--:-- Speaker 1: You're watching TBPN.
--:-- Speaker 2: Today's Friday, 11/06/2026. We are live from the TBPN UltraDome, the temple of technology, the fortress of finance, the capital capital.
--:-- Speaker 3: So good to be back.
--:-- Speaker 2: So good to be back. Everyone
--:-- Speaker 3: was Kind of brutal week.
--:-- Speaker 2: We sold the UltraDome. We were down so bad yesterday that we couldn't possibly maintain the UltraDome. It's simply too much. But of course
--:-- Speaker 3: Brutal week of travel.
--:-- Speaker 2: We've been saving time and money since day one, of course, with RAMP. Let me tell you about RAMP. Time is money, save both, easy use corporate cards, bill pay, accounting, and a whole lot more all in one place. No matter what the stock market's doing, you got to maintain your ultra dumb. This is key. Yeah. Brutal week of travel. Crazy crazy time. Stocks are up now. So That's right. Vlad
--:-- Speaker 3: Never in doubt it. The trenches. Never black pilled.
--:-- Speaker 2: He fixed it. Yeah. We
--:-- Speaker 3: were... Catch a falling knife.
--:-- Speaker 2: Yeah. You wanna try? You wanna try? You think you think you can catch a falling knife? A lot of people say, never try catch a falling knife. Why don't you try, Jordy? Oh, he did it. He did it. It's not that hard.
--:-- Speaker 2: Of course, you might cut yourself on a true falling knife. That's sort of plastic cutlery.
--:-- Speaker 3: Yeah. You just need to know how to catch a falling knife.
--:-- Speaker 2: You know why they say don't
--:-- Speaker 3: catch falling knife. Don't catch falling knives if you're not an expert in knife catching.
--:-- Speaker 2: Yeah. You didn't cut yourself, but you got microplastics all over your hands right now.
--:-- Speaker 3: I'm not too worried about it.
--:-- Speaker 2: Okay. Well...
--:-- Speaker 3: I'm worried about personally the microplastics reaction to my Sure. Yeah. To me. Yeah.
--:-- Speaker 2: Yeah. Yeah. Yeah. That makes sense. No. Bad day on Wall Street yesterday. Wall Street got a $2,500,000,000,000 reality check with historic route of tech stocks. It was the worst day on record since 06/05/2026, couple months ago, when it was 1,870,000,000,000. Before that, you gotta go all the way back to 04/03/2025 when they lost 1,740,000,000,000. Then back to April 4, the day after when it was 1,580,000,000,000. The numbers are big because there's been a lot of growth, lot of inflation, a lot of big numbers racking up. The economy is big. The market is big. And so the numbers get big when the percentages move. But yeah, yesterday was crazy. 5% down. Not typical. But, you know, looking better today. NASDAQ's up 1.38. Seems to be holding. It's not entirely a falling knife. If you caught it this morning, you're doing okay. Who knows what happens next week? But...
--:-- Speaker 3: Somebody, Daniel in the chat said app is up so much and I went to look at it and thought there was a bug because they're up 67% in the last five days.
--:-- Speaker 2: What? Apple?
--:-- Speaker 3: Yeah. Up another... Up 10% Wait. Today after earnings.
--:-- Speaker 2: That's amazing.
--:-- Speaker 3: Lads over there crushing it.
--:-- Speaker 2: Wow. This is crazy. For such a big company, $131,000,000,000 company now, wild wild swing at that scale. Typically not something you're you're seeing constantly. So to recap for yesterday, two days after the midterm elections swept a block of artificial intelligence skeptics into power. The new reality slammed into Wall Street. We still can't figure out exactly why things are happening in the order that they're happening. Feels like everyone knew the results of the midterms, knew what was going on in Texas on Wednesday, and yet they waited till Thursday to sell. So a little bit of, like, digestion of the narrative maybe because, of course, on Wednesday, stocks actually rallied. What did I see on the back? What's going on? The road
--:-- Speaker 3: to Christmas? Oh, look at this.
--:-- Speaker 2: Oh, we got we got orbiting the earth.
--:-- Speaker 3: That's amazing. Oh, he goes around. Okay. Now we gotta wait for Christmas.
--:-- Speaker 2: Christmas countdown. I think we're at forty eight days. There he is. Let's go to the official Coming around. The official countdown. The road to Christmas. Forty eight days until Christmas. Just a hair's breath away. The first spam email was forty eight days... Forty eight years ago? Wow. That's crazy.
--:-- Speaker 3: So... How far we've come? I almost feel like we gotta put ourselves on the naughty list. Why? Because we were so ahead of Christmas. Right? We were sort of front running Sure. The rest of the market.
--:-- Speaker 3: yeah. I was at dinner Wednesday night Mhmm. I'm walking around and there's like a three story high tree Woah. That's already up Okay. In Beverly Hills. Yeah. And we're sitting here, there's not a single...
--:-- Speaker 2: Short sellers and John and Jordy
--:-- Speaker 3: There's not a single... This is our new naughty list courtesy of producer Ben.
--:-- Speaker 3: But, you know, some people are... I think we're gonna be coming back to this a lot Yeah. Over, you know, in the sort of final days, final hours.
--:-- Speaker 2: Helping Santa out. We're Santa's little helpers. Yeah. We're helping him out.
--:-- Speaker 3: We're trying to get back on his good side.
--:-- Speaker 3: good side because again, we started so strong Yeah. Then all of a sudden there's trees going up all over the country
--:-- Speaker 3: And we're sitting here treeless Okay. In the Ultradome. It's crazy. It's got complacent.
--:-- Speaker 2: It's actually crazy. So yeah, for today, we'll rank our stories. Are they naughty stories or nice stories? Where are they going? Where are the key actors in the stories going?
--:-- Speaker 3: Mike Bird had a good post today. I'm tempted to put him on the nice list for it. He said
--:-- Speaker 2: could be This was contention.
--:-- Speaker 3: Could be quite a buying opportunity here if stocks bounce back. Not if they sell off further though.
--:-- Speaker 2: Great. Great. That is my quant. Let me tell you about Console. Console builds AI agents that automate 70% ITHR and finance support giving employees instant resolution for access requests and password resets. Moving on. What else is going on
--:-- Speaker 3: in the market? Great. This What happened? Brian says there is a nuclear war. Just four humans remain. One is Gavin Baker. He is telling you how this is actually good for AI stocks. And Gavin responds and says, we would need a lot of robots and GPUs to rebuild civilization.
--:-- Speaker 2: Good point.
--:-- Speaker 3: He's got a point.
--:-- Speaker 2: He's got a point. I think Gavin Baker's going on a nice list. The anthropic IPO of the Financial Times AlphaVille over there is questioning where it will get out. 2,000,000,000,000 was floated originally. Then that was retreated to maybe 1.5. Now there's, you know, people going back and forth around maybe it's 1.3, maybe it's 1.2, maybe it goes back up. Who knows? Perhaps you're old enough to remember yesterday when Wall Street stocks posted their biggest gain in three months as investors bet that the Democrats' resounding victory in the US midterm elections would cause policy gridlock in Washington. Maybe you can recall when inflation fears were damped by crude by Brent crude closing yesterday's US session below a $100 a barrel for the first time since September and when a nearly 11 basis points tightening of the Franco German ten year spread signaled optimism in Europe. You might even remember when the NASDAQ composite advanced by 1.4% literally yesterday when tech mega caps outperformed amid a rotation from the weakest of AI names that meant selling was contained among semiconductor stocks, neoclass developers and politically exposed plays like SpaceX. And so you can see in this Financial Times article the heat map. There's obviously a lot more pain on the chip side than on, you know, the broader tech community. We saw that with, like, the hyperscalers. They already have a lot of data centers built. They might do very well. They have other businesses. Apple, not really affected by the midterms. Tim Cook, John Turnis, they played the they played the the whole political chaos very well, going to the movie screens that they need to go, but not getting too lazy with it and it's balanced out and the market seems to be rewarding them. But AlphaVille continues over at the Financial Times. It's a fine time to test. It's a fine time to list shares if you're anthropic. You might remember having read in the Wall Street Journal less than a day ago. But chances of an IPO have crumbled on Polymarket. It's now down to a 49% by November 24, which was the week before Thanksgiving when the latest rumors were swirling. This on Polymarket was up at 70, 75, 72%, now down at 49%, still fiftyfifty. It could happen. And you saw some positive notes from coming out about RSI progress, a lot of debate from the meter folks, like the science, the technology, the capabilities are still advancing. But it's still just a crazy tumultuous time to go into the market. And what was a ton of optimism around the s one, really financially healthy, a lot of cash on the balance sheet, really good q two, see where q three came out. Q three was weak, but then boom, they came out with the 80,000,000,000 ARR number. Good stuff. But still, like the market is what the market is. And and and I don't think very many bankers recommend
--:-- Speaker 2: Jumping in the water when it's this tumultuous. So we'll see where they go. It feels like fifty fifty is pretty accurate. Those of you with even longer memories might recall the numerous years that we in the media have been punting.
