Fundrise CEO Ben Miller: VCX, Roaring Kitty's revenge, and AI killing the office

0:00 If the MAG 7 had stayed private, just weren't public, and everyone's 401k basically was the same as it was in 1995, do you think our social fabric [laughter] would hold together? And if we create this dynamic where uh AI takes away people's jobs, they don't get any wealth, and the world changes under their feet, like that's a disaster. So this growing divide between public and private markets, I just think has a lot of hidden risk for American society.

0:34 Hello fellow data nerds. My guest today is Ben Miller. Ben is the co-founder and CEO of Fundrise, an alternative asset management platform that gives individual investors access to private real estate, private credit, and venture capital. In March of this year, he listed the Fundrise Innovation Fund on the New York Stock Exchange. The ticker is VCX, and it's one of the first publicly traded venture capital funds, giving basically anybody, retail investors, direct exposure to private companies like Anthropic, OpenAI, Data Bricks, and SpaceX. Uh, VCX manages over $650 million of investments and has over a hund,000 individual investors. Ben, welcome to Summation.

1:16 >> Thanks for having me, Orin. Now you are a second time guest. I think you were the only the second second time guest of this podcast. So it's a huge honor. Yeah. Yeah. So we only have like the only if they performed super well on the first one do they have them come on the second time. Okay. Now the VCX it surged about 700% on day one of trading and traded like at roughly like 10x NAV at the time. What did that tell you about like retail demand that maybe institutions miss?

1:46 >> The most common question I I get from people is why did it trade up so much? I was really lucky because Robin Hood Ventures went public two weeks before ours did and traded down, right? So it traded down like not a lot, a little. I mean that and it traded >> blown. Yeah. >> Oh wow. >> Yeah. It went public at like $25 a share and fell at $23 a share and now it's at $32 a share. So or something I don't know. So but temporarily it it traded below NAV and then it's since then I think started to trade.

2:19 >> What was the reason that they traded below live at least what's the street belief? >> Yeah. Well, I don't know about the street, but I think I I have a strong opinion about why we traded up and also act Bill Aman took his fund public this week and it traded down also I think about 10% 10 or 20%. And so there's no sort of like why did some funds trade way up our funds and some trades funds trade down. And it's actually I think that this is what my theory is is that institutions undermine the success of retail investment.

2:56 So Robin Hood and Bill Aman were pro- retail pro institution. They raised a lot of institutional money and they raised a lot of retail money and it traded down. It was like the the institutions left and the retailers stayed or some of the retailers stayed. >> I think the institutions their instinct is to dump on retail and so would you bring institutions in and retail you the institutions undermine your retail success. >> So you kind of have to pick one or the other and if you're institution then no sense going public because you're like a traditional fund and if you're retail like lean into the retail.

3:30 >> Yeah. I've been, you know, raising money from the public for 15 years and I experienced the opposite, which is that retail investors undermine institutions. Institutions hate investing with retail. It feels like they got a bad deal. They're supposed to be like special, exclusive. And so, for the last 15 years, I've been dealing with the other side of the coin, which is that uh institutions hate retail. They hate it. The only thing they want from retail is to be able to basically sell to them at a big premium. Y >> and I think for the first time >> or trade with them because they think they're not smart or something or whatever, right? This is a classic like Citadel trading with Robin Hood or something, >> right? And over the last 15 years since I started Fundrise, retail has become more and more important, especially in public markets and institutions are trying to figure out what to do with that. I think I think it's like a third of all markets is retail and the rest of it's basically Citadel. [laughter] So I think that the combination of the two is why we were pure retail. We leaned into it.

4:32 We didn't institutions were interested in investing. They wanted to invest. They wanted to basically but what I learned so I went and interviewed investment banks before we took VCX public. And I learned that institutions were excited about buying investing so they could dump it on retail. And that was exactly the opposite of our mission. And so I said, "No, no institutions." Which my investment banks were just like, "What are you talking about?" >> Yeah. [laughter] Yeah. That was kind of what they get paid to do, right?

5:02 >> And I mean, institutions are the are where the brand is. Like in financial markets, institutions are the most soughtafter, biggest brands, you know, most this how you build your resume. And to be anti-institutional is like anathema to success. >> So it's like the revenge of roaring kitty or something like that. Revenge of the Nerds. >> Revenge of the Nerds. If one had a basket of public stocks that are easy to access or something like that, then I mean in some ways you would think it should trade like below NAV because it's taking fees from it and so it's partially the reason these things trade above NAV is that you know they're these are scarce resources that are hard to get. Is that is that correct?

5:46 >> Yeah. So before we took innovation fundraising innovation fund public I went through a very interesting process because I did something fairly novel arguably novel period like no one had ever done it before because normally when companies go public they're a private company and then they list and become public company and then there's funds who were like uh you know already public and they list and it's all it's a secondary it's direct listing and the only reason they list the Pretty much the only reason a fund that is a non-traded, you know, like public fund like a private credit fund or some is because they have to.

6:26 >> Yeah. >> They they have a lot of selling pressure. They have a lot of retail investors can't redeem and so they go public to get liquidity for investors and that's why there's a closed end fund starts non-traded public and becomes public. And so we were a a public 40 act fund, but we had no selling pressure, right? Nobody wanted to sell. And and so that caused like we were sort of neither fish nor foul. And so when I when I went talked to different lawyers and different investment banks and different the SEC literally they all said it's going to trade down and they always basically insisted that was going to be the case and I had to put it in my disclosures constantly and I had to be tell everybody it's going to trade it down and I kept saying well I don't know if it will because I don't know who the seller is here.

7:11 >> Yeah. Basically supply and demand. Right. >> Right. >> Yeah. >> We put it to a shareholder vote. We had 100,000 shareholders and we put it to a shareholder vote of do you want to take it public on New York Stock Exchange? Do you want to lock up your shares for 6 months and then do you want to raise our fee? >> 80% of people voted to to take it public, but 20% of people voted against that. And those 20, you know, 20,000 people like they didn't want the volatility. They didn't want it to trade down. They kept giving me grief on Reddit.

7:37 >> It does show you I mean like kind of a broad metal lesson for me is the experts are often wrong about novel things. >> Yeah, that makes sense. like these closen funds like they could basically wander from NAV indefinitely, right? And is that a feature or a bug? >> There's this challenge, right? Which is that private markets are now huge companies, great companies stay private, you know, trillions of dollars, public is being excluded from them. How do you solve that problem? That's the question.

8:04 And so people have tried it a lot of different ways. I've tried a lot of different ways. The way that most people in the public markets have been trying to do it is with an ETF. And an ETF is different than what we did, which is a closed-end fund. And most venture funds are closed-end funds, right? Like you you raise money into the fund and then usually you just you liquidate it. In our case, we took it public.

