FULL INTERVIEW: Anjney Midha on Fixing AI’s Biggest Bottleneck

0:00 First time with his new fund AMP PBC. He's here in the waiting room. He's here with us in the TV panel How are you doing? >> generational run. Yes. >> [laughter] >> Generational run. >> know. It's getting started, guys. No, generational run is used for people who are retiring. Oh, yeah. That's true. That's true. >> it's I think it's appropriate to I think it's important to recognize when you're on a generational run that you realize you have to actually level up even further if you want to stay on the same trajectory.

0:28 >> Yeah. Yeah. >> Uh cuz if you just get complacent then >> [laughter] >> Yeah, it's important to like count the chickens before they hatch. Like that's what you're saying? >> No, no, no. The The opposite. >> [laughter] >> Anyway, great great to have you back on the show. Um Uh it's been it's been >> Yeah. Fun to um But yeah, catch us up to speed on >> Yeah, what Yeah, when did the fund launch? What do you know, what's the strategy? Uh and uh yeah, like like like walk us through like the current thesis for how you want to actually develop the firm.

0:56 No, I think we should talk about something more interesting. Let's talk about eBay. Let's talk about eBay. >> Okay. Yeah, what you got? So So here's what I'm And I want you guys to kind of spar with me, right? So I looked at the Ryan did this CNBC interview and everybody's like pinging me and saying, "Oh my god, this makes no sense. Blah blah." And And so here's my my take on it, okay? Which is that like if you read the GameStop deck like carefully for eBay most of what's been said about the deal in the last 48 hours is basically totally wrong. I I read I was just before jumping on I was reading Michael Burry's piece on it, which you guys should check out. Yeah.

1:30 Um and he's right that the leverage is pretty tight. But I think he's not answering the wrong question. And so is Ryan on CNBC where he's you know, they keep asking him like where's the cash? How are you going to fund the deal? >> Yeah. I I don't think the question The question isn't can GameStop afford eBay? The question is whether the underlying business actually works. And And it does, but not for the reason I was expecting Ryan to pitch.

1:58 >> Okay. So if you if you pull up eBay's 10K from February, Yeah. fiscal 25, and I did not understand this until I read it. eBay spent 2.4 billion dollars on marketing. Mhm. How many new users did they get for that? I mean, you guys are marketers, you understand. 1 million. Woah. That's crazy. >> The user base went from one 134 million users to 135 million users after spending 2.4 billion on marketing. >> So and that's basically they're basically you you would have to imagine they're just having to reacquire all their old users, people that have been on the platform before, or maybe even lost their account, and they're they're they're coming back.

2:40 I don't know, but it's That's $2,400 of marketing per new user on a site that every American already knows exists. >> Sure. >> Yeah. So where's all that money going? That's rough. So I don't think Cohen is I don't think he's buying eBay. Like just watching Ryan, I don't think he's buying eBay because he thinks he's smarter than eBay's product team. I think he's buying eBay because he can see 2 billion dollars of fat that Wall Street has been pricing as fixed cost.

3:07 And so he goes, "Okay, let me cut that." And the interest on the debt just pays for itself. Mhm. Interesting. >> Right? But he doesn't necessarily want to say that cuz he could kind of give that idea to the management. >> to put the money together, right? But is your thesis that like the deal is coming together? He has investors that he's talking to, but it's too early to say, "Oh yeah, I actually do have a fund that's going to give me another five over here. I got seven over here." And it will map out, but just give me a week. Or is there something else going on?

3:35 It depends on which investor he's talking to, but if he's pitching me, here's what I would Yeah, yeah. underwrite, right? I'd say, "Okay, that's the floor. The floor is Ryan's going to cut 2 billion dollars from this thing of fat, put that into treasuries, and we're going to make more money Sure. than it's currently yielding. Okay, so that's the floor. Now, the ceiling, cuz I'm a I'm a technology investor, right? Yeah, the opportunity. Okay, so Amazon's used and collect collectibles business has been flat for 6 years.