--:-- Speaker 3: Yeah. The only the only... The interesting thing about the debate around where it actually goes out at Mhmm. Is it could end up being like the the the general market sell off Mhmm. If that means that a bunch of people that have wanted to invest in in Thropic for years have an opportunity to... Like, you shouldn't have less conviction in the company now
--:-- Speaker 3: Than you did four months ago True. Just because some infrastructure names are selling off.
--:-- Speaker 2: Maybe that's why I've been selling...
--:-- Speaker 3: If you liked this company
--:-- Speaker 2: They're backing up.
--:-- Speaker 3: In summer Yeah. You should love it now because you potentially are gonna get in at a massive discount
--:-- Speaker 2: That's true.
--:-- Speaker 3: To if the the sort of overall AI infant trade had continued through the end of the year.
--:-- Speaker 2: Yeah. Rough on the VCs who might not get to distribute at 2,000,000,000,000, they might have to distribute at 1.3 or 1,500,000,000,000 and not get the full full mark, but still very good for the ones who did get in. Yeah. Something kinda... Something about Feet attaching a Google screenshot of stock market charts is kinda trashy. It is funny that they don't have, like, their own built in widget, but I think Google charts are really good. I share these all the time. And I think that they did a really good design here. And when I'm on other websites that have stock charts, it's it's sometimes like they're too cluttered or it's too pro or has candles and all these crazy things. Like, I always just wind up typing, you know, the company name and then market cap in Google and I still I still use this. Okay. But it does feel a little off brand, but I don't think this was... This is AlphaVille, which is a blog on the Feet. It's not the official Feet's publication workflow. So probably goes through like a slightly modified CMS or or just, you know, they can just rip whatever they want. Anyway, Claude is bearish on Anthropic. You saw this? If you ask Claude what the fair market cap...
--:-- Speaker 3: I think it's not bearish, it's just humble.
--:-- Speaker 2: Humble. Yes. Okay. So Claude thinks the fair market cap for publicly traded anthropic is somewhere between 500,000,000,000 and 800,000,000,000, which is about half of where they've been rumored to be going out at. And Dizzy has a good take here. The Mahdi is too humble to say he's worth 2,000,000,000,000. Even more reason to know that he is. I love it. I love it. Anyway, I'm sure we'll be following this over the rest of the month. Couple weeks more to see if there's stabilization in the market. You know, getting out of 1.5 seems totally doable. What's James Chanos saying about all this? He says, I can't shake the feeling that selling your high beta tech stocks already down 40 to 70% to buy low or no growth consumer names at 30 to a 100 x earnings might not be so smart either. So if you're...
--:-- Speaker 3: Tell me that that buying Monster at a 42 PE isn't smart. Monster Energy?
--:-- Speaker 2: Yeah. 42 PE. That's nice.
--:-- Speaker 3: $90,000,000,000 Right?
--:-- Speaker 2: It's crazy. Take him as still bullish. He says, the Texas governor elect does not hate data centers. When asked by CNN Jay Tapper about today's stock market decline, AI investors worries and fears about the economic consequences of her data center policy. Gina said this, we have always been pro business in the state of Texas. But what changes now with me as governor is it has to be a partnership that benefits Texans. And right now, what has happened is data centers have moved mostly into rural communities and there are no rules and laws to protect Texans. Certainly must be some rules and laws, but Texans are being taken advantage of. She says to the difference, we have to have laws. So she wants to move forward but with a new negotiation. Tay Kim says two words, buy stocks. Let's go.
--:-- Speaker 5: Love it.
--:-- Speaker 3: Tay is...
--:-- Speaker 2: Eternal eternal optimist over there.
--:-- Speaker 3: Yeah. What did he say last night? He in in his... In the preview of his sub stack, he just said buy the dip.
--:-- Speaker 2: Cats pulling knife. Skill issue if you can't...
--:-- Speaker 3: Yeah. I mean, we we practice this thing. Obviously, we did... We caught a knife live on the show.
--:-- Speaker 2: Showed that it's possible.
--:-- Speaker 3: Yeah. But we were listening to a talk yesterday and the the individual was basically saying, like, we're entering the era of stock picking. Oh, You could basically just buy anything over the last year or two Yeah. And do quite well. And maybe it's time to buy the dip because almost everything is traded down. Yeah. But you gotta pick the right ones.
--:-- Speaker 2: Yeah. I mean, that that that was the same, like, the stories that we tell about the storied tech firms, like the the really successful venture capital firms of today, all were in, no coincidence, like Google, Amazon. Right? They were in the right place through the dot com crash. So even if you wind up in a in a total reset of the market, you would you would definitely expect that there's a couple new effectively hyperscalers that make it through. Daniel Newman had this very interesting visualization of .com versus AI, tracks very closely and then gets crazy at the end. Let's pull this video up. But while we're pulling that up, let me tell you about Cisco. Critical infrastructure for the AI era, unlock seamless real time experiences and new value with Cisco. I'll pull up .com versus AI. It looks identical for a minute. And .com there is on the top. The orange line doing well. Crossing, they're going back and forth, going back and forth. And then here we are today with a sell off, and then .com keeps ripping. Look at that. So from start to finish, .com produced something like... What what... What's the final? The final tally is a 100 something x, 151 x. And at the last close, this AI peak is at 16 x from the baseline. Depends on where you start the baseline. But looking at the... Some of the Korean stocks has been particularly crazy. I was looking at... I think it was the COSP index over time is... Let me see if I can just throw this in because it's a it's a crazy, crazy chart. Let me see if I can drag this in. Uploading image. Here we go. The... Yeah. Pull up the the image. A screenshot from Google, of course. There's nothing better. Where else where else are you gonna go for a quick screenshot? Look look at this. The, this is the the Korean index. Complete store of value for like twenty years and then just completely vertical and then right back down who knows. Yeah.
--:-- Speaker 3: Peaked at 9114 now sitting at at roughly 5,000.
--:-- Speaker 2: 5,000. Yeah. Anyway... Jobs.
--:-- Speaker 3: We gotta talk about jobs.
--:-- Speaker 2: I'm just talking about jobs.
--:-- Speaker 3: Geiger says jobs in October came in higher than all 80 forecasters in Bloomberg survey predicted. Wow. Well, you shouldn't have been forecasting. You should have been predicting big Yeah. On your favorite prediction market. Yeah. Just kidding. Unemployment rate is back down to 4.1.
--:-- Speaker 2: Good news.
--:-- Speaker 3: I still have trouble getting excited about any jobs report just because it's just my default assumption is that it gets revised down massively in a few months. Sure. And so hard to hard to hit the gong or
--:-- Speaker 2: But we've had some good ones, and they haven't been revised negatively Yet. In, like, six months. And then we've also talked to the ADP folks and the Gusto and a whole bunch of the payroll companies, and they all match what's tracking. I think, in general, we we we can read this as a as a good thing. The really interesting thing is that there's 19,000 new manufacturing jobs. So for a long time, any time we got a good jobs report, was always like, okay, more health care for old people, more, you know, that's how that doesn't it feels important, but it doesn't feel like any big change structurally in the economy. It's just, okay, we're aging. We're taking care of our old people, which is important, but it's not a new area of growth. We're not going to look in... Look back in fifty years and be like, wow, the expansion in health care really changed That was what America was doing. Manufacturing on the other hand is a huge thing. Can unlock new technologies, new vehicles, new capabilities, new defense. Like there's so many different things that you can do. So very very good. We we we love to see it. A 165,000 jobs added in October. And the numbers... So the the economists were predicting 59,000 jobs. They got absolutely blown out by a 165 k. So the unemployment rate now is 4.1%. And the the the Fed is pricing in or or expecting another rate hike, which is, you know, fighting off inflation, but still strong job market. Good place to be in for The US economy. Said that the drop in the unemployment rate was especially notable given that the labor force participation rate, the share of the working age population that's either working or looking for work picked up last month, which is good. So what you always want to avoid is a situation where, yeah, the unemployment rate went down, but it's because no one's even looking for a job. Everyone's just chilling at home, relaxing, I guess. Yeah. Instead, people are people are entering the workforce. They're saying, I'm ready to work. I want a job. And they're getting jobs. Yeah. So it's that balancing factor that's really key. That's an indication that more people were entering the labor market and finding jobs. Torsten Slach, who I mentioned to Joe Wiesenthal at our New York Stock Exchange show, he's the chief economist over at Apollo. He pointed out that the unemployment rate has now been under 5% for roughly five years. That puts it just short of a record sixty four month stretch from 1965 to 1970. I was doing some some economic history research the other day about, you know, the the the GDP projections. You know, the most ambitious ones are what, like 30% GDP growth sustained over some period. That has like never happened in human history. I was looking back through like what what has been the best decade for GDP growth of any country anywhere
--:-- Speaker 3: the world? Peak.
