, you know, a line can carry 100 units of energy at any given moment, units of power. On average, that line is used, on the distribution

• 2:03:54Speaker 05

  side, 20 or 30, with 20 or 30 units of energy. So it's heavily underutilized. But the problem is that certain times of the year, think August 15th at 6pm, when everybody came home and turned on their air conditioner and plugged in their AV and turned on their oven, that line is at 100%. And so the grid has to be built for the peak load. It doesn't, it's not built for the average load, it's built for the peak load. And so what distributed batteries allow you to do is reduce those peaks in specific areas. You can, you can choose where those areas are, our software does that. And therefore utilize the existing grid infrastructure for far more load. So that's AI data centers, as you said, that's more EVs, that's more electrification of heavy industry and such.

• 2:04:35Jordi Hays?

  Can you talk about the decision to start in Texas? I have some ideas around it. And then I want to ask you about what's going on with the California utility providers. Apparently, I live in Malibu and apparently like our local utility provider is in like an adversarial relationship with like the city government. They're basically just like fighting all the time. And so what that means, they just turn off the power if there's any, ever any issues. But maybe let's start why, you know, with kind of why you guys got started in Texas and then where you're thinking of expanding to and then, and then maybe, and then really kind of like that dynamic between cities, utilities, and consumers.

• 2:05:16Speaker 05

  Certainly. So the reason we started in Texas was, this is pretty much the obvious place to build, to start building a business like this. So there's a few reasons. One is, folks might know this, Texas is actually its own grid. So there are three grids in the US. There's west, there's east, and then there's Texas. Texas is basically an island from a grid standpoint. And so what that simply means is you can't borrow from your neighbors when you need more, and you can't share with your neighbors when you have too much. And so that leads to a lot of volatility on the grid, where you have sort of supply-demand crunches, for lack of a better term. Additionally, there's a ton of renewables in the grid in Texas. It's a little bit perhaps counterintuitive, but there's more solar and wind on the grid in Texas than in the grid in California or anywhere else in the US.

• 2:06:00Speaker 05

  And so that also drives the need to store energy when the sun's not shining or the wind's not blowing. Furthermore, in Texas, there's a sort of regulatory aspect. And so our first go-to-market motion is what's in called the deregulated portion of the grid. All that means, by the way, there's a ton of regulation. This does not mean it's the Wild West. What it means is that you can sell power to people. So if you're a homeowner in Houston or Dallas or North Austin or other parts of the state, you not only can, but you have to choose who you buy your power from. So if you're in Malibu, your utility provider's probably LADWP or maybe SoCal Edison. And if you want electricity at your house, you've got one option, only one game in town.

• 2:06:43Speaker 05

  Here in Texas, companies like us can start and become a utility provider. And what that means is that we buy electricity from the generators, we pay the poles and wires companies to get it to the house, and then we sell it to the house at retail. And that allows us to monetize the value of the batteries behind the meter at the customer's home. So again, we own and operate the batteries as opposed to sell them outright to customers. And so what that means is that customers don't have to shell out tens of thousands of dollars to go buy a battery like they would if they went and bought a competitive product or they bought a generator. And so that's sort of the other fundamental reason why Texas. Now, you also asked about cities and utilities and such. This is a, we could spend hours on this

• 2:07:24Speaker 05

  topic, but, but very simply, there are a handful of some utilities in the, in the country like L A D W P, which I think is your utility, is actually owned by the government, by the city of, city of Los Angeles. It is a government-run utility. Funny enough, actually here in Austin, Austin Energy owns, is, is the utility that's owned by the city of Austin. In other parts of the country, like in Orange County, where I used to live in, in Southern California, that's a private company. That's a company called SoCal, and they're publicly traded. And so you have this weird dynamic between cities and utilities that can result in frictions around technical standards and permitting and all this, and shutting off power when there's too much wind

• 2:08:04Speaker 05

  and all this other stuff. And it's, I think the thing that you, that you guys, maybe your listeners, this in Southern California is different. In the Detroit area where I grew up, it's different in, you know, Florida, et cetera. It's a, it's kind of a very state-by-state thing, and the state governments typically have a lot of authority and control over how the energy markets are run and how the utilities are regulated.

• 2:08:29Jordi Hays?

  How are you guys reacting to the tariffs? There's a lot of, I mean, the, the, the only thing you can lean on right now is uncertainty. We don't really know what's, what's going on. I imagine there's businesses in the energy space and, and solar that, that are, you know, specifically like low margin, completely dependent on, on China, and maybe aren't even viable at this point. Base Power is like, you know, sort of got, I think, a more sophisticated model, but I'm curious what your guys' reaction, how you're thinking about it, and then kind of the broader industry, how you think people are reacting to these changes.

• 2:09:07Speaker 05

  Yeah, certainly. So, you know, as part of our Series B announcement, one of the, one of the big things that comes with that is us building a factory here, here, here in, here in Austin. And so that very much puts the supply chain and the, and the manufacturing in, in our hands. We, we already do some assembly. This will further that and will, will really mean that we assemble the whole, the whole unit, both the battery itself and all of the power electronics that, that are built on top of it. Today, the tariffs are certainly uncertain, as you mentioned. And the battery cells, like the individual, you know, things that modules that sit inside of the battery, those are typically made in China, and we are working aggressively

• 2:09:48Speaker 05

  to bring that supply chain here to the US, and we're very close to doing that. But do the tariffs affect the industry? Certainly, a lot of energy products, not, you know, even in oil and gas, come from manufactured goods in China and around the world.

• 2:10:06John Coogan?

  Yeah, what was your take on the Skydio news that their battery supplier was sanctioned or something, and they kind of lost that aspect of their supply chain? It seemed like a very rough go. Now, you focus on the consumer market, so probably a little bit less, but even Skydio, I don't know that they have a big DoD business, and so it was a weird shock to the system.

• 2:10:26Speaker 05

  Yeah, certainly. I don't profess to have a, you know, a ton of insight into them.

• 2:10:32John Coogan?

  Sure.

• 2:10:33Speaker 05

  In particular, having spent a lot of time at Andurall, though I can say there are a number of, you know, sort of commoditized products, batteries were one of them, that are, the supply chain is primarily in Asia or in China. And us and a lot of others are working quite aggressively to bring that here to the US, or at a minimum to more friendly nations.

• 2:10:56John Coogan?

  Now, given that you spent...

• 2:10:57Speaker 05

  So, yeah, the batteries are, go ahead, sorry.

• 2:11:00John Coogan?

  Just given that you spent time at Andurall, can you walk me through the decision to go consumer first? You could imagine that someone's like, "Oh, I'm building battery packs, and yep, I'm going DoD with this. It's a defense tech company." We've seen that even with some, like, nuclear energy companies, where they've said, "Hey, yeah, we will sell the oil and gas companies, but this is going to be, you know, a power unit that's dropped on a military base instead of a diesel generator." Is that on the roadmap, or do you think that, like, the real opportunity is just in consumer? And how'd you get there?

• 2:11:32Speaker 05

  Yeah, um, so I, you know, I don't think we looked at it from like, is it B to B, B to C, B to G, like that, that wasn't really the, the, the sort of initial thinking. It's more about, if you look at the grid writ large in the U.S. or, or even in a more microcosm like it is here in Texas, where are the, where's the actual problem to solve? And a majority of the load on the grid comes from residential, uh, single-family homes, which is where, where we're starting. And so we more looked at it from that perspective rather than like, what is the sort of, you know, hypothetical best go, go to market. On the consumer side also, it has allowed us to build a, build a brand. So we're very focused on, uh, the brand of base power, the resilience and reliability that it adds to homeowners, uh, with the backup power.