4:03 They tried to renew it, they tried collectibles, they tried trade-in, none of it scaled. You cannot put a 1962 Mickey Mantle card through the same warehouse as a phone charger. That category that category, right, collectibles is structurally defensible against Amazon. Amazon is for phone chargers, Mickey Mantle for eBay, right? eBay has the marketplace, GameStop has GameStop has like 1,600 stores that could physically verify the good. That's a real moat. Yeah, yeah. And it's worth more in the AI era than the human era, right? Because why? Because when AI I I collect I love collect like rare pens, okay? This is a Montblanc. Sure.

4:39 As I get I love it. I'm a pen guy and I I love old vintage glasses. I don't know if you can see my Jacque Marie Mage box in the back, but Nice. But when I'm out of time, what do I do? I have Claude go look for rare pens and glasses for me online. The biggest problem with used rare asset purchases is fraud. Yeah. So, I often will tell So, Claude will be like, "Andre, I found this amazing pen, this Montblanc pen." And I say, "Okay, can you triple check that it's it's it's real, it's not fake?"

5:11 And that's where things go off rail because there's no way for him to verify that without messaging the agent and so on. Yeah, yeah. But if you have 1,600 stores where people who have Montblanc pens can go and physically verify those assets at GameStop. Now, Claude just says, "Yeah, I checked. It has the physical verification stamp from Exactly. So, you can't you need physical verification built into the system for agentic commerce. And look, the reason I know this is real is cuz a few years ago, I think you you guys we talked about this last time, but I sold my last startup to a company called Discord in 2020, pre-pandemic.

5:47 So, I come on as the head of platform. My My My job is supposed to be, you know, Ansh, go build SDKs, APIs, and so on for gaming. Uh we helped this company called Mid Journey get going, AI, you know, generate But, 12 months later, suddenly I find myself running, without realizing it, e-commerce business because it was the summer of NFTs. Yeah. >> And the the the Bored Apes are blowing up, and suddenly we have more than $10 billion of GMB flowing through Discord by selling Yeah. And Jason and Stan are like, "Hey, brother, your job is to like capture a piece of that pie." Yeah. I got, "Okay, homework accepted." So, we started doing a deep dive.

6:25 And we realized ultimately the what what these users need and pay for, like so you have liquidity, right? Ultimately, that's what a marketplace like eBay and Discord um provide in sort of community commerce is liquidity. But, you cannot provide liquidity if you don't have physical verification. And for Discord, that was just out of scope. You know, you sneaker >> Well, and it worked, you're saying it works for NFTs because you had the on-chain piece. >> need any physical. There's nothing physical to verify.

6:50 >> You owned it, and you can transact. >> Yep. >> Exactly. And so, we had we are bootstrapping the e-commerce platform at Discord with NFTs, but of course, everyone on the board is like, "Well, how long are NFTs going to last? It's a fad. So, Ansh, what else is coming?" We go look at rare sneakers, rare keyboards, like bands, all this stuff that nerds like me love. But, for those you need physical verification. And once we realized physical verification was out of scope, we nixed the project.

7:11 >> Yeah, you're not going to go have the 1,400 like retail locations where people can drop things off. Yeah, that's that's that's quite that's quite interesting. So, that's when I realized, "Okay, eBay is this undervalued asset." And I hope that Ryan has figured it out as well. Because if he hasn't, he's giving me ideas. Yeah, yeah. Have you Have you tried to walk through what what uh you know, given that you're probably more AGI pill than than I would say 90 90% of of VCs, have you tried to play out what is it what how would you how would you build eBay from the ground up today with an agent first approach? Is that even the right question to ask? Look, I I have not guys cuz right now I'm in a I'm a computer infrastructure guy, right? We started Amp as this public benefit corporation whose job is to be an independent system operator of the compute grid. We think about We think we're roughly in like 1885 industrial England where the steam engine's been invented. Everybody knows that you can make cool new products like, you know, uh steel and and notebooks and pens and cars.