--:-- Speaker 2: China has been 10% for a long time. That's great. What does it take to get to 20%? It has happened twice. Equatorial Guinea is one of them, and Guyana is another one. And both of those were countries that found offshore oil reserves Yeah. Where they could basically just sell them instantly and say, hey, come get the oil. You don't even have to rely on our infrastructure. You just show up, start drilling, take it, and we will tax it, and we will... And and it counts as our GDP because we're we're we're producing the oil here. So Equatorial Guinea at one point had like 99% of their economy oil exports or something. That's something crazy. It wound up being sort of a mixed bag like because it was like, you know, kind of like free money and it just kind of happened offshore. It didn't really revolutionize everything. It didn't take them from... It's not like they became Singapore, you know? Yeah. But it was good and they did... The government did get that money.
--:-- Speaker 3: China did peak at 15.2%
--:-- Speaker 2: For like a year or two.
--:-- Speaker 3: For one year in 1984.
--:-- Speaker 2: Yeah. But it is it is very difficult to to find a historical precedent for sustained 20 plus percent growth. Now you could say that like in an intelligence explosion, it's kind of akin to finding oil. It's this like it's this it's this like tokens that you can use for economic value. Same thing with oil. You can use to move things around. You can deploy it in the economy in so many places that if you can produce it, it's like the bullish... It's the most bullish case. But it was just funny because like it is extremely rare to find to find an example of of north of 20%. I mean, that's a huge amount of economic growth, especially for any any country that's at all at scale. It's really, really...
--:-- Speaker 3: Can you think about how electric it would be?
--:-- Speaker 2: It'd be amazing. Be... Yeah. It'd be it'd be incredible.
--:-- Speaker 3: It would fix me.
--:-- Speaker 2: It would. It would. Well, hopefully it happens. Lots to do though. Lots to deploy. Lots to unhobble. The models need to get even better and Yeah. They need to be adopted.
--:-- Speaker 3: If you were a hedge fund hoping to survive to get to 30% sustained GDP growth in The United States, you maybe didn't do that well this week because you may have exploded.
--:-- Speaker 2: Yeah. Lot of lot of headlines about hedge funds...
--:-- Speaker 3: They wanted explosive growth and they exploded.
--:-- Speaker 2: They got the exploded part, but that's it. Has any... Have any of them actually blown up fully? Like had to sell order books or sell sell holdings in blocks or do any of that?
--:-- Speaker 3: Think that was certainly happening yesterday.
--:-- Speaker 2: It might be happening like over the course of the next couple days. Because a lot of these are running leverage. And so at the very least, if their book is in semis...
--:-- Speaker 3: This was in this was in Bloomberg. So hedge fund Vara plunges 33% in brutal October for AI stocks.
--:-- Speaker 2: That's so much.
--:-- Speaker 3: Coffee's hedge fund, Kirkswald, had worst ever month in October. Mhmm. Wallach to return some capital following brutal October.
--:-- Speaker 3: Ex Moore money manager to return cash from his hedge fund, Millennium, ex Citigroup banker. That's something else.
--:-- Speaker 2: One of them hired a Citigroup banker to lead India operations.
--:-- Speaker 3: There you go.
--:-- Speaker 2: They're just expanding. They're like, do nothing. Win. I guess they're doing fine. Yeah. A hedge fund trading...
--:-- Speaker 3: Oh, interesting. So there's a hedge fund coach Yeah. Denise Scholl had multiple clients just cancel their appointment yesterday. It's like one of those things like you're... If you're in the middle of chaos Yeah. You often don't necessarily need to just talk it out for an hour. You need to solve your
--:-- Speaker 2: problem real time and you can
--:-- Speaker 3: you can figure out what happened later. Sure. So For sure. I think that makes sense.
--:-- Speaker 2: Well, let me tell you about Shopify. Shopify is the commerce platform that grows with your business and lets you sell in seconds online, in store, on mobile, on social, on marketplaces, and now with AI agents.
--:-- Speaker 3: Dowman Eddie said, do wellness checks with your public equity TMT friends today. They need you, but not Lead Edge Capital. Hearing public fund is up 32% gross year to date What? And down only 1.2% yesterday.
--:-- Speaker 2: That's sick.
--:-- Speaker 3: Owning tech that trades at single digit ARR and low double digit CF multiples works after all. Yeah. Yeah. Contrarian. Yeah. Some of the last contrarians.
--:-- Speaker 2: It's great.
--:-- Speaker 3: Great. We have some big stories that we we need to
--:-- Speaker 2: Let's rip rope. We need
--:-- Speaker 3: to get into. Take me over.
--:-- Speaker 2: Where you want to go?
--:-- Speaker 3: Wildlife at our new LA Wildlife Bridge. Couldn't wait for the ribbon cutting. Really? A coyote has become the first documented animal to use the Wallace Annenberg wildlife crossing over the 101 Freeway. So again, we were once This guy. Minorly cancelled over over talking about this bridge, which we're very much in favor of. But effectively a mega project. Yeah. You know? This thing has been in the works for years and years and years and years and it seems... I mean, I'm kind of... It it feels a little feels a little cyberpunk, you know? You have this like massive structure and then they just try to trick the animals into thinking like this is just a normal hillside Yeah. Crossover. But really really fantastic news. I think it's, you know, coming in well north of a $100,000,000 for this bridge.
--:-- Speaker 2: Well, that's not bad. I I I... For some reason, had earmarked it like 10,000,000,000. So like if you're telling me it's a 100 mil, I'm I'm 100% Yeah.
--:-- Speaker 3: The crazy thing is I don't know how you actually get down because there's like a two story drop.
--:-- Speaker 2: Well, they're gonna build more of the bridge to like smooth it out.
--:-- Speaker 3: I... Crazy because it's like you you would Yeah. You would think that the right thing to do would be able to build like a bunch of small bridges, you know? But maybe animals... $1,000,000
--:-- Speaker 2: bridges.
--:-- Speaker 3: Yeah. Maybe animals talk amongst themselves and they're like, yeah, there's an amazing bridge down the 101 over here. You gotta check... It's a little bit out of the way, but like it's just so scenic, you know.
--:-- Speaker 2: I wonder if the bridge is too narrow, the animals won't think that it's for them and it needs to kind of blend in and feel like a continuation of the the hillside there. But I mean, I... That they're...
--:-- Speaker 3: What if we built... What if we built... If built... Or more.... Thousands of animal bridges and and... But but had data centers inside them. Secret data centers.
--:-- Speaker 2: I would be very much in favor of building a bridge every mile at this size and scale or build build... Just cover the cover the freeways entirely. Just put them... I mean, you... If you can't build them underground You wanna be... Build them... Just build a...
--:-- Speaker 3: Constantly in tunnels. You don't want to...
--:-- Speaker 2: I don't care. I'll turn on the lights in my car. It's fine. I drive in the night all the time. It's no big deal. Like that does not matter to me at all. I don't I don't need... I'll I'll have...
--:-- Speaker 3: You want you want California
--:-- Speaker 2: to Turn earmark the entire one zero one
--:-- Speaker 3: You want giant... California to earmark a few $100,000,000,000?