• 2:12:15Speaker 05

  Uh, and that can carry itself into a more B to, B to B model. Uh, as we, as we grow, we're, we're moving towards working with the regulated utilities. Um, so some, so a utility like LEDWP, like SoCal Edison, like, uh, DT Energy where I grew up in, in, again, in, in Michigan. Um, that's a different business model, but it's the same technology stack. In that case, we go deploy a battery on that utilities, on a, on a, you, home that that utility serves. We don't sell power to the, to the homeowner, but that utility actually pays us for access to that battery. It's like a, basically a distributed power plant in a, in a box, so to speak. Um, that is a, um, not B to G, but sort of more B to B motion that we're, that we're starting. And we've actually already announced our first partnership here with a regulated utility

• 2:12:59Speaker 05

  starting in, in, in Texas, uh, near San Antonio.

• 2:13:02John Coogan?

  Can you talk a little bit about the actual customer experience, uh, on the consumer side? If you, is this, uh, is it like a prepper argument? I just don't wanna, or is it purely economic? Uh, who's the ideal customer? What's motivating them? And then walk me through the actual like installation process. Is this something I need to get permits for? Does it take months? Like, how, how does all that work? Where does it sit in my house? Is it in my garage or basement or outside? Is it huge? Is, is it small? I wanna know everything.

• 2:13:29Speaker 05

  Yeah, yeah, all great questions. So in terms of the ideal customer, it's really a very wide swath of today's single-family homeowners in Texas and in the future renters and small commercial business owners. Our view is that is that batteries and generators have been sold as a luxury good previously. That basically rich people have put these on their homes so that they don't have power outages. And you'll see a lot of these in wealthier neighborhoods and such. And our view is that the battery really should support the grid and it also support the home and the power outage. But really it should be a grid asset. And so again, by this business model whereby we own, we own the battery. We don't charge the customer for the capital cost of the battery, that really opens up the market.

• 2:14:14Speaker 05

  And so we have sort of first-time home buyers, we have elderly folks, we have everybody in between. Certainly, there are some people that are thinking more about their energy resiliency and sort of the maybe prepper mindset that you're referring to, but that's definitely not, not all of our customers. We've got now thousands of customers there again from all walks of life. In terms of the experience, this is an area we put a lot of, a lot of focus into and a lot of our software stack is built around. And we think about it from start to finish like a factory. My background's in manufacturing and so the, so the concept of having a customer sort of start at the beginning of the line, which is put their information in on the website and end on the end of the line with the battery installed, operating and providing the backup and supporting the grid.

• 2:14:59Speaker 05

  And every step in between is this sort of regimented, highly documented and relatively automated process. What that actually looks like in practice is a customer puts in their information. They send us a handful of photos of the side of their home, basically to make sure that there's a place for us to put the battery. Then we go and handle all of the rest. So some cities require permits, some do not. We handle all of that. We also work with the utility to do the, what's called the interconnection. Again, it's kind of like another permit. And then we have our own installers come out and install the battery. That typically takes a few hours. It's installed on the side of the home, right next to your meter or very close to your electric meter. And you can see on our website, basepowercompany.com, but it looks like, kind of like an air conditioning unit roughly.

• 2:15:41Speaker 05

  It's a white box that's about two and a half feet cube roughly. And that supports the home for a day or more, depending on usage during an outage.

• 2:15:50Jordi Hays?

  Uh, how, how much has, uh, you know, your time at SpaceX and Anduril influenced like just the way that you guys operate? Obviously, you know, 10 years ago, uh, investors, you know, might, you know, shied away from these sort of like, uh, businesses that are capital intensive and just sort of like logistics intensive, but you went and worked at two companies that have done this. Um, and, and basically set the bar of like how quickly you can spin up these sort of like real world operations. Um, but I'm, I'm curious, like the kind of key learnings from, from both companies.

• 2:16:28Speaker 05

  Yeah, feel extremely fortunate to have worked for excellent leaders at, at, at both companies and have learned a tremendous amount. Yeah, I think you're right. Look, the, I mean, you guys, you guys talk a lot about this. Um, there's a large number of startups in the sort of hardware, physical, real world space, uh, funded by venture capital than there was not, you know, five, 10 years ago, uh, in large, large part, thanks to companies like SpaceX and Anduril. You know, I think the, the big learnings from, from those two companies are a combination of operational, technical and cultural. Maybe starting with the cultural, um, you've, you've likely heard, heard this, but there's, um, you know, the, the cultures at SpaceX and Anduril, both were extremely high ownership. They had a really high talent bar.

• 2:17:13Speaker 05

  Uh, they're very execution and operations focused, um, especially in the areas that I was working in, which are more manufacturing, production, operations, um, execution and how do we get, how do we produce more units, more drones at Anduril, more rockets at SpaceX? How do we install more batteries here at Base Power? Uh, there's a lot of similarities on the cult, the culture that you sort of build around that and being very data driven and metrics focused. And how do we get dollars per kilowatt hour down, kilowatt hours per day up? Uh, and we're like laser focused as a company on that. So I'd say that's some of the cultural learnings.

• 2:17:47Speaker 05

  On the technical and operational, right, we're, um, we're, we're taking a pretty vertically integrated approach, right? So we're developing the hardware, we're writing all the software that runs on that hardware, all the software that manages the operational stack that I outlined from the customer journey. We're directly interfacing.

• 2:18:05Speaker 05

  And so both of those companies take a very vertically integrated approach and they're able to drive costs down over time because because they've been able to do that. And so that's something we're also sort of lessons that, you know, I learned and that others that join me at the company here who have worked at SpaceX and Android learned from both of those companies as well as Tesla, Ramp, Apple, et cetera.

• 2:18:26John Coogan?

  That's awesome. Well, I think we'll let you go. I'm sure you got a busy day with the launch. Thanks so much for joining us. We appreciate you taking the time out of your busy day.

• 2:18:34Jordi Hays?

  Yeah, you're our new energy official energy correspondent. So get ready to regular appearances.

• 2:18:41John Coogan?

  Yeah, we'll have you on again soon.

• 2:18:43Speaker 05

  Happy to report, happy to report live from the field, guys. Really appreciate it.

• 2:18:47Jordi Hays?

  Love it. Awesome.

• 2:18:48John Coogan?

  We'll talk to you soon.

• 2:18:48Jordi Hays?

  Congrats again to the team.

• 2:18:50John Coogan?

  Bye.

• 2:18:52John Coogan?

  You know, if you're managing a wander, maybe you should throw base power on that.

• 2:18:56Jordi Hays?

  Do it. Great idea.

• 2:18:58John Coogan?

  Luxury home. Go to wander.com. Find your happy place. Book a wander with inspiring views, hotel-grade amenities, dreamy beds, top-tier cleaning, and 24/7 concierge service. You just, you know, the power goes out, you call your 24/7 concierge. That's a luxury you get.

• 2:19:11Jordi Hays?

  Fixed immediately.

• 2:19:12John Coogan?

  At Wander. It's a vacation home, but better. We got some other news from Layer Hippow. They launched their their next fund. This is their ninth seed fund. They've been in the game for quite a long time. $200 million new capital. They'll invest in pre-seed and seed-stage companies. This fund represents an increase from the last fund, which was 140 million. Committed continued commitment to supporting the next generation of founders while maintaining a focus and approach. This fund also includes several dozen LH portfolio founders as limited partners. They like taking the money from LH. Now they're putting the money back in. LH, one hand washes the other.

• 2:19:49Jordi Hays?

  Washes the other. Love it.

• 2:19:50John Coogan?

  You love to see it. Yeah, it's great.

• 2:19:52Jordi Hays?

  That might, that must be one of your favorite phrases.

• 2:19:55John Coogan?

  Oh, it's the best. It's the best. So yeah, go raise some money. Go raise a pre-seed from Layer Hippow and then, and then, yeah, or seed. And then buy a billboard for your company on AdQuick. Out-of-home advertising made easy and measurable. Say goodbye to 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. And breaking news, TBPN will be having a billboard.

• 2:20:21Jordi Hays?