8:18 And there's this very scarce input called coal that everybody is hoarding. In this case, it's compute. >> Mhm. And when I when you fly over industrial era England, you'll see all these factories getting set up and everyone's running a generator in their backyard at half capacity. I'm going, this makes no sense. If I'm looking at all my portfolio companies, you know, you these these clusters are running at like half utilization. In fact, Elon's Yeah. like got 500,000 GBP 100s in Memphis at running at 11% MFU and less than 60% their node allocation. I mean, this is $12 billion of compute being wasted. So, I set up Amp as an AI infrastructure organization where we buy a bunch of compute, we do long-term leases, we pull that all those clusters on the grid, we coordinate capacity, drive up utilization. And by the end of this year, I think we'll have, you know, several billion dollars of compute coming online. But that's what I've been focused on night and day since like I left Andreessen Horowitz in January. And so, no, I have not had time to look at how to redo eBay, but if Ryan called, I'd probably help him out. But right now, it's wartime on compute, guys.

9:14 >> So, we yeah, I want to talk about Amp, but I also want to talk about just last question on the the the the combination of eBay and GameStop. Like I get the thesis, the bull case. Uh GameStop is $10 billion, eBay is like $48 billion right now. You put them together, maybe you get to 100 billion. I'm in for the bull case. The question is like, how what's going on with like the plan? Because it feels like Ryan just doesn't have the capital, but but then he announced it. Like what like what what what do you think is happening behind the scenes because there's one thing where you could throw it out as like oh like these two companies should work together. Here's a bull case. Let me know if you want to be on the team that does this. And then there's the other one which is like make the offer before the capital's lined up, but I just haven't been through enough of these stories to actually understand like why it's playing out this particular way.

10:04 >> to be honest I think he's sitting there with I think he has $9 billion of cash. He's in a $10 billion company. I think when he announced this, I think he expected the stock to pop like crazy and he'd be going on CNBC being like this merger could make sense. >> Sure. And I think that >> We'll issue another 20 billion of equity and then and then we'll merge or something. >> And I think if you looked at I think if you looked at like how kind of frothy some things in the market could be you could have imagined that playing out. I mean the Allbirds thing was I'm sure you appreciated appreciated that from a [clears throat] meme stock >> Direct competitor to you.

10:38 >> competitor. Amp com Amp [laughter] versus Allbirds will be the new horse race. Oh no. Um anyways, that that was my that was that was my read cuz he cuz they're basically GameStop is basically valued at like the brand is and the and all the retail locations and everything is valued at like a billion dollars, right? He's getting no credit for all the cash. Yeah. So to be clear Amp is not a cloud business. We are so I started Amp as a holdings business and I've got an infrastructure business and a capital business and the infrastructure business secures compute and passes on at cost to our portfolio companies. We have more than $1.3 billion in commits for our first fund of an added eight weeks. And so we do do venture capital investments.

11:15 We put $300 million into an optic. Yeah. Oh, okay, cool. Yeah, but we we we need to raise another roughly, you know, six and a half billion dollars this year and a lot and more is getting committed by the day. But we give away the computer at cost to the independent ecosystem because my belief is that you know, You know, the the like sort of the optimal unit of research today is a like a focused out then steam outside of the hyperscalers, you know, Anthropic and coding which was I was the first one of the first eight I'm certainly I think I was the first angel investor if not the first uh investor in the round and I was >> you're the Jason Calacanis of of Anthropic. Unfortunately, J Cal I could never top J Cal, but like if I was a J Cal intern or something, fine, I'll take the win, you know, but But I I think more importantly like I think compute is a strategic asset I've which I've been yelling about for 4 years and it's a primary bottleneck on these teams and if you're not at the hyperscalers, you just can't get access.

12:05 So we buy up that compute, we give it at cost to the portfolio comp teams and then we reinvest the profits of carry and fees to buy more compute and so on and so forth. And so I'll take as much capacity as I can get from all birds. I love it when new people go into the business cuz that gives us more supply. So if you're the Albert CEO listening to this, please send us your compute, we'll take it all.

12:23 That makes that makes a lot of sense. Uh what are you excited to invest in? You're investing in teams that need a lot of compute. You're trying to find things that aren't going to get steamrolled by Anthropic who's another big portfolio company. Uh there's there's you know There's application layer things and there's a lot of other different things that need compute, but what what do you think so? >> Cuz I feel like I feel like a lot of a lot of VCs are would never say this out loud, but a lot of I get the sense from a lot of VCs that they're kind of like paralyzed where they're like they really don't they don't have a clear sort of understanding of where things will be in 5 years and they feel like they need to be active um and so it's a mix of like doing new neo la doing some neo neo labs, maybe doing some application layer stuff and just kind of praying.