8:25 >> Yeah. >> An ETF, the underlying stock gets redeemed or issued every day. Like you may hold 10% of your funds Meta and 10% of your funds SpaceX. And if the fund doubled in size in one day cuz people flooded in to buy that ETF, you'd have to buy 10% more Meta and 10% more SpaceX, which is easy for Meta and hard for SpaceX. >> Yep. >> And so the ETF model doesn't work. It falls apart >> if you have private, right? Because you can't just like you can't just rebalance that day. It takes a very long time to rebalance and >> it's hard to even know what the mark is at that point. And so you've seen some SpaceX ETFs or other ETFs basically like kind of underperform expectations because the cost of buying those shares on a kind of like forced buying and forced redeeming is like leaves it very exposed to different market traders who take advantage of it and sort of eat the up upside that people expect.

9:24 >> Yeah. >> Close End fund I think is the right structure for how to create access to to the private markets. the challenge and the the normal expectation. Everybody said this is how the world works, right? Close down funds trade at a discount. So they all assumed this wasn't the solution and they all it's sort of like no one will sleep on your couch. Airbnb like everybody assumed a certain thing and it turned out they were wrong.

9:48 >> With a venture fund, let's say you have a $650 million venture fund. You make your investments over a period of time. You might you might have some follow on. Then maybe you can even recycle 20% more. So, if you have some exits, you can recycle that in that might end up like netting out the fees or something, but you don't like add more later. Like that $650 million fund doesn't bring another $500 million into that same fund later because like it's hard to like remarket and stuff. In your case, like you guys went public, you can now, if you choose to, you could sell shares into the public market and add more money into the fund and then make more investments in that same fund. Is that right or am I getting that right?

10:35 >> Yes. Yes. So, the difference between like I mean essentially a mutual fund and a a private fund is mutual funds that last forever, right? They're mutual funds that are 100 years old. And so as long as it's trading above NAV, yeah, we could go raise more money into the fund. It's something we we've contemplated. I mean, the advantages of that are that like, you know, I mean, let's take a company. Let's take data bricks as an example. Data bricks, we hold it at the same at at market value. You you could buy more at market value. Do you want more data bricks or do you want to hold it? But like whether or not we buy more or less or let's say that we go public and we whatever there's reasons why an investor might say I'm excited for you to you know rebalance the portfolio or invest more in something I can't get access to >> clearly a good investor so I want to give you more money invest more or whatever >> they might think that yeah and so and so um yeah you could raise more money and so it's like a little bit of an existential question of like what do we want to be when we grow up Like do you want to be you know small fund with like high high alpha and you know and don't pick winners you know pick really like the ride the winners or do you want to be a big fund more structural you know like could sort of public market access to private companies be a hundred billion dollar business like >> I think so pretty easy to imagine >> yeah absolutely >> that's something totally different >> you also like a venture fun just start a series of $500 million funds you have fund three for for so you could also do that. You could just like okay we're just well this one worked out well and now we'll start the new fund and you know and then take that public eventually if you choose to or something right. Yeah, this is a challenge is that there's really high fixed costs in being public whether we're traded or not. Like the costs of >> what are the fixed costs of being public? Is it like a $3 million a year kind of it's in that range?

12:27 >> Something like that. It's in the low single digit millions being public in New York Stock Exchange in some way more expensive. We have more drama, more people to stuff to manage. And also I think the market, you know, you wouldn't want to have 11 closed de 11 trading funds. It would confuse the market. The market wouldn't be able to differentiate well. >> Yeah. So there's these high fixed costs and obviously you have like legal and regulatory costs and people sue you all this other stuff and those are like relatively fixed so it makes sense to accumulate aum or or even have like a s you could even have a series of funds in a metap fund or something like that or whatever.

13:02 >> I mean again this is like we could I mean we're at kind of a fork in the road and we could try to you know stay have smaller funds. The way our platform works where we already have a couple million customers on Fundrise, we could launch another fund, have it not be traded, raise from our clients and then take it public in a few years. Like that's a different model than like having a public fund and trying to get it to 100 billion and you know try to get really big and then I think what would happen if you got really big is you lower your fees. You basically try to be the lowcost index for private markets.

13:39 >> Yeah. Got it. Okay. Yeah. So you could just slowly lower the fees over time. Okay, right now you're at >> what do you 1.85% or something. So you could just say, okay, we're 1.85% for the first billion and then for the next billion we're 1.5 and for the next billion 1.4 and then you kind of like lower it over time or something like that. So people get lowered fees. They'll kind of like end up like Black Rockck or something.

14:01 >> Yeah. Like like Vanguard. And so that's kind of more my in the spirit of what I'm about >> because there's just high fixed costs essentially. So, um, if you can like accumulate it, then you might as well lower the fees and pass that on to your your customers, which are these individuals. Yep. >> You just end up being the lowest cost, biggest, and then I think that helps us with private companies. Like, if you're the hundred billion dollar fund, like, you know, most companies will say, "Okay, well, I'll take, you know, a billion from you."

14:29 >> Yeah. Especially if you have your long term, if you show your long term because you're not selling their stock. So people might be selling yours, but especially if you have like good retail interest, they're going to stay. So they're going to want you involved. Now what happens? So like how does it work? So like some of your companies will go public, right? And how will that work? And if like a certain percentage of the thing is public, do you like is there a point like you're going to have to manage it and decide to rebalance or something? Right.

14:56 >> Yes. I mean that's a question that's coming for us because a lot of our portfolio I think will go public in the next 12 to 24 months. And I think that like first they will go public. There's a six-month lock up and I haven't articulated to the market what we're going to do because I'm we're still I mean there's a lot that's going to happen over the next 12 to 24 months to help us understand what to do. But I could imagine again going with this sort of ethos of democratization build something structural the market. I could say, "Okay, you know, we're gonna continue to hold SpaceX, but our fees on SpaceX will be uh 15 bips, 20 bips."

15:34 >> Oh, got it. So, if you effectively will lower the overall fee for like if you have certain names that are percentage of your NAV or something. >> Yeah. So, maybe we say, "Hey, like we want to hold SpaceX. We think SpaceX is good hold. We don't want to sell it right now, >> but you don't want to pay us to hold something you can buy direct. you know, we'll just put a like a normal ETF fee on it and then maybe, you know, like whatever some point in the future you sell and you rebalance into the next SpaceX or the next.

16:01 >> So, you almost have like two types of fees of you or almost like three. You have fees for private and that depends on your AO aum for private, your fees for public and that also may even depend on your AUM for public or something. Those fees go go [clears throat] down as you get more AUM. That makes a lot of sense to me actually. Yes, exactly. So I what I'm trying to do which is like I'm playing a different game than the venture in manager. I'm trying to make what we're doing structural. I'm trying to make it so that it's like aneseptic.