  Our first AdQuick campaign.

• 2:20:23John Coogan?

  Is going out.

• 2:20:24Jordi Hays?

  It's going out.

• 2:20:25John Coogan?

  We're not going to leak the strategy. We're still debating it, exactly what the image will be. But you can expect to see it in the timeline.

• 2:20:31Jordi Hays?

  Yeah, we have been, this has been in the works for a while, but in close collaboration with the ad quick team. So very, very excited.

• 2:20:41John Coogan?

  Yeah, I like this, this post, we have, since we have a couple of minutes before our next guest, let's go to Matthew Prince, the founder, CEO of CloudFlare. He says, "I'm playing everyone's favorite party game. Guess the Trump administration's strategy. Like most of you, I have no inside information, but that's what makes it fun. Here's my best theory. Some assumptions first. One, they're not crazy. There is a strategy. It doesn't align with conventional economic principles, but there's something they're playing toward. Two, they're not stupid. I know enough of the players involved to know that they're not idiots. They may be making what will turn out to be accurately predicted to be horrible decisions, but they do have a plan and it's coherent.

• 2:21:20John Coogan?

  As part of this, while I think that they, while I think they can bring, while they can increase US manufacturing, they don't really believe they can bring everything on shore. So they're not completely naive about that. Three, they're intentionally being opaque as to what the real plan is. Trump fashions himself a negotiator, holding his cards close to his vest, even lying about what cards he has is part of the game, part of the deal. Four, they're not just in it for themselves. I get that this has become non-conventional wisdom, but I'm going to assume that this, that, that for this, that the goal isn't merely grift, even if you believe it is, suggests that's an easy out

• 2:22:01John Coogan?

  to thinking through what may be more complex motivations. And number five, which we are starting to see today, China is the real enemy. China has done some things in the last two years that have made it even, that have made even the China doves in the last administration into hawks. Again, I know there's lots of media saying Trump wants to kiss up to Xi Jinping, but having spent enough time with folks in this and the last administration, they really worry about China morning, afternoon, and all night. So with this context, I posit the strategy is entirely destabilize and ultimately decapitate China. If that's right, you could just impose tariffs on China, but China has lots of export markets, so goods will flow through those. What if instead you impose tariffs on everyone? While China and the US have similar GDPs, China is much more dependent on exports.

• 2:22:46John Coogan?

  That means while the countries of the world like cheap Chinese exports, they don't depend on the Chinese market for their exports yet. China has actually been on a nationalistic spree recently, so foreign brands are more out of favor. We saw this with Tesla and some of the luxury goods manufacturers declining in sales in China, meaning they're an even less interesting market to sell to. The US, on the other hand, is the world's largest buying market. We are the consumers to the world. If we stop buying, everyone suffers. That means nearly everyone needs to come to the table with the US, even if there are universal tariffs. The US is also unique in that it is among the only country, the only countries that don't need to import anything. Don't get me wrong, we want to import iPhones and PlayStations and French

• 2:23:31John Coogan?

  wine and German cars, but we don't need oil, or food, or water, or most of the other raw materials to make sure people stay alive. So the US will hurt under a high tariff regime, but it won't collapse. Some manufacturing will move back on shore, but the biggest thing is every country needs to negotiate with the US. So what does the US ask for? I'm sure there's a bunch of nits with every country, but what if the big ask is it's us or them? You either trade with the United States, or you trade with China, but trading with both isn't acceptable anymore. For some countries, Vietnam, Indonesia, Philippines, the promise is to be the next China, but this time under more careful rules dictated by the United States. For most of the rest of the world, they're already massive net

• 2:24:13John Coogan?

  importers from China, forced to make a choice between selling to China or selling to the US. I guess that most would pick the US. German automakers are terrified of BYD, and the Italians and French haven't proven they can sell wine or cheese to China at any real volume. So what's China's response? It's tricky, because they've preached self-sufficiency and internal focus, but if the world order suddenly aligns against them, what do they do? I have no idea if this is the Trump administration's actual plan, but it is the only thing I've come up with that passes the sniff test. What do you think, Jordi?

• 2:24:43Jordi Hays?

  Yeah, I mean, this is already somewhat out of date, but in the sense that... Where I think it could make sense is that Trump is basically saying, you know, 90, you basically have 90 days to like recommit to aligning with the United States. Otherwise, the tariffs are back on for you.

• 2:25:03John Coogan?

  Yep.

• 2:25:03Jordi Hays?

  And yeah, I think I like these sort of like thoughtful attempts at analyzing what's going on.

• 2:25:12John Coogan?

  Yep.

• 2:25:13Jordi Hays?

  I think the, I think Trump is happy for people to believe that he's crazy. Cause it sort of plays into his strategy, but I don't necessarily believe that they're, you know, everybody involved is completely crazy.

• 2:25:26John Coogan?

  Yep.

• 2:25:28Jordi Hays?

  And I believe that they're, they, they, they aren't very clearly being as intentional as they, you know, can be, but.

• 2:25:38John Coogan?

  Yeah, I was, I was, this is.

• 2:25:39Jordi Hays?

  I'm hoping that, I'm hoping that, that candidly, we can shift back to talks, you know, SaaS espionage and.

• 2:25:47John Coogan?

  Yes, yes. I mean, seriously, I, I do get a lot more energy from deep diving llama than tariffs. Although this is a very important story, so we are covering it because this is the technology business. Production network?

• 2:26:01Jordi Hays?

  Programming.

• 2:26:02John Coogan?

  Programming network, TVPN, technology and business is our focus, but politics creeps in there every once in a while. But as you know, we never talk about politics.

• 2:26:09Jordi Hays?

  Never.

• 2:26:10John Coogan?

  But I, but I was thinking about in terms of like geopolitics, there was this, you know, alignment of like, you're either with China or you're with the US and China has the Belt and Road Strategy. And they've kind of brought, like when I was doing, I was interning at a venture capital fund that was investing in Africa and India. And a lot of the deals, like on the, on the ground level, the government would kind of have to decide like, do we want to align with an American company or a Chinese company to do this like infrastructure build out, right? Or you're going with like Halliburton or a Chinese, or some Chinese company. And what, one of the things that leaked in the cable gate news was like, on the ground, a lot of American embassies were, were highlighting

• 2:26:49John Coogan?

  that developing nations were more inclined to work with China because they felt like the government was more of a backstop. Whereas in the US, if that, if, if you had a deal with an American company and they didn't come through and they went bankrupt, there wasn't going to be, you weren't just going to ask America to, hey, hey, the company that we were doing business with is an American company and they didn't come through, can you come fix it? But China would, and that was kind of the Belt and Road Strategy, a lot of debt stuff. And so you can you can kind of imagine that there's a new order kind of building around China aligned with Russia and Iran and some African nations and some other nations in Asia. And then on the flip side, you have America, the West, and that kind of bridges us into our next discussion.

• 2:27:32John Coogan?

  I'm sure we won't get too into geopolitics, but we are joined by someone from Palantir. So we have Akshay here. Please, welcome to the stream. Thanks so much for joining.

• 2:27:45Speaker 06

  Great to have you. I'm doing great. Hopefully you guys can hear me okay.

• 2:27:49John Coogan?

  Yeah, you sound great, look great. Everything's fantastic.

• 2:27:52Speaker 06

  With the fake plant in the background, of course. No, it's good to be with you guys. My name's Akshay. I'm the chief architect at Palantir. I've been here for about 12 and a half years, lived a lot of lives. Things are still moving super fast, but I'm excited, kind of given where you guys are taking the discussion and everything you guys have been talking about throughout the the day and morning as well, so.

• 2:28:09John Coogan?

  Yeah, yeah, I mean, I don't want to go too into the whole thesis of Palantir in the West, but maybe we could start with like, what you're working on today and really, what does Palantir actually do?

• 2:28:23Speaker 06

  Yeah.

• 2:28:23John Coogan?

