America 250 Recap with Bo Nickal, Gavin Baker Joins, Anthropic in Washington, Le Chaton Fat

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4:35 >> You're watching TVBN. Today's Monday, June 15th, 2026. We are live from the TV ven the temple of technology the fortress of finance the capital the capital let me tell you about ramp.com time is money save both corporate cards bill pay accounting and a whole lot more all in one place the chat wants me to pronounce leon and it's going to be a fun day obviously mistral is in the news uh incredibly bullish for mistral uh obviously very unfortunate uh drama happening in the anthropic world we'll go through all of that but uh if the if the sovereign AI thesis could not get any stronger right now, uh this weekend really showed uh a lot of countries, hey, maybe we do want a national champion. Hey, maybe we do want someone that will provide us models forever.

5:25 We're also going to be going through SpaceX IPO. We have Gavin Baker joining in 30 minutes and we're recapping UFC Freedom 250. It happened at the White House last night. Jordy, take us through your reactions. introduce our first guest of the show. >> Uh, okay. Quick intro on the event overall. Uh, I >> am a UFC fan. >> Yes. >> It's one of the few sports, maybe the only sport where I actually know the names of the people that are competing.

5:54 >> Um, our guest in just a few minutes is is one of those people. >> And are you more of a fan of the UFC or more of a fan of the government? Because a lot of people were watching just because they're fans of the government and they're and they said, "Oh, I will watch any I watch C-SPAN all day long. I watch anything that happens if it involves the government. This was an interesting cross. >> No, more uh more seriously, >> I as a UFC fan >> and as an American >> uh I'm excited for the for the UFC to do well. I'm excited for the fighters to have a platform. I was a little bit wary of this event overall. Sure. just because uh the aesthetics of putting on this crazy party high stakes in this moment uh when there is a ton to blackpill about. Yeah.

6:39 >> Not after all this other stuff going on >> and Yeah. So war raging, gas prices are high, house prices are high, rates are going up, a lot of people in America are not having a good time. Yep. >> Uh and it really felt like a bread and circuses moment. >> Sure. But the bread and circuses, John, it worked on me. >> Top notch. >> It worked on me. Some of the best ever. It was uh it was >> Why was it so good compared to a normal UFC event?

7:07 >> Uh well, you didn't watch, so I guess it's uh I guess it's hard. >> Uh uh >> was it the aesthetics or the actual >> Well, so one, the production value one, the card was absolutely stacked. It was eight fights, no filler. >> Yeah. >> Wall towall. uh really really uh fights that had a lot of um uh they carried a lot of weight, right? So like the the main uh title fight Gachi versus Ilia Taporya uh that changed both fighters careers like full stop, right? Uh and even with Bo Nickel joining uh uh in just a few minutes, you know, Bo that was the biggest possible stage y >> that any athlete could be on and especially in the UFC, at least here in in America.

7:52 >> Um so anyways, going into it, I thought the aesthetics were bad. I was excited to watch the fights turned out. >> Uh it was just really cool. Uh, and sure, there's still going to be people that are upset that the the that the president uh and the admin is like platforming something like this. Turned out to be really fun. It was it was a cool night. Uh, and I think America kind of needed it. >> Yeah.

8:16 >> Uh, >> a lot of people are saying it's not unprecedented because Teddy Roosevelt held a boxing match in the White House uh almost 100 years ago around that time and apparently he fought in the boxing match which is crazy. >> Yeah, he was a big big boxer. He was a big boxer and so >> imagine imagine >> so this is like a light craziness. >> Anyway, >> but anyways, uh yeah, I you know the event was was incredible and I came away thinking that uh >> big parties and sporting events are potentially the most underutilized political strategy, right? I would actually >> expect uh the the admin's like overall popularity >> approval rating to go up based on >> interesting >> uh based just on this event because there were so many >> iconic images. Funny enough, the most iconic image >> is of a Brazilian named Diego Diego Lopez which we had up on the screen there standing up.

9:11 >> Um but uh but anyways uh really really wild and uh let's bring in uh let's bring in Bo. >> Let's bring in Bo Nichol. We've talked about it many times on this show. >> Welcome to the show. How are you doing, Bo? >> Doing great, guys. Thanks for having me on. >> Thank you so much for taking the time. >> Long long overdue. Uh, so backstory here is Bo somehow was like one of the first 10,000 people to discover TBPN. You're you're an entrepreneur outside of outside of the octagon. And somehow you were in between camps or maybe during camps. You you maybe saw a funny clip of a couple guys uh in suits. And um yeah, I remember getting the notification like Bo Nickel has followed you. And I was like, "Oh, who's this? Who's some troll?" Like Bo Nickel. It was you. Uh and it was a funny moment because um yeah, you know, I probably hadn't even shared that I was a UFC fan on the show.

10:03 So, uh first off, congratulations. Uh, I was a lot of a lot of the fights last night were high stakes and uh but but yours was the highest stakes cuz I was watching and um I I can't imagine uh what you were going through in the leadup to the fight. Um but you you had a a perfect performance and and uh it was really fun to watch. Um wanted to first off ask what it was like leading up to this event. highest profile UFC event ever by far. Uh and and I want to know I I want to know what that was like.

10:43 >> Yeah, it was pretty interesting. Um I think my experience was a little bit different than a lot of the fighters because I knew immediately after my last fight seven months ago that I was going to be on the card. Um you know, I think most guys didn't find out till, you know, probably 10 12 weeks out and uh you know, I knew seven months that I was going to be on it. So, I started prepping immediately and um yeah, it was just a lot of uh a lot more media, a lot more attention, a lot more buzz. Tried to take advantage of that as best I could, you know, first and foremost by being prepared to whoop ass. But secondly, just you know, um the opportunity with the the you know, viewership and stuff like that and maximizing that. But is that is is that have knowing nine months out that you're going to be fighting like you know 5 feet from the president on the White House lawn.

11:33 >> Is that an advantage? >> Is that an advantage or a disadvantage? Because in some ways you're probably more locked in. You know you're taking every moment more seriously, but on the other side like I know I there's been moments where I know I'm going to be like doing public speaking, right? I don't really love public speaking. Uh and and I and and usually I'm thinking like ah it'd be nice to just get this over with. But nine months out, you know, you you don't you gota that's a lot of time being like, I want to I want to get in there.

11:58 >> Yeah, it definitely goes in waves. Like, you know, there's certain times where you feel a little more stressed than certain times you feel really relaxed. Uh for me, it was just staying focused on the process, focused on my systems, refining everything that I do and improving every day. And I knew if I kept doing that for that period of time that I'd just be as prepared as possible. So, you know, really, like I said, riding those waves was was big and just uh being able to, you know, kind of stay stay focused on the process and my systems and refine those rather than like thinking about this big moment 24/7.

12:32 >> Was the crowd any different? Was the vibe in the stadium any different? Does that affect you during a fight? >> It was way different. To me, I come from a college wrestling background. So, you know, when you're competing in a home match, you got 10 20,000 people that love you, want you to win, right? And uh and since transition to MMA, I've had like a little bit of mixed emotions towards me. Some people love me, some people hate me, which is it's good for me at the end of the day, but this one definitely felt more like my college days where it was a home match. I felt like everybody was on my side. President Trump was actually the way he was kind of positioned around the ring, it was like he was right next to my corner. So, he was like almost in my corner and uh yeah, it was it was sick.

13:15 >> That's crazy. Uh what about the prep? I saw folks doing walkouts from the Oval Office. Uh do you have enough space to sort of get in the right mindset? Are you stuck in a trailer? Like what is your day of the fight like? >> Yeah, day of fights. Um I try to just keep it loose. Um they have you report a few hours early, but I'm just hanging out with my my friends, everybody that's visiting in to come watch me. And um once you get in, you just you get warmed up, get your gloves on, get taped up, and then uh what was really unique for this one is the walk out being next to a Medal of Honor recipient and another um another uh military member was just like they're walking out with you. And so I showed up and the guy that I was next to, he like was just a total badass older guy and was like, "You ready to do this?" And I'm like, "Hell yeah, let's go." And so, you know, that just got me hyped up and just had to have fun with it.

14:10 >> I feel like every UFC is a Super Bowl in some ways. It's it's the top every time, but this was a particularly special moment. Is are you uh optimistic that uh the UFC will find other ways to sort of create even more special events in a calendar crowded with like special events that happen fairly regularly? Not necessarily it's going to be 250 at the White House lawn, but you can imagine that there's just something that breaks through and goes into the mainstream media even bigger like this one did.

14:45 >> I don't know. I don't know how you I don't know how you go bigger. >> I don't know. I don't either. I >> in space on the moon we'll talk about later. Top of the Eiffel Tower. >> Yeah, top of the Yeah, maybe. Who knows? >> Who knows? They're they're going to figure out something. They always do. There's always something that comes along. But, uh, yeah, I mean, I I was told this actually did more viewership than the Super Bowl, which yeah, >> doesn't surprise me. Um, but, uh, yeah, it was it was unbelievable. I mean, >> they're going to figure something out.

15:13 I'm just going to keep getting better at fighting. So, I focus on that and take care of business on my end promotion. >> Where were you watching uh, Ilia Gi from? So, what they did was they had us go back to the hotel, do media, and then uh they had a little room set up for us where we could have all of our families and stuff because postfight they had the presser with all the winners and uh we had to wait until main event was over to do the presser. So, they kind of set up a nice little area with food and stuff for us, but it was all the fighters in there together and it was it was a pretty cool environment. It was insane.

15:46 Yeah, >> that was uh John John given that he didn't watch even though he was cheering for you in >> calling me out here. >> No, you're it's okay that you're it's okay that you're locked in. You're probably you're probably reading for tech. Um no, but I was explaining like to me to me that was that was the most uh you know the Gachi Ilia was the most insane UFC moment you know going in underdog. He's lost to a bunch of guys that that uh he's lost to multiple guys that that Taporia has, you know, wiped the floor with. Yeah.

16:22 >> Uh and for Gachi to do that in that moment just felt like what a way. I mean, I I was h I was just really happy for the guy, one of those guys who's uh been on top and uh as an American UFC fan. Uh I bet I bet that fight created like a bunch of GIS and a bunch of and a bunch of Bo Nicholls. >> I love it. I love it. What does the next week, month, uh rest of the year look like for you now? Like what is it like off this?

16:49 >> I texted Bo last night like, "So happy for you, you know, blah blah blah." You texted back in like 30 seconds. I was like, "What are you doing right now?" Like I would I would have just thrown my phone. >> Yeah. >> I do like uh Yeah. Post fight for me, I probably take like a week or 10 days to do a little media tour just to kind of maximize that and, you know, do as much as I can. And >> it's kind of just like, you know, business. But, uh, I got a couple things planned for the summer. Of course, a bunch of training. Going to take a twoe trip to Japan, see Japan, which is going to be dope. Mhm.

17:23 >> Uh but yeah, usually post fight, like I said, try to, you know, take advantage of the media buzz and then, you know, maybe work a little bit on on some my businesses, things like that while I'm not, you know, directly preparing for a fight and couple couple weeks for vacay if I can slip that in. But, uh, yeah, always staying busy. >> You're going to Japan. Anything we can do to get you to stop over in China and get in the ring with one of those humanoid robots? I want to see you clock it so hard.

17:52 >> Yeah, we need explodes into all the humanoid companies. We need to create bow bench and it's like can how long how long can you last? It was like >> with with >> 10 milliseconds. >> Yeah. No, easy money for me. I might break my hand on that, but I'll I'll I'll destroy it for >> padded gloves or something. >> I don't know. Awesome. Well, happy enjoy enjoy the moment and uh come back on uh next time whenever you want to talk about some of your businesses. Uh and yeah, we're we're we're very proud and and uh yeah, enjoy the moment.

18:25 >> To have you as a fan. Thank you so much. >> Let's do it. Thanks, guys. Appreciate you all. >> Have a great rest of your day. We'll talk to you soon. Let me tell everybody about MongoDB. What's the only thing faster than the AI market? Your business on MongoDB. Don't just build AI. own the data platform that powers it. Um, so the other big uh topic over the UFC was the fact that Daario Amade was not in attendance. He wasn't front row. Mark Zuckerberg was. And it sort of underscores this odd situation that Anthropic's in where like they just got dealt this weird hand where like they're doing so well and the admin could not be more misaligned aesthetically with Anthropic. It's >> their whole brand.

19:08 >> Yeah. with the whole brand. They're very very different. >> And and I was I mean I was I was you know I read the article yesterday that that anthropic staff were going to Washington DC. >> Uh and funny some people were like oh this this is you know this is bad. Like if it was they could if they could solve the issue easily they they could do it over the phone. Not how this works serious issue show you know. Yeah, you would obviously go. Um, but going to flying to Washington DC to try to solve >> an issue on a Sunday, there was not a worse.

19:41 >> They'll be here. They'll be >> No, no, I know. But you can imagine you land there, you're like, "Okay, like where is everyone? Let's let's like meet is a big issue. Let's meet figure this out. This is important. National security is on the line. Like let's figure this out." And they're like, "Where is everyone?" And like if you take safety seriously, cyber security seriously, bio security seriously, export control seriously, like like UFC could not be less aligned with that the stakes there. Uh and so like there is this big gap between the administration and anthropic. Uh and I think that everyone should like every American should care about bridging this gap.

20:18 Like private enterprises should be able to flourish in the United States. Everyone agrees with that. and the government should be able to enact reasonable regulations to protect America's interests. And both of those need to find a way to play together, but there is just a really, really broad gap between these two organizations. And so, everyone's hoping that things resolve quickly. And it seems like the right, you know, wheels are in motion. The flights have been booked or already taken and things are moving along. Just a recap on the playby-play. March 4th, Anthropic received a depart Department of War supply chain risk letter that of course got rolled back eventually. Uh April 7th, myth was the Mythos preview announcement alongside Project Glass Wing. June 9th was the Fable 5 launch last Monday. Mythos with guard rails around cyber bio and AI research. And uh on June 12th, just 5 days after the end of the week, Fable 5 gets suspended after the commerce department issues export an export control directive. So uh Enthropic explained in a blog post that the US government is restricting both Fable 5 and Mythos 5 from being used by any foreign national whether inside or outside the US including foreign national anthropic employees.

21:29 And so that's a huge compliance burden, very sudden. And that led Enthropic to completely suspend the use of those models for all users. Um, not just uh not just foreign national employees because they need to at least if they want to comply with this do all the KYC, understand how different organizations are using the model. Who at those organizations has access? if something's being vended through an API and it's showing up in another product, does that product do all of the proper, you know, authorizations? And so, uh, it's a big it's a big wrench in the gears of the roll out of this model. Uh, then the information reported that Andy Jasse at Amazon had raised concerns with the senior administration officials about jailbreaking, the risk of jailbreaking fable and getting access to all of Anthropic. Anthropic countered in their blog post saying quote uh we reviewed a demonstration of this specific technique being used to identify a small number of previously known minor vulnerabilities.