16:33 It's just like this is just how the market works. You passive index into private tech through a low fee regulated rapper. >> Yeah, it's interesting. And venture is different. So venture has management fees on what you raise um not on the nav. that NAV could go down or NAV could go up and you still get the same management fee which is a yearly management fee typically 2% but you know that depends on the venture fund and then you've got a carry you know typically 20% on what and you may have a hurdle rate or something and that carry is you know once you start returning money to investors when you return more than 100% of the money to investors then you start participating in this carry in your case you just benefit on the NAV and so you're kind of aligned with the investor as the NAV goes up you get your your fees go up essentially.

17:22 >> Yeah. So the question is like so I don't have a profit share and so the people will say okay that's good and that's or that's bad for me I think I'd like to debate both sides of it because like obviously in theory I'd be more incentivized to make good investments if I got 20% of the profits but I mean I'm already incentivized right because obviously the better my returns the better my fundraising and the better like the bigger the fund gets and the more our fees. So that's like there is an incentive there and >> if your NAV doubles, your fees d, you know, essentially maybe your fees don't exactly double, but they they go up quite a bit. Yeah, >> our NAV did double before we listed, right? We had 100,000 shareholders before listing. So and so on the other hand, one of the reasons I've been against the carried interest, and this is less true in venture than it is in other sectors, but in the 2008 financial crisis, I watched a lot of people have kind of a one-way incentive.

18:17 >> Yeah. They were very risky. They went up 100%, they got their fee, and then the next year went down. They just closed the fund down. >> Yeah. If they lose 100% of people's money, they don't give back 20% of the fees. And so, and interestingly enough, like the SEC doesn't let you take a 20% carry for retail funds, but they do let you take a fulcrum fee, which is a two-way fee. So, they'll let you take 20% of the ups.

18:44 >> Uh, if you go if you take money, >> they'll let you take 20% of the downs. Oh, I didn't I didn't know that. >> It's called a fulcrum fee. >> Yes. And so they're only willing to do >> is are there funds that have I've never seen that. >> I don't know if any funds ever had the balls to do it. [laughter] >> I've thought about it a lot. It's really interesting question. But yeah, you're like there's reciprocity essentially like if you're going to take 20% of the upside, why don't you pay 20% downside? And so I think that there's a lot of incentives that can warp decision making around the car interest. Obviously, it's there's pros and cons to it, but the fulcrum fee is really interesting.

19:22 >> Some venture funds are somewhat like that where if you take carry before you return 100%. And then it goes down like you do owe that carry back. So, there are some funds that depending on the LPA agreement that has something like that, but once you pass the 100%, you know, you you get your car and then if it goes down, it goes like there's not uh it is what it is at that point. >> Yeah. I mean it's it's a very different business model and ultimately like um I mean I've gotten some positive and some negative feedback from venture industry as I've sort of taking VCX public particular and I think that ultimately it's so our incentives and our structure is so different than venture that we end up being the sort of I think we're going to be the sort of complement like we sort of become because it's also passive.

20:10 >> There's all these funds that essentially are very late stage funds right now. Let's say Thrive is a very very late stage fund. They're putting very very big dollars to work late stage. Like what's the difference between like a Thrive and you guys like you're like a Thrive but you have like tons of retail investors. Thrive is more like they have sovereign wealth funds, they have other types of things there, right? But like what does it do the industry if folks like you start to be successful?

20:40 >> Yeah. No, so I think that is much more competitive with growth equity funds than venture capital. Yeah, I >> think the seed >> Yeah. late stage like these later stage are putting 100 plus million dollars to work and some of those like started out as seed but then they kind like thrive kind of started but now they're mostly writing like very very large checks right into into companies. >> Yeah. And if you saw this like Blackstone announced that they're going to start writing checks into the um latestage privates too.

21:09 >> Yeah. So there you go. And if if Blackstone does it, then Brookfield will do it and Apollo will do it. And so the consequence of companies staying private longer is that all this money needs to and wants to flow into, you know, the post series C check. And uh and there's a lot more fees to be made doing that than having those companies be public. And so whether it's Blackstone or or GST or Fundrise, like it's I think that to some extent they're all the same. Like I don't think there's a lot of value ad in the late stage checks. Most of the value ads in the >> Yeah. You're not on the board usually or anything like that. You're just giving them money.

21:48 >> That's my view. I mean, occasionally there are people I think I think Thrive and I think a A16Z are like, you know, they have late stage stuff. I think they do add more value than like >> I agree. you can call that that person if you call Jos Kushner like he's a super smart guy and that's great or you call you call Mark Andre like I mean that's worth a million dollars for that hour call bro just to call him right so there's value just being able to call those people um but like calling a random Blackstone manager like who cares like that's not going to add that much value for most companies >> right and I think so I think there is differentation and like we have millions customers so like you know we can bring you know we're kind of a sales and marketing channel for the companies. So, we're all different, but ultimately at the scale of dollars you're talking about, like it's not really that there's just room for a lot of money. I mean, it's just like it's I mean, there are companies now raising a hundred billion dollars. Like, if you're raising that much like there's they need a lot of capital, >> multiple companies. Yeah. Prometheus doing I mean, there's just so much money flowing the private markets. I don't think it's really about oh, there's not enough to go around. I mean like I think this is just it's just so normalized and I think companies just really don't go public. I think that companies going public that don't have to go public isn't going to happen.

23:02 >> As we see more closed end funds, obviously you guys and you Robin Hood, there's a few others that are kind of coming out. Essentially, there'll be more supply for investors like at some point. Would you expect they all kind of trade relatively close to NAV, let's say plus or minus 10% or something, but not 3x or 2x nav? >> Yeah, that's the logical answer, but the public markets aren't always very logical. >> Yeah, that's right. Yeah. So, I've learned that Yeah. the hard way sometimes. Yeah.

23:31 >> Palunteer, SpaceX, some of these companies trade to these premiums that others companies don't. They traded premiums because of brand, because of the founders, because of narrative, because of, you know, some other reason. And so, I wouldn't be surprised that some companies just don't trade as well in the public markets. is you're I don't know you you know I mean I now have a public fund and I one of the great things of having a public company is you get a lot more data about who's buying your stock who's selling your stock you really get to understand the markets better though you knew before you had 100% of the data when they were buying it on the Fundrise platform right now you have less than 100% because it's somewhat opaque they're buying it through Robin Hood or they're buying it through this other bro bro bro bro bro bro bro bro bro bro bro bro bro bro bro bro bro bro bro bro bro broker they're buying it through E trade or you know whatever it is right >> yeah less they buy more than me as just a straight public investor right I know more about my stock than anybody else.