--:-- Speaker 2: Yeah. Why not? We got the money. We got the people. We'll just build it.
--:-- Speaker 3: We don't. We don't have the money. The state is Unlimited. The state is broke. We're doing fine. We're doing fine. This is big. This is big. The Cybertruck is being scrapped. I It's crazy. Came in at the perfect time. I now have a one of 17,000.
--:-- Speaker 2: Wait. They only ship seven... Is that the actual number? How many did they actually ship with these? Because 17,000 is not a lot. I mean, that's... That that is actually somewhat limited. Where...
--:-- Speaker 3: They sold 20,000 in the last year. It's not limited at all.
--:-- Speaker 2: 73,000 since delivery started in late twenty twenty three. So you have one of 73,000.
--:-- Speaker 3: Yeah. Are you thinking what I'm thinking? It's going into... Going into 500.... In pristine condition for the next hundred years. Yeah. Hundred years. Yeah. Pull it out.
--:-- Speaker 2: Pull it out.
--:-- Speaker 3: Like a low mileage example, only one of 73,000.
--:-- Speaker 2: Yeah. It's really it's really disappointing. It's really disappointing because I was hoping that this would have enough...
--:-- Speaker 3: Chad is saying, CMC is saying, ah, so Jordy is a collector of sorts. Yeah. I... In favor of collecting things that you can have like a a wonderful experience with.
--:-- Speaker 2: Was really hoping that they would take this and be successful enough to do the Cybertruck do the three row like the Excursion Yeah. Built on the truck platform.
--:-- Speaker 3: At the end of the day, I love the car overall. Yeah. It is really like horrible in so many ways. And should... Like, what I actually love about it is it should never have shipped. Yes. It really should never have shipped. The build quality is is really bad. It's like very dangerous. Like I'm I'm constantly kind of on edge when I'm around it, you know? I'm trying to tell other people that might be around the car like, hey, that's like effectively a knife's edge, like keep your fingers away from here or there. You can... And again, you can see issues with the car from like 20 feet away. Mhmm. And that's just like how the car came. So it really never should have shipped but I'm glad it did because it like looks completely insane.
--:-- Speaker 3: It actually drives... Again, doesn't feel nice to drive it yourself. Yep. But when the computer's driving, it's it's it's really fantastic. Yeah. So I will cherish mine. And yeah, your options are just getting more and more limited. I know. If you if you wanna be in the...
--:-- Speaker 2: Gonna sell one car in a few years. Mean, I I guess they're just... I
--:-- Speaker 3: don't think it's I don't think it's ugly. I think it's like very unique looking and it's not for everyone and it's completely insane.
--:-- Speaker 2: I mean, when this dropped, people were like, it will never ship looking like that. It's impossible. It's illegal. People were worried that the hard edges would cause, like, major damage in, to pedestrians. And I haven't heard about that many incidents involving Cybertrucks. I I don't... I still don't understand what you can get approved and what you can't, but what what a saga. They actually did ship it, and it's out there. In the end, few people bought the stainless steel Cybertruck, and now its days are numbered. Production will wind down next year. It is the latest indication of Tesla's swift... Shift away from selling traditional cars towards autonomous vehicles and robotics. Must Wow.
--:-- Speaker 3: So in 2019, they were targeting annual production of 250,000 a year or 250,000.
--:-- Speaker 2: They did not hit that. And also they were targeting like...
--:-- Speaker 3: And then they long term they were talking about 500,000 a year.
--:-- Speaker 2: Yeah. And what what wasn't the original price in the $40,000 range? 50,000? It was supposed to compete with like a Raptor or like a Ranger f one fifty.
--:-- Speaker 3: Yeah. Mean, I'm sure they could have sold an insane amount at that price range.
--:-- Speaker 2: Yeah. But it's just too expensive even for them with all the with all the efficiency. But Cybertruck ditched the traditional boxy pickup design for sharp angles and stainless steel body said to be inspired by the iconic DeLorean DMC 12, the flying car in Back to the Future. Tesla's photos and promotional materials gave a hint of the Cybertruck roving around another planet, a clear nod to Musk's own space faring ambitions. Cyber Cup... So yeah. He said the entry level car, real wheel drive, rear wheel drive would start at $39,900. That is very very cheap for a four door truck. He claimed it could outperform a nine eleven and showed a video where it won a tug of war against a tethered Ford truck. The body was said to be bulletproof to a nine millimeter handgun with armored windows glass to boot. The first crack in the Cybertruck's image was a literal one at the debut.
--:-- Speaker 3: That was crazy.
--:-- Speaker 2: Tesla chief designer friends van Holz...
--:-- Speaker 3: It is amazing that every single iconic tech CEO has had like the most brutally botched demo.
--:-- Speaker 2: True. True.
--:-- Speaker 3: Like Yeah. Happens happens to the best of them.
--:-- Speaker 2: Indeed. Indeed. When sales began in 2023, prices started at roughly $61,000. That's not too bad. About 21,000 more than Musk's... Musk originally claimed. The CEO conceded that Tesla dug our own grave with Cybertruck. Yeah. There... There's definitely an intermediate design. It was also just so odd to just completely redo the design language and not bring any of that to the model y. Like, there is... Like, there are plenty of, like, boxy crossovers that look like even, like, a Range Rover, some Hyundai and Kia has been adopting more boxy language. The g Wagon has boxy language. You could pull some of that over. And they were like, no. These are two completely different brand styles. Right? And they and they introduced new model wise, new model... They did a whole refresh during the Cybertruck era and didn't bring any of that design language over. They could have evolved it more. I mean, guess they brought the light bar but that's about it.
--:-- Speaker 3: Yeah. But still no. Just give me a classic SUV.
--:-- Speaker 2: Yeah. Just a full size SUV that competes with a Navigator or an Escalade a Yukon or a or a Suburban. There's like so many. And I mean, it's the same thing with the f one fifty.
--:-- Speaker 3: But we gotta talk about the the Yang Wang u nine. Boo. The Yang Wang u nine extreme Let me hit see. 503 kilometers an hour on a closed stretch on Abu Dhabi's E 11. Fatality.
--:-- Speaker 2: So over for...
--:-- Speaker 3: It's every other... 300 miles an hour. Yeah. This is gonna be...
--:-- Speaker 2: 500 kilometers an hour. That is...
--:-- Speaker 3: Just over 300 miles per hour. Yeah. Really really...
--:-- Speaker 2: That's Koenigsegg...
--:-- Speaker 3: Do they have a video of it?
--:-- Speaker 2: And do we know how much this costs? Like, what what what is it? The u nine extreme? Is that what it's called?
--:-- Speaker 3: Is this a production car?
--:-- Speaker 2: I don't know. I I I think it will be. I think it will be. Let's see.
--:-- Speaker 3: Is this the video? Let's see it.
--:-- Speaker 2: Let's see it.
--:-- Speaker 3: Warming up the tires.
--:-- Speaker 2: Oh, yeah. There you go. I saw this video. This is crazy. This, warming up the tires here. It's funny to be doing that, like, during your run and not have it... Not have the video start there. You know? Going up and down. So this is a $3,000,000 car, I guess, the extreme. So it is in Koenigsegg So not not competing with a Tesla Roadster anytime soon. Although, who knows where the... We actually have no idea where the where the Roadster pricing will land. But, yeah, Elon definitely has work cut out for him with the Roadster. If he wants to set a record here, he's gotta get it up to 300 something at least. And that was always debated with the Plaid. The Plaid was marketed as being 200 plus miles an hour, and I think people had some trouble getting them up there on road tires... On street tires. Tires.
--:-- Speaker 2: But it was certainly certainly possible. 20,000,000 won, 2,900,000 at the April twenty twenty six Beijing auto show. There's only 30 of them that have been have been produced. So interesting. Sort of like a one off stunt, but impressive impressive nonetheless.
--:-- Speaker 3: What's crazy is this E 11 Highway that they're on
--:-- Speaker 3: Just, I think, goes between it goes between Abu Dhabi and Dubai. Okay. Like, it goes all along the coastline.
--:-- Speaker 3: So they must have shut it down. So, obviously, they
--:-- Speaker 2: appreciate it. Look at those look at those, telephone poles going by. Crazy being the left lane.
--:-- Speaker 3: And they have crazy automated speed cameras all over the country.
--:-- Speaker 2: That is crazy. He's really pushing it. He's he's gonna hit it. Here we go.