22:28 These vulnerabilities all appear relatively simple and we have found that other publicly available models are able to discover them as well without requiring a bypass. Um so they're saying this isn't that big of a jailbreak. This isn't that big of a deal. We can move forward safely. We've taken safety seriously. But that is the debate that's going on between the admin and anthropic. So uh as everyone knows the the roll out of Fable 5 has been a bit rocky. Uh incredible demos, incredible benchmarks, but offset by the odd decision to silently degrade the quality of answers related to frontier AI development. Um instead of just refusing the request like cyber and bio prompts, which that was the main thing that everyone was really confused about, the actual rationale behind AI development refusal is pretty sound. Like people are upset about that if they're working on machine learning systems, recommener systems, anything that requires, you know, turn like instantiating an AI product, let alone if you're just, hey, I'm just doing open source AI research and I'd love to use the latest and greatest models to help me. Uh, now it's not an option. And but at the same time, just think about the logic. If a model doesn't let you hack a system, just have the model build you an unrestricted model that does let you hack your s that system. And so clearly in that scenario it makes sense to restrict if you want to restrict hacking or bio you also have to restrict the tool that makes the tool that hacks the system or develops the bioweapon in theory. Um and so uh but the choice to silently degrade uh responses was not wellreceived. Uh these are important issues and there's another timeline where AI leaders are cut from the same cloth as America's elected officials. Uh but we're in a world where Anthropic has to make their case for safety in an age of RSI during a UFC fight on the White House lawn. It's a very bizarre timeline, but here we are.

24:17 Uh most of the big tech CEOs, they have figured out how to work with the administration effectively showing up to large dinners, photo ops, the occasional movie screening to make their case about hot topics. Many of these CEOs also have business relationship with Anthropic either on the customer side or on the investor side. And that's what's really complicated about the Amazon relationship. Obviously Amazon uses uh anthropic models also is an investor in anthropic also provides compute to anthropic and so they have a very hairy complex circular relationship and so uh that clouds the discussion over whether or not is anthropic going to try and help anthropic get through this? Are they doing everything above board? At the same time you know people were sort of putting out that like oh did did Amazon like spike the ball on this? And uh at the same time if the government comes to you and asks like hey you're a big tech company you've been using this model a lot like your close partner were you able to jailbreak it at all and your security team just issued a report like yeah we actually were able to just jailbreak it a little bit like you're not going to withhold that from the government. You're going to turn that over. That's different than calling and saying hey I I I really think it's dangerous. You got to put pressure on them. So there's this there's this wide range of levels of interaction that can go both ways. can be a lab partnered with a big tech company. That big tech company can have a really established government regulations group that is actually helping you get through uh to the admin. Um on the flip side, you could have a uh big tech company that is competing with you or or frustrated by your your your business and is actively trying to uh you know put their thumb on the scale the other way. So I'm sure we'll learn more in the future. Uh many of these CEOs have business relationships with anthropics.

26:00 So, we'll see how all of this develops. Um, and they're always renegotiating these contracts, too, which makes things more complex. And they're competing across multiple markets. So, expect the 4D chess to be on to be uh on full display all summer long in Washington. Uh, anyway, um, UFC anthropic, what else is going on? Meta is doing a 180 according to air over at the information trying to be the vanguard of token minimizing. I think the token maxing, token minimizing thing is so silly because do do you know where maxing comes from really? Like it comes from gamer lingo usually and >> adopted by the looks maxing community. I I don't know if looks maxing community was the first one. They certainly made it really >> they popularized like I feel like through >> Yeah.

26:53 >> effectively through Clav's clipping. >> Yeah. >> That the idea of like doing anything like oh I'm I'm computer maxing today. >> Yeah. I mean isn't it from like minmaxing? >> Minaxing. And that's what I'm getting at. Like you shouldn't be token maxing or token mining. You should be token minmaxing. And the idea of minmaxing is when you're in a video game, you want to get the most resources for the lowest cost. So if you're playing League of Legends, you're going to put just the right amount of of gold into this particular item or this particular stat point in an RPG and you're going to try and find the optimal build based on your resources. you have confined resources and somehow it feels like these like tech and all these companies went through some sort of hallucin hallucinatory period where they lost sight of that they should always have been minmaxing because that is the goal of business at all times in all things like you don't you would never say like oh yeah we're ad maxing this quarter we're going to buy as many ads as possible oh no it didn't work we we spent way too much on ads they were not effective we need to admin spend as little as possible on marketing it's like you always want to be spending. You always want to be getting the most return on ad spend, the highest leverage output.

28:06 >> There was uh and again unsubstantiated post. >> Yes. >> But somebody was saying they talked to somebody at Meta >> and there was one engineer that spent $90,000 in one day >> and was quickly terminated. >> Really >> terminated within three days. So again, could just be entirely fake news, but >> yeah, >> it seems somewhat informed. The crazy thing is that is that like the lesson from that >> this guy's like I'm not getting fired.

28:33 I'm going to use AI more than anyone else in the whole company >> riding loops >> $90,000 bill. >> The I mean the so so the lesson that will be learned from that is is don't spend $90,000 a day but like the Super Bowl is literally for a marketer the Super Bowl is spend 5 million in one day and it works sometimes and sometimes Super Bowl ads deliver $20 million value. >> But but what do teams do when they run Super Bowl ads? Right. We ran our Super Bowl ad. Yeah.

28:59 >> We we we trained our own model in order to kidding. Um no, but >> no, we made sure that ours was ROI positive and we only bought the ad in a small market and we did it before the game our audience was and so for a very low cost we were able to get a very high of val high value. So I believe we got a very high return on investment. We midmax the Super Bowl. Now, there were some companies that sort of just Super Bowl maxed and they just spent a ton of money and when you looked at the data on how they were received by audiences, it seemed like, oh, they definitely didn't get $5 million in brand value back. In fact, maybe that ad was poorly received.

29:36 Some of the AI generated ads. >> I gota I got to give it up to the UFC for the for the the level of advertising during the event yesterday. Um, >> they're running full full ads in the middle. I thought UFC was no ads. >> No. So, one, the interesting thing >> just in >> No, with the new Paramount deal, there's a lot of ads. Okay. Um, >> but one, >> Dana White was in a lot of the ads that were running. So, so like Dodge was doing a TRX ad. It was Dana White driving.

30:05 >> That's cool. >> There was another ad. I forget the brand. So, I guess it was a bad ad, but uh Dana White was they faked a podcast set where it was with an insurance company >> and Dana was having a conversation about business insurance with this the CEO of the company. Interesting. So, it looks like a podcast. So, I thought it was interesting they were casting Dana and all them. Then second, the the the level of advertising just in the octagon was out of this world. There was um uh so many different ways to gamble. Uh uh every there was like there's no like the UFC UFC cannot do like a gambling exclusivity deal with anyone, right?

30:44 Because it's like they have it's crypto.com. It's Poly Market. It's Bet 365. Any possible way that you could want to like gamble >> bet 365. So the only day you're cap you're taking off is leap day. >> Every four years you take one day off of gambling. That's kind of like the >> one day off every four years >> and then and then Kalshi's running ads during the event. >> So Kelsey and Poly Market are doing >> So Poly Market is in the Octagon, but Kalshi's running a bunch of ads against it against it and they're buying directly through Paramount because you streamed it on Paramount. Is that correct?

31:17 >> Yeah. I don't >> Did you have to pay for it in addition to >> No. No. No. >> Okay. So you pay for Paramount on a monthly basis and then you get UFC for free. Got it. >> Gambling is just minmaxing done poorly. That's true. That's true. Anyway, um so the the the news around Meta is uh Meta is doing a 180 trying to be the vanguard of token minimizing. Two months ago, Meta epitomized token maxing on trend on track to spend billions a year on claude, etc. We've seen an exponential increase in AI usage and we are tracking to spend billions on internal use alone in 2026. The memo said at the same time, individuals and teams have limited visibility into and control over how they use AI. In 2027, we expect Meta will move towards managing AI tokens in a more structured way with bullet budgets, allocation decisions, and supporting tools. That makes sense. You have a marketing budget. You should also have a token budget. Um, as part of >> they also saw something they have like meta code, which is their internal >> Yeah, >> that makes sense. I mean, they're they're like, you know, catching up to the frontier with >> Yeah, I mean talked about this. There's a bunch of like these leaked calls where suck is like you know you should imagine that meta employees are going to be better than like the the average open source contributor. So it's like the the basically quality of of coding data within meta should be super good. You can train your model on that.

32:34 >> It's the same pitch as take a frontier model bring them in through some sort of consulting partner. They fine-tune on your business workflow. They automate your business process. Uh but your business process in this case if you're meta is generating code that makes your social networks better. >> Yeah. Especially good because like in meta all of the like you know internal business like whatever data it's already in like code format you know you don't have to like scan in a bunch of papers yeah >> into you know digital >> I still don't know what meta is actually building and I think there there comes a time soon that they should probably communicate that to the market >> personal super intelligence baby what's not to what's there not to understand >> no it's just It's a$1.5 billion.

33:22 >> What does that mean? Uh >> 75% as valuable as SpaceX, buddy. Come on. >> It's crazy. >> SpaceX. Well, >> SpaceX is 2.3. >> Well, if things keep going the way they're going, we'll see even more of a divergence. No, but I think like it's so unclear. >> You should be able to put a lot of the SpaceX bullcase on Meta, right? It's like sure they may maybe Colossus was built a little bit faster, but Meta is pretty fast. I think they're wildly I think they're they're >> couldn't be more different with Meta right now. It's >> the bull case is it's potentially the greatest business in the history that is not threatened by AI.

33:59 >> Totally. Totally. >> That actually is accelerated by AI. >> Yeah. >> Uh and and um I don't think >> any anyways. >> Yeah. But I do think I do think I would expect some communication from Meta around what their real strategy is. >> Yeah. >> Over the next month or so because it's killing them that they just keep saying, "Oh, we're personal super intelligence, but >> wait, they're building like a coding harness and they're and they're working on coding like are they going to sell that externally or is it going to be internal?

34:33 >> Are they going to are they going to try to >> coding seems like it makes sense? like they're >> are they going to try to sell their model on an API and get into enterprise? Like the big question is like do they take the leap? They kind of did that with Manis. >> Yeah. >> But that's getting unwound. >> Well, let's talk to Gavin Baker about it. But first, let me tell you about the New York Stock Exchange. Want to change the world, raise capital at the New York Stock Exchange.

34:54 Our next guest is the CIO and managing partner at Trades Management. You've heard him on Invest Like the Best many times, Gavin Baker. Welcome to the show. How are you doing? Doing great, man. How are you guys? >> Fantastically, right? Uh SpaceX IPO. It seems like everything went just flawlessly to a tea. Like to the point where it wasn't even dramatic. >> A round of applause for the banker. >> The banker. It's like 20% >> 20% pop almost to a te.

35:21 >> Yeah. What what I mean by that is like is like it would have been more dramatic if it had like popped up 70% and then went down 30 and then went up 50 and it was drama, but it was just like perfect execution from start to finish. Was that how you interpreted it? >> I thought Goldman Sachs and Morgan Stanley did a very good job. >> Yeah. Um, what do you think the market is looking for SpaceX next? Is it all eyes on the first earnings report? Like where do we go from here? Because there's so much of the SpaceX story preipo that was a decade out, five years out, two years out. But is the market going to be processing quarter by quarter plays like a like many other companies? Well, I think the market is always, you know, quarters matter.

36:04 >> Yeah. >> Um, you know, the runners on X, you know, it's like they're these reply people on X for any topic or experts. >> Yeah. >> But, um, somebody once told me a marathon is 26 onem runs. >> Yeah. >> And so, you know, and then all the runners were like, no, that's not true at all. Running, you know, obviously running a mile is different than running a marathon. >> But, you know, every quarter matters. Uh but at the same time I do think if you look at how um the market has has looked at Tesla over the last five six years you know Amazon during kind of the days of you know when they were building out AWS and then um you know kind of their their retail distribution infrastructure when they'd go through these investment cycles. I do think the public market has a much greater tolerance um for investment and a much longer time horizon than a lot of people in the venture ecosystem give it credit for. By the way, this is Foxy in the back. Um he's our he's um he's one of the analysts here at a trades.

37:06 >> I was just listening to him on the Brad Gersonner podcast. I think you chimed in on that, right? You brought him in. There we go. >> Yes, he did. But he did the work on SpaceX, so I thought you guys might want to fantastic about that. Um, but I do think that I'm not sure the story is as far out as you made it seem to be. >> I think there are two variables that are going to matter a lot over the next year.

37:29 >> Mhm. >> The first is just how quickly can they bring on terrestrial compute. >> Yeah. >> It does seem like they monetize gigawatts at a higher rate than anyone else. >> Yeah. >> And we know from Jensen that they bring on data centers faster. >> Yeah. >> Than anyone else per Jensen's words. Yeah. >> Um and everyone in the ecosystem is really incented to get um land and power in the hands of people who can energize it because everybody starts making more money when the GPUs are energized. Um so you know if they can what what are what was the altimeter figure for how what they were monetizing gigawatts at Foxy?

38:08 Do you remember for which deal? Well, I think it was like two to three, wasn't it? Like at least two times higher than like average NeoCloud pricing and that's partly in due to scale and customer quality and things like that. But it was meaningful. >> Yeah. So they're doing 50 billion a gigawatt on the Google deal. >> Wow. >> So how quickly they can add gigawatts really matters. >> Yeah. >> Right. If you can energize two, three, four gawatts >> Yep.

38:33 >> in the next year. >> That's a lot of revenue. Now you know that prices may go up, they may go down, but that's really going to matter. >> So all eyes on Colossus 3, four, five, six, seven, eight, nine, 10, etc. At least in the short. >> Yeah. Our macro hard, macro harder, macro hardested >> to that. Yeah. Macro hardest. >> Yeah. >> Um >> and then I think cursor is another big variable. Yeah. Um, you know, we we talked about it with Brad about how composer 2.5 after three weeks of, you know, RL and supervised fine-tuning Colossus 2 is kind of paro dominant. So, what's going to happen when it's applied to a bigger, better base model? Um, I do think Cursor being in, you know, half the Fortune 500 >> is interesting. So, I think those two things, you know, while I mean, I'm super excited for going to Mars and asteroid mining and >> yeah, >> and you know, a city and mass drivers on the moon, like all that stuff is awesome and I think there's a, you know, decent chance it happens in my lifetime. I just think there is there's much more tangible near-term drivers here.