  I'm getting, it is a meme, but how do you describe it?

• 2:28:27Speaker 06

  And I think it's funny because it's been this, in some ways, it's been so consistent in intention, but I think the way the technology has evolved has been because like we had to kind of keep pushing the frontier of what we were limited by, what we built originally and what we had to kind of fulfill. And long way to way of saying like, it was always about how do we help people in operational contexts make better decisions? So it was very simple early on of like, these are people who are working in counterterrorism and specific defense workflows. And it's like, they need to be able to do their jobs better to avoid roadside bombs, to be able to uncover intelligence networks. Like, these are the actions, the decisions they're taking. And like, you know, the cheeky kind of naive first version of that was like, can't we build like a fine terrorist button or do some cool like algorithmic,

• 2:29:07Speaker 06

  you know, kind of analysis to do this? And it's like, well, you first need to build like the the dirty, dirty data integration plumbing to be able to then enable people do the interesting stuff, right? So that's the whole data integration, bringing together disparate systems piece of Palantir. And then it's like the requirements keep changing on you, right? Because it's like, okay, that works for the first intelligence workflows. What about the next set? What about then going into warfighting, which is much more kinetic, much more realtime? And so you have to keep building new parts of the stack to be able to enable different types of decision making. And then there's kind of the whole commercial journey, right? Which is like, okay, if we think about all of these pieces of technology, being able to reconcile complex systems, enable decision makers. It's like at BP, those were now petroleum engineers. Or Airbus, those were like people working on the A350 ramp up.

• 2:29:51Speaker 06

  And it's like kind of a different problem set, different nouns and verbs, but kind of the same kind of ooda loop of like, how do we get people to be able to make decisions better in these contexts? And so then you see kind of more layers of the platform and the architecture evolving to kind of meet all of these different needs. And it's like, I joke, it's kind of like building something through backpropagation. It's like you keep doing this forward deployed approach, seeing what doesn't work, seeing what you built isn't sufficient, and having to understand kind of from the coalface what to build.

• 2:30:17Jordi Hays?

  Can you talk about the the the potential trap? Because you you guys like made the sort of forward deployed model. And, you know, I think startups now can kind of like look at you guys and your success and be like, okay, we're gonna do the same thing, but I don't necessarily think that's always gonna end up in the same place. I'm curious how you thought about kind of, you know, as you were rolling it out, the sort of traps, what you wanted to avoid and how to make sure that, you know, you were actually building a, you know, real software business behind the scenes.

• 2:30:55Speaker 06

  Totally. And, you know, I could make it sound like it was all, you know, predestined and perfectly planned out, which it certainly was not. But I think like, the funny thing to me also is that it's become such a meme because it's like, it was the ugliest of ducklings back in like the mid 2010s. Or it was like, you guys are working for the government, deploying and doing what? And it's like, you know, it just was the complete antipode of like the consumer B2B SaaS kind of or B2B SaaS kind of thing that people expected to see. And I think now it's become very in vogue, which again is just very bizarre, I think. But, but to me, it's like, it is, um, like, I think you're, you're intimating here. It's like, it's easy to say you're doing it and just put a label on what somebody might call like, it's sparkling sales engineering. It's not forward deployed engineering. I think it was one meme, right?

• 2:31:36Speaker 06

  And it's like, to me, it's like, it kind of comes from how the organization is run. So like the first forward deployed engineer was Shom Sankar, right? Who's our CTO. And like, basically the organization was built around like, the field has this primacy. It's the primacy of winning and showing up for the outcome. And product has, you know, it was Bob Magru and folks back in the day and a lot of talented folks on both sides now, but there's always this dialectic between like field and core, right? And so it's like, as the field is uncovering what needs to be built, like, how is the core responding and how much circulation is there between the two? I think it's very different than the normal construct in Silicon Valley, which if you kind of go up and down the peninsula here, um, it's like, we have the kind of high priests or the privileged engineers that sit, you know, eating berries in Palo Alto or in, or

• 2:32:21Speaker 06

  in New York. And then if you're like a sales engineer or like a solutions architect, you go into the field, or we delegate that to somebody who's like a consultant, right? And, um, I think that is kind of the inverse model, right? Where it's like, if that, if you're just relabeling that team as being a forward deployed engineering team, that's not kind of the same thing as saying the way you do product development is kind of front to back. Um, and, uh, like you have to orient kind of your entire organization around that. And I think to your point, it's like, you have to think that there are complexities or worthwhile things to uncover through that method to make it worth it, right? It's not something that's going to make sense for maybe, you know, simpler product schemas.

• 2:32:57John Coogan?

  Yeah. Can you talk a little bit more about the forward deployed engineer? Uh, it, uh, in a lot of B2B SaaS, if you think about like the implementation of like an ERP or even like an email client or email SaaS product like Mailchimp, uh, there are agencies that pop up and effectively act as forward deployed engineers. And maybe they're like partners, gold tier, silver tier, or whatever. I can imagine that that doesn't make sense in a security environment, but, uh, was that ever evaluated on the commercial side?

• 2:33:30John Coogan?

  Or is that just completely off the table?

• 2:33:31Speaker 06

  Being able to kind of like have those like automations or sorry.

• 2:33:34John Coogan?

  Specifically like specifically like independent agencies or companies that are building an entire business just around Palantir implementation.

• 2:33:43Speaker 06

  Yeah, it's interesting because like that's now coming to life through alums that we have.

• 2:33:47John Coogan?

  Sure.

• 2:33:48Speaker 06

  Who've actually gone on to kind of make these kind of like more Spartan, I'd say smaller squads that are kind of dedicated consultancies now. I think the joke back in the day was like, nobody who was a consultant or was external would like bother to do this because like we're trying to build this plane in midair. We're trying to like, understand like your job as an FDE is not just to service the demand or to implement the use case. It's also to figure out what to build, right? And like, you are given kind of that creative power to say like, you now have to spend your nights, your evenings, you know, the off time you don't have, talking with product about what to build. And then showing up the next day or two days later with a new version and like, it's much more collaborative with a core engineering org. And I think that's where like, we tried to outsource that. I think there was always fantasies in the painful moments about like, we just get other people

• 2:34:30Speaker 06

  to do some of this stuff. But it's like, the real magic is saying like, you are all part of that shared engineering core. And it's the same, by the way, like kind of hiring profile of somebody who's kind of a core dev or somebody who's an FDE. And all the people who are like core product leaders now were FDEs before. And so I think that that kind of results in a different kind of profile between the two.

• 2:34:49John Coogan?

  Yeah. Can you talk a little bit about where, just some case studies on the commercial side? I remember hearing about the Airbus case study around manufacturing logistics. When everyone, somebody asks, oh, what does Palantir actually do? It's very easy to say like, you have a bunch of parts, you need to know where they are and how much they cost and whether or not they're in stock and all this stuff. But are there other, how are you explaining it to like a a non aerospace Fortune 500 company today?

• 2:35:16Speaker 06

  And I think that that very much is the kind of progression over the past couple of years. I think as the business has really grown, there is of course, like the industrial, like hardcore, I love this stuff, right? It's like, it's the new warp speed cohort. It's like, it's Sironic, it's Andoril, it's Eperus. And they're doing, and like, it's like nuts and bolts stuff. But I think what's more subtle, and I think what's kind of unifying among all these things is like, what are we actually doing with the software now, especially with the AI platform? With the Gen AI piece, it's like you're modeling the world, right? Of course, the other Palantir meme is ontology. They just say ontology to everything, right? It's like, what do we mean by that? It's like, it's a shared model of decision making. And it's like, you have to model, of course, all the objects and links, like it's the it's the underwriters, it's the claims, it's the movements across those things.