24:23 And um and I I feel like the public markets I mean they're sort of falling apart. The passive indexing thing like it eats all the flows. All the flows go to the passive indexing companies. And then if you're not in the index, you're sort of left with hedge funds, quantitative traders, and retail. And all three of those pe you know are very different kinds of investors. And so your stock trades very differently than the companies in the index.

24:49 >> Yeah. And if you're in the index, like it's very weird because like a very high percentage of your company starts to be owned by these random indexes and then of course they can't own more than a certain percent just starts to be like very odd over time. >> I did a company presentation this week and whatever 200 people in our company and they were asking me about why VCX trades the way it does. I was like, everybody in this room, every paycheck allocates to 401k and allocates into the public stock market and you don't know what you bought and you don't know what price you bought it. Like that's the majority of the market.

25:23 >> Yep. That's right. >> It's the opposite of the way a private market investor invests, which is like straight up fundamentals, roundup underwriting, relationships. This is something Brett Weinstein talks about a lot, but like just the public markets. When indexing was 5% of the market, it really worked. Now that's whatever 60% of the market. It's really really like changes everything. >> Yeah. So anyways, that my point is when it comes to like how do these how do funds like ours trade, they're not going to be in the index and so I think that they're going to have idiosyncratic trading dynamics.

25:54 >> How do you think about these indexes in general? It's like if you're an index and you own every oil and gas company and every clean energy company and every what all one like you don't care if Exxon goes down as long as like the overall economy goes up or so it's like you're a very weird shareholder because like imagine just not caring about your holding any particular holding you don't really care about unless you're like super overindexed like maybe Nvidia is like super overindex to most of these places, but like the average like they just don't care about Exxon at all.

26:30 Either way, >> the way that manifests is that when they vote the proxy, they end up voting it not the way you or I would vote it because we would be thinking like a founder thinking like an investor, they would they're thinking more like the most institutional, which I mean institutional in the worst way like like you ever read One Floor with Cuckoo's Nest. >> Yeah, of course. >> Yeah. Like institutional in that sense. Yeah, >> like it's all about CIA. It's all about check the box. It's all about, you know, whatever institutionally safe.

27:01 >> Or even worse, they actually could do things to actively harm the company, but to make the other all their other companies go up or something. >> Yeah. Or like they have a a political agenda or they're or they're worried about being fired and they're trying to be, you know, you know, politically correct or whatever it is. But like it's like it's not like a fundamental investor the way you and I think about investing. And so that's the market is just it's warping like every every year it gets more warped warped as a result.

27:30 Now, there's these amazing latestage companies, some of which may go public, some of which may never go public, right? You've got the Anthropics, the Open AIs, the SpaceX, the Data Bricks, you've got Stripe, you've got, you know, all these different companies that are all, let's say, over hund00 million in value. Super incredible billion. >> Sorry, 100 billion. Sorry, that's what I meant to say. Well, I said 100 million. Oh, wow. Okay. Yeah, hundred billion dollars in value. Just like, you know, 100x what I just said. Sorry, thousandx what I just said. and just like incredible, incredible companies, incredible founders doing incredible things. If I was them, I would want the public to own some of me. Now, I could understand why I don't want to become public. Like, Stripe may never go public because there's all these problems with being a public company and getting sued and all these. You just read Matt Lavine and you're like, I don't know if I'd ever want to be a public company or something like that. But like I think they'd want like the retail investor to benefit from their success. And so in some ways I would want you on my cap table rather than like some random endowment from the Philippines or something like you know I I would prefer to have you guys on the on the cap table. How is that conversation go with those types of companies?

28:52 >> Yeah. So that's that's my pitch and that's my belief and I and that conversation has evolved because when we first started people the companies were really confused and they're like how many people are going to my cap table I was like one or one we're a we're like fidelity or like black rockck and code launched a non a fund like this and so our Kathy Wood has one and so to some extent as it you know any kind of like you know you're you've built tech startups like the it's not competitive.

29:24 You're just trying to build the category. And as you build the category, the category expansion is more important than winning, you know, your share of the category. And so companies have started to like to to see this as normalized. And at first they were just, you know, they were worried about it and they weren't focused on the benefits. They were focused on the risks, transparency, and things like that. And then they it started to shift over the last especially like back half of last year started to shift. And now you know when I especially when I'm talking to these most important companies who are growing like crazy I say to them here's my counterfactual for you. If the MAG 7 had stayed private, just weren't public and everyone's 401k basically was the same as it was in 1995, >> you wouldn't get any appreciation like all the appreciation came from like a small number of companies, >> right? Do you think our social fabric would hold together?

30:22 >> Yeah. No. [laughter] I mean, imagine a 401k is just not working. Maybe a few pension funds like benefited and that that flows through, but like if it just like the Yale endowment got bigger, like that's not good for our social fabric, right? >> Yeah. And most people don't have pensions anymore. And so like so like there's a um you know, the way capitalism works is that there's these sort of knock-on benefits to, you know, GDP growth and new job growth and people's 401ks getting bigger. And if we create this dynamic where uh AI takes away people's jobs and they don't have and their 401 they don't get any wealth and the world changes under their feet like that's a disaster. I mean it's a catastrophe. And if you're one of these iconic companies in some ways, like you owe it to the public to not just benefit from your great products, which we all do, like I'm extremely thankful of all these companies cuz I get to benefit from their products and their innovation and all these other types of things, but you kind of owe it to the public to get them to benefit from your success as well if they buy into it, right?

31:24 Obviously, it's their choice, >> right? I think that the companies like we're lucky the AI companies today are I think are very socially minded and they and they want social success. They're very focused on that. And so I think they absolutely want that buy in. And I think about Amazon and Google and other big tech companies that have at various points were very unpopular. I mean Amazon used to be the you know when the closing down Main Street had I mean there were all these negative feedback about it >> and their stock was down too right for some period of time.

31:57 >> Yeah. I mean the stock had fallen during during 2001. So but I I really think that the fact that it made people wealthy really helped manage some of the negative side the reason why government ultimately didn't break up Google or break up Amazon. I'm sure the fact that it would have been bad for people for the voter for the people's 401ks like mattered to that decision. So this growing divide between public and private markets I just think has a lot of hidden risk for American society. Now if I'm buying private shares today, if I want to buy shares in data bricks, like there's a secondary market, I can go on to these different secondary brokers.