--:-- Speaker 3: Really slowing down towards the end. Yeah.
--:-- Speaker 2: Incredible. Incredible demo of electric performance. That would be terrifying if you get in a crash. That's that's very, very fast. Hacker News was actually very bullish on the Cybertruck when it was announced. There's a comment here from 2019. There's a truck guy who's owned a lot of trucks and currently owns a 2017 Ram two, 2,500.
--:-- Speaker 3: He's a truck guy on hacker news.
--:-- Speaker 2: A Land Rover Defender one ten. I'm telling you right now, this is gonna kill it. This is the suburban status item of 2022. I wanna buy this right now. This has nearly the towing capacity of my Ram and will smoke my wife's Audi on the track.
--:-- Speaker 3: Why are you taking a Cybertruck to the track? Or Fun. I mean, I don't know what Audi it is.
--:-- Speaker 2: I don't know.
--:-- Speaker 3: Audi. The whole thing is, like, if they could have made this product for 40 k, probably would have sold, you know, available.
--:-- Speaker 2: 40 k. I mean, the extreme the extreme design is still a choice. It's such a choice. Yeah. Like, you just limit your tan because, like, even though... I mean, the g wagon has, an iconic silhouette, but you... If if if you're in a community where everyone has one, you start wanting something else. You just want something a bit different. You just want a different style. And then also the the politics thing obviously really restricted it because you have you have the the like democrat community buyers who like the the environmental friendly angle and have the disposable income sometimes Yeah. Are like, I'm out for for political reasons. I forgot that Tesla's also a CPG company. They have a they have a tequila brand, Tesla Tequila. Vittorio has taken shots in your honor because he loves the Cybertruck. 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. The surf community is selling man made waves to homeowners. I know you're gonna have a lot of opinions about this. Waco Surf. It's a 500 acre development in Waco, Texas. Developers in states like Texas, Utah and Arizona are betting that man made surf lagoons will lure wealthy buyers despite high construction costs and steep monthly fees. So are you in search of a vacation spot for surfing with your family? Clint Tasset was. And he put down a $600,000 deposit last year on a $1,800,000 lot in Cabo, Mexico, a place renowned for its coastline but he doesn't plan on surfing in the ocean there. Instead, the $3,000,000 house he builds will be across the street from the beach at this location, the Cabo Rail Surf Club, a private residential club next to an artificial lagoon with a wave machine. In the lagoon, he won't have to wait for waves and battle other surfers. There will be no sharks, jellyfish, rocks, bad currents. He's promised multiple good waves a session as big or small as he wants. It's approachable, said Tasset 46 who lives just North of Denver and founded a digital marketing company. If you can lie on a board and move your arms, you can get in. He plans on surfing there with his wife and two kids aged 13 and 15. There's some interesting photos of them building this development. Thanks to advances in wave pool technology, man made surf lagoons are becoming the latest amenity high end housing developers are using to lure buyers instead of golf courses, ski mountains or lakes. These develop... These developments often with custom built homes and members only clubhouses offer surfing is the main activity. Whether these capital intensive projects can be financially successful, however, remains to be seen. At least one planned project has already faltered. Are you... You're you're in favor of these? What do you think?
--:-- Speaker 3: Love wave pools. Yeah. Cannot imagine buying a property down in Mexico off of the beach right next to like a chlorinated pool and I've... And and this is coming from somebody who loves surfing.
--:-- Speaker 3: I love surfing wave pools. Sure. I just do not... I don't understand. Like the ocean has so much more to offer than just surfing. Right?
--:-- Speaker 3: Sounds amazing. Yeah. Let me get in my car. I'm in Mexico. Let me get in my car and drive to the beach. Oh, yeah. Like you're you're buying a place in Mexico because you love surfing and Yeah. You're gonna be not near the... Like not near the ocean. Yeah. I don't I don't... I'm like I'm I'm very very confused
--:-- Speaker 2: I mean these by these brands. These make a lot more sense where they're like... They they they call out a couple other places that are... Where they're building them in a...
--:-- Speaker 3: So yeah, Waco Surf Waco
--:-- Speaker 2: Surf Texas.
--:-- Speaker 3: Is gonna be a development outside. How far is Waco from Austin?
--:-- Speaker 2: I don't know.
--:-- Speaker 3: I think it's a couple hours.
--:-- Speaker 2: You'd visit on weekends Yes.
--:-- Speaker 3: After work his
--:-- Speaker 2: private plane.
--:-- Speaker 3: Two... Just under three hours by train for you, John.
--:-- Speaker 3: For me, it would be like an hour and thirty minutes by car. Okay. Trains.
--:-- Speaker 2: Why do I say trains?
--:-- Speaker 3: love trains?
--:-- Speaker 2: I like trains.
--:-- Speaker 3: And you... Don't you wanna build it like a mini train on your
--:-- Speaker 2: That would be amazing, yes.
--:-- Speaker 3: But yeah, I just don't under... Like, again, I I just was at the new Wave Pool in Palm Desert, had an amazing time.
--:-- Speaker 3: But I had no desire to like live right on the pool.
--:-- Speaker 2: Look at look at Zion Shores. This is in Utah. You're so far away from the ocean. You're there. You're in Utah. Maybe you're gonna go skiing sometimes in Utah. But... Not
--:-- Speaker 3: not loving it. He says, this is this is perfect for the NPC.
--:-- Speaker 2: You got $8,000,000 to spend on a a Wave Pool property in Utah. He plans to build a 2,700 square foot home there for Parkinson. Means a few hours drive to surf instead of flying to the coast. His wife and seven children aged k. 10 to 14. I mean, with that big of a family, getting out to the coast, that's gonna be a that's gonna be a hassle. So bringing the surf to you, not a bad trade. Controlled waves mean they can all do the sport together. The $130,000,000 Zion Shores project came developed... Came together after developer Cody Larkin installed a continuous surf... A continuous wave surf machine in a lake in 2021 at one of his residence communities in Utah. He was shocked to see that the surf wave was far more popular than water skiing or wakeboarding. Everyone would spend almost all their time there. Half of the 56 residential lots at Zion Shores have sold since development started a year ago. There's a $500 monthly HOA fee per house, and that doesn't include surf fees, which range between $30 to $200 an hour. What are you paying... Why are you paying more per hour? Is that like I want a bigger wave and so they charge you more?
--:-- Speaker 3: They they have different pricing based on time. Like they have like their their sort of peak rates.
--:-- Speaker 2: Oh, okay. Okay. Yeah. Yeah. And then...
--:-- Speaker 3: There's sessions that basically take a lot less energy and you can put more people in the pool Oh. Versus certain settings are gonna be like bigger waves
--:-- Speaker 2: Okay. Okay. Energy cost?
--:-- Speaker 3: And so they can't monetize it as well. Okay. Yeah. Know. The crazy thing with with all these wave pool projects is like you're making your... There's all this CapEx going into the actual technology that generates the waves. Yep. And so if you're buying a home, you have to have conviction that the operator is gonna continuously update Sure. The technology the pools that I was surfing two years ago are not fun anymore in comparison to the pool that I just surfed.
--:-- Speaker 2: Oh, that's interesting.
--:-- Speaker 3: It's just like Yeah. Such a big leap.
--:-- Speaker 3: It's... If you're really into surfing pools, you kind of always want to be on the pool that just got built. Yeah. It's sort of like a fast takeoff scenario like like we're seeing on... I saw one that has... You know, it's like no one's like I gotta get access to GPT four or five anymore.
--:-- Speaker 2: Yeah. Yeah.
--:-- Speaker 3: Yeah. There's a few people out there. But
--:-- Speaker 2: I I saw one that has like basically a train car that moves along a track and creates the wave. I don't know if that's older.
--:-- Speaker 3: The chat the chat is not Crazy. Not liking not liking the pools. Okay. Let's let's go into the Wall Street Journal comment section.
--:-- Speaker 2: What do they say?
--:-- Speaker 3: Michael says, I grew up around Malibu as both a surfer and a scuba diver. To me, this has no appeal. Just as swimming in pools has no appeal compared to ocean and lake swimming. I just find it a bit odd to see them being built in places that have water supply issues.
--:-- Speaker 2: Interesting.
--:-- Speaker 3: The coolness of surfing ain't the waves, says Eric. That's just the feather in the cap. The real joy is witnessing nature. I agree.