• 2:35:58Speaker 06

  But then it's also the actions you can take, and it's all the compliance and security requirements around who can take what actions. And then it's like the reasoning or the business rules that govern how all of these like states can change, right? So it's kind of almost like a digital twin of not just the asset, but the business process. And so in that sense, like you're seeing a lot of really cool workflows now in hospitals. So like Cleveland Clinic, HCA, Tampa General, where it's like they're talking about nurse scheduling. And what's cool is like you have this kind of teeming between human users, like the nurse schedulers, and then AI able to actually be useful in those contexts, because you can kind of measure when and how you're injecting the AI. You can put guardrails around what it can do and what it can't do. And it's kind of right there with you in the same context.

• 2:36:40Speaker 06

  So it's not like this weird black box off to the side where you're like, I hope the AI does something useful. And then if it doesn't, like, I'm just going to pivot back to doing my other thing. It's this kind of like incremental rollout within these existing workflows. Staff scheduling, you know, patient lifecycle, things like that. One that's really cool is AIG recently talked about underwriting and like how they're driving automation through underwriting, you know, with all their core benches. And Dr. Karp and Dario from Anthropic were on stage with the CEO. And they were talking about kind of how this incrementally happened by, you know, first modeling the underwriting process in the software and then gradually driving more automation through it. So I think domains like that are showing a lot of really interesting and like kind of colorful usage outside of what you might typically associate with Palantir.

• 2:37:23John Coogan?

  Yeah, it must be so funny to be using Palantir in the global war on terror. And then as like a field medic, and then you get your job as, you know, someone in a hospital and Palantir shows up again. And you're like, yeah, this software defines everything.

• 2:37:39Jordi Hays?

  How do you think that just agents in a B to B context are sort of?

• 2:37:47Jordi Hays?

  Uh, overhyped, underhyped, has your thinking around them changed at all? I mean, when you guys started the company, agents were just called bots. And now, now they're, they've got a shiny new name and it's very exciting. But I'm curious how you're, you're thinking around sort of the high level concept of agents has changed from, you know, basically over the last decade.

• 2:38:08Speaker 06

  No, it's, it's a really good point. And I think it is interesting to see kind of the nomenclature shift on you over time. And I think our perspective is there is something, you know, unique and significant about the rise of generative AI, like all the transformer based architectures, what you're seeing, especially with the latest generation of frontier models, as being essentially like a reasoning engine that can be used in concert with decision making. And so like, from our perspective, it's like, what these agents are showing is the ability to actually creatively be able to deal with that decision graph, with that model of decision making, and then actually provide real horsepower that first augments human users, then can kind of slide up to automation. But I think to your point, it's like, how is this not just hype? From our perspective is like, is there an actual story you can tell around like, it

• 2:38:50Speaker 06

  could be 10% useful with maybe the first phase of underwriting, like the exploration phase. And then I can actually have a smooth curve up as I start to drive more agentic behavior through the workflow. I think where we tend to see like the hype bounce off of people, especially enterprises, at this point in the cycle especially, is where they're saying, you know, when, when people are telling them, just trust us, you know, it's just, you're just going to like flip a bit. It's not going to be a sliding scale, it's going to be a bit flip and, and hope that it works. Cause I think we all know that that's not how it works. And I think what's actually kind of ironic is that's not how it works with any human user either, right? It's like if you're training an employee or like the Japanese call it like deshi, like an intern, it's like you're gradually leveling them up over time, right? And so I think we're very bullish on that. And I think we're seeing a lot of very cool use cases in, in that sense.

• 2:39:35John Coogan?

  Can you talk a little bit about the tariffs? Uh, I'm sure that a lot of customers are rethinking their entire supply chains potentially. Uh, how does Palantir play into making great business decisions in uncertain times?

• 2:39:49Speaker 06

  Yeah, I think it kind of gets what you were saying at the very beginning around ERP systems, right? And kind of these rigid legacy systems. And in some ways, you know, these system shocks, these exogenous system shocks especially, are a bit reminiscent of things like COVID, where it's like, it kind of tests the state of your software, right? It's almost like an environmental pen test against the state of your operations. And so I think where, you know, we've tried to provide value for existing customers and where we're engaging new folks, is where they're saying like, hey, like, we feel trapped by the rigidity of the existing system structure, right? Like, you know, our ERP models things one way, our second, third, and fourth ERP models things in a discontinuous, slightly different way. Same with our MES systems, our PLM systems, our ordering systems. And it's like, what we really need to be able to do is understand, A, what's

• 2:40:31Speaker 06

  going on across everything, and then be able to impose strategy, and kind of reconnect strategy with operations, in a way that can actually be adaptive, right? I think what we're not doing is going to people and saying, hey, there's a magic wand that will magically fix all the tariff issues, you know, no matter what the circumstance is. But can we instead give you like, an operating system, to be able to say, you can now actually like, kind of like, you're a pilot in a jet, be able to navigate through, as conditions are changing, test things, get leverage through AI and automation, and kind of be on the front foot when it comes to this stuff. And I think, you know, we've had customers who have talked about their supply chain journey with Palantir, with General Mills, Tyson, others. And I think they're great examples of people who have like, it's almost like they're retaking control from like, all those legacy systems.

• 2:41:12John Coogan?

  Can you talk a little bit about the, kind of the broader Palantir ecosystem? I know that, obviously, Palantir sits on top of a lot of like, on-prem servers and cloud, different mixes of cloud tech. And then, now with AIP, there's now companies that are building on top of Palantir, so they're kind of sandwiched there. How are both of those going? Where are the pockets of opportunity that you're seeing in like, the high growth, that's maybe indexed to Palantir's growth, which has been fantastic, but outside of the Palantir direct ecosystem?

• 2:41:45Speaker 06

  Yeah, no, it's a great question as well. Unlike the stuff below, I would say like it's like the infrastructure we deploy on. There's of course like a broad strategy to keep adopting more and more infrastructure like substrates we can deploy on, right? So whether that's Metal, that's the three major hyperscalers, that's Oracle, that's being able to deploy, you know, in sovereign clouds, like we've built our Apollo platform to allow us to be able to kind of do this in a highly leveraged way without having to rebuild those core components in every single environment. I think like it kind of there's a general trend towards more options there. I think we're also to your point like kind of riding the wave around, people have gotten to the cloud or they've lifted and shifted a lot of data and maybe some data science workflows, but now it's like it's time to operate. It's like, okay, like, am I actually like, are the core business workflows, those nurse

• 2:42:29Speaker 06

  scheduling workflows, those underwriting workflows actually changing? And I think there's a ton of like kind of tailwind from people saying, I did the first step. Now, like, what's the operating system I'm using in the cloud? And I think that answer more and more is Palantir. Things on top, I think, that are really interesting. There's of course, like, there's partnerships with the AI providers, there's partnerships with, you know, folks like Databricks and others. But I think what's really cool, and we actually just announced it, I think, a couple of minutes before we went live here, is like, it's the startups cohort. So it's people being able to actually build their entire kind of businesses on top of Palantir and say, I like the leverage I get from the integrated, you know, data tooling, model tooling, workflow tooling. It's like, I don't want to start from scratch, like 2016 style with the hyperscale. I want to build like on the 10th floor now. And so there's a ton of great startups there.

• 2:43:13Jordi Hays?

  Yeah, talk about why companies should be taking that product extremely seriously. Because I remember there was not that long ago when people said, oh, you know, don't like, don't build a Shopify app, like, you know, and then you have like all these unicorns that kind of like started as Shopify apps.

• 2:43:32John Coogan?

  Don't build a Chrome plugin. And Honey sold for a billion dollars.

• 2:43:35Jordi Hays?

  Yeah, so I think if you want, yeah, if you want to do anything in, especially in industries around national security, I feel like building on top of Palantir is a way to like, you know, potentially accelerate

• 2:43:47John Coogan?

  Totally.

• 2:43:47Jordi Hays?

  trust and things like that. But would love to hear it in your words.