32:37 Some of them are like seem very legit. Some of them seem a little sketchy when I'm interacting with these secondary brokers. I can buy some data bricks and there there's there's some liquidity there at least for like the big names. I can go buy it. Sometimes like it's not like clear of like data bricks knows that I bought it like I'm not like directly on their cap table or something like that. I'm like on some somehow some flow through or I'm buying a piece of an SPV or or I'm buying a forward contract with somebody who has shares and stuff like that. It seems more opaque. Whereas if I buy a public company like it gets it's like those shares are in my account or something. How do [snorts] you think about that as a manager who's trying to like manage all the risks and manage all these types of things?

33:20 >> So I think most people don't know anything about buying shares in secondary aren't accredited investors. >> Yeah. Let's but let's say somebody wants to put you know who's got an extra $10 million and they want to put in a data bricks or something like that. Yeah. >> This is not the customer I normally focus on. Yeah. or you or your competitors, right, who want to get more access to data bricks today. >> Yeah. I mean, I mean, we're on the cap table, data bricks, we're on the cap table, Android, like >> if you want to get more data bricks tomorrow, like there's not necessarily an opportunity like get on the cap table tomorrow, but there is an opportunity to to go on the secondary market or something.

33:54 >> Yeah. Well, so the secondary market sort of didn't really exist any any scale until the last couple years. It's really become a new a new space. You know, there's a lot of things that are that the market's trying to figure out. And so, for one, it it's very grindy getting hold of shares. And typically, if you want to get company approval, you need a big block. You know, they're not company's not going to mess around >> or $400,000 block or something. Yeah.

34:22 >> Yeah. So, you're saying 10 million. Okay. Maybe a company might be willing. You you sort of sign it up. >> It goes to the company. Like, you sign it up. It goes to the company. company, >> they have a f write a first refusal or something maybe or something. Yeah, >> Stripe. I signed up five different blocks of Stripe over the course of three years and Stripe wrote it every single time. >> Oh wow. Okay. They wrote for $100 million on me or something over five years. Like so like Yeah. So like the companies will sometimes wrote for it, sometimes approved, sometimes reject it.

34:55 And so and that's like a process with secondaries and and there's different companies have different philosophies around this. And by the way, that makes me mad because like Stripe, like I think more is Stripe is an amazing company with amazing founders, amazing products. Like I wish more retail had access to Stripe. Like I I feel like that's almost they're doing a dis I love the Colston, but that to me that seems like they're doing a disservice by not allowing funds like you in. I haven't have engaged a lot with Stripe, so I have kind of like a bitter sense of it. And I think Stripe I think they were trying to figure out they were more worried about the downside risks.

35:27 >> Yeah. They were trying to figure out >> obviously they think it's cheap, they should roll for it, right? So if they're like, "Oh, you're getting the deal. They might as well they might as well buy it, right?" I mean, that that seems reasonable, right? If you're buying it for 80% of what it's worth, well, they might as well row for it at that point if they have a better view on the the value of the of the shares.

35:45 >> Yeah. >> And I think they made good money on those roofers. I I just think a lot of companies were nervous about the new structure and didn't, you know, just it was more about risk management. It wasn't like they're said no to retail or anything like that. It was just like what is this thing? Is this thing is this is this is this like going to create regulatory problems for me. They were just trying to manage risk and it wasn't like the ethos problem. I think that over time I just think every company this is going to become so normal. I think that like companies like like Stripe, you know, they're going to raise tenders. Revolute, they raise tenders. They're gonna stay private and and they'll I think I'm would be shocked if they're not like excited about, you know, opening access in a way that's like good for the company and good for the investor. And that is just a a point of like creating these norms and creating these like practices that are win-win for everybody.

36:36 >> Now, you are now you're running a public company essentially. at least one of your companies is a public company and I personally would never want to be a public company CEO. It just seems like terrible terrible [laughter] like like walk us through what it's like that maybe maybe someone who isn't running one would not understand even though you're not ex you're running like a a fund. It's not exactly the same but >> exactly the same. I mean there's some similarities. I mean things that I feel like happen and most public CEOs probably experience this is that um so at any point in time you have some percentage of your stock that people are short like the average short in a stock is a few percent some stocks have 10% short and that's like actually a a functioning market because you know lots of long short funds and things like that. So, so shorts are normal part of the market, but there's a a part of the shorts market where they will take a short and then put out media, social media.

37:34 >> They may even closed it out before they do it or something like that or whatever, right? And they disclose. They say, "Hey, we might have already closed it out by the time you read this, right?" Or something like that, >> right? And so, so part of now being an executive at a public company is that you're like a source of way for them to sort of drag the stock down by throwing [ __ ] at you. And this so they'll attack you personally, attack, you know, like they'll dig stuff up. They make stuff up. They just try to create innuendo.

37:58 And so you get more people attacking you. You get the public, you get more individuals attacking you, right? >> Um, everybody thinks I got rich. Everybody's like, "Oh my god, you must have made a billion dollars." Like my my 14-year-old son in 8th grade, nobody knew who I was. And then every all of a sudden they're like, "Oh, you you must be a billionaire." And I'm like, "I literally made zero money on taking public." Zero. >> Right. Right. Right. because your your your company makes money and you know it has some revenue, right? I didn't buy any shares and sell any shares before anything like I and it's just but like it just there's this perception I mean you run a public company you must be rich you know oh the company's worth billions of dollars blah blah blah because at one point the stock was worth like VCX was worth like $20 billion right how does how do I run a stock that took from 0 to 20 billion and making zero money what did I do wrong or >> because also like closen funds are different right obviously if you were if you were if you're if fundrise itself goes public and it's $20 billion valuation, you will have uh significant wealth, >> right? But but that's confusing to people.

39:01 >> Yeah, that's right. That is very confusing. >> People find that confusing and so it created like I just became more of a target for for drama. >> Yeah. Interesting. And it might confuse you like there's this other Ben Miller who did something like you know went to jail and it's like oh look it's the same you know it's like you >> there's actually an actor famous actor I think named Ben Miller. So he's like number one on Google. That That's a good one to get actually confused with.

39:24 >> I got to hang out with that guy. >> Yeah, totally. Totally. I actually meant to have him on the show, but we got you by accident. Yeah. >> Yeah. Totally. >> Yeah. Okay. Now, I mean, one of Okay, we talked a lot about like these closing fun, which I'm like super interested in. You guys started in real estate. I most of your funds are in real estate and now you're kind of dealing with this kind of like AI wave in real estate. And there's kind of like two things. There's like AI making you a better investor and then there's also investing into the wave data centers, you know, uh energy projects, etc. How do you think about the AI wave?