--:-- Speaker 2: Well, if you don't wanna be outside, you can go in an underground bunker because there's an Arizona compound with an underground bunker that is listed for sale at $55. Might be the most expensive bunkie in the world. The Paradise Valley home is equipped with an AI surveillance system. But they're
--:-- Speaker 3: the flock balance here.
--:-- Speaker 2: Flock your house. Yeah. This would be the most expensive house ever sold in the state of Arizona. It's being sold by an investment group who purchased the property for 33,000,000 last year and they built it in 2024. It spans two and a half acres. The estate includes a four bedroom main home, two bedroom guest house, recreational shed that has a sports court, golf simulator, and underground bunker with
--:-- Speaker 6: a shooting range.
--:-- Speaker 3: Slide going into the pool. This thing is insane. Okay. This is going to someone This on the shooting is certainly going to someone on the Sun's basketball team.
--:-- Speaker 2: Oh, you think so?
--:-- Speaker 3: I would assume so.
--:-- Speaker 2: I was... AI researcher for sure. Bunker.
--:-- Speaker 3: All the AI researchers in Arizona. SpaceX does have a new data center
--:-- Speaker 3: Being built out in Arizona.
--:-- Speaker 2: Paradise Valley is home to the most expensive zip code in Arizona according to listing agent Katrina Barrett. And the last one was, you know, 40,000,000.
--:-- Speaker 3: Yeah. A friend... This is a... Friend's dad had a place in Paradise Valley, bought it, instantly got offered two x by an NBA player
--:-- Speaker 2: No paid.
--:-- Speaker 3: And it was already like one of the Wow. Nicer humps. Well,
--:-- Speaker 2: it seems like a lot of fun. A lot of fun underground bunker. A lot of cool things you can do. Well Let me tell you 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. And we are joined by famous CFO, Praveer, Melwani. Welcome to the show. How are you What's
--:-- Speaker 3: going on?
--:-- Speaker 2: Thank you so much for taking the time.
--:-- Speaker 5: Yeah. Thanks for having me guys. Excited to be here.
--:-- Speaker 3: Thanks. Coolest looking CFO in the business. I I expected nothing less.
--:-- Speaker 2: Yeah. Where's the suit? Aren't you a banker effectively?
--:-- Speaker 3: No. He's not like the other CFOs.
--:-- Speaker 2: That's true.
--:-- Speaker 3: That's true. He's he's got taste. It's a new moat. Yeah. Even for CFOs, you know. At least at Figma.
--:-- Speaker 2: That's good. That's good.
--:-- Speaker 5: I try. Okay.
--:-- Speaker 2: Enough with the glaciers. How'd the quarter go? Take us through the results. What stands out? How's Fig and Dec? Yeah.
--:-- Speaker 5: I mean, I... I'm really proud of how the team executed. We Yeah. You know, put up 391,000,000 in revenue. We grew the business 43% year over year. Amazing. Our net dollar retention rate's at, you know, a 131%, so above a 130% for some time now. Yeah. But what... What's been really fun to see is just the, you know, the rapid acceleration of movement of of a number of our different AI products and features. So we GA'd our our Figma agent product on October 6. We're seeing credit consumption, you know, through that through that GA through the end of October up, you know, two and a half x. Yeah. Folks are looking for ways to, you know, really go deep in Figma and really find ways where they can deepen their deepen their workflows. And maybe the last one I'd call out, you know, I'm really proud of how we've been executed on the MCP side. So, you know, our MCP server is up, you know, to about just over a million weekly active users at this point. Wow. We grew it overall usage three x and overall write back usage to the canvas, which is, you know, just shows you how valuable Figma is as a as a core medium there about four x. So lots of momentum on that part of the business.
--:-- Speaker 2: What... How is the overall market expansion working its way through Figma? Like, I can imagine that there's some people that are, you know, for their first time, they're getting into making digital products. And some of them might flow into Figma. Some of them might flow into an agentic workflow or an MCP interface, and they might not even know. Other people might be expanding their usage because they're they're creating new products. Like, what is the shape of the growth in demand?
--:-- Speaker 3: Yeah. Yeah. I think the
--:-- Speaker 5: way you're describing it, it's kinda how we feel it. We both have an opportunity to go broad. Yeah. A whole bunch of the new use cases are now enabled via the AI products that we shipped. So Yeah. You know, you historically maybe would have needed to lean on a designer or developer as your hand in order to communicate or build an idea. Now through prompting a natural language, you can, you know, you can sit in Figma make and, you know, have your ID... Have your idea then be rendered for you.
--:-- Speaker 5: So it's really empowering empowering to to PMs. PMs. It's It's really really empowering empowering to marketers, user researchers. It's giving more reasons for folks to hold a full seat, you know, where that where that would have been a little bit of a tougher sell, you know, even a couple years ago. Sure. And I... And then to your point on the MCP side, you know, I I do think that the ways in which the people are working are shifting very rapidly. I think it's, you know, it's been really interesting. We've added over 20 MCP partners over the course of the quarter, and, you know, we continue to we continue to open up how we can work with others there and kick off different workflows. And it's not just that, you know, we're bringing more context in. It's actually starting kick off first party agent workflows on the Canvas. Yeah. It's about 5% of all credit consumption in the quarter was actually orchestrated via an MCP. So it's actually people kicking off a first party workflow, which is pretty unique.
--:-- Speaker 2: How how mature is the the thinking around the billing relationship around MCP? Because I have been hungry for integrations that flow through to an agent of choice with that I already have a billing relationship with. Yep. And I mean, I guess the agent can just like shut set up my credit card over there. But it seems like there's an opportunity that could be good for everyone involved. It's a little dicey. It could be app store ish. It could be bad but... And frustrating. But I'm wondering how you're how you're dealing with the trade off of what happens if someone goes to ChatGPT and then says, I want to use Figma, go design it in Figma and then charge my OpenAI account versus take my credit card over to Figma and put it there? Like, how how are you dealing with the trade offs and opportunities and risks there?
--:-- Speaker 5: Yeah. Well, I mean, just just to start, I think what we're what we're seeing is that by virtue of how we've orchestrated our our MCP, we've actually given people more reason to hold a full full seat Sure. Than, you know, in prior cycles. So that has driven a benefit in the number of new new paid team conversions, the amount of, you know, folks that are holding a paid seat. Mhmm. We've we've also found though is that, you know, what folks are really trying to do is, you know, if they're gonna kick off a first party workflow in Figma, what we're doing with the first party agent in Figma has got to be has got to be of higher quality leveraging unique context that that we own. And in doing so, they're they're actually getting value from, you know, leveraging the the the AI features in Figma. You know, what what has... What the reality is today is that MCP usage as we've tracked it, you know, through the business is leading to higher retention. Mhmm.
--:-- Speaker 2: We'll have
--:-- Speaker 5: more expansion within accounts. And then as you start to put the math together on the credit consumption side, you know, I think that our ability then to farm to different sub agent workflows is gonna be increasingly more important.
--:-- Speaker 3: Yeah. Jordy? Yeah. There's this interesting dynamic right now where if, like, people are sending agents to your product
--:-- Speaker 3: It's... It can be an indicator that that there's functionality
--:-- Speaker 3: That that that you're not building. I was talking to some people at a at a like a financial institution this week and obviously every finance company in the world is dealing with people like sending their agents to like poke around and do things in their product and they're like scared about that for for a good reason. But to... I was telling them this is just a signal that like you need to do a lot more Mhmm. In your product to to have that same functionality and I think that's what you guys have been doing for like, you know, the last two years. It's like make sure that that the the same, like, sort of, like, intelligence is available wherever you're sort of, like, starting a project from.
--:-- Speaker 5: I also think you have to think about, you know, what are the things that you can do with lower latency, higher quality, and lower cost on your platform that makes it better for for a user to feel like they should be leveraging your first party first party, you know, AI use cases. So we've been developing a first party model now for for some time. You know, we doubled the amount of actions that are powered by that first party model over the course of the quarter. And we hold a whole bunch of unique context of our file system of, you know, the the Figma architecture so that we can actually build a smaller model that's lower latency can can work through those tasks much faster. So I think you have to think workflow when you think about, like, what are the things that you really want to own and where are there areas where it's it's helpful to, you know, almost use the MCP as an acquisition vehicle or rather part of part of the process versus feeling it like like it's combative in any way.