• 2:43:52Speaker 06

  No, I think that's well put. I think there's two dimensions I think about, right? One is, like you said, like it's being able to get leverage in kind of the, it's access and compliance and these sorts of things. So it's like, I want to work in, I want to get access to problem sets or mission sets. And so our mission manager offering on the government side allows you to be able to get high side, get into these domains and deploy your products. And there's a ton of great examples of that. And I think people see a lot of value. That's kind of more of the infrastructure enabling you as a startup. I think there's then building with kind of the platforms that are at kind of the above the infrastructure level. So this is Foundry and AIP. And there are folks saying, like there's Helm Guard and others who have presented recently that say like, to build the AI-enabled applications that I want, this is the toolkit I want to use to build them, right? Because kind of everything

• 2:44:36Speaker 06

  from that data integration layer, the ontology layer, the workflow layer, the SDKs, all of that stuff is like, now it's the equivalent of like the, you know, in the personal computer era, like the, it was great to build against core components on my IBM PC or my son workstation. But it's like, I could really use an operating system to be able to like build at a higher level and build much more sophisticated things. So I think that's what we're seeing. We had our second developer conference three weeks ago, and they had a bunch of startups there kind of telling that story in effect.

• 2:45:05Jordi Hays?

  I think I already know the answer, but do you feel like you guys are just getting started? I imagine with these, you know, customer relationships you have right now and the existing products, every single time you maybe like, think you hit the end of the product roadmap for like a certain category, it's like, you know, you get the next, you know, request from a customer and it's like, hey, there's this whole area and opportunity that we weren't even thinking about a year ago, much less five years ago.

• 2:45:31Speaker 06

  You took the words out of my mouth. It's like, it's kind of an incredulous thing to say, I realized a little bit of like self-awareness in Silicon Valley to say like, you're 12 and a half years in and it still feels like it's been a blink and there's like, it's just, it's like the joke, it's like it's the end of Dune book one in like the first, it's like, it's like, we're just getting, like, we haven't even gotten off of Arrakis yet or whatever, or like whatever metaphor you want to use. And it's like, I totally feel that way because it's like, a lot has happened, a lot has transpired and I'm, it's meaningful and there's so many people that were part of the journey that are now in the ecosystem of folks you guys have been talking to and others broadly. But it does really feel like it's just the beginning.

• 2:46:04John Coogan?

  I want to know about the shift in security mindsets, specifically in the commercial sector. We've heard a lot of talks about corporate espionage, even in B2B SaaS. But obviously, there's a bigger national story around security, even outside of a government context. Are you seeing increased demand from corporations that maybe don't need to be ITAR compliant? Just around taking their software and data more seriously in terms of security?

• 2:46:39Speaker 06

  100%. And I think that manifests in a few ways. One is just like it's the core, kind of like hygiene or meat and potatoes part of that, which is like, it does feel like the threat vectors are increasing, the threat profile against any prominent company in America is increasing. So the way that we operate our core workflows, the way we secure our data, I think is more top of mind. It's not just sort of in the purview of the CISO or the CIO. I think everybody's thinking about it now, especially given kind of global volatility trends writ large. I think there's also this sense of like, if we're going to have to take these big leaps forward with AI or with building the next generation of digital applications, like these seem like they're going to be big shifts in the business. And they're going to affect a lot of, not just the technical users, but the business users, the operational users.

• 2:47:24Speaker 06

  So for building like essentially the next foundational parts of the business, like I want to be very sure that we're building it in the right way. And I think, as you guys probably know, like a lot of people have battle scars from the prior generation of stuff, not having been built the right way, or there being, you know, things that people have had to deal with off the back of those designs. So I think people are definitely tuned into that. You're totally right.

• 2:47:45John Coogan?

  Yeah. Culturally, what's changed as Palantir has become a public company? I know you've been there before when Palantir was private, now you're public. Is it stressful having a stock price out there every single day? Have things kind of been business as usual? What's the shift been?

• 2:48:01Speaker 06

  I think, honest, for those who've been around, I think what's cool is that the hiring profiles and the people that are coming in seem as good now as they ever have been. You know, this is the shameless plug for we are hiring, all the things, but it's like, it's still a very young and vibrant place, which is why maybe like the temporality in my mind is a little bit broken as a result of these things. I will say one thing that's different for sure is like your friends and your family and your college friends, like talking about the stock up and down. It's like, people couldn't pronounce the name, people had no idea what it did for like most of the time I've been here. So like, it's still very bizarre, I think, for anybody who's been along or been around it to be like, people care this much about this? And it's like, of course, we always cared, but like, that's still kind of bizarre. When you get these ping, like, you know, LinkedIn requests from somebody who went to high school, where then he's like, hey, man, I'm in the retail investor community, keep

• 2:48:46Speaker 06

  it up. Or it's like it went down and it's like, hey, can you do something about it? It's like one or the other, right?

• 2:48:51John Coogan?

  Can the devs do something about the stock price?

• 2:48:54Jordi Hays?

  How do you, how do you personally think about AI safety? So not, not speaking for Palantir on this one. My, my, you know, one of the reasons I'm curious is, you know, reacting to AI 2027, which who knows if you even had time to like read through from last week?

• 2:49:11Speaker 06

  I'm not halfway through, but I did the mistake of like watching the interview and then reading some of it.

• 2:49:16Jordi Hays?

  Yeah. No, but like in the sort of like doomsday scenario, like I imagine like you and the Palantir team are like in a war room with the president and it's like, hey, we gotta like figure out how to like, you know, save humanity from the bots. But I'm curious, like, you know, general maybe reaction to that piece and then, you know, how, how you're thinking about it more broadly.

• 2:49:37John Coogan?

  I mean, just the shift from deterministic computing to probabilistic computing injects like just so many risk vectors. I'm dying to know, what do you think?

• 2:49:44Speaker 06

  No, I think, again, I'm on the same wavelength as you guys. I think like, AI, I like those pieces. I think even if people dismiss them or try to critique them for being kind of sci-fi, it's like, I think it's good that people are doing some definite thinking, even if it is a bit forecasted. I think this is true of like, you know, the piece, you know, Machines of Loving Grace that Daria put out as well. And it's like, I think it's worth having these sort of like future looks just to be able to at least game theory through some of the implications here, as you're saying. I think what you touched on, John, I think is exactly it, which is like if you assume these things are probabilistic or probabilistic in some degree and are going to have more agency over time, like what is the outer shell of assurances that we're building to keep the machine subservient to the human?

• 2:50:26Speaker 06

  Right? In like the grand sense of like human agency, right? As people of the world. And I think like that's where careful system design from our perspective is so key. It's like there's kind of testing the models in isolation, but then there's like the live fire exercises of how do these things actually perform in indicative contexts? Like whether that is a battlefield or that is a production line or that is a hospital. And I think like we have to evolve the testing frameworks to take into account more of the operational theaters, so to speak, and then be able to pull back the requirements from there. There's a lot of pontificating. I think that's easy to do when you're just looking at the models themselves against benchmarks. But it's like, how do you evolve past benchmarks to operational testing? And this is kind of what we've done with other sectors, right?

• 2:51:08Speaker 06

  With like, whether it's electrification or it's like other kind of core assets to make up the digital world. Not in the same level of sophistication, but we had to evolve how we're measuring efficacy, right?

• 2:51:17John Coogan?

  Yeah. I feel like Palantir has taken a pretty foundation model agnostic approach, kind of a bring your own, bring your own foundation model if you're a company. Obviously you do have some partnerships that are bigger than others, but that makes sense from a commercial or DOD perspective. But what has been your reaction to DeepSeek? It's open source and people think, oh, well, if I run it on my own hardware, I'm all good. But there's been kind of a sci fi-esque debate about is it possible to embed kind of a Manchurian candidate in the weights that wakes up when it is like, hey, I'm, it turns out I'm in a DOD data center. I want to do something different. Is that pure sci fi? Is that something that you need, we need evals for?