39:47 >> Yeah. How do you think about the tension of the cloud business versus their own application and and model business? Uh I think a lot of people were surprised when the initial anthropic deal happened purely because uh knowing Michael Truel, he would have been very excited. >> That's my compute. >> Yeah. Yeah. Get access, hey, you got to share the only child around here. >> And and it feels like uh you can imagine SpaceX, you know, bringing on a lot more compute very quickly. Uh but at the same time, every lab has had to go through this tension of like how much how much compute do we allocate to training versus inference.

40:23 >> A way to interpret that is that maybe the team at SpaceX is pretty confident in their ability to bring gigawatts online. >> Yeah, that makes sense. >> And the altimeter figure that they've ordered 20% of the Reuben's and the Reuben is an epic chip. Like Blackwell, it was really hard to get it online. Ruben is kind of a more drop in replacement. >> It's a really really good chip. You'll have the um you know the Grock LPUs integrated at some point in the next six nine months.

40:54 >> Um >> so one way to interpret that is they're pretty confident that they can bring data centers online pretty quickly. Um, but I also I I don't remember all all of the details, but I do think there there was an out in the anthropic agreement that >> if they and the Google and the Google >> D could be short-term Google and that's that's what I just meant. It's like it is there is like a tension there where if you you know there's a moment where maybe you want the compute but you don't necessarily have all of the revenue yet and so you could see Anyways, I'm I'm very confident we can figure it out.

41:30 >> Yeah. on on the topic of like Elon Web Services, is there a world where uh SpaceX winds up building out more of what looks like AWS? Like we've seen between OpenAI and Anthropic, there's this tension of like you got to be on AWS because it or you know the ecosystem or enterprises just want to be on AWS. They won't even go over to Azure or Google Cloud for whatever. And you could imagine like it might is it enough to just be a token factory or do you need to have you know a database and an in-memory storage and you know cloud storage and cold storage and all the things that ABS provides.

42:08 >> My thought is that being a token factory is more than enough for the next 5 to 10 years man we are >> yeah we need more token factories. Um but we'll we'll see and if they need that stuff like they will build it. >> Yeah. How are you thinking about the other hyperscalers, the other big tech companies? Uh we we were sort of puzzling over uh Meta's strategy at this point. Tons of resources, cash flow, data centers. They have experience there. Maybe they're not as fast as as SpaceX, but there's a lot there, but it's a completely different motion to go into token factory. Um and yet there's still a lot of demand. So, how do you think all of that plays out?

42:47 >> Well, I think there's many ways to go into the token factory business. You could, if you're if you're Meta, >> yeah, >> you could just say to someone like Fireworks, um, >> hey, >> here are 100,000 GPUs. We'll we'll take a revenue split and we'll see what happens. >> Y >> um >> I am increasingly looking at EV to net PP&E as a valuation metric. Just with the idea being installed, atoms on Earth, I think are going to appreciate in value. This is a little bit that halo trade that um I think maybe Goldman Sachs came up with, you know, high asset value, low obsolescence.

43:23 >> Yeah. >> But Meta, you know, Meta's EV to net PP&E multiple is in an interesting place. It just suggests that the market has an immense amount of skepticism >> about their ability to monetize their own asset base. And and I think that's I think that's warranted given that all we've really got out of management is this concept of personal super intelligence. >> And it would be different if Meta AI was like at the top of the app store and everyone you were talking to was like yeah you know I'm using Meta AI >> where there even there was like a killer feature within Instagram. It's like oh people are shopping in Instagram now.

43:59 >> And I think no one no one doubts that like once Zuck has an AI product with a billion dollars of revenue he can take it to to tens of billions. But it's unclear I feel like you know going into enterprise like you know what is this API business going to going to look like we know they can use the GPUs just on making the ads product better at the end of the day and um >> but there's a lot of questions >> look I think a few things I do think it if I look at the way different players are behaving it feels like everyone thinks we're entering the endg game.

44:33 Everybody, you know, loves to use these chess analogies and it looks like the endgame may be here sooner than we think. I think that's why OpenAI is cutting codeex pricing >> simply because coding, you know, coding tokens are so valuable >> and if you don't have enough of them, you may not be able to get into this RSI loop that that everyone is, you know, >> pushing for. Um, and I I think if you're Zuckerberg, you feel that acutely. I thought Muse, what are the >> Muse Spark?

45:08 >> It it was to me it was an upside surprise and it made me feel like, you know, what's the uh what's what's what's from Tallaladega Nights or what is it? So, you're saying there's a chance. >> Oh, yeah. >> Like, yeah. So, you're telling me there's a chance? Um, >> I mean the other quote from Tallaladega Nights is if you're not your f if you're not first, you're last. >> And and you know >> that's how a lot of >> there's so many good quotes from Tallaladega Nights.

45:35 >> The windshield. >> Yeah. 100%. But I think if um I'm pretty confident Mark Zuckerberg has proven to be a good entrepreneur over time and has been willing to pivot, you know, and it's just it's so funny, you know, right now Facebook has, you know, Meta has tell investors there's like no chance that we're going to, you know, you know, monetize GPUs externally. Well, like 10 days before they announced all those layoffs. Um, which I think it was at the end of 22, if not I don't remember when they started to announce the layoffs. It was short shortly after Brad, maybe at two months after Brad wrote that letter to Mark where he said, "You're the king. You can do whatever you want, but this what I might respectfully encourage you to do." Um, you know, they went from saying, "We're not going to do that. we're gonna keep investing to, you know, super focused on OPEX in a couple of days, man. So, it's like people they meet with Meta and they hear, "Oh, you know, we're not um we're not going to monetize our GPUs externally." Well, I don't know, check back in a few hours.

46:44 >> Yeah. Yeah. No, it's like everyone it comes down to like everyone has a price. You look at you look at Elon and Anthropic's relationship 4 months ago uh and then you look at kind of kind of as the opportunity unfolded >> it made sense for them to partner. I wanted to ask how >> on the meta thing I think there is one point that's important what ultimately drives behavior for all these big cap companies like getting to AI I think that does feel um existential for all of them but the stock price also really matters >> because if you don't if the stock goes down you know you gave people a grant at this price stock goes down you know your engineers are unhappy and it's tougher to get to where you want to go if you don't have you know these you know Well, forget the 10x engineer. People are talking about the 10,000x engineer.

47:34 >> You know, you're not going to get there if you don't keep those 10,000x engineers. >> Yeah. >> So, just I think >> like we'll see. We'll see with Meta. >> Yeah. >> Yeah. Uh how did this IPO uh update your your general kind of framework for the role that retail is playing in capital markets? Uh a lot of uh it was very funny last week to see people like uh say like oh that the IPO is only 2x overs subscribed by retail all these other you know three billion dollar IPOs were we're 10x overs subscribed and it's like no we're we're talking about you know a very you know order of magnitude difference here but it still feels like retail is going to >> play a very very important role over the next 12 months maybe more so than ever given that the the the the hyperscalers are are now running um you know cash flow negative. You have the conflict in the Middle East, right? There's rebuilding efforts that needs to needs to happen. And so I feel like retail this is this is kind of um retail's moment now maybe more than ever.

48:40 >> Yeah. Well, so a few things. One, people say retail in a porative way, and I would just say stupid is stupid does. And like you know we track you know there's all these indices of retail favorites and man they're up a lot and they're up a lot 25 and they're up a lot in 24 >> you know so kind of stupid is a stupid does. So I'm not um you know like I think retail is probably outperforming the overwhelming majority of professional money managers whether they're you know private equity managers venture >> you know public equity managers whatever. So like retail, I don't think it's pjorative. I do actually think in the case of um >> SpaceX, I'm not sure, you know, you process so much information. I'm not sure where this comes from, but I actually think after the IPO, um you know, for whatever reason, it some of that retail stock may have may have gotten allocated to people who were flipping it because my understanding is there was more institutional buying. I don't know where this after the IPO there was retail buying. Huh. Now, I'm sure you know retail is very sensitive to momentum. So, maybe what's happening today changes that. But I think another really underappreciated thing about the SpaceX IPO is that 10 over 10,000 SpaceX employees bought on the IPO. And that's just, you know, everybody does all these lockup analyses and oh, how much stock is going to come come to market and, you know, for sure there's all these triple layer SPVS or whatever, you know, or maybe there are there are people speculate there are um and I'm sure some of that will get unwound, >> but the reality is is that SpaceX employees own a lot of this. And if you're an employee or even if you're an investor who has an S an SPV or you're directly on the cap table, you've had a chance to sell every six months for the last 10 years.

50:36 >> If you wanted to sell, you could have sold and you know whatever when they did that offering in in the second half of last year. >> Yeah. >> So I think the supply demand dynamics here are going to be very interesting. But with retail in in general, um, yeah, man, they're they've been a more powerful force in the market over the last three and a half years than at any other time in my career, including the year 2000 bubble, which I think this is nothing like, by the way.

51:09 >> Um, but yeah, they matter and stupid is and stupid does. Uh I'm interested to go a click deeper on the idea of like value will acrue to companies that are in the token path. I think that phrase is uh extremely powerful right now. But I want to sort of expand it and understand the fringes of the token path because uh we talked to Matthew Prince at Cloudflare stocks at all-time highs. It's delivering tokens at the edge and obviously there's an immense amount of AI agents that are interfacing with different websites.

51:46 They need to be distributed. So there's a lot of value there. But is Cloudflare in the token path if they're the one finally sending you the packet of tokens at the edge >> or does that not count? How does that how do you think about that? >> Every CDN has has this business. You know they signed >> Yeah. What was it a$ 1.8 billion dollar with anthropic and if you have all these points of presence Yeah.

52:10 >> and you can deliver really low latency tokens to highv value users. >> I think what's interesting for for cloud for all these CDNs >> Yeah. >> is they're they're getting a massive premium for that latency. >> Yeah. >> You know it turns out you know one of the lessons from from Cerebrus is people are willing to pay for speed. >> Yeah. >> And you see that in the prices these guys are commanding. But I do think I mean my gut is in terms of tokens consumed um on planet earth these CDNs are delivering less than 1% of them and I mean maybe less than 10 basis points >> they're all most of the tokens they're happening internally and then you just get the result.

52:50 >> Um >> would I say that these guys are in the token path? I mean I would say they have a path towards being in the token path. Yeah. And they have part of their they have part of their business that's in it today. >> Yeah. >> And they're trying and like everyone they're trying to move it more and more there. >> Yeah. Yeah. I mean uh Matthew was talking about uh h colllocating Nvidia servers on the edge specifically for the delivery of voice models because you want those to be very low latency. Maybe you want your coding model to go off and cook in Virginia for 20 minutes or an hour and then come back to you with the final result. But uh if you're trying to actually talk to a model, you probably want it as fast as possible. What about on the opposite end?

53:29 >> Wasn't there that startup that Nvidia just invested in that like will >> Oh, yeah. On your house. >> Money >> that put a GPU, you know, four a four GPU server on the outside of your house. I mean, >> yeah. >> GPUs are going everywhere, going in your bed eventually. >> I mean, it's full circle, too. >> Wasn't Jensen talking about stuff like that back during like the original crypto cycle being like everyone's going to be, you know, mining?

53:53 >> Yeah. Yeah, I mean the the Tesla Power Wall is like a version of that for storing energy. It doesn't store compute, but it stores energy locally on the edge off the grid and uh there's a lot of powerful things that get unlocked by that. What about land? Is land in the token path at some point on the extreme other end? Uh because people are obviously searching for go going further and further upstream. They found a a toilet company that makes a particular material that goes into semiconductor supply chain. People are hunting for like the final the final ingredient.

54:24 Maybe it's just sand that turns into silicon. >> Yeah, I do think the bottleneck bros as they are called are >> this like bottleneck trade is kind of nearing its end. >> Okay. >> And you know I did um you know the Wall Street Journal had the story about this Japanese company that makes um I forget what they make. It's atood. Yeah. Aimoto. Um, and you know, everybody's in this because they thought they were going to raise prices and then they just said, "We're actually not going to raise prices. This is the wrong thing for us." And I almost posted yesterday on X, welcome to Japan to all of the uh bottleneck people.

55:05 >> But, you know, everybody's, you know, having claw run, what's the next bottleneck? >> Yeah, >> that was that was the game for the last year. The next game is what has enduring franchise value. >> Yeah. kind of on the other side of these bottlenecks whenever whenever that is >> as far as land. Is land a bottleneck? Man, I do think the math for orbital compute to me it once they can reuse Starship. >> Yeah, >> I think the math for orbital compute becomes pretty compelling. You know, it's just 60 billion to bring on a gig terrestrially. 25 is power and cooling.

55:39 You don't need that in space. And so the right comp for that 35 billion of kind of you know IT equipment GPU, CPU, switches um you know memory, storage um is is that 25 billion versus the cost of launch. And once Starship is reusable, I think the cost of launch is 5 billion. So 20 that means you can put a gig into space for 30 billion and a gig on Earth is 60 billion. And that 25 the power and cooling feels reasonably inflationary to me.

56:12 >> Sure. >> Um so I don't know that I would say land is in the tokens token path. >> Maybe beachfront property but that's about it. >> Yeah. Beachfront property is beachfront property. Airplanes. Yeah. >> Really nice cars. >> Yep. Firmly in the token path. >> All that stuff is in the token path. >> I gotcha. uh how do you think the events of of last week with Anthropic and DC update uh different countries on their own sovereign AI play because there's been there's been attempts it doesn't feel like you know many of the attempts have you know you can have a powered shell and you can have the best GPUs but if you don't have the talent it's really it's going to be really hard to get to the frontier and now if you don't have massive usage it'll also be really hard to get to the frontier and So, do you think the ship has sailed?

57:05 >> No. Well, look, look, I think every country is going to want to have their own sovereign AI strategy at a minimum for national defense. I think where that ends up is um I saw today that the EU had restricted exports of Mstral's lat. >> I think that's a joke. I think that's a meme. So people have gone so far on the MR leashhat thing that that they're saying it's like mythos is distilled on it and it's breaking all the benchmarks.

57:34 I think it's a good model but I don't know that it's quite there yet. >> Yeah. >> But you can imagine that we get there for sure. >> Yeah. Yeah. So, I think what sovereign AI will look like for essentially all countries really other than the United States and and China, although I think China is going to fall further and further behind >> is just some sort of you do you use um you know, you use one of these providers to do some reinforcement learning on your language, your culture, your values.