--:-- Speaker 2: What is it like doing an earnings call when there's all this chaos going on but it feels like you have a pretty clean story? Like there's like the semi trade is like going is getting nuked and then there's the midterms and it feels like you're just presenting like the business is still working, we're still growing, everything's moving along. Do you have to answer questions for... To investors about what's happening in the market broadly, or are you able to kind of just stay focused on the core metrics?
--:-- Speaker 5: I mean, I think you definitely take the context of where the world is because you recognize what are the things that people... That are on people's minds and how you can orient the story in a way that, you know, is is both appealing to the way that they're thinking, but then, you know, also is additive in the framework of how they how they view Figma. So, yeah, we go through a bunch of fun back and forth just to to brainstorm what are the things and themes out there.
--:-- Speaker 3: Oh, sure.
--:-- Speaker 5: But but I think outside of it, you're right in that, like, our story is clean. I think we've been really, really clear that we're focused on the long term here. Mhmm. And we'll make investments.
--:-- Speaker 5: know, one of the things we did over the course of the quarter was reprice our credits. Sure. We actually doubled the allotment that folks get on our pro plans and grew the allotments on our organized price plan 60% because we knew that in doing so, we experimented our way in there, it would drive credit consumption and, you know, Trevon's paradox was starting to play out for us. Yeah. Yeah. And so I think we need to be long term oriented. We need to kinda, like, stick to our guns there, and I think it's the consistency and the consistency of our our execution that'll, you know, that I I wanna be able to use as a track record to to to point back... To point investors back to, and we gotta keep blinders on it and keep going.
--:-- Speaker 3: it. How are you thinking about token budgeting? There was a headline this week that I guess Apple is sort of like doing reductions or or like adding a lot stricter limits on how much engineers specifically can spend Yeah. Via via API on a on a day to day basis. But what's what's been your philosophy and approach today? Like knowing Dylan, he doesn't seem like somebody who would wanna be like, you know, like he wouldn't wanna have blanket rules around some of this stuff. But I'm curious. It's it's a
--:-- Speaker 5: tough challenge. Yeah. I think that I think you you need to take a little bit of an an iterative approach there. So, you know, setting soft limits, giving yourself an ability to really understand what's going on with your... You know, across your... Across the entire company and using that to feedback into the overall strategy and implementation of what you're doing. I think one of the reasons why we, you know, we raised our op profit guide for the full year by 30,000,000 is because we found opportunities to be more efficient both in how we're serving our, you know, our our our AI products for our users while also then running our business more efficiently. You know, we found, you know, some of our engineers were previously spending, you know, tens of thousands of dollars be able to run, you know, run similar similar tasks that they had for for fractions of that as they start to, you know, come up with different... Leverage different model types. Sure. Level... Leverage different architectures, and then they start to share that information with others. We just hired a CIO who joined us from Coinbase, a guy named Casper Sorenson, who I'm really pumped to to be working with. And Awesome. Do a lot of that same thought they had there at Coinbase where, you know, we we also are of similar similar minds. Yeah, we'll we'll be able to to see what we get up to over the next little bit.
--:-- Speaker 2: Awesome. Fantastic.
--:-- Speaker 3: Well, great to meet you. Congratulations on the the fantastic supporter.
--:-- Speaker 2: We'll talk to soon.
--:-- Speaker 1: Yeah. Cheers.
--:-- Speaker 2: Have a good one. Goodbye. Let me tell you about the New York Stock Exchange. I wanna change the world, raise capital at the New York Stock Exchange. And our next guest might be there any day now because Keller Cliffton over at Zip Line's been on an absolute tear. Back on the show for the fourth, fifth, sixth time. I can't keep track, Keller. How you doing? Congratulations.
--:-- Speaker 3: You Thank guys landed. What's the latest? Good. Yeah.
--:-- Speaker 2: Give us the latest We've
--:-- Speaker 4: been busy. I'm I'm standing in our factory which we just quadrupled in size and we Again? Quadrupled the... Yes, again.
--:-- Speaker 3: Four heads. Heads. Four heads. We... I'll show you guys around.
--:-- Speaker 4: This is basically like end of line.
--:-- Speaker 4: can see aircraft that are waiting to go out into commercial operations here. Wow. You know, Zipline Zipline builds... And keep in mind... So in this space, we not only build the aircraft, but we build the droid, the small robot that we're using to deliver to people's homes. Yeah. We build all of the ground infrastructure, the docks, which is what charges the aircraft, and we build the drop boxes, which is sort of how we integrate with partners like Sure. Walmart or, you know, any of the other large buildings that we're integrating with. So all of these sub assembly stations are where we are...
--:-- Speaker 6: Let me try
--:-- Speaker 4: to turn the phone here. All of these sub assembly stations are where we're building. You you can see motors here, latch assemblies. These are all basically feeding the main line. Team's on lunch break right now. Yeah. But the vehicles are flowing down this line. You can see, you know, parallel tubes, ruddervaders. There are 43 major sub assemblies on the aircraft, 700 main components.
--:-- Speaker 3: Love how you could be just making up random words right now. Yeah.
--:-- Speaker 2: Show us the turbo incabulator. Where's the turbo incabulator?
--:-- Speaker 3: The discombobulator. The discombobulator.
--:-- Speaker 4: Yeah. Maybe I will maybe I will just troll you guys next time.
--:-- Speaker 2: Yeah. You something gotta in to let people know. For the real heads, they'll be like, wow, these two guys really...
--:-- Speaker 7: I knew they
--:-- Speaker 3: were non technical.
--:-- Speaker 2: This is my Gunning Kruger moment. Gelman and Reality. Exactly. Right. Yeah. So
--:-- Speaker 4: so this this used to be like the entire space and now this is a quarter of this space.
--:-- Speaker 4: yeah. This is the this is the what we're moving into. Yeah. And so this is Bay 2. It's Bay 12, and then Bay 3 And 4 are through there. I'll show you guys battery manufacturing, but it's gonna take me a minute to walk over there.
--:-- Speaker 2: Is this in Texas?
--:-- Speaker 4: No. This is all right next to SFO.
--:-- Speaker 2: Oh, it's next to SFO. Okay.
--:-- Speaker 3: That's right.
--:-- Speaker 2: But you are delivering Yeah. In
--:-- Speaker 4: Exactly. Most of our commercial operations today are in Texas.
--:-- Speaker 2: Yeah. Yeah.
--:-- Speaker 4: Cool. But we... Yeah. The factory is right here next to headquarters, and we have a thousand people across avionics, aerodynamics, mechanical engineering, firmware, software Wow. Autonomy, building all the different systems that are that are required to kind of operate these... The service at scale. We... Yesterday, we announced a $1,500,000,000 financing at a $21,500,000,000 valuation.
--:-- Speaker 2: Okay. Congratulations. Yeah. You're backing up the truck.
--:-- Speaker 4: Yeah. We we we also announced that we're expanding nationally with Walmart, starting with 300 supercenters in the largest autonomous vehicle contract in human history.
--:-- Speaker 4: So, you know, it's kinda cool. You know, I I I was posting on X yesterday.
--:-- Speaker 4: You know, for the first three or four years of Zip Line's history, people didn't even think we were like an economic venture, you know? Like, we were we were operating in Africa, delivering platelets and blood transfusions. And I think that, you know, in retrospect, it was helpful that we got all that experience spending a decade getting to operate outside The US, figuring out how to make these kinds of systems reliable, safe, unit economic. But, know, now that the system is scaling everywhere, it's just becoming obvious this is gonna be one of the biggest industries in the world. Automated logistics is gonna have a big impact on. This is the battery manufacturing. We used to do this with a supplier, but this is this is now... It's a little bit of bummer we're doing because it'd be cooler for you guys to see the teams here. But this is where we're building the batteries on the Zip as well as on the Droid. Those are Droid batteries there. We're doing all the battery welding back here. We bought these machines on eBay. We had a supplier who was doing this for us in San Jose, and they kinda shit the bed. And so, you know, we just very quickly decided, like, alright, like we'll buy some machines on eBay and do it here
--:-- Speaker 3: ourselves. Do it
--:-- Speaker 2: We'll do That's it great. What's the biggest driver of Walmart adoption? Is it is it like food or medicines or toilet paper? Like what what are people actually buying? Like what's the... What's the power loss skew?