13:15 But I would hope that you have a given given your background and how you're approaching this, you have like a stronger thesis on on where the opportunities to invest at the early stages. Look, in some sense, it's it's back to the future. I started my career at Kleiner Perkins when I was 19. My first board seat was as an observer with John Dorr when I was 20. I wasn't old enough to drive Technic or drink, sorry. I didn't have a I didn't have a driver's license. I wasn't old enough to drink.

13:40 And and I got the chance to apprentice with like the greats like you know Brook Byers. And and look, that's the that's the vintage of venture capitalist I grew up admiring like Arthur Rock. And that's my you know, our thesis at Amble on the on the venture capital side, our business is called the Amp Foundry where we help create code design you know, new labs one at a time. My current one is called Periodic Labs. And we just decided to lead their series A. I led the seed round last year with Liam who was the co-creator of ChatGPT and Dorje was there um who led some of the quantum physics teams at DeepMind and we're trying to find new high temperature superconductors there with physical We have a 30,000 square foot facility in Menlo Park. I spend 3 days a week there.

14:14 We do a stand-up every morning from 8:00 a.m. to 8:30 a.m. and then we make our priorities and then go execute. And you know, basically we have AIs predict new materials. We then have robots synthesize the new materials. We then have an X-ray diffraction machine that tests whether the material has the properties that robots said uh the AI said. And then we pipe that verification loop back into the training room like as many times as you need for the agents to continue predicting new superconductors.

14:34 And in the last 90 days we've had more material verifications than I think in the last decade in the field. And so I'm a huge believer in unblocking frontier progress in domains where it the verification uh sort of loop is clearly just like we know it's going to work but execution is the bottleneck. And then I like giving these the best teams, the best scientists, the best engineers, the capital, the compute, and the commercial help they need. Now, I I think that the beauty about having Anthropic around is that it's made this idea of the bitter lesson and and scaling legible to the capital markets. So now instead of me having to call up 22 friends and getting 21 knows which was the case with the seed round of Anthropic, now I I make two calls instead. We get like you know, like we get three times oversubscribed. So capital is no longer the bottleneck which is phenomenal. You know, again, I've been at it 8 weeks, have more than a billion dollars committed for my our first fund. I'm a solo key man GP on on fund. And there's lots of institutions, pension funds, sovereign funds who are like, "Andre, how much more can you put to work, especially in publics, privates, buyouts?" The It's a bonanza for people who want to be true partners, who want to be the Arthur Rock of this era. I think if you believe in the bitter lesson, it's not new, it's been around for ages. You and I The three of us talked about this like over a year ago at the last recent Horowitz AGM.

15:38 Yeah, still better. I I'm I'm more zen than I am bitter. >> [laughter] >> Uh how are you thinking about building out the team on both sides? Uh trust is the moat. So, there's five of us on the team. My full-time engineering co-founder was Sebastian Lobo. We were roommates 14 years ago at Stanford, and then he went on to build a grid into a new Google. >> Overnight success. Here we go. What what was that one?

16:01 Overnight success. Overnight success. Thank you. 12-year overnight success in California. >> Exactly. Um so, Seb and Mihai built the Borg, Xborg, GQM scheduler, which kept the Google internal capacity pool at more than 95% utilization. There, if it was at 94% utilization, that was considered a major outage globally. Wow. Um Andrew Erskin is my uh partner on the operations side. He was a uh right a partner at Orrick, which was the you know, outside counsel for Anthropic.

16:25 >> Yeah. Um and he was my GC at Ubiquity 6, which was the company I sold to Discord. And then Rosie, who was my chief of staff, ran comms for me from Edelman when I was at Andreessen Horowitz, uh you know, when I was a VP there. Um and so, >> the band back together. It's it's it's it's the Andre reunion, basically. And you know, we put we called Amp uh not after my initials. Sometimes people think that. It's not Andre Partners or anything like that. It's about energy.