58:02 >> Um you have a system prompt. um you do some supervised fine-tuning and you run that on whatever the best open source model is. I think that's where sovereign AI ends up and then you run it in your own data centers so you feel like you know it's safe and whatever defense questions you're asking it or whatever forget questions whatever defense and intelligence um and maybe um you know policing activities your sovereign AI agents are doing you know 24 hours a day you feel like they're safe.

58:37 >> Yeah. So I think that's where sovereign AI ends up and I think you know there'll still be a big buildout for that but man sovereign AI at the frontier I don't see it. >> Yeah. What do you think the drivers are of the widening gap between Chinese open source models and American closed source models is? >> China has made a terrible mistake not you know taking it feels like the administration has been willing to let them buy H200s or P30s.

59:01 >> Oh yeah. And I think they're on this like, you know, they have this crazy belief that, oh, you know, our own internal chips are good enough. They're not. >> Yeah. >> And then, you know, I think what's making them think that is that Chinese labs are very, very good at distillation. Somebody told me it only took 160,000 reasoning traces >> from 013 to get the original Deep Seek. you know, they're very clever at industrial scale distillation, running it through multiple APIs, >> pinging each API from, you know, we've all seen those iPhone farms in China.

59:39 You know, they've got they've got the same thing for distillation and they've got, you know, 100,000 endpoints distilling these models across every API available. They've gotten really really good at that, but man, all that goes away if people stop releasing these models at the frontier. And I think mythos is a side of things to come there. >> Yeah. Yeah. It seems like they're getting much better at locking down the reasoning traces, locking down the the espionage. It feels like uh back during the L1 days, the labs weren't even aware that distillation was so possible that that was uh that that was something that was such a such a potential threat. For sure.

60:18 >> Jordan, please. >> Is any part of you worried that you'll never see another another company like SpaceX? Um, worried is the wrong word. >> Not not worried. Not worried, but but like you have to appreciate you have to appreciate that a moment like that you it's possible that you have an opportunity to invest in a company like that one time in your career. And thank God you did it because there's plenty of people that that had the opportunity and didn't. And uh >> well >> well I did own 15% of Nvidia when it was a sub$2 billion market cap but and I own 10% of Tesla when it was a sub$2 billion market cap. Um but um but SpaceX certainly it's been a special experience for me >> and I think there is a chance that it is you know one of the most important iconic companies of all time. I mean it already is. Uh maybe there's a chance it's the most. Um and I think in general it's just like I I kind of want to take a step back and like all this trillionaire hate from the left. It's like the you know there was a great post from my friend um Kevin Mafy saying like oh this is a bond villain who's decarbonizing the world.

61:38 Last time I checked, people on the left >> were like the environment >> connecting u you know poor people in low-income countries, schools and hospitals to the internet at very low cost and he's helping blind people see today and you know interact with the world. That's a villain. Um and then just like there's so many parts of the SpaceX story like all of the you know blueco collar workers who've gotten super wealthy. uh if you're opposed to data centers on Earth because the environment, well, SpaceX is your is your solution. So, um you know, there was another great post that just said, you know, the left won and they don't even appreciate it. The world's first first trillionaire, >> you know, has done more to kind of solve the environment than like everyone else on Earth combined.

62:28 >> Y >> I saw there was another good one. It's like, yeah, Elon could solve world hunger by, you know, market selling every, you know, uh, piece of stock that he has and send the world into a global economic downturn, losing, you know, millions of millions of jobs in the process. >> Yeah. That somebody said that Elon that the World Bank could solve hunger with five billion. And he and he said, "If you prove it to me, I'll do it."

62:55 >> Yeah, of course. >> And turns out you can't solve world hunger for $5 billion. >> Yeah. Um, but yeah, SpaceX is certainly I would say, you know, SpaceX, Nvidia, Tesla, they've all been very special to me in in kind of a different way, but man, there is nothing like a rocket launch. And so, I just don't think has a visceral experience. I highly recommend everyone listening, you guys, if you have kids, take your kids to a lodge.

63:22 You don't want to go with SpaceX. Everybody's always like, "Oh, get me the special tickets." You just literally you could go to a beach at Bokh Chica. Yeah. >> And be where the special SpaceX viewing area is. You can literally be closer to the lodge. Yeah. >> You could there's hotels near Vandenberg. Take your kids >> see a lodge. It's super inspirational that humans are capable of this and it's much more visceral than you realize. >> You know, the sound, the blast of hot air, a lot of people cry. So, go see a launch. But there will be a ne never I don't think a I'm pretty skeptical that there will be another um company that delivers a visceral experience like that. And then listen, if SpaceX puts a city on on the moon and then Mars and enables, you know, becomes the British East Indian company, the solar system, I think this will and those there's a lot of hard engineering that needs to happen to go into all that.

64:21 this will probably be the most important company um of certainly my lifetime of maybe maybe of all time. Um and so from that sense I don't think there will ever be anything else like it. And yeah, I guess that is a little bit sad but you know what there's so much awesome stuff happening in the world that it's it's it's tough for me to get too down there. >> I love it. >> Yeah. Hard hard to hard to be hard to be too >> I have I have one last question. We have uh um you mentioned owning Nvidia sub2 billion. What is the health of the sub2 billion uh market right now? Is there is there anything that you're excited about?

64:57 >> Is there anything that the bottleneck bros haven't ran up haven't run up to a billion? >> Bros have taken everything under two billion a maybe not even maybe not even uh like uh like public companies but private areas. is I mean we're starting to see the knock-on effects of AI in bio and uh material science and like neuralink was sub 2 billion for a long time right and so there are more like not in theme but accelerated by so I don't know there's also just like >> company >> there's loads of incredible venture companies you know startups under two billion yeah um >> like loads of them um you know I I I I talked watching them, you know, several times a week minimum.

65:42 >> Yeah. >> In public, you know, until the bottleneck bros came along, until AI came along, there was not a lot happening in public small cap land. Yeah. >> And by the way, on this like all these small caps, these bottlenecks, this AI, it does feel a little weird to me that you could have like a large following on social media, post about, you know, buy buy stock at something. >> Yeah. >> And then post about, you know, outline your thesis in a $35 million market cap company and send it up like a thousand%.

66:21 Um, and there's a lot of that going on. And by the way, this not this is not like a serenity comment. I think that guy's that person >> is smart, >> but I mean there's there's there's there's a lot of shady stuff happening it feels like to me. >> Sure. >> Well, yeah. And it's you look back at uh you know you were a young uh young analyst at at Fidelity right during the the doc you know the end of the the dotcom cycle and there was a lot of just like euphoria stuff happening and in the years that followed there was consequences right there there were people ultimately had to to face um >> sometimes civil penalties all sorts of different things companies went bankrupt there were all sorts of different uh you know perturbations in the kid. And of course, we got a co we got a bunch of really enduring generational companies through that period, too.

67:13 >> Although a lot of these accounts are anonymous, and I'm sure they're logged into social media with a madeup email. >> Yeah. >> You know, gone through a VPN. And so, >> I don't I don't know. We'll see. >> It is different than a research than a sellside research report that maybe goes a little bit too far, but there's still a whole compliance department around it. Uh we are in Yeah. uncharted territory. So, uh, everyone needs to stay safe out there and do your own research, I suppose.

67:41 >> Yeah. >> Anyway, >> well, guys, man, this was super fun. >> This was great. Let's do it again soon. >> Come on more. >> Thank you so much. >> Anytime. Let's get the whole team on, too. >> Yeah. You know what? That's actually fun. >> Let's do that with the whole team. >> That' be amazing. >> Awesome. >> I would love it. Yeah. Yeah. You got a conference conference room with a with a nice wide angle camera. You can just have the whole crew there. That's great.

68:02 Partner into a partner meeting. Exactly. Awesome. Great to hang with you guys. Have a great rest of your day. Thank you so much for coming on. We'll talk to you soon. Let me tell you about CrowdStrike. Your business is AI. Their business is securing it. Crowd Strike secures AI and stops breaches. Our next guest is Leaf Abraham from Public. He's the co-founder, co-CEO. Here to break down what happened on Public when SpaceX went public. How you doing, Leaf? Good to see you. Beautiful background. What's up, guys? Hope you're enjoying New York City. What's up?

68:31 >> It's fantastic. Was was Friday crazy for you? Was the weekend crazy for you? Is today crazy for you? Is it all just like crazy in the wow this is a historic moment versus like crazy at the office like the servers are on fire? Like does that happen with you? >> Yeah, I mean by now it's obviously more kind of business as usual when IPOs happen, but on Friday definitely. I mean SpaceX was the most popular IPO that we have seen on the app ever. Yeah, >> by like a wide margin. And um you know to give an example of like you know of everyone who bought a stock on Friday, nearly half of people who bought a stock on Friday bought SpaceX, >> right? So which is obviously quite quite crazy, right? Like now >> diagram is a circle >> like second most traded stock was Nvidia and SpaceX was like 533% more trading than Nvidia that day, right?

69:27 So definitely, you know, the the like one of the kind of craziest IPOs that we've seen so far. >> Yeah. What was the resale allocation actually like on the ground? We heard numbers like it's it's double overs subscribed, but then the number that I saw reported was like a hundred billion for retail. And that seemed like way more than what would actually go to retail because so much of it is going to be anchored by the banks and what I would not put in the retail bucket like JP Morgans's like you know client >> and and and you would think so but I think we when when people talk retail they think what you and I were just thinking of like basically people who use retail investing apps like public and the like >> individuals and they're making individual like self-directed you know and so don't necessarily fun like but like retail is still you know the rich guy who has a JP Morgan adviser and stuff that still counts as retail right and and like when you see >> you know and I know it was first about 30% then it was like down to 20% in terms of like retail allocation of it you did still see that >> you know at least you know sort of you know half don't like you you you did still see that at the end of the day when these retail allocations happen these days it still mostly goes to the good wealthy customers of the big banks and their wealth management arms first.

70:50 And that's why you saw like, you know, the like retail brokerages that had some allocation, you know, ended up mostly giving people like one share and stuff. And that is because most of that 20% still went to, you know, the good long-term customer with a very large account of JP Morgan and Merill and whatnot, right? So that is still the reality. And I think the main thing there is really is that um you know the banks who are in most cases also like the ones who are underwriting the IPOs you know >> they are kind of managing also their process they will say that to retail allocation etc. Most companies that go public maybe also don't really have the not saying SpaceX but like you know most companies in this city really have the perfect understanding of like the nuances in retail and I think um you know that's why you're still seeing that the the banks who are underwriting are like pushing their weight around and at the end of the day most of that still goes to you know the the wealth management customers and stuff. Can you talk a little bit about uh either the research that you're seeing folks do or maybe the research that you're enabling with public's tools specifically? I I I read a very interesting report in the Financial Times where they visualized over the next year how the lockup will actually play out. It's a very lowflat stock early on gets added to the indices and there's all these different milestones that I mean you could just say it's all priced in already. uh but I imagine that many investors will care and want to buy ahead of uh ahead of a index purchase but after a lockup ends or something like that and I'm just wondering about um how you can actually help a investor understand those dynamics.

72:30 Yeah, I mean I don't have the perfect schedule in front of me right now, but first off, I think this IPO specifically that the banks lucky have done a pretty damn good job like in terms of the pop was there. It was sizable but it wasn't ridiculous necessarily, you know. Um even now on day two like the the stock clearly is holding up. Um and then the whole orchestration of the kind of multi-stage unlock of the of the float at the same time or or or the lockup at the same time where you know obviously like the whole renegotiation with the you know adding to the NASDAQ 100 and so on which then creates more buy pressure on the other side as the other ones kind of you know get unlocked and I think that orchestration we'll see how it all plays out as it kind of really unwinds but it's clearly very well thought out and if you would judge the performance of that you know orchestration so far throughout this IPO and stuff. I mean >> I would argue compared to many other IPOs has been very well executed, right?

73:28 So my my hunch is that a lot of smart people have done some some some good work there that I don't know if you can really play it like that because you know >> there's surely smarter people than you and me that have models that have all figured that out. >> So there's clearly continues to be more retail demand than allocation for these blockbuster IPOs. Uh on one hand, Elon has benefited tremendously from like the power of retail, right? It helps to have a bunch of people invest at like you know you know uh uh low twodigit you know billions you know with Tesla and sort of ride that up right. Um, but I feel like one of the challenges for retail to actually get meaningful allocation is just the lack of like reliability and the flipping risk associated with allocating to retail. Uh I'm sure Elon in a perfect world would love to say like yeah we're going to give half of the IPO to uh to uh retail but then uh there's there's going to be that risk that people are like you know not as not as reliable as the big you know institutions and things like that or or certain even clients of the private banks that uh want to make sure they're in the next IPO. So how do you think that that gets solved? Is there a world in the future where like retail has like a true lock up like they they cannot sell versus just saying like hey please don't sell.

74:54 >> What do you think happens? Yeah, I mean so as a broker you you know what what what most brokers do and also what the companies who who IPO kind of ask for is just like what's your flipping policy and is that in most cases if you flip within a certain time frame you basically get restricted from future IPOs and that's like one of the kind of forcing functions from a pure security law perspective you can't create these this notion where you know once this stock is common stock publicly trading like every you know every investor has to be treated equally you can't then suddenly be like or I like I don't trust you retail investor so you can't sell but the other institution I sold it to they they can you know like those things can't like can't really happen um but I think from the retail investor perspect it really depends on obviously like the the the at the end the platform in most cases right so in our space I would also divide it up is like trading platforms where they have their focus right trading platforms or like investing platforms so like trading is basically like your chart based first product technical analysis very heavy options and future and so on. And in that world, you do actually have a flipping culture.

75:58 Like there's Reddits about it. There's like, you know, uh, like Telegram groups, etc. about, you know, where basically people like try to find multiple access points to an IPO just for the matter of like flipping it. Um, but I would say that that is a small sliver of the retail market. Most people are actually more buying and holding. what we've seen with IPOs in our history um our like net share retention on IPOs is like 125% roughly you know which basically also means that people actually add to their positions afterwards >> and so they get shares allocated they didn't get everything that they wanted in obviously you know so far always and then uh but then they add to it as it starts trading in the public markets and I think most cases what you're seeing because like normal retail investors like the way we're not traders we're people who like build up portfolios for the livelihood and stuff like they are mostly people that are cold stocks, right? That's what you've seen also with like the dieh hard Tesla crew like in the past. You know, these people were people who were tweeting out pictures of, you know, their monthly DCA, their monthly dollar cost average into their Tesla stock because they got a new paycheck, you know, and I think that is the much more normal behavior, I think, than this jewel flipping thing. So, I think it's yes, it exists, but I think it's a little bit maybe the fear is a little overstated. I would argue >> there were a lot of people that were upset about SpaceX's inclusion in indices. They maybe they don't like Elon for political reasons. Maybe they don't like the stock because of the revenue multiple. There's a variety of of gripes that people have. But uh I saw Jason Calakanis fire back say hey you can create a synthetic uh index that you know you want to own the S&P 499 uh just go do that. And it seemed a little complicated. How complicated is it actually to do that today if you're genuinely so bearish on SpaceX that it can't touch your portfolio? Because you could go short or you could just buy everything else in equal proportion, but then there's reweing that happens and it's sort of complicated. But where are we from someone being able to just do that with a prompt or a click these days?