40:00 >> Yeah. So, actually there's there's two things and a lot of real estate people asking me about AI because I sort of like I mean knowing more than real estate people is not saying that much. >> No, [laughter] not at all. I I feel like they were some of the least tech people. But when I've interacted with real estate people, it's like it's like Excel is like the top of the the the the stack. It's like they don't have anything really. They have very little data, almost no like no like machine learning. The AI is almost zero, etc.

40:28 >> No, no, no. The machine learn I mean like some of them just use yellow notepads. I mean that's where >> totally like they're touching the dirt. >> Some the best ones are just the yellow notepad people. But >> yeah, I mean maybe there's a feel you have to go there. You have to see it. You have to kind of see how the sun shines on it or something like I don't know. There's something about it that is very visceral.

40:45 >> Yeah, totally. The sunshine out. That's right. But so I there's the the way I articulate to them is that there's like how AI makes their operations more efficient. Maybe they're run a 100 person company or 10 person company and they're going to try to automate asset management or analysis and then there's like how AI is going to impact their real estate like the apartment buildings and and how is it going to affect San Francisco versus Austin.

41:10 >> Yeah. Oh, investing but also pricing and management and you know whatever might be >> right. How's it going to affect their asset versus how is it going to affect their their holding their their GP you know the actual and I say the asset is going to be much bigger effect is much more important the asset the effect on assets is going to be tens of percent and the effect on the operations like we rev a $5 billion real estate portfolio with like you know real estate team's probably 60 60 people or something you know like I can't the amount of if I can get 10% change in in the real estate That's half a billion dollars. I can't get half a billion dollars in savings from the from the team, right? So, the asset matters a lot more. And AI is going to have incredibly large effects on the asset. And that's something that that people don't really see coming even though you as somebody who lives it will more intuitively understand the impacts once I if I chain them together for you if you're game.

42:08 >> Yeah, let's do it. So everybody knows that AI data center is great investment but like okay here's what I think as a real estate investor you buy real estate property let's say you buy something a hund00 million building you're really thinking about as a 5 to sevenyear investment and so you're talking about 2031 2032 2033 is when you're exiting >> so you're really on the other side of the AI >> sorry I didn't know that so five to seven years is is typically when people exit >> five would be yeah I would say the norm But the reality is five always becomes seven.

42:41 >> No good. I didn't realize five is the norm. Oh wow. Because I would I would think you just hold it forever. Like you know >> No, they're in a closed end fund. >> Closed in fun. Okay. So most of these are fun. So you're you're competing with closedend funds and that fund has a 12-year date on it or whatever. Maybe it could start expanding a few more years or something. But uh but yeah, you're right. So 5 to seven years they need to they need to exit out, >> right? And you know, you're raising your next fund. you need to show returns in the last fund. It's much shorter than that. And and so let's just say 5 years is 2031. Yeah.

43:14 >> Right. And so with 2031 like >> a big part of the impact of AI will have hit the economy when you're trying to exit your business plan. >> For sure. >> AI doesn't exist in their business plan. It doesn't even it's not even in the business plan today. But you and I probably say it's the most certainly top three if not number one most important thing that's going to happen to their business plan. Just like COVID was the most important thing to happen. Yeah.

43:36 >> In during the, you know, you buy something in 2019, guess what? >> Yeah. >> Co changed the entire business plan. So, >> that's right. >> And this is like um very simple, but like AI is going to replace cognitive labor. And so, white collar workers are going to be impacted and probably mostly young white collar workers. And so, you're going to see this sort of like impact on white collar workers, good and bad, and growth in productivity, growth in GDP. And so if you sort of break that down, that means like, well, maybe less normal jobs, but more stuff. There's more wealth.

44:14 There's more stuff, but there's less jobs, I think. And so you sort of say, okay, well, you trade that by being more industrial because stuff moves through the industrial system. You need like to store stuff and move stuff, but you know, you don't want to be an office. And then there's certain places that the typical back office >> you still like I mean office is so bad right now but you still don't you think office is just going to get worse.

44:37 >> I I think office gets worse for sure. I think that like it's like buying a farm after the invention of the combine. I guess you know the the effect on agriculture was of technology was massive. I think the effect on office is like you're moving from from farm to factory to office to the next thing whatever the next thing is. >> Yeah. And also offices will probably look differently because if the teams are smaller and you know there's going to have or they may want to have more if you're and if you're if if each person is adding a lot more value you may want to have more amenities and there there's might be a whole different way of how they look and so there might be a lot of investment you need to make to attract those types of companies.

45:17 >> Yeah. But I mean like just the things that I think will happen is that driverless cars will become normal within 5 years. And so where do people live? I think they disperse more I think work from home technology like you and I will we be wearing with eyeglasses will it be threedimensional you know will it be like full sensory like >> so you think work from home keeps going up obviously kind of like it's it's been going up well obviously there's a co kind of thing but it's been going up if you take out co every year um without co but you think it just that that trend keeps going >> I mean again if you can live wherever you want because you can have a driverless office right you get Oh, I live in like, you know, every year you're in San Francisco. I live like way up in like, you know, Paluma. It's awesome.

45:59 >> That you're still going to the office every day. Maybe you're just living further because you can you could you're okay with the longer commute because you're in a driverless car. But what you're saying is that the work from home will go up. >> Well, I'm saying both because I'm saying exactly what that office looks like and how it works. And I'm just saying there's this big changes coming as a result of of technology and those changes like will have huge effects in real estate. And the where I was going with the other one was there's um all these cities like Charlotte where a lot of the white collar young back office people move out of college. They move out of college and they go work in Charlotte and they get hired and I think that kind of job is the kind of job most impacted by AI that kind of back office young person at a big company.

46:42 >> Yeah. If there's like a process around obviously like a BO would be the first ones to go. Maybe most of that's in India or the Philippines or something. Phoenix has the the biggest concentration of customer service back office in anywhere in the country. >> Okay. So, you would be you would be a bear on that market or something like that, >> right? So, there's certain certain and then you wouldn't want to be buying uh apartment buildings focused on people coming out of college in Charlotte.

47:08 >> Yep. Interesting. >> So, this is very I mean, and you sort of hear about that, you're like, well, that kind of like it may be wrong, but doesn't seem like a good bet. >> Yeah. It doesn't seem like there's high upside and there's definitely high downside. So, okay, that that's a that's not a bet I want to take right now. It's hard to tell a story that that goes up, though. I mean, I guess you could find one, but I'd be interested in our I'd be interested in our audience members coming up with the other story. Yeah.

47:31 >> Yeah. There's I mean, there's lots of I think but the point is like this is I go back to I've been in real estate and tech since uh the late 90s. And so, you know, when the internet showed up, people had lots of oh, the internet's going to do all these things. The internet didn't do all the sort of grand things people said, but it did cause e-commerce to eat retail. >> Yep. >> And it just slowly but surely ate retail.