16:46 It's about amp, you know, ampere is the unit of of energy. And we we want to amp things up because we think we're entering like the great renaissance in technology. And you know, if you can have a small team that trust each other across context, you know, compute, capital, sports teams, buyouts, leverage technology, all of this stuff is These are all buckets and categories that we've all put, you know, traditional capital allocators have put around these asset classes that shouldn't exist. And I think if you have the flexibility to go back to first principles with a small team that you trust, you can execute, you know, with with orders of magnitude less less size of a team as a firm in this new era with the right tools. I don't know if if that makes sense. No, totally. You you mentioned taking positions in public companies.

17:25 The fund structure is a PBC. Are you also an RIA? Like how are you thinking about navigating both of those asset classes since that's a little more mature? >> in process. Okay. >> Yes, we are in process of becoming an RIA cuz you know we founded the firm barely Yeah. Yeah, 90 days ago, but I'm used to that cadence because Andreessen Horowitz was a RIA. I was a general partner in the AI infrastructure fund for several years as you guys know and we were an RIA. I'm used to the compliance and regulatory sort of guardrails we got to follow and I think that piece stressed us to, you know, have that cadence from day one. And so we're we're going to make sure that we, you know, Zach, if you remember this this like, you know, 12 years ago Zach went on TV to say move fast and break things and then you have to update the thing to be like move fast with stable infrastructure. And and I think we move fast with stable infrastructure from day one essentially cuz we are an AI infrastructure team. Yeah. Talk about the PBC.

18:11 Like if I'm playing back like what what what what year were you referencing? 1850 or something like that? 1885. >> 1885. So if I go back to 1885 and I think about the financiers that, you know, created the industrial buildout, they were not public benefit corporations. They were >> They were personal benefit corporations. Yeah. [laughter] And I mean there was a lot of good that was created. We got railroads and trains and, you know, machinery and cars and all sorts of things out of the industrial revolution. There were also things that were rough and there was unionization and battles and back and forth. Like what is the PBC in service of solving? What what what what why PBC?

18:47 Yeah, great question. So there's the I I'll tell you the substantive answer and then the vibes answer, right? So from a substantive perspective if we do two things, right? We have a venture capital business and we have an infrastructure business. Both things have this very unique property called positive externalities. When implemented correctly, venture capital can unlock massive positive externalities for the ecosystem and for the world cuz you end up funding innovation when done correctly. And then infrastructure the same, right? When you have compute that's used by small focused down teams like Anthropic that's able to produce 10 times more soda capabilities than like Yeah. DeepMind, which is you know 60,000 or 160,000 people, then you're generating positive externalities for the world by being much more efficient per unit of input with the output they create. And so I was like, "Huh, well, what happens when as an economist you look at positive externalities?" Usually you have market failure, you have under consumption of that good. Well, how do you correct the market failure? Usually you get the government to intervene, but if you don't have the government intervening in time, what do you do? You become a private sector participant. And if you look at the arc of 1885, you know, private sector businesses that ended up correcting market failure by by producing public benefits, they ended up getting regulated as utilities. Mhm.

19:52 That's what Amp is. Amp is a self-regulated utility of that provides venture capital and infrastructure to the world's leading scientific teams. The next Dario, the next, you know, Guillaume at Mistral who created Lama, the next Robin who created stable diffusion. These are the my generation's smartest minds. I'm not smart enough to be, you know, them, but I can be their intern. And instead of waiting for the rest of the space to come up with standards and institutions to enforce this, we're like, "Dude, let's just do it ourselves and show the world you can have fun while doing it with a small team. You don't need to be, you know, some something called a you know, like these words like RIA, multi-stage asset class firm, doesn't matter. Just let's skip ahead to the part, the good part, and and like, you know, use all the proceeds that we get from management fees and carry to keep the space like innovating at the pace that we were promised you know, 12, 13 years ago, and instead we got tweets and not flying cars. You know, when I was at Stanford, I got the chance as an undergrad I had the chance to take Peter Thiel's class, the Zero to One. And he was you know, his whole moniker was, "We want to flying cars, but we got you know, um 140 characters. Well, 240 characters, thank you. And now I'm back at Stanford teaching CS 153, which is the largest class on campus. It's called AI Coachella. We got thousands of people following along. AI Coachella is a good one. And and it's got frontier systems cuz it's all possible now. We're literally in our lifetime we're going to have flying cars. We're going to have room temperature superconductors. We are going to solve cancer. We just want to do it in a way that's stable, predictable. We want to skip all the boom and bust cycles and the way to do that is to lead by example and say, "Hey guys, the public benefit, you know, is to provide goods and services that are utilities and make sure that we we don't like Let's be the adults in the room and not do the stuff where we try to be rubber bands and monopolists and got greedy along the way." And so, that's the substantive answer. The vibes answer is, "Look, I don't want to get sued by shareholders for whom it's not legible why I'm giving away billions of dollars of compute at cost to portfolio companies, right?" Because we That's what we're doing and that shareholder That's You could argue that shareholder value that we're destroying, but I would argue in the long term we're actually creating orders of magnitude more value.