78:05 Well, I love the question because I can perfectly now do a put an ad in here. Um, so the simplest way is we just go to public.com, sign up, and there's something called >> public.com. There's >> something called direct indexing. There you go. >> There you go. >> Fantastic. So, and there's direct indexing, which basically means you can buy the S&P, you can customize it. You can be, you know what, I want to have the S&P 500 without this and that stock.

78:28 You can have rebalancing built in even Texas harvesting built in which means you can actually you know save some money just on you know take the the just on taxes there as well >> to selling the losers you know and um rewaiting over time >> and so um that >> is super easy now at least on public >> um and is is something that that a lot of people do. I think the main thing that really was I think what a lot of people got upset with was that um people have trust in these indices because of the rigid frameworks that they have.

79:04 >> Yep. Have to be profitable for a certain amount of quarters have to be a certain size. Yeah, totally makes sense. I understand the critique. >> And so and so and so the minute >> it was basically like oh now we make an exemption suddenly. I think a lot of people were just getting upset with that that basically been like hey what the [ __ ] like I put my my life savings into this yeah >> because of these frameworks and I have basically like you know agreed to them or whatever I believe in however you structure it and I think that was mostly what kind of came >> yeah and also like when I think about the S&P 500 I think most people mentally think okay I'm going to have 02% in every company but of course it's cap weighted and when you see a two trillion behemoth come into the index you're like well that could be like 3% % of my portfolio, maybe 5% of my portfolio if it runs and and I don't want that index exposure necessarily. Of course, everyone has different risk tolerances, different preferences, but good to know that there's an alternative out there.

79:58 Jordy, anything else? >> I was going to say if if you have 30 more seconds to answer, how do you think the SpaceX IPO impacts how, you know, bankers and companies are thinking about, you know, potentially other IPOs this year? Obviously, retail's quite strong. They want exposure and uh it's at a level that is pretty unprecedented >> and also the market I felt like there was one narrative was like if SpaceX wins everyone else loses because there's going to be so much rotation out of everything else but the market's performed well today and stuff and that was that's not what's happened at all.

80:33 >> Yeah. I don't know. I would argue there's so much money in the world that it's totally fine. kind of thing when you if you look at the big institutions that put multi-billion dollar checks into the SpaceX, a lot none of those were even like existing investors and so on that kind of double down their positions and stuff like >> you know and so I I I wouldn't necessarily think of that argument. Um I do think that um because this IPO at least so far has been really executed quite well >> that it makes everyone very confident on the next ones.

80:59 >> Yeah. And so, you know, if I would be now anthropic or open air or something, I I would I would like look at this one now and be like, >> "Okay, fantastic. The market is ready and the bankers seem to be ready as well." >> Um, so I would say this I like I would argue it's a it's a very good sign of general confidence and so >> white pill on a suit day. >> There you go.

81:19 >> What else? Sorry, I cut you off. >> Whatever. >> Thank you so much on the show. Always great to see you. >> We'll talk to you soon. Have a great rest of your day. Goodbye. >> Let me tell you about Cisco. Critical infrastructure for the AI era. Unlock seamless real-time experiences and new value with Cisco. Fox is buying Roku, the streaming service, for $25 billion. It's in the Wall Street Journal. >> 25 or 22? >> 25 billion in the Wall Street Journal here. Let me refresh the page. See if they updated it. It still says 25.

81:53 Weird. Reporting 22 billion. >> Okay. Well, who knows? >> Somewhere in the north of a billion, subund billion. Let's be very conservative with our estimates. >> Yeah, CNBC also 22 billion. Weird that the journal is >> the journal may have inside information given that it's a News Corp property related there, right? Um anyway, let's read through the journal piece, which might be wrong. I don't know. Uh let let me just give you some facts and then you can sort of uh give me some takes and and and contextualize it with more information. So uh Fox Corp said it's acquiring Roku in a deal valued around 25 billion. So the Wall Street Journal saying around is 22 around maybe making a major bet on the future of adup supported streaming. Adupported streaming obviously Netflix pivoted to ads after saying we don't we're not going to do ads turned out to be a great business. ads are undefeated and more people want >> down with ads.

82:48 >> They're just down with ads, especially if they're good ads. >> Anyway, the Fox the the deal the deal is Fox's largest to date. It brings together a media company known for its live news and sports programming with the biggest provider of streaming platforms for connected TVs. Uh, it will add scale to Fox's streaming business, currently home to free adsup supporting streaming service Tuby, which the company bought for 400 million in 2020, and subscription-based Fox One and Fox Nation. Uh, in addition to >> Tuby, from my understanding, has been a home run. Yes. Like, you know, >> uh, I don't remember exactly what the revenue is, but they bought it for 400.

83:26 It's in the billions now. >> And all all the metrics about actual audience size are huge. and uh yeah, putting up uh getting to tens of millions of dollars in revenue, hundreds of millions of dollars in ad sales against a big audience like the Tuby uh viewership when you have the Fox machinery behind it makes a ton of sense. In addition to distributing other streaming services through connected TVs and devices, Roku has its own adupported Roku channel. The combined company will better will better compete with the likes of Amazon.com and Netflix for ad dollars. quote, "Bringing these two companies together will really help define the future of television in the United States and in many other markets around the world." Fox chief executive Lachlan Murdoch told investors on a call Monday. Fox will pay around $160 per share, 96 in cash and.99 9693 Fox Class A shares. Uh the deal is valued at around 22 billion on an enterprise basis. Fox expects to fund the cash portion of the transaction with 12 billion in new debt as well as cash on hand. The combined company expects to cut around 400 million in annual costs.

84:30 Fox plans to keep TubeBu and the Roku channel as separate offerings. Uh consumers are increasingly opting for free and lowerc cost adup supported streaming options as the cost of subscriptions marches ever higher. Adup supported streaming plans now represent almost 50% of all premium subscription ad uh video on demand signups in the US, up from 39% just two years ago. More than 100 million global households stream with Roku. Roku is the largest streaming platform for connected TVs with 25% market share. Uh Samsung's Tyizen is number two at 23%. And then I'm sure uh probably Amazon's Fire TV is not far behind. Um Fox remained on the sidelines during the heady early days of streaming boom. Pouring money instead into programming for its cable channels and buying up sports rights. It launched Fox Nation in 2018 and introduced direct to consumer Fox 1, which includes sports and Fox News last year. Fox said last month that Tuby had nearly 100 million monthly active users and its revenue had grown by 23% in the fiscal third quarter. And so uh uh the Fox's stock is down today. Uh Roku is down 2% something like that. Um and the market doesn't like it. take him has a a take here. We can read through his opinion. He says, "I don't understand how this Roku deals makes any sense. Uh bringing together the most valuable live."

85:56 >> I'll tell you how it makes >> How does it make sense? >> Um no, so I think it makes sense. One, uh Fox, they have a a great product in Tuby, right? Uh it's again, um uh there there are certain people that are that are happy with their with their HBO or Netflix or whatever, but Tuby has uh has a great niche. Uh it's been a great acquisition for Fox. Um north of a billion dollars of revenue. Uh that is a product.

86:23 >> Roku is a platform. They have over 20% market share in connected TVs. Um I was looking at the data, they have over 40% of the engagement with connected TVs. So when you think about it from an advertising potential, right? It's not just that they have 20% of the connected TV market. they have over 40% of like the watch time effectively, right? So, uh looking at the potential from an advertising standpoint and how many dollars are still yet to shift from uh traditional television to connected TV.

86:56 So, from that lens, I think it's I think it's great. Uh Roku is also a much younger demo. So, like a lot of media a lot of media properties, right? uh especially television related are going to be uh you know older demos that are that are eventually going to be uh aging out at least of like prime consumers but uh these are consumers that are in their you know prime uh earning years prime years as consumers and uh and so ultimately I think it makes sense uh I think it makes sense for for Fox uh next the thing that I hope that they can do as a consumer is uh rebundle, right?

87:35 We've just gone uh we've gone through this era of of unbundling and the fact that uh you get a new TV and you're like, "Okay, great. Let me log into, >> you know, 15 10 different services, something like that." I would like to see them do uh I would like to see them do something in bundling for um for a consumer. So again, uh looking at it from the lens of like having north of 40% of like watch time, right? That is a super valuable property property and like with the right ad driven approach, I think uh I think it'll pay off.

88:10 >> I wonder how windowing fits into this. Like I I when when I grew up, I didn't have cable, but you would get a prestige movie played on ABC like once a week. And for a while, that was the flow on Netflix. And HBO was like its own premium subscription. You open up the HBO app, it's all premium uh series and movies. Um, and then some of that would trickle down, but then it feels like the ecosystem sort of branched a little bit where Netflix stopped getting like the James Cameron library for a while. Uh, and Disney started hoovering up some of that, keeping some of the really popular movies, the Marvel franchise off of Netflix even for later run a year or two after um because there was more competition from the actual different uh pieces of the the the different studios.

89:02 So, I wonder if Roku will be able to to provide some sort of like neutral territory in some ways where where viewers can pick up something that's in the premium end, something that's, you know, a sequel to a franchise that they know and love, but it's not seen as as competitive as as, you know, Disney versus HBO or whatever. Um, we we will see. Uh, the history of Roku is interesting. We got to take you through this briefly. So, uh, it was founded by Anthony Wood, born in 1965.

89:35 Uh, in when he was a teenager, he point he published Lunarlander in the AOY magazine. Uh, earned a bachelor's degree in electrical engineering from Texas A&M. Uh, he met his wife there. Now they have three children. Congratulations. They live in Palo Alto. But, uh, in college, Wood founded his first company, AW Software. AW Software. What do you think the AW stands for? He's putting his name on the line. >> On the line. >> Andrew Wood Software.

90:02 >> Meet Anthony recently. >> Oh, you did? Wait, really? No way. >> That's awesome. Uh, so he was selling computer programs. He founded Sunrise Industries while studying engineering, developing software for the AmIGGA, the original AmIGGA system. Um, after graduating, he s he founded his I think this is his third company and it's called Sunrise version two. Uh later in 1995 he launched another company iBand and iBand sold to Macromedia for $36 million in 95. That's a lot of money.

90:33 And Macromedia of course was the makers of Adobe Flash. Uh he left in 97 after two years to launch replay TV which was a digital video recorder DVR for you you you'd have something coming in over over the antenna and you would be able to record it and watch it later much like to was their main competitor. Uh he uh in 2002 he founded Roku his sixth startup to market home devices. Roku means six in Japanese and he's just like it's the sixth time I'm doing this.

91:05 Imagine being on the sixth startup. I'm number four or three or something like that. Um he also worked at Netflix, >> but the Roku history is sort of interesting. So, uh he he founded Replay TV. Uh Replay TV did not was not successful. So, he worked at Netflix. In 2007, Woods company began working with Netflix on Project Griffin, a set top box. Netflix was thinking about getting into hardware and it would allow Netflix users to stream Netflix content to their TVs. like they were working on like the Apple TV basically. They it was a crazy fork in the road. Uh a few weeks before the project was due to launch, Netflix's founder Reed Hastings decided that it would hamper license agreements with third parties. Is all of our thirdparty license agreements. They're giving us content. They're going to be super upset about this. We're shelving this product.

91:54 We're not doing it because we we want to keep Netflix on all the other platforms. when the Apple TV comes out or whatever other box is out there, we want Netflix there. We don't want Apple cutting us off because they say, "Oh, you got your own box. You can live over there. You're not on ours." Not that Apple would necessarily do that, but that type of set top box would not integrate or the smart TV would say, "We are not integrating." Um, and so Fast Company cited the decision to kill the project as one of Netflix's riskiest moves.

92:21 Netflix then decided to spin off the company and Roku released their first step set top box in 2008. In 2010, they began offering models with with various capabilities which eventually became their standard business model. Uh and so they went on and on and uh wound up as a very successful company now owned by Fox as long as this deal clears. >> Overall real platform. >> Yeah, >> they already have a product that sits on top of it. tons of of advertising potential and um I uh I I think that uh regardless of whatever the market reaction is today, I expect that people will will get it over time.

92:58 >> Well, Roku is ad supported and we are too. So, let me tell you about console. Console builds AI agents that automate 70% of IT, HR, and finance support, giving employees instant resolution for access requests and password resets. Tyler Cowan shared some more thoughts on the recent mythos brew. Haha. It's a good term. Uh we this was all over. We talked about this earlier, but he says according to not yet confirmed but likely true reports, it was shown that the model could be jailbroken. There's debate over this now. Uh the released Mythos already restricted bio and AI improvement queries rather than strictly in fact uh rather strictly in fact. So now we are back to the model not being available. Here are a few of the constraints on the US government, not the only ones, I might add. One, it needs for the main companies to stay in business. On top of that, it wants their IPOs to go reasonably well. And it's now much harder for the top companies to recruit foreigners, which is a significant share of their highest quality workforce. Demis, Ilia, Andre for a start, are all uh are all international uh engineers. uh it is much harder for the main competitors to drum up foreign business in a credible manner and sustainable manner. That's interesting. We haven't seen many breakout charts of how much revenue is domestic versus international, but we have seen reports of uh open AAI and anthropic doing big deals with international companies. Some of these companies, Fortune 500s, they just have global footprints. So they got to use the models everywhere ideally uh unless they do all of their software engineering in Silicon Valley. Um, 1B, how are American multinationals operating abroad supposed to use top systems moving forward? That's literally what I just said. I just predicted the next uh line. Whoops. I am a I am a stochcastic parrot. Um, it wants to use model access as a tool of both hard and soft power. So model access has to be possible at some level, but it is very hard to control what foreign agents will do with partial model access when they get it in the future. Uh three, the US needs to stay ahead of China in the AI race. This is a big question. We have Aaron Gin from Hydro Host joining in just 10 minutes. We'll ask him for his perspective on this. Uh four, the US needs to issue restrictions that are actually enforceable and US citizens only doesn't fit that bill. That's a good point. Um, you might have some KYC, but it's very difficult when these APIs leak into other products. All of a sudden, you're prompting a model within a piece of SAS. We've seen this with uh you go to Slackbot in Slack, Salesforce product. There's an AI model under the hood that's vended in by Enthropic or OpenAI depending on the deal, depending on the product. And uh that now needs to be passed along to understand uh is this a US citizen on the other end of the line? Let's find out. Furthermore, markets and everything. He it is easy enough to hire a traitorous American to access tools of wrongdoing. That's a really good point. How can you verify that every American is is loyal or for a matter it is not that difficult to fake citizenship in various ways? Yeah, there's been there's been people over the last 50 years that have gotten caught like passing on or basically selling, you know, secrets around our various military aircraft, for example.