47:52 >> Yeah. You don't want to be like a random mall or something or whatever. >> All retail was repriced over. It took like 20 years of repricing to finally get to bottom. >> And has it reached bottom now or is it still going down? >> It did. It reached bottom like maybe two years ago. So it took, you know, more than 20 years 20 basically from like 1995 to 2024 or something. took it took that long for real estate to repric to the bottom and so you sort of have that I think with office I think that like and I just and there's of falling populations and so falling populations are bad for different kinds of residential units for young people so there's all these like it all the macro it seems very intuitive but these kind of intuitive analyses are not really how institutional investors in real estate make decisions if you can't put it in a spreadsheet it's very difficult for them to price it.

48:44 >> Yeah, exactly. It's interesting. So, so what what is an area that maybe is like you're bullish on that like maybe somebody like me wouldn't have thought of? >> Oh, you wouldn't have thought of. I mean, it's so obvious. New York, San Francisco, bullish still. Okay. >> Oh, yeah. on housing and you know all that stuff and >> just everything that we saw in 2010s there's this elomeration effects that I think are compounding and all this wealth from from the you know tender offers and these AI companies >> and you're not worried about like random government things that make it you know okay now of a sudden they have excise tax and they have this and they have you know they have other types of things that make it or if you know if you're buying things over X you have all these different kind of potential areas right?

49:28 >> What's definitely going to happen? It's already happening. I was just putting those places out as like as like obvious. So the less obvious would be I think the again these sort of like the pedalumas of the world or these like great cities that are that were too far the the car. So this is something every real estate knows people outside real estate generally don't know is that there's like a there's a ring of how far people drive to their office and and beyond that ring and and that ring has certain kinds of infrastructure and roads and stuff like that. based on time, not not not miles, right? It's really based on time, right? You know, time at 8 am or something, right?

50:03 >> Time and commute. And it's like it really falls off after 45 minutes of commute. >> Yeah, makes sense. Yeah, that would suck, >> right? It's just so horrible. And so driverless is going to change the living patterns and I think we'll see more sprawl. >> You think even in 5 years like a lot of people will be in driverless cars and stuff like that? >> Yeah. And also like so much of everything is priced both on the marginal consumer, marginal investor.

50:30 >> So you only need a small percentage to have driverless crush to make that, you know, pedaluma thing very exciting or something, >> right? And you're if you're selling in 2031, somebody's buying 2036. >> Yeah. Okay. Got You know, you just look at that and you see the trends and you say, "Okay, this trend is like clearly because it's when the trend the institutional investor comes in when the trend's established and clear and the entrepreneur comes in before." And so right now we're in this entrepreneurial period where the institutional investor actually not putting money into real estate. Like there's certain sectors that are just xed off because they don't know, they don't know what trend to buy that's totally invisible to them.

51:05 Because today, even when I'm in driver else mode, even when my car like I'm I'm on I'm honestly like still I still have to like pay every once in a while maybe like I'll pay a little bit less attention than normal, but I'm like I'm still like paying attention. I'm I'm on it. It's not like I can like do work in my driverless car if I'm the driver. Obviously, if someone else was that, you know, it's like if obviously if I'm in Uber, I can do work in the back seat.

51:29 Like that's fine. >> Yeah. or even better like a you you or in probably a Ford a kuno a car. >> Yeah, especially if it was designed in a better way and there wasn't a steering wheel in front of me and stuff like that. But today in my Tesla like I am I'm I'm listening to a podcast or I'm on you know on the phone but I'm not I'm not able to actually so the commute does affect me even if it's driverless today because I have to pay attention.

51:52 >> Yeah, we're not there yet, right? But 5 years from now it's kind of like uh you know quad computer mode or something. It's like it's using your computer but it doesn't we just need you to not have a computer and just go around that kind of like human interface. So, so we're in this transition period and then like as and the obvious thing we started a AI application layer called uh application company called real AI and that's I've been building for three years and like you know AI is going to also affect how you do analysis how you do operations like every other sector like you know Harvey does that for legal real does that for real estate and as a result like there'll be different kinds of things people buy and manage because probably things that are easier to manage with AI actually are are are more liquid and easier to buy and sell.

52:40 >> Yeah. >> And the things that are like harder to manage AI that need people you you sort of like I don't really want to deal with that. That would be like a non-obvious impact. Going back to your trend that you and I both live in the DC area and there's tons of these like really iconic places to live in Maryland and Virginia, but like they're let's say an hour, hour and a half outside of um and they're gorgeous and beautiful and um and it's kind of like the type of place you like to go on, but like you don't want to commute to DC from there, but you think like that's those are going to be really great investments in the future. Yeah, I think it's the small town that is like eastern Maryland like where they have like a city center and they have like good restaurants but like you can also get super affordable. There's enough people like you. Yeah, maybe they have a good school. Schools are really important, right?

53:34 >> Like is Ohhigh like that for LA? I don't It's a little bit but like you know Santa Barbara is kind of like that for LA. >> I mean Ohigh is already you know gazillion dollars or something like that, right? Right. I mean, it's I don't know if there's any houses less than $10 million in Ohio. I if there is, I'd like to buy one. Yeah. >> What's the whatever the next ring around that would be that's like So, I think it's still ends up being it's not like you're in some forest in the middle of nowhere. I think it ends up being like >> Q town and it's got some it's a nice little It's a little main street and you got a nice school there and you got a football team for your kids.

54:06 >> Yeah. Greenville was that for Atlanta. Atlanta had that with Greenville. Greenville was the Atlanta. So you sort of like and a lot of real estate again in real estate it's about buying the marginal change you know they they in real estate they used to call it gentrification before it became unpopular but it's like you're buying uh a change in in the constitution of who lives there population change and that's and that's like a form of growth. You go from average income 50,000 average income 100,000 and then that attracts more people. So you get sort of this compounding. Real estate is a derivative of people and and but a lot of people real estate are less focused on the people than they are on the property which is like a some kind of institutional bias.

54:47 >> And also like if there's going to be like a new like people are building all these cool factories in Texas or something like that and they're kind of like out there well then certainly you need to build housing to to support those people and then eventually you need to build schools to support. You need to have those types of things to to for that to be attractive for people to want to work long term. >> Then there's a lot of jobs from that because there's all these, you know, you can go open a restaurant for like nothing in some of these towns where it would cost you millions.

55:16 >> If you believe in a town like you're you're buying the housing, you're buying you're you're buying restaurant space there, right? You might be buying mini warehouses that are supporting that, right? So, you're going like kind of all in on that town. >> Yeah. I've seen some wealthy people do that. they sort of move to a city and just try to like partly they do it because it's kind of a passion they're trying to build. >> I'm saying you personally like if funds like if you guys if you guys believe that X place is gonna is gonna get like you're going to you're going to try to find every way to invest in that town in a way.