21:51 And if you look at Ben & Jerry's, you look at REI, they've become stable enduring businesses in categories that are fairly crowded and eventually I do think technology and AI will get crowded. It will get commoditized cuz technology's never the moat. Trust is community is a moat. Culture is a moat. Execution is a moat. And so, we're trying to skip ahead to that part, but it takes time for people to get aligned. So, until then we'll >> Well, we see Well, we see an Amp joint venture with private equity to uh help distribute >> diffusion.

22:19 Yeah. >> If If we can Yeah, you know, if you go to our website, it's called amppublic.com because I do think if you look back to the like vulture uh era of private equity, you remember like RJR Nabisco and what what what the barbarians at the gate, we should just learn from from their mistakes and go, "Can we do private equity but done right in an aligned way? Let's not rush to like lay off, you know, hundreds of thousands of people and then not re-educate them and prepare them for their new opportunities." I I'm an optimist as you guys know. I came from Andreessen Horowitz. So, I I I'm sort of a rational optimist. I believe the transition can be done in a positive way. Um Is that me getting kicked off? There's like a bell ringing, but that might be here. No, I don't know. Oh, okay, cool.

22:57 No, I'm I'm looking at >> bell we have is this, but no, we're We got plenty of sounds for you. Continue. Continue. Uh we will do everything we everything we do is governed by public benefit charter. So, if we do private equity, it'll be governed in the public benefit. If we do education stuff, that'll be in the public benefit. Look, I've made more money than I know what to do in life. I'm 34 and I'm just getting started. So, my goal is I'll be remembered for having been a net positive influence on the space. I just got tired of telling people I told you so because after a while they start looking at my returns and going, "Why didn't you give me a call?" And I said, "I did. Look at your email. I introduced you to Entropic in the series A and the series B and the series C." And so, at some point I was like, "You know what? I'm just going to go direct, talk to the LPs, set up a platform, build infrastructure, and uh hopefully be known as a generally like sane, common sense, rational point of view on stuff that can often be like is not legible to people from different parts of the stack. And that's what the class is about. So, cs153.stanford.edu, I would recommend anybody watching go check it out. Um the the lectures are all online and the first one went on on Stanford's official page on Thursday.

24:01 >> Was that with Scott Nolan? So, Scott, no, actually Scott is lecture eight. I put up We put up lecture one, which was mine, as a kind of the opening act cuz, you know, Scott is one of the main liners, the headliners of the AI Coachella. Scott's will be up soon as well, and then Jensen was last week. So, I think he followed Scott. Well, thank you so >> last question for me. Do you think the world is prepared for it not to be a bubble?

24:29 That's a good question. The world if the world prepared not for it to be a bubble. Oh, yeah. Yeah, inertia is Guys, inertia is a powerful thing. Most of the world still has no idea what AI is. It is crazy. And I've been flying to places where I thought there would be diffusion of AI by now, and they just aren't barely using Claude, ChatGPT. I mean, these things are still alien to most of the world. And so, if if if we stopped capabilities today and half of us in the AI ecosystem vanished off the planet, nothing would change. It's still so early. Yeah. Yeah. It is early. Very cool. Well, great to catch up.

25:01 Congratulations on a very impressive fund raise and and a very unique approach and looking forward to the next conversation. Thank you. You guys are on a generational run and I hope the acquisition does nothing but give you guys more steroids and more fuel for the fire. We need more of you every day. Fantastic. We'll talk to you soon. >> Have a good one. Thank you. >> bye. Cheers.