96:17 >> Yeah, there's a very controversial story of Virgil Griffith, uh, cryptocurrency researcher who I actually met once. uh he worked at Caltech, was deep in math and very excited about cryptocurrency and he went and gave a talk on cryptocurrency in North Korea explaining how cryptocurrency works and how crypto cryptography works and that was seen as a violation of export controls and he was sent to prison. Um and the crypto community is very upset about that because they they maintain that math should not be illegal, this information should not be illegal. the the government side as they helping >> defense. Was he like thinking that he was going to liberate the North Korean people by giving them access to effectively or explaining how code >> can be used to create a a store of value that that is that is unsanctionable essentially and so it was seen as a violation violation of sanctions by the US government and and more importantly >> have a North Korean stable coin >> I don't know I don't know they had a lot of >> calling it the most sanctioned stable coin >> potentially potentially. Um, this one number five by Tyler Cowan was a little bit controversial. He says the US government cannot nationalize these companies and then proceed to run them effectively. And people were debating that um saying that it might be possible for the US government to to own the labs in some way and and and leave them to their own devices to actually roll these things out. What do you >> Yeah. I mean, if you're like super RSI pled, right? You don't need the employees at all because the AI just improved.

97:48 >> So the government just says continue to improve. >> Yeah. And that's it. So you don't actually >> you know the extreme scenario. >> Yeah. Yeah. And then and then on the other side it's that okay these systems are actually extremely complex. You look at the uptime of some of these systems the guard the research taste. In fact you need so many employees to make these products effective. You actually need the international employees as well because they come up with great ideas.

98:13 And so yeah, those are the two sort of sides of the of the debate. Uh six is Chinese and open source models do in fact improve at some reasonable pace even though they are right now considerably behind them at best proprietary models and that's something that I want to dig into more. It does seem like the pace of open source development in China is slowing. I'm not entirely sure what's driving it. It feels like there's a number of different things. Gavin Baker said it's about compute and they're and they're they're turning their backs on the black wells that they had the opportunity to buy. I think it might be research ideas that are more locked down now in in in tighter controlled circles in San Francisco. It also might be the data might be but you'd have to imagine that they have lots of people that are writing code, lots of people that are inferencing those models and then full data and and and information capturing of those rollouts. Uh there are a number of different uh reasons why that pace might be slowing and we'll see. Maybe there's a big jump in the graph. Maybe we have another deepseeek moment in the next couple months. We'll see.

99:13 >> I think everyone should expect some type of uh update hopefully today >> from from Washington or Enthropic or both. Hopefully today uh Enthropic had originally said I think uh 24 hours. >> Obviously a lot more time has passed but partially due to uh >> the events on the White House lawn yesterday making things a little bit harder. Um one person one person potentially impacted is >> railway Railway is the all-in-one intelligent cloud provider. Use your favorite agent to deploy web apps, servers, databases, and more. While Railway automatically takes care of scaling, monitoring, and security. Who was >> One person potentially impacted is Carpathy.

99:51 >> Okay. >> Theo went to Google and said, "Is Karpathy a US citizen?" and uh AI overview seemingly pulled uh went to Grock and said according to Grock, Andre Carpathy is a EB1 extraordinary ability green card recipient, not a US citizen. >> This is a loop. This is a loop loop from Gemini to Grock and back and then he goes back into Grock now because the screenshots's been shared. >> This is RSI. >> This is RSI for sure. For sure. Uh, where where next, Jordy?

100:26 >> Uh, what else do we have? >> Letton. >> Letton. >> Lrochetonal. >> I think that's how you pronounce it. >> Okay. Yes. Take us through this. What's going on? >> Well, yeah. So, there's rumors. I I think this has not been formally announced by Mistl. >> Yeah. >> Uh, >> formally announced by a bunch of teapot skits. >> So, so in closing, Tyler Cowan called out Mr. specifically. He said rising in status, Mstral, AI nationalism, proponents of slow takeoff is the likely scenario, reticent, quiet CEOs. But he calls out Mistral as a potential uh beneficiary of all this uh government chaos, government restrictions, closing down. Um and so what's going on? What is they they Mrol's released many models.

101:11 They've done their actual pre-trains. They're not doing fine tunes on Chinese models. Correct. And and and it's been a good product. Like it's been working. They've been raising more money, but they've never been seen as one of the leading frontier labs. Is that the general tone? >> Yes, I think that's correct. I I think I mean very early on I think they were like, "Oh, this is maybe one of the frontier labs, right?" It was all I think X meta uh researchers. Um but yeah, there's the new model uh you know, is it real? Technically, no.

101:41 >> But you know, perhaps in the future some of the uh the founders are vague posting. Maybe they will actually release a model called >> Let's go through some of the vague post. >> All I know is a lot of Americans have ever since uh ever since this new model started being talked about. A lot of Americans that maybe formerly had some type of beef with France have been real quiet. >> Yep. >> Real real quiet.

102:02 >> Quiet down. Well, uh people are having fun with the fat cats. Arthur Mench, this is a fake screenshot, I believe, but TensorQT shares the death star with the cat on it. And then uh Shashank Goyal says, "Leton fat is now number one on open router. Need to urgently fix our axis." And he actually helping the confusion. >> He actually works at open router. And on the chart, it has a break in the chart because it goes so high that it's off the charts. Leon fat is crushing it. I like I like a I like a friendly hype hype cycle. This is great. Lucas says, >> "We thought I thought we had more time."

102:45 >> We thought we had more time. >> And it's a fake in in it's a fake image, but it says, "The French government citing national security authorities has escort issued an export control directive to suspend all access to Leo FAT by any foreign national whether inside or outside France, including foreign national Mistral employees. The net effect of this order is that we must abruptly disable lethon fat for all of our customers to ensure compliance. It's a direct copy pasta from the anthropic post of course and Gary Marcus also says I got early access to chat and it's terrifying. I was wrong about everything. Of course, Gary Marcus has been skeptical that a LLMs will uh deliver AGI, ASI, RSI, whatever you want to call it. Wherever your goalposts are, Gary Marcus says LLMs are not the direct path. And so the joke here is that uh Leeton updated his notice leon fat got quantized lately.

103:50 >> Yes. People were also saying mythos is a distillation of Lechon fat. Yeah, there's there's various rumors around. I think the accelerate harder says you can really tell who has early access to leon fat and who does not, >> you know, like like the the butt of the joke here is that uh oh like fat and mistrol like it can't possibly be on the absolute frontier, but this this is just good vibes. Like this like it's showing that they are the leader in France for sure. Uh they're they're getting a lot of attention. still have mind share.

104:25 >> Yeah. Growing the valuation, delivering something and now people are going to check out this model and see what it can do. And uh it's certainly it like people wouldn't be making this joke if Mstral had you know been like completely languishing, not doing anything, not making any progress. Like this is a sign of of uh some healthy attention. Um I can't tell if this is a joke anymore, but Nvidia is reportedly in in talks with Mr. for all AI to supply 1.5 billion euros in compute per month to help support the demand for less fat and leong ground.

105:02 That is a joke. >> I mean Nvidia probably do. >> It's all faked except except the vibe is real and it's amazing. >> You can tell who has early access to fat and who doesn't. >> In other news, the prime minister of the United Kingdom has banned social media access for under 16s. He says, "These days, kids must find their feet in a world where technology intrudes into every area of their life. I just can't let that go on anymore. So, we're giving children their childhood hoods back.

105:31 Let's play the video." >> Very interesting. Kier Starmer, right? >> Every parent wants the best for their kids. And that's what being a parent means. And for me, for my two kids, all I've ever wanted, hand on heart, is for them to be safe and for them to be happy. And the rest is up to them. But, you know, I think back to when I was growing up, and I have to say, I think we had it easier.

106:03 These days, kids have to find their feet in a world that changes so quickly where technology intrudes into every area of their lives and we know that harms them. The response from parents in the consultation has been absolutely clear. Thousands of parents say their children are addicted to social media. It can leave them trapped in a cycle of endless scrolling that displaces play, sleep, and time with the family. It can harm their mental health. And frankly, parents need our support on this.

106:42 That is why today the government has decided to ban social media access for children under 16. It's a big step for our >> Goodbye. If you're under 16 in the UK, >> it's not an easy run. I'll be honest. >> We exist on social media. I haven't I don't know. RSS feeds are those social >> carefully at the evidence. >> Imagine if we'll have to turn. >> Okay. So, you know what we have to do? We have to we have to print every episode's transcript as a book and mail it and put in children's bookstores.

107:16 >> So, every every episode of TBP needs to be transcribed. It works cuz there's no >> printed on paper and delivered to children's books, >> fly plane over the UK and then drop >> leaflets, a massive leaflet campaign, but every every episode is like 50 500,000 words. So it just hits the ground like that every every >> So what's going to what's going to happen? They're going to require >> they're going to require >> major social media companies to require ID verification for every user.

107:45 >> Okay. uh there's potentially a bunch of you know issues with that especially given that uh there's a sort of raging debate around free speech in the United Kingdom and a bunch of issues related to that. >> Um and so that that a lot of this um again I I will happily say that I I'm I look forward to trying to get my children to not use social media as long as possible. I don't I don't think it's uh I don't think it's good for anyone's mind much much less the mind of of a child. Um but there's a lot of issues here. One the other thing with vibe coding is like literally anyone can make a social media app with like one prompt now, right? And so my expectation is this is not really going to work and one of the >> I think it's a power law though.

108:34 >> Yes. But but imagine being a kid and being and that's been you're 15 years old right now. You've been using social media for years. >> I I mean truthfully like if a kid goes and vibe codes a social network and sends it to like their five friends like yeah that might violate like user account login. It might be like a social app but that feels like way chiller and not a big deal to me. Like it feels like the spirit of the law is upheld there.

108:57 Anyway, we can come back this in the >> Yeah. I just I just don't I just think like there will be a new social network later tomorrow that gets hundreds of thousands of users because social media is inherently viral the next day. They all have Yeah. Yeah. But but again like these things pop up. I remember I remember there was >> if you have the if if you have like okay there is a million dollar penalty for delivering a social media experience to someone under 16. Then if I'm a vibe coder, first the model is going to say, "Hey, what you're doing violates UK law.

109:32 I can't help you." Or they'll say, "Are you sure you want to do this?" Because like that's risky. And then you do it and then you just get the fine. And you're like, "I'm shutting down. Why would I keep doing this?" >> Yeah. But there's going to be plenty. I mean, there's there's >> I don't I >> informationows you on this. >> Information flows. one of and and and the only other thing is people have had every issue with like meta is like trust and safety, right?

109:58 >> Yeah. >> But for everything that they do is that is bad, they do probably a million good things, right? Like taking down content that shouldn't be online. Uh stopping abuse, things like that. >> Um and so I'm just very interested to see how this plays out. I think that kids are going to find a way to gather online no matter what the law says. >> Yeah. um you know maybe it's in the comment section of like the Financial Times you know yeah they'll turn they'll turn that >> so so the the definition that the UK is using they're using the Australian model it's not anything with accounts and comments it's userto-user platforms whose purpose is to enable social interaction where users can post material and where content is distributed alongside slash through algorithms so you got to have an algorithm is there they explicitly name Snapchat, Tik Tok, YouTube, Instagram, Facebook and X. Um, and so the working definition is basically a social app where users post content to other users interact socially. Algorithmic feeds shape distribution. So, um, messaging services like WhatsApp signal are not affected. So, anyway, we can dig into this more. Uh, I I think we have Derrick Thompson coming on this week. I'm sure just everyone's sharing, you know, homegrown reels in that they're making in their own homes.

111:16 >> Yeah, why not? Imagine >> that seems more healthy than I don't know. It seems like it solves the problem that they're going after if they think it's a problem they've been solving. Anyway, we have Aaron Gin from Hydra Host. He's the CEO and co-founder. You know him. Aaron, how you doing? Been too long. What's up? >> Yeah, it's been a while, man. I missed David Cameron, so that that's what that's what I take away from that.

111:35 >> Yeah. >> Uh Oh, really? Victorians are a mess, but Yeah. >> Yeah. Yeah. Have you been grappling with the phones, fertility thing, the social media thing? Like, where do you stand on all that? I mean one most of the longitudinal study they actually can't normalize or control for most of the stuff versus like already predisposed behavior. Sure. >> Uh and then like you already were existingly depressed and accelerates the depression similar like alcohol and other things like that.

111:58 >> Uh but but but the second is that this is going to go the way of the 18th amendment >> because what Jordy said which is like but the world is flatter than it's ever been before just like the model stuff with anthropic. >> Mhm. It's like it's like okay so we make a big deal about this but then six months later China already has it so like what's the point of this >> and and and I think that that's like I I I like the intent but the intent should be like empowering parents to like educate their children and and empower them to control even a curfew feels more like even a curfew feels more enforceable or like enforced screen time which is like you get 30 minutes a day on social media >> like that feels like easier for for the platforms to actually enforce then or the country to enforce than like a total ban.

112:48 >> Yeah. But but this this just goes the normal trajectory of how technology gets adopted. There's always a late stage of regulation and and for like GPUs, you know, like the the reason why the UK government is so aggressive on sovereign AI is because they want to do similar things the to like what this is. And and I I think that that trend is a little bit unescapable because in the UK you have the right to do that like they are a sovereign country. You can regulate how you want to regulate. Uh and then the latter component is that if if you think about the kind of how this whole space is flushed out like what has enabled our business uh and why we just uh you know closed a very large series A at $und00 million. $100 million. Yeah.

113:30 Yeah. I know. Right. Right. So appreciate that. Uh, I I have a gong in mind whenever y'all had your uh successful application. I rang my little I ran my little gong for y'all. So, uh, yeah, of course. And the, uh, >> did you did you prime it? Cuz we've been getting a lot of critiques online. People said you didn't prime the gong. >> And I just thought you come in with the hardest possible hit. >> No, I'll show you. I'll show you. You have to do five priming strikes and then the real strike. So, you go.