55:45 >> Yeah, for sure. And I've done that actually before in cities and because the thing is that you can make it happen like by by actually >> Oh, true. The more you build it is it's a virtuous cycle. Like obviously if you like make a cool restaurant it makes the other properties more valuable and then if the other properties are more valuable makes the restaurant more valuable. It this kind of goes together. Okay. >> I've done this many times over the years. It used to be in the 2010s you do this in emerging neighborhoods. You'd go to Bushwick, you go to LA Arts District.

56:13 I mean, back in the day, the mission was like, you know, the mission was like this emerging neighborhood, and you you go there, you open restaurants, you buy up apartment buildings, you build up, you build stuff, and then it just becomes this cool place, and it gets really expensive, and then you move on to the next place cuz it's too expensive to do anything there anymore. >> In San Francisco, there's actually like two different rich guys kind of doing this in in in neighborhoods that are already good. Like there's this there's basically one guy doing it in Jackson Square. He's kind of a well-known guy and he's basically bought up all the different buildings in Jackson Square and just like making and core is already awesome. He's making it better and there's another guy doing it in like there's a Filillmore corridor in Pacific Heights and someone's basically bought like probably 50 different buildings in Filillmore. He's making the restaurants way better. He's doing all these different things and obviously it's already incredibly incredible place to live and but but he's making it like even better in that this very very micro area.

57:05 >> Yeah. And actually, I love that because there's this fake narrative about how change happens, but like Soho, you know, there was a person who did that. >> No. >> Yeah. Tony Goldman. And then there he went down to the uh Miami and built a uh Windwood. Winwood. He created Winwood. Then he did. >> He created Winwood. >> Yes. So the thing you're describing, >> he created Soho and then Winwood, like two iconic places. >> Yes. And then Danil still alive. No. So Dan Gilbert hired him and they were going to go do Detroit together and then and then he died. He I think he did one more city. I don't Miami Beach. He did Miami. He did Soho, then he did Miami Beach, and then he did Wind.

57:47 >> Wait, what? This guy's a legend. Oh my gosh. Yeah, that's crazy. I had no idea. I thought it was I thought it was just like kind of like >> organic. Yeah, organic. Yeah, >> it's too hard to do organic. Like makes sense. You need someone with a vision to really be pushing it. >> I have this theory. I I have a friend who's like this populist and he has this, you know, criticizes all these movements because there's some people behind it.

58:09 >> It's kind of interesting. That's that's the question we always ask on this podcast. What's a conspiracy theory you believe? And I believe there's conspiracy theories everywhere. Essentially, there's a conspiracy to build Soho. There's a conspiracy to build Miami Beach conspiracy win. Like it was someone who had this conspiracy who had this idea of making it happen. Like that's how these things happen with conspiracies. Everyone all so many people on this podcast always say I don't believe in conspiracy. I'm like how do you think things get done? Like every almost everything that that got done out there is a conspiracy. And you more you learn about it, you're like this didn't happen organically. Like this happened because like someone or a group of small number of people had a vision to make it happen.

58:45 >> Exactly. Like and like it's only conspiracy if you don't agree with them. [laughter] >> Right. Right. Right. Right. Exactly. Or it's so fanciful that it's like you know they came in and injected you with alien dust or something, you know, whatever it is. But I do believe in UFOs, so Oh, well. So, so do [laughter] I. Actually, of course. I mean, I have to you have to do that. Back to DC. Maybe the last question like you and I you and I both are in the DC area. We're both in like the tech world in the DC area. There's not, you know, it's it's it's okay. um you know but if we had a rank order it's you know what 3% of the size of San Francisco or something and maybe it's 10% of the size of New York or something the tech community and maybe it's bigger than other people thinks might be as big as bigger than Austin or something I don't know but like how does the DC tech community become better or do you think it will ever become better >> yeah I mean the beautiful thing about being older is you see the patterns and so I was here when AOL Well, AOL was the most important tech company in the world briefly, right? From like late 90s and they were based here because the internet is here.

59:54 >> Yeah. Started. That's where it started. Yeah. >> This is where like all the the biggest most data centers are here. the sort of the biggest pipe and because of DARPANET and so I launched that wave and then it it well ultimately you know went away and went through another wave in the after 2008 because um >> like living social or something right was one of couple companies >> and there was this other dynamic happening in that period where Washington DC bailed out the entire world financial system and became so important everybody had to be here because it was the source of all power for this period and then they kind of receded >> but there weren't a lot of iconic companies right I mean back then or >> well I mean it depends because because I was going is like you know a lot of defenses here things that connect to government and I think that I think that AI is going to end up becoming more and more government connected what what >> they'll have an office here and they'll have they'll hire a bunch of lobbyists and stuff do you think engineers will be here right that's where that's really how you know like there's there's innovation happening.

61:01 >> This is a question this was because if AI gets to a place where it's like actually AGI ASI the government it's going to have to be be like like a defense you know the the buildings will have no windows you won't be able to get in without I mean it's probably going to be in near DC because they're not going to let you know it's or some big part of it. It's going to be more like the NSA.

61:22 >> You should be in the real estate world of just like building skiffs. >> Yeah. our CTO was uh built the fingerprinting for the FBI and he talks about talks about what that was like inside those like windowless offices for eight hours. But yeah, so so I think DC ultimately is about I mean AOL ultimately is downstream of DARPA. everything is downstream of the government and and the government's like always going to be essential to technology and that's where I think that DC has a like a kind of permanent place but it's not the culture of of innovation is like is runs kind of into the culture of government and it's where kind of puts a ceiling on how much innov how much like people want to start and grow here this has been awesome because you're a second time guest I'm not going to ask you our normal questions because you've already answered them so we can we'll link to the notes of the the other podcast. If people haven't listened, I'm sure almost everyone's listened to that one because it was so popular. But if they haven't, we can go back to that one. But this has been awesome. Thank you, Ben Miller, for joining us on Smation. I by I follow you at Benmillery, which I love. I love that handle on X. I definitely encourage our listeners to engage you there. You're a great exposter. Uh so, uh thank you very much for being on Summation. [music] >> Thanks, Orin. It was awesome.

62:37 >> One more thing before we go. I wrote a blog called Summation. It's the same as this podcast. The blog is about non-obvious idea sharing on business, talent, data, [music] longevity, and random contrarian takes. If you like the conversations on this show, [music] you'll probably like the blog. It's free. New content comes out twice a month. You [music] could subscribe at orin.substack.com. That's ore.substack.com. [music]