• 2:52:02John Coogan?

  We need extra testing. We need to air gap and then kind of test in a, in a, you know, offline environment first before we deploy these? Or do you think it's all sci fi and it's not worth worrying about?

• 2:52:13Speaker 06

  Well, I think there's probably some Aristotelian mean there, right? Where it's like, I think, even if it's not all sci-fi, it's like, I think there are real challenges across the intersection of different considerations. One is like, our ability to mechanistically interpret these models is still limited. So even if you assume it's not malicious behavior on part of the DeepSeek or a CCP proxy, you could still have a situation where the model's not understandable and therefore you can't trust them for the spectrum of utility. I think, given that ambiguity, and also the ambiguity around like, what was the story behind DeepSeek's creation? I think there's less ambiguity around the control that the government can exert on them in China.

• 2:52:56Speaker 06

  I think it all points to like, why would you add up that composite risk profile and go all in on that if you had open source options or equivalent options in the Western world? And I think this is why it's important for us to have the ecosystem of proprietary models. Commercial models are great, but also open source models like the Llama release that we saw. And you're going to have different cases where the abilities and the controls provided by each of those different types of models is going to be suited for different domains. For instance, there are going to be certain government domains where a commercial model provider will not be suitable. There are going to be domains where it will be. And it's like, we want to have, as the West, as the US especially, the full range of options to come to the table with.

• 2:53:41Speaker 06

  I don't think we want to be in a case where we feel like we're backed up against the option of having to go with a foreign model, especially one from a rival regime.

• 2:53:49John Coogan?

  Yeah. Do you think every Fortune 500 company needs their own set of evals for when these new LLMs drop? Because you see what happens on LM Arena, and it's driven by the vibe of whoever's voting that day, or even MMLU and some of these IQ tests don't necessarily translate into better business value. And so I'd love to know what you're seeing from Fortune 500 folks or bigger business folks on how they make decisions about what models to use as just cost to benchmark? Or is there more nuance to it?

• 2:54:27Speaker 06

  Yeah, I feel like there's a great tweet in there. I mean, the evals vibe, like vibes are not enough for something like that. But it's like, I think certainly, absolutely, right? I think this is part of like the idea or the thesis we have for like this shared model of decision making that is this ontology system. Like how we design evals is literally around that, right? You could, you can say there are sample workflows. There are, you know, unit tests that have to pass every time you upgrade the, you know, the agentic logic for that underwriting workflow at AIG or whatever it might be. And, and, and, you know, it's not just like an abstract set of tests. These are actual like in vivo tests that, you know, have to pass and yield certain results either deterministically or probabilistically for us to be able to go forth and, and, and continue with this workflow. And so, and even if nothing is changing, maybe we're just periodically running these tests because these models, like you said, are probabilistic, right?

• 2:55:12Speaker 06

  So things can change over time. So if the underlying model is shifting on us, we want to know that. But I think you're totally right. Like enterprises have to get into a mode, I think, of thinking about the way they're instrumenting and validating the application of AI as being kind of one in the same with rolling out these evals in an operational sense, right? If you're, you can't, you can't, you can't kind of control or, or improve what you can't measure, right? And I think it's, it's kind of the same concept here for bringing AI into these critical spaces.

• 2:55:38John Coogan?

  Yeah, it's kind of like the way a hedge fund would back test a strategy and see, okay, yeah, if we apply this to all of our historical data, it's like new model comes out, let's just reevaluate every piece of debt we've ever underwritten or every policy we've underwritten and see if we get a better performance. That'll be fascinating. I imagine that there's a business to be built there. Maybe it happens at Palantir or somewhere else, but very, very cool idea. Jordy, do you have a last question? No, this was, this was fantastic. Two minutes. Thanks so much. Looking forward to the next one. Yeah, this is fantastic.

• 2:56:08Speaker 06

  Yeah, looking forward to it, guys. Thank you so much for having me.

• 2:56:10John Coogan?

  Thanks for making the time. Cheers. Uh, let's run through some timeline to finish it out. Um, uh, Cole Rotman says Mazel to OpenAI fund for turning $8 million into $600 million of paper gains from just two deals in $175 million fund, based on his math. Did you see this? They did Harvey, they led the $5 million seed in 2022, and now the Series D in 2025 is a $3 billion value.

• 2:56:37Jordi Hays?

  Sam Altman is is pretty good at being a VC.

• 2:56:40John Coogan?

  It's insane. It's insane. And then Cursor, they led the $8 million seed in 2023. And the Series B is at a 2.6 valuation and might be getting like a 4X markup soon. I think we see, we saw some leaks around, so could be, you know, a 5X fund off of two deals in just three years, which is remarkable, remarkable. You'll love to see it. Anyone who's in that fund, anyone who's exposed to those deals, they're going to be sleeping well, but they could be sleeping better if they got on an 8Sleep nights that fuel your best days. Turn any bed into the ultimate sleeping experience. Go to 8sleep.com/tbpn. Lindy Man says, "There's nothing to fear. Smart people adapt. In the 2010s, they went into

• 2:57:23John Coogan?

  software. In the 2020s, they will open up factories. It's all the same thing, finding angles and edges." I thought this was a kind of interesting white pill you threw in there. It is interesting that like, that's the nature of capitalism. It's, it's, you know, water finding cracks in the middle midst of a jar full of pebbles, or the way sand flows through a jar of pebbles. If tariffs go up and there's a bunch of incentives, like, you know, the Hadrians and the base powers, they're ahead of this curve, but that's not the end of the story. There will be plenty of people that see the news of the tariffs stick and say, "Hey, this fundamentally changes the economics. I'm ready to write checks if I'm a VC. I'm ready to build a factory." And yeah, maybe it will be a slightly different

• 2:58:06John Coogan?

  work environment than building B2B SaaS, but I'm ready to make it fun. I mean, a lot of the, one of the coolest things that's happened over the last few years has just been like the El Segundo movement and like the Aaron Slodovs and the reindustrialized folks just making, you know, that that meme obsolete of like, everybody wants to reindustrialize, but no one wants to work in a factory. Well, like, a lot of people are down to work in factories now, because it's not that dirty. It's actually like, oh, there's just a big machine over there. There's still some offices. It's quiet. You're fine.

• 2:58:36Jordi Hays?

  Anybody that has ever made, made something, you know, in the, in the context of a business, it doesn't really matter what it is, right? Even if it's a startup and you get a little bit of revenue and you make some merch and you can suddenly hold, you know, a product in your hand. It's amazing. So I actually do believe that people, many people would rather, you know, work in a factory or work around factories. And be involved with producing things, not just software.

• 2:59:00John Coogan?

  Well, after you produce things and you start selling it online, what are you gonna have to do?

• 2:59:04Jordi Hays?

  You're gonna go.

• 2:59:05John Coogan?

  Pay your sales tax.

• 2:59:06Jordi Hays?

  You're gonna go to Numeral HQ.

• 2:59:07John Coogan?

  It's sales tax on autopilot, folks. Spend less than five minutes per month on sales tax compliance. Go to Numeral HQ.

• 2:59:14Jordi Hays?

  Twenty-five states are now taxing software sales. Get in front of it. Just do it.

• 2:59:21John Coogan?

  And we had a really cool launch video from ZipLine. This company's been around for a long time. We should ideally pull up the video if we can, but regardless, ZipLine is a drone. They're kind of vertically integrated drone delivery. They make the drones, but then they also run the service. And so they were in Africa doing blood deliveries via drone. So it's a very important to get it there very fast. Someone's bleeding out, you need a blood transfer, send it from the central hospital as fast as possible. So even though drone delivery is expensive, totally makes sense in that, in that case, they built out a ton of technology, ironed out a bunch of problems, and now they're ready to bring it to the United States. And they are launching in a few states, Texas and a few other places.

• 3:00:05John Coogan?