114:02 Now it's >> Now it's primed. >> Okay. >> And then now the reel hit like this. >> That's how you prime the gong before you strike it. This is the way you do it. We learned this from the commenters who said we weren't warming it up. >> Hey, I'm I am pro appropriation of my culture. So like like this this is this is always a pro for the >> You brought you brought us hats. You brought us hats that I didn't even I didn't feel comfortable wearing because it they just >> I thought he was talking about appropriating GPU whisperer culture whispering to the GPUs.

114:37 >> The the uh I mean literally my dad gave me this on my desk so like this holds my phone. Love it. So $100 million uh what is the distribution of that? I mean are you going to be buying a lot of GPUs? You're working with Nvidia. Is this like one data center multiple data centers? Are you part are you building like what restate the thesis of like where you fit in the bottleneck? >> Yeah, the uh so no we're not using any of the money to buy GPUs.

115:02 >> Uh we are an asset like company. Yeah. >> Uh I believe we hold the title as the only NeoCloud in Nvidia's orbit that is a software company. >> So we we manage GPUs. So we provide an operating system for the data center >> to where any data center in the world can become a neo cloud. >> Sure. uh we're already in almost two dozen countries close to 60 data centers and we have uh let's say several billions uh in contracts that have been signed >> uh for us to continue this project. So so that's why sovereign is a big uh customer of ours is you got to think that you know is is a US company really going to go try to build a data center and supply in England or are they just going to rent from somebody in England?

115:44 Then you then, you know, add the layers of now we're on social media, but this is clearly going to be applying to GPUs. >> Then you can see how this all kind of all flows out where data residency in nation states is going to be a permanent fixture going forward. And and then that's not me approving that or wanting that. Like it's just I just think that that's just where we are right now. And and then you then add the continuous layers to that of like well what is AI going to work on? healthcare, education, defense already all those are nationalized industries in these other countries. So in summary, public cloud is dead and Nvidia in there all the other accelerators are basically are applying a ton of free cash flow to that same argument. And so we're the software that enables all that to work together.

116:28 How much of your thesis is like you want to stay Nvidia only, you want to compound the learnings around the Nvidia ecosystem, there's value like we talked to another uh a neocloud last week that's AMD superfocused, but then you talk to other folks and they're like we want to be completely agnostic. We want to be, you know, one big blob of fluid compute. There's multiple thesis uh that are playing out and people are sort of testing every idea. Um but how do you see it like what is your strategy?

116:59 >> Yeah. Yeah. So our our software works with with any OEM or or ODM. It's intentionally designed that way. But of course like the capacity in our data centers reflects exactly what the market demand is >> and the video is just the best. And and yes I I do think that there is a place for uh not necessarily the hyperscaler chips. I think that that market is pretty narrow. I think it's probably five customers that actually would ever buy that. Um, but the rest of the uh kind of alternatives, yeah, they're they're all going to be designed for very specific use cases. But if you're in a market where power is going to continue to be constrained, data center be you're going to pick the most like you're basically always going to pick the Porsche Cayenne Turbo >> over and over and over again. You want to put your kids in it. You want to put some stuff in the back and you want to go fast. You want to go you want to go fast or or or Mercedes uh uh station wagon, right? the AMG station wagon, right?

117:52 >> Yeah. Classic. >> So that so that's Yeah. So that's the Nvidia play, right? Is that >> I'm the best. I'm expensive, but I can do everything you wanted me to do. And AS6 and TPUs, etc. They're very They're like, I'm getting a motorcycle. I'm getting a SCOD. Y >> and the market will eventually get there. But in a world cross cabin Baker just told us in the show earlier. I asked him about um it looks like the trend lines are widening between the United States closed source model capabilities and Chinese open- source model capabilities. Uh there's a bunch of charts that show one line is growing linearly. The other is growing exponentially over time. That could be really good for America. It could mean a lot of different things. They could catch up. Who knows? But he was saying that uh the the big reason for that is that uh Blackwell is a great chip.

118:46 they've had the ability to buy it and they've turned their back on Nvidia. Even though Jensen and Nvidia went to Washington and figured out the correct framework to allow for exports, those exports have not been received on the other side because of the push to build an indigenous supply chain. How strong is that narrative for you? What would you add to that? Uh I think on one of my last opeds and appearance of the show I told all that was going to happen >> that that China was going to basically reverse ban.

119:16 >> Okay. Uh because and that's why I wasn't really that concerned about the initial kind of B. >> Yeah. Because that that wasn't actually the goal. It's again like y'all both know my disposition. I love this country and I'm happy my family came here. >> But there's a kind of an underappreciation about how actually Chinese people think and what their goals are as society. So the I agree with Gavin's kind of you listen to him on all in this other podcast like Yeah.

119:43 Yeah. He's very aligned with kind of our thesis about global comput. >> Sure. >> The the the one thing that I would add as a caveat like the question is like does it matter and and that's what we don't really know is that that if if we're in the market as customers and I think probably all three of us has at least some German car. >> Sure. >> Then other models of German cars are very interesting to us. But if China doesn't care because it buys Toyotas, it buys Volkswagens, it buys whatever like lowerend stuff, then it's just a different way of understanding the preference theory of another country.

120:12 And and currently I think the safest assumption that we should have as Americans is that it doesn't matter to them >> and because it could be 80% and that's all it needs to be. Uh and if you look at the history of CCT policies, everything from environment to manufacturing to buying stuff from TIU, it seems like the consistent strategy is that 80% is good enough. >> And and the the one thing that we do have to be very careful about which Sax has talked about pretty religiously is that they are winning on the adoption side.

120:39 >> Yeah. and and every kind of arc of innovation uh that has happened in in the world like previously AI America has won the several stage of the in uh like industrial revolution to other phases of the internet because we are first to adopt and China clearly is the first to adopt on robotics on drones on AI integration and and that's where maybe they figured out it doesn't matter like like they can solve it via other mechanisms like dirty power inexpensive chips and they can kind go their own their own trajectory. So, so like you know I'm I'm with the administration on the changes that they've all implemented. Uh I would say that the uh Freedberg's kind of last rant last week was definitely echoing like my view on things which is like the the government always thinks they can do something about something when they're out they can't and then they spend a bunch of energy and at the end of the day doesn't work and then they still claim victory >> like the war on poverty is a great example >> and and and so I feel like that's where we're going to end with AI where in the end it kind of like all this effort really didn't matter and it caused you know entrepreneurs to slow down and then eventually the government backs off and realizes that we have to uh to quote David Saxs, you know, let America cook.

121:49 >> Yeah. Is distillation a bigger problem than uh chip exports? >> Uh I I think most of that's overblown and it's kind of hard to prove. >> Yeah. I think I I think it's actually quite hard to prove and and and I I also believe there is this kind of >> even if the model will just tell you straight up that >> it's Yeah. >> You mean Yeah. I like that. Like I I I undoubted like I'm not to to be clear it it totally does happen. The question is like how much does it matter right like like the and and I think a lot of it is oriented towards the fact of like underappreciating the fact that Chinese engineers are actually amazing at at this br and I think it's kind of all coded with that that like oh if they're copying us somehow they can't do it themselves and they have proven over and over and over again they can >> and then you then go into the fact of obviously coding is now universally accepted as a wide adoption or like you know the first CSA foothold for AI Well, that's because it was also the most widely used by the customer base and it has a you know a firm yes or no answer. So now you see China which is using kind of grade B models currently but it accelerating in its adoption >> like and it you know doesn't care about the what things that we care about in terms of everything from formality to safety and things like that. So, of course, they're going to be able to find use cases and things that we didn't understand. And and and that that's that's something we as Americans have so far deeply underappreciated and and you can see that in the poll numbers where data centers are more unpopular than nuclear energy.

123:21 >> Yeah. >> And and that's a quite scary place to be. uh which is why the kind of I think in arc of the data center business is actually going to mimic the oil and gas business where they the reason why fracking became this great energy revolution >> and why we became the number one exporter of oil and gas in the world is because oil and gas companies pay off owners of land. >> Yeah. >> So that that's just what >> too I mean like you have a small piece of land that they're fracking on like you get a check in the mail.

123:48 >> Um and that's starting to happen. I I I there's a >> Sounds like Brad is working on something. >> Oh, with the Trump accounts, but also I mean >> No, not even He was sort of teasing like we have something around like >> Yeah, >> cuz we were just saying why would you want data center in your backyard if you can get if you can use infrints from, you know, somewhere in another state. Makes sense.

124:09 >> Um Tyler just wanted to say hi. It's been a minute. >> Oh yeah, >> there we go. There's the hat. >> He kept the hat. >> Yeah. Oh, of course we kept Of course we kept the your gift. We would never we would have we would never uh it's it's here always in the office. >> It's on our hat rack with a space helmet, hard helmet, >> cowboy hats, unicorn heads, >> welcome. >> Oh, that's so great.

124:31 >> Anyway, thanks so much for taking the time. >> Yeah, congrats on the milestone. Great to see you. >> Yeah, thank you. It's been too long. Let's do this again soon. We got to chop it up on all sorts of things. This is always a great time. >> Have a good one. >> Yeah, absolutely. Yeah. And congrats to y'all, too. God bless y'all. Y'all definitely out of the few entrepreneurs I know, man. Like I was very happy for y'all. Y'all deserve it.

124:50 >> Thank you. >> Thanks. We'll talk to you soon. >> Congrats again. >> Let me tell you about Figma agents. Meet the canvas. Your AI agents can now create and modify your Figma files with design system context. And our next guest is here with us live in the TVPN Ultra Dome. Raphael, welcome to the show. Uh please introduce yourself for everyone at home first. >> Raphael Vivas. Uh helps Apploven. >> Yeah. Apploven is the largest mobile ad platform that you may or may have not heard of.

125:17 >> Let's put this. >> I think everyone on X knows. I feel like your guys's you guys have like 100% saturation at least on our corner of X. >> Yeah. I feel like some people learned like forcibly because they were like, "Hey, what's going on with this business?" It came out of nowhere. Like wasn't I don't know. It wasn't like super noisy and then people were skeptical and then you kind of proved all the haters wrong again and again.

125:39 >> Not not a venture story, right? It was >> No, not at all. We couldn't even raise a dime in Sand Hill. I think Adam was willing to give away 25% of the company out of five billion cap way back in the day. >> Wow. >> And now the company's worth $180 billion. We've done pretty well. >> That's crazy. 25%. Uh what what was as you tell the story, what was the key to get from five billion to where you are today?

126:01 >> The big thing for us is really just been the model, right? The great thing is in the world of performance marketing, advertisers don't have incremental costs typically to bring in new users. And then we went into e-commerce as well. >> The question is how many more times over can you do that? We've been able to do it at a pretty big scale. >> Okay. So, uh, mobile games super interesting economy, sneakily large. Again, I think that part of the reason why app is sometimes misunderstood is that people misunderstand how big the mobile games market is. They think like, oh, well, I'm familiar with like a blockbuster movie. Certainly, it's about the same. It's entertainment. Uh, no, it's way bigger. Um, but walk me through first, how big is the mobile game market? How international is it? Walk through the dynamics of like whales versus daily players versus free players, like what what's the shape of the market that you're describing to a potential new app customer?

127:00 >> Yeah, sure. So, the mobile gamer is pretty much everyone. Think about it. You're >> on a first class flight, right? you see somebody right next to you playing a word game or a solitary game or you're on the bus or it's your wife at home. >> So it's not just some kid sitting in their basement. >> For us we see over a billion people every single day >> primarily heads of households and female. >> Um so for us like we see it's a massive market and I think in the app store there's I think uh over $120 billion of annual spend just in inapp purchases. So that really speaks to the volume of >> Yeah. The dads are PC master race. Mouse mouse and keyboard.

127:38 >> Exactly. >> Can't be call dead on a mobile game. And I mean, >> it's getting there. It's getting there. You You get the backbone. You click that into your phone. You can play COD Mobile. There's ways around this little Halo, but uh game streaming. >> The The business grew 70% last year. And it was primarily driven by the gaming side of the business. Now, e-commerce has been the really big massive thing for us. And >> listen, you say everyone's heard about us. Part of our TVPN ownership, you know, helped with that.

128:03 >> Yeah. Yeah. Totally. Um, but no, it's it's been incredible. I mean, you know, kind of looking back, we're in 26. >> Yeah. >> In 25, we announced doing having a billion dollar run rate in the e-com business. Just a year of it being open. >> Now, we're have our self-s served referral only. >> Yeah. >> Thousands of accounts have onboarded and hundreds of millions of dollars, hundreds and hundreds of millions of dollars of value has been generated for ecoms merchants and we're so small. I mean, like just for the context of the market here, right? So, I think Facebook's got over 10 million active advertisers. We only have a few thousand, right?

128:38 >> And so, for us, this is like a holy crap once in an op like opportunity, especially for advertisers that are looking for a new channel. >> That's amazing. >> Um, for us, like, you know, we're at less than 01% of the market share. Yeah. >> Um, but we have north of12 billion of ad spend compounding at 70% year-over-year, right? So we think this is going to be a massive massive opportunity. >> So uh two questions on AI. Let's start with the the mobile game dynamic. We've seen those charts. The number of app store submissions is skyrocketing and yet we all can't really point to like oh there's that breakout game that was vibe coded by uh the you know the the kid in the basement or something like that. Uh and we could during the early app store boom. I remember uh was it Flappy Bird? Wasn't that created by a kid? It really not. It wasn't some Sand Hill Road $10 million.

129:34 >> It was some NBA related game. >> Uh I didn't I didn't play it, but I had at least a handful of people, but it was all >> a few games that are happening. But what are you seeing in the data? Is anything starting to move where you're like, "Oh, like that's AI or that's vibe coding. I can see something changing about the business." Or are we still sort of like pre-showing up in your business? >> So, what we see is really cool. I'd say on the advertiser and the developer side, more and more people are coming onto the platform, right? And so on the developer side, what we see is that more developers are in need of distribution.

130:06 Y it's now become a core part of the strategy. >> So much sense. Yeah. >> In 2012, 2013, when we started the business, most advertisers would depend on just getting an app store feature. Sure. That is no longer the >> Yeah. Yeah. Yeah. >> Yeah. Buddy of mine the rankings coded an app. >> Yeah. >> I downloaded it. >> Yep. and then was later trying to leave a review because he's like, "Hey, this helps visibility." Yeah. Couldn't find the app in the app store even if I searched the app like the exact >> phrase. Yeah, there were so many find it through the link. So like app store discovery seems like you know >> there were so many little like uh I don't know the like the web 2.0 0 playbook of like uh contact, import, invite your friends, share social media board, and people would be oh yeah, game center integration is going to be the thing that makes you pop out. And none of that was they were always sort of overpromising, but some of them did work. Like some of them really did go viral and and had interesting distribution techniques, but a lot of those have been commoditized. So actually showing up and and you know, building your business on the back of Apple makes a lot of sense. Um, what about AI internally? Uh, Eric Suffort at Mobile Dev Memo is writing a lot about uh, GEM's model, the GEM model over at Facebook that they're getting a lot of lift at Meta out of new, more advanced transformer-based, you know, uh, matching algorithms, advertising algorithms. It's sort of like the unsexy part of Meta's AI strategy. But have you started to see uh glimpses of just improvement in your system during the AI era?

131:39 >> So yeah. So you know on our side our developers on a weekly basis are releasing improvements to our algorithm >> and a lot of those improvements are also on the backs of using the state-of-the-art models out there. So we definitely get an advantage of it. >> Yeah. >> And outside of just like the ad algorithm itself internally our efficiency gains have been massive. Like I can speak for myself personally. Our marketing team is eight other people.

132:03 Every single person on the marketing team is a vibe coder, right? They're using cloud code. They're using codecs and they're building tools to make them more efficient in their role. You know, we before used to have to run everything through an engineer. Now, everyone is their own engineer. >> Are you token maxing? Are you token mining? Or are you token min maxing? >> We're token maxing, baby. >> Maxing. >> We're token max. >> Wow. Flashback to February. What's going on? Isn't this going to be a problem?

132:27 Aren't you sure he's going to be upset? >> Messages. We've gotten some messages from >> flashback coming in. >> We've uh you know, we've got some messages about cost getting a little about out of hand, but you know, the good thing is this. >> This not showing up in the quarterly earnings yet. >> No, not at all. I mean, the beauty is that when you've only got a few hundred employees and you're generating as much revenue as us, you're going to have to be doing >> Hey, there was somebody who allegedly, it might be a complete rumor, but $90,000 in a day.

132:53 >> Wow. So I I think you might be changing your tune. Pull out. We're nowhere near that. >> It was a light week. >> Half a million dollars. >> But yeah, judicious use token maxing but not taken to the extreme. >> Yes, >> the judicious usage. That makes sense. >> Uh what what what does it take to all the digital marketers, growth people I know will happily test any new ad platform. what what has been the key to retaining customers, right? like you know marketer let's say they're managing $20 million budget a lot of it's going to meta Google handful you know maybe some TV you come to them and you say like give us a shot with like you know a quarter mill or half a mill or something like that everyone will take the shot right but you got to if you want to build a big business you got to retain that >> profitability at scale so that scale is different for everyone some people are happy with you driving an extra 10% growth to their business some are saying hey you have to be the next you know Facebook or Google for us.

133:55 >> But I would say for us like we see over half our clients actually retain. So we do a pretty good job. The algorithm works for a lot of people who come on. Now it's just getting the word out to the masses. Right. >> Yeah. Awesome. That's next week. >> Uh that is next week we open it. One other big thing um is that we are going back to the app loving name and this is a part of the amazing >> that's what I wanted. I wanted the whole time. I wanted the whole time.

134:19 >> Apploving's amazing. It's it it transcends app like I think of it as its own entity. Apploving, you know, it doesn't it doesn't matter. >> And for for anyone that's confused as to why app is going back to the name Apploven, you guys were thinking about having the ad platform be named something else. >> Axelon. Yeah. Yeah. >> So, smart smart play. I always I always it's what I always wanted. I have no say in the matter, >> but uh I was always >> Yeah, more marketing people.

134:48 >> That's amazing. Um, talk about generative creative. Is is that in demand from your partners? Because I can imagine a marketer saying, you know, for this particular audience on this particular platform, yeah, I want you to just go to a frontier model and generate me a hundred different copy lines that all fit neatly in the box and generate some images and here's some screenshots to sort of work through. You could even have an AI agent actually use my game, take real screenshots, then you don't get the slop allegations. But in terms of layout, in terms of distribution, like how much of that is brands coming to you saying, "Look, I'm already really comfortable with ChachiBT images or Nano Banana or Higsfield, so I got it handled. I don't need your tool."

135:34 Versus, "I would love for you to do this for me." >> Yeah. So, taking a step back. Yeah. The value of creative is that if you find the right creative that resonates with the right audience, it can be one of the biggest growth levers for your business, right? You know, >> sort of a power law. >> Exactly. Right. It's, you know, let's say you spend an extra 5% on creative and you fight a winner. It doesn't mean you're only going to spend another 5%, you could spend double, right? And so every advertiser wants more creative that's performant and high quality.

135:59 >> And so amongst all the advertisers we talk about, they all want the generative tools. >> What we have right now is generative interactives. So that has been very helpful for us. Yeah. >> Why is that? Why interactives? And we'll talk about video in a second. >> How our ad unit works is we show a video, then there's interactive, and then there's the catalog. A lot of the clicks that happen on our ads are within the interactive and so that has been massively adopted >> and that's basically playing a demo of the game or a smaller version loaded probably in HTML uh or JavaScript and then you get to demo it.

136:31 >> You hit the nail on the head. That's exactly >> and that's probably extremely cumbersome for a small small developer with a new game. They have to go create a new version of their game that loads quickly in the app platform very seamlessly. And that's a perfect use case for >> 100%. And imagine you're not even a game studio, right? You're an e-commerce store. You're selling wallets >> and you want to use the interactive, right? Exactly. Oh, interesting.

136:53 >> Right. Well, the interactives are massive, right? And so, it's where we get a majority of the engagement. And you're showing an ad within a game, right? So, how do you gamify that experience or how do you allow it to look at more specifications of the product, right? >> All I would say 80% of our top advertisers use interactives. And so, it's such a massive unit. Now, where is this going? So, right now, we've got the interactives. Now, >> video has been our main focus. We have it in beta and it's been really good.

137:20 >> And so, our goal is to get that out to everybody. >> Yeah. >> By the end of the year, how we envision onboarding on Apploving is you go onto the site, >> you set up the pixel. >> Yep. >> Then you create a campaign with one button, >> it automatically generates the creatives, >> it pulls the links. Yep. >> And then you're off onto the races, right? You just have to tell it your goal as well. So that's where we expect where the market is going and it's part of our goal which is making profitable advertising accessible to everybody.

137:48 >> What uh what's your advice for somebody that wants to be the first hire at a company that becomes worth 175 billion in the public markets. >> Work harder than everyone else around you and always be meeting people. I you know I got lucky to meet Adam. >> I don't think there was any luck. I think it was pure yourself. That's why I asked. >> But no, I mean like my background, funny enough, is I'm a high school dropout, right? And what I tell everyone is that >> you get your GED or >> no GED. If mom and dad are listening, sorry.

138:21 >> Have you have you actually gamed out, can you get like an honorary PhD from some elite institution? >> I don't know. I I haven't reached out >> because that's the maxing graduate. >> Yeah. wherever like your hometown has a university you go give the commencement speech you start donating and all of a sudden they're just like PhD and it's like probably cheaper like if you donate what the tuition would have been you probably get the honorary degree >> well Stanford and Harvard are listening you know my email box is open for you >> I think they need you >> um but but my analogy I always tell everyone is that you know when you send the warriors out to go get food the first question they ask back isn't who is the the eldest tribes leader it was who killed the animal and who brought us back the food and So that was always my analogy of like as long as I outworked everyone and delivered a ton of value then I would be at the same conversation in the same table as everybody else.

139:10 >> Your advice one word kill. >> Yeah. Kill. >> I mean yeah you kill at a lot of small companies and if you provide value, if you pro provide ROI, you keep showing up. Um what about um other platforms? I mean we were just talking earlier in the show about Fox acquiring uh Roku. They have TB. There's a lot of ad inventory there. Have you thought about getting into that space? Like what does that look like? What does a product line expansion beyond the phone look like in the future?

139:40 >> You know, it's funny. Everyone talks about expanding. We're thinking about consolidating more focus. Yeah. Focus. Exactly. Right. You know, you try to do everything and you can't go deep on many things, right? And so our what I would say is like our company has grown so much since we got rid of a lot of the gaming studios since we stopped focusing on that side of the business. >> For us, we feel like we have so much room to grow. I mean remember less than a tenth of a percent of advertisers in the world even use app 11. So let us get to millions of advertisers and then we can talk about the rest of the other platform.

140:08 >> That makes sense. And also you're very fortunate like you're focused on a market that is growing both like mobile gaming and advertising in mobile gaming and e-commerce and time on like you're I like 12 different tailwinds. Why go into a market that has headwinds? >> 100%. I I don't think people are spending less time on their phone these days. >> Nope. No. Maybe in the UK if you're under 16 soon. >> John with your Apple Vision Pro. Yeah, >> you know that's taking away some screen time. That's a threat. That's a real threat to you guys.

140:37 >> It's actually twice the screen time cuz it's both eyes, two screens. >> Nick Nixon one YouTube on the left. >> Yeah, asking full brain rot. >> Awesome. Anyway, um yeah, excited for more people to to get access and great to meet you. >> Thank you so much. Thanks for having me on the show, guys. >> Coming on the show. We'll close out there. Leave us five stars on Apple.com. Oh, we got we got stuff. Okay, what do we got?

140:58 >> Uh, one of the best ads I've ever seen. >> Okay, we're going from ad to >> in my life. This ad is is truly >> one of the best. Let's pull it up. >> Wait, what is this? >> This just is an ad from >> Cheaper usually. Cheaper usually. This is one of those fake This is one of those fake tech ads that the guy put up in the subway. >> That's what's going on. No, >> cheaper usually.

141:22 Yeah. I I start thinking, hm, well, in what settings is it not cheaper? It's really tough if you're trying to get people to to switch. >> It's certainly not cheaper if you're trying to go uh like one block. Like a car is always going to be uh is always going to be more expensive. But this also feels like it's like we're trying to be cheaper. It feels like price war with Uber still, but it's like we're sort of doing a price war, but not all the time. So, you don't know. It's not really a guarantee of >> I feel like most marketing campaigns need to guarantee something. Even if it's a moderate guarantee, it's like 5% cheaper every time.

142:00 >> Yeah. But because if it's cheaper usually, could they not just say cheaper? >> Even >> drop the usually. >> The usually is hilarious. Like I'm thinking about different if you take if you take a bunch of lift rides and the same route every single day and you take a bunch of >> like Uber rides. >> Yeah. Yeah. >> You could probably just make the argument that it's cheaper. Yeah. Well, what's the uh what's that airline that has the tagline bags fly?

142:25 >> It's tough to put cheaper and then your logo. >> Yeah, >> that's not good either. Uh I think it's Southwest that has bags fly free. Like can you imagine how bad that campaign would be if it was bags fly free usually. >> Usually >> like built Ford tough. Usually >> it's usually built Ford tough. >> Not always, but usually. What are some other uh big just do it >> usually usually usually not the most expensive option.

142:53 >> Most I most >> that's even that's even that's even worse because then they're thinking okay sometimes it's the most expensive. >> Um anyways folks uh I'm rooting for Lyft. >> There's some other billboards. The new Chad GBT billboards are are really good. >> Lyft is up 10% in the last month. >> The Chad GBT is working. It's really cool. I like it because it has the same like it it is aesthetically pretty but it's also functional. It like actually >> don't fly free anymore apparently.

143:22 >> Oh yeah, they don't. But there was one airline. >> Think different usually. I'm loving it. Usually McDonald's a diamond is forever. Usually beers got >> what's the other one? Fingerlicking good. Usually KFC it's very ominous. The best a man can get. Usually >> usually >> breakfast of champions. Usually >> have it your way. Usually >> usually like a good neighbor. Like a good neighbor. State safe is there.

143:54 Usually >> the few, the proud, the marines usually. >> Taste the rainbow. Usually Red Bull gives you wings. Usually >> that's actually probably accurate. Anyway, >> fly the friendly skies. Usually. Wait, I got to tell you about Shopify. Shopify is the commerce platform that grows with your business. It lets you sell in seconds online, in store, on mobile, on social, on marketplaces, and now with AI agents always. Shopify always lets you do this. They never It's not a usual thing.

144:25 >> Let me also tell you about Codeex. Codeex always is a powerful workspace for always getting work done with AI agents. Whether you're writing code, analyzing data, creating content, or automating business workflows, Codeex always helps you move projects forward from start to finish. Always >> Visa everywhere you want to be usually. >> Also, we told you about public earlier, but it's investing for those who take it seriously. >> BMW, the ultimate driving machine. >> Oh yeah, we all Oh, we got also got to talk about Finn.ai Sale to Salesforce.

144:54 Fantastic outcome. True testament to founder mode. Give it up for Owen McCabe, friend of the show. Mark Beni off, friend of the show, teaming up. Uh absolutely amazing outcome. such a wild ride to build intercom, wind up raising a ton of money, build a great business, but not, you know, have this like, you know, founder energy. We talked to uh we talked to about this where it was like, okay, the business is working. Things are growing. It's not crisis mode. It's not wartime anymore. And he sort of got forced into peace time and then AI shows up and he gets to go back into wartime.

145:32 and he delivered a fantastic growth, fantastic new products, a fantastic outcome for everyone, met the moment and is now uh on you know the the Salesforce team and going to be absolutely knocking heads. >> Great outcome for Intercom and Finn. Uh massive pickup for Salesforce. >> Yeah, I mean the rebranding crazy move like I think a lot of people were like wait intercom's like this known thing why are you launching a new product and rebranding the whole company? Uh, but that's the type of thing that you get when a company switches into wartime mode, switches into founder mode. And so you get these like high risk, highreward things. And I don't know if the rebrand, the rename was, you know, that critical to the outcome. There was a lot of other stuff, mainly the growth, the product, right? Um, but, uh, it just shows you that, uh, own came in and said, I'm willing to change literally everything, including the name of the company that I've been running for a decade. So, uh, fantastic news. The transaction is expected to close in the fourth quarter of fiscal year 2027.

146:35 That's a long time to integrate, but good luck to them to get through that. It's been 15 years in the making. So, what's six quarters to wait around for the clos fantastic outcome >> uh in the seat for 27 years Ben off's been at it. So, >> fantastic crew. Congratulations to all in >> market clearing order in >> Leave us five stars in Apple Podcast and Spotify. Sign up for a newsletter, tbp.com, and we will see you tomorrow at 11:00 a.m. Pacific. Goodbye.

147:01 >> Technologies Daily Show. >> Technology in Motion, >> according to Train in the chat. We love you. Goodbye. >> Goodbye.