  Seems really cool. And we were talking to somebody here, we can watch this video because I think this is so cool.

• 3:00:11Speaker 07

  I love to work on things I'm passionate about. I think when you're passionate about something, it doesn't feel like work anymore. You might observe it as like type two fun, because often if you're passionate about something, you're willing to do things that other people would find harder than anybody would want to do. But it turns out when you're passionate about it, it's, it's just, you know, it's fun.

• 3:00:28John Coogan?

  And it's just such a different vibe than the normal hard tech vibe reel that's like really intense. With like over the top music.

• 3:00:37John Coogan?

  Just like chilling.

• 3:00:42Speaker 08

  I know it's been a lot of sacrifice for a lot of people to make this happen.

• 3:00:46Jordi Hays?

  This is such a fun sci-fi future. Yes, the drones, drones are gonna be a little bit noisy. Hopefully they can figure out the noise problem.

• 3:00:53John Coogan?

  Yeah.

• 3:00:53Jordi Hays?

  The magic now of pressing a button on your phone and getting an item.

• 3:00:56John Coogan?

  Totally.

• 3:00:57Jordi Hays?

  In, you know.

• 3:00:59John Coogan?

  And we were talking to somebody who I think was an investor in ZipLine, and he said that something like eighty to ninety percent of all of the goods in a Walmart fit in that drone.

• 3:01:08Jordi Hays?

  Yeah.

• 3:01:08John Coogan?

  And so, yeah, you're not gonna drone delivery like a couch, but like for most things, you can actually use the service and hopefully the economics pencil out in, in a viable way. I definitely want to have the, the team on the show soon and talk about it, but. Really like above all else, it just stuck out that they went with such a different style and aesthetic for their launch video with something much more ethereal and it just feels like summer and it just feels like you're just relaxing and a drone comes to deliver and it's like, yeah, this is cool. This is sci-fi. This is tech, but it doesn't need to be cyberpunk. It's the future, feels like the future. There's something futuristic about this, but it's still very pastoral and it feels like something that integrates with just like the kind of vibe of like hanging out on a ranch in Texas. It was just a really

• 3:01:52John Coogan?

  nice video and it was just, it was just cool to see someone take a very different direction from what we've seen that it's been a cool meme. We've played into it a bunch, but it's maybe at the end of that road and maybe something like this is what's next. So go watch the full video and sign up for ZipLine if you're in the delivery area, I guess. Will Nitsy says, "The only career question that matters is what can you be world-class at and everything else is noise?" I like that. It was kind of paired with what we were talking about yesterday with the intersection of two novel ideas or areas of expertise being something that LLMs struggle with and I think this will be a continual-

• 3:02:33Jordi Hays?

  Big opportunity for humans.

• 3:02:35John Coogan?

  Big opportunity for humans. Yeah, I mean, I think AGI in many ways has been achieved, but very few people would say LLMs are world-class at really anything. And they kind of go through this gelman amnesia thing where if you don't know about a topic and you ask an LLM to talk about it, it can kind of get you up to speed. But when you talk to somebody who's much deeper, much more aggressive, much more definitive in their worldview around that topic, they're going to give you much more insight. And that's why-

• 3:03:09Jordi Hays?

  Well, John, I would disagree. They're world-class at creating Studio Ghibli copycats-

• 3:03:14John Coogan?

  That's true.

• 3:03:14Jordi Hays?

  -or pennies on the dollar.

• 3:03:16John Coogan?

  That's true. They're world-class at creating viral content, as I tested it, because the actual Studio Ghibli photo I posted from the real movie Spirited Away, not a banger.

• 3:03:25Jordi Hays?

  Flop.

• 3:03:26John Coogan?

  Flop. But when I took Oppenheimer and made it Ghibli, it got like 30,000 likes. People like that. Let's go to MDA. They say, "VCs told me, build a pitch deck, design a roadmap, hire a dev team, but no one told me, post TikToks, trigger FOMO, make it look like a trend, not a tool. That's when I started thinking like a dropshipper, not a founder." What do you think? Insight.

• 3:03:50Jordi Hays?

  I don't know. I don't know where to take this. But I, I think if a lot of companies posting TikToks, good way to get customers.

• 3:04:01John Coogan?

  I talked to a, a Gen Z founder who said that my distribution strategy is if I'm in, if I'm building something for consumers, I'll make viral TikToks. And if I'm selling something B to B, I will hire Nepo babies because the Nepos will have parents who are involved at businesses.

• 3:04:19Jordi Hays?

  Yeah.

• 3:04:19John Coogan?

  And, and they will be able to get my, my product.

• 3:04:22Jordi Hays?

  Yeah. One, one thing this made me think of is this guy Cormac, who's built a company called Oasis. He started posting information about water quality, started posting TikToks and, you know, eventually built out a database where you can sort of get access to different data. And he basically tapped into something that was like very much a trend of people wanting to understand what's, what's in their water, what's in other products that they're consuming. So yeah, I think in general, powerful to tap into it, you know, make sure that your tool is part of a bigger trend. Otherwise it's going to be really difficult to get the type of real traction.

• 3:05:02John Coogan?

  Totally. Yeah. The hype can get too much and you can get lost in the sauce and you can just become like a TikTok company. But there's something about the communication and casting a wide net that clearly lets things ramp. I think we probably saw that with the, the, the Crea team. They had like 20 million users or something like you don't get that without going viral. I'm not sure if they did it through TikTok, but they certainly became a trend and that enabled a lot of fundraising and stuff. Speaking of fundraising, 25 year old police drone founder, Blake from Brink Drones just raised a $75 million round led by Index. I met him camping like a year or two ago. He's a Teal Fellow, great guy and fascinating.

• 3:05:43Jordi Hays?

  I love this photo. The drone's just hovering behind him.

• 3:05:46John Coogan?

  Yeah. Yeah. He's a fantastic builder.

• 3:05:48Jordi Hays?

  They come with me everywhere.

• 3:05:48John Coogan?

  Yeah. Yeah. And he has a very interesting use case. So I really want to have him on the show to talk about like, how do we build the American DJI? You know, obviously like, how do you get to market with something reliable? He's going after drones for police because the police legally cannot buy DJI anymore, or in many jurisdictions, they've been banned. But if there's a broader ban, I'm kind of getting. Burned out on the defense tech stuff and I want consumer products now. I want, I want there to be, you know, world peace and then everyone's like, oh yeah, actually we can pivot back into hardware.

• 3:06:24Jordi Hays?

  Well, yeah, this is the obvious thing with Neros, right? Uh, Soren was a drone racing pilot. I imagine he wants to, you know, save the world and then get back.

• 3:06:35John Coogan?

  Yeah.

• 3:06:35Jordi Hays?

  To his original passion of racing drones.

• 3:06:37John Coogan?

  Yeah, yeah, yeah.

• 3:06:38Jordi Hays?

  You can imagine Nero's doing something in consumer.

• 3:06:40John Coogan?

  Totally. And it's just like, it's just the nature of the market that if Soren at Nero's had said, hey, I'm this fantastic drone pilot. I'm going to build a consumer drone FPV product. People would be like, that's too capital intensive. You'll never be DJI, blah, blah, blah, blah, blah. There's a million reasons why this won't work. He wouldn't be able to get funding. You know, let, let's, uh, let's bring about world peace and then get back to having fun with some drones, making some cinematic videos. That's what I want. Anyway. Any other posts you want to close out on or I think we're good.

• 3:07:09Jordi Hays?

  I think we're good.

• 3:07:10John Coogan?

  This was a fantastic show. Thanks for watching everyone. Don't forget to leave us five stars on Apple Podcasts and Spotify and stay tuned for the next one.

• 3:07:17Jordi Hays?

  Just do it.

• 3:07:18John Coogan?

  We will talk to you soon.

• 3:07:19Jordi Hays?

  Looking forward to tomorrow.

• 3:07:20John Coogan?

  Bye.