--:-- Speaker 4: So the crazy thing is like we had no idea if this was going to work at all Yeah.
--:-- Speaker 4: were launching the service on January fifteenth of last year. Yeah. We deliver 90,000 of the a 100,000 SKUs in a super center.
--:-- Speaker 4: So we deliver two rotisserie chickens
--:-- Speaker 4: Birthday cakes, you know, 36 eggs.
--:-- Speaker 1: Birthday cakes.
--:-- Speaker 4: My my girls
--:-- Speaker 4: No. But keep in mind like we're we're delivering super gently like into your backyard. You know, customers order attachment pieces for garden hoses. We deliver prescriptions.
--:-- Speaker 4: can get almost everything delivered in this way.
--:-- Speaker 4: It's hugely popular with college students. Sure. You know, I posted a couple weeks ago a video of a bunch of college students having like a pool party on the 7th Floor of an apartment building You ain't doing and they just have zipline delivering directly next to the pool.
--:-- Speaker 3: Feel like I feel like it's very natural, you know, growing up playing Call of Duty, I'm very very, you know, used to just calling in...
--:-- Speaker 2: An air strike.
--:-- Speaker 3: Not air strike. But, you know,
--:-- Speaker 4: your drone your drone supply drop.
--:-- Speaker 2: Yeah. Yeah. Supply drop. Yeah.
--:-- Speaker 3: Yeah. Exactly.... Way that I bought things.
--:-- Speaker 2: Oh, yeah. In the virtual economy essentially. Yeah. You trained in simulation for years to prepare yourself for zip line. That makes sense.
--:-- Speaker 4: But by the but by the way, like hugely popular with college students who, know, a lot of times they may not, you know, they're living on the apps, may not even own a car. Yeah. Also hugely popular with nursing homes. Like, I would not have thought these would be, you know, early adopters, but all of these grandmas and grandpas are super comfortable with like Apple Pay and Face ID, and it's huge, man. Like, in these nursing homes, lot of these folks are not that mobile. It's a really big deal to get whatever you want delivered in five to ten minutes. It's also really popular with young parents who Yeah.
--:-- Speaker 4: got a sick kid at 2AM, and you need to order something, being able to, again, get something delivered in ten minutes is is a
--:-- Speaker 3: big deal. Yeah. This is saying tactical birthday cake deployed and tactical chipotle tactical Chipotle inbound. Inbound.
--:-- Speaker 4: Yeah. Exactly. Exactly. But I mean, you you guys should come visit in person sometime Yeah. But this is just giving you an example.
--:-- Speaker 3: Yeah. I didn't realize you're right at SFO. Were It's so easy. We had... We were there and back Yeah. And look, this
--:-- Speaker 4: is this is this is a livestream of a site. So this is Rowlett, Texas. You can see all the aircraft on the sky map. So there's one, two, three, four, five, six, or seven deliveries happening Wow. Simultaneously This delivery just came in. It was just routed. See an aircraft picking up from a business here, delivering down to this home. Oh, look you guys, can you see this? I'm gonna pull it still. Do you see the zip landing there in the back? Oh.
--:-- Speaker 3: That's all... Wow. That's crazy....
--:-- Speaker 4: Video. It also looks like this zip is pre flight... Oh, yep.
--:-- Speaker 2: That's really
--:-- Speaker 4: cool. Aircraft coming in to land. Can you
--:-- Speaker 4: Sure Sure. It's not great. But... Yeah. Exactly. So anyway, you know, this system operates from 6AM to 11PM, seven days a week, every single day of the year including Christmas and New Year's. Oh, look, you guys see a zip? Actually, looks like you guys are gonna see multiple zips taking off here to go make deliveries. You see the zip taking off Wow. Yeah. So this is just constantly... Oh, see the second zip taking off?
--:-- Speaker 2: Oh, yeah. This is
--:-- Speaker 4: not planned. This is not planned, you guys.
--:-- Speaker 2: That's Just,
--:-- Speaker 4: you know, giving you a sense for like how busy these sites are
--:-- Speaker 2: That's amazing. As they're
--:-- Speaker 3: delivering. So crazy. Yeah. Just because Yeah.
--:-- Speaker 4: Because Yeah. All real.
--:-- Speaker 6: way You would just imagine
--:-- Speaker 7: 30 this five
--:-- Speaker 4: sites. That's one of 35 sites in The US. Like that's just one site, know. We're building 20 sites per metro doing a million deliveries per metro per year right now.
--:-- Speaker 2: Yeah. Yeah.
--:-- Speaker 3: So insane that this is what... I mean, how many times has this been depicted in like science fiction? Yeah. And like your own mind and everyone like everyone has just had this idea that this is this sort of inevitable future and yet like I love how open you are with it because it doesn't seem like you're work... You're like, yeah, go... You can try to copy us or or do what we do. But it seems like it's so hard, you're just not really that worried about giving people a little inside look at at the business.
--:-- Speaker 4: Well, mean, you know, there were companies with like, you know, trillions of dollars of capital trying to build this for the last thirteen years and, you know, I do think that the technology wound up being harder than people were expecting. Mhmm. You know, any safety critical, highly regulated market that involves like hardware and weather and safety and, you know, all the necessary testing, it takes time. It takes a really dedicated focused team. And like autonomous cars, I think it wound up being harder than maybe investors were thinking. And, yeah. So I I think we... You know, we've always kind of thought that the competitive advantage of the company is that is the team focus, our ability to be practical and get into the real world quickly and learn by doing. So yeah. You know, we've we've tried to generally build in the open.
--:-- Speaker 3: Yeah. Amazing.
--:-- Speaker 2: I mean, the partnership with Uber makes a lot of sense. Walk me through the Salesforce partnership. Is this... Are we gonna be able to deploy champagne when deals close autonomously? Send send another business partner a steak dinner so we can do business together. How'd that come together?
--:-- Speaker 4: Well, with with Uber, you know, we announced a cool thing. So I was actually just giving this tour that I'm showing you guys around. I was giving this tour to to Dara a couple weeks ago. And agreeing to them, basically forming this vision to do a million deliveries a day together, that's a quarter of their deliveries in The US via Uber Eats. Yeah. It's, know, delivering in this way, you can be 10 times as fast, less expensive, zero pollution, less traffic for neighborhoods, quieter, safer
--:-- Speaker 4: Than car based delivery. You know, the advantages... The biggest advantage is that you're having an in restaurant experience at home. And and what we are seeing when you look at the demand just in Dallas, for example, is that if you were to extend that demand to the rest of The United States, you would 10x the size of the delivery market. Mhmm. So there's so much latent demand here that, you know, it's it's similar. If you remember when Uber was launching in the Bay Area and everybody was like, oh, even if Uber is 50% of the size of the taxi market, it'll only be a $20,000,000,000 company.
--:-- Speaker 2: Yeah. That was crazy.
--:-- Speaker 4: But, you know, it turns out that like it's now 10 times the size of the taxi market.
--:-- Speaker 2: Yeah. No. No. No. It may... It makes so much sense for delivery. Are you are you like just taking off the the zip like For
--:-- Speaker 3: me for me, like I'm just... I'm waiting for this to roll out broadly in California because I love pho. It's like one of my favorite foods. We don't have any Yeah. Pho restaurants in my town. Oh. And so it's like a thirty five minute drive to the closest place and it's not that... Live? Where do you live, Geordie?
--:-- Speaker 4: Can you just... Let's just dox you right now. Where exactly do It's you well known.
--:-- Speaker 2: I live in Malibu. So flying over
--:-- Speaker 3: those mountains. Well, we're launching
--:-- Speaker 4: LA LA LA is early next year.
--:-- Speaker 2: Well, we're... Well, our studio is in Hollywood, so I imagine we'll be in the delivery zone for that.
--:-- Speaker 3: I need pho airdrops starting Yeah. In November November through, you know, February. But
--:-- Speaker 2: make sure you prioritize Pasadena over Malibu because Malibu is kind of...
--:-- Speaker 4: Hit that button.
--:-- Speaker 3: This... You got it, John.
--:-- Speaker 1: Thank you.
--:-- Speaker 2: Alright. But, no. I mean,
--:-- Speaker 4: one one one one interesting point on this, think it's it's particularly relevant for LA is that, you know, zipline delivers out to way further than cars are typically willing to deliver out to, which means that you actually see like 10 x the selection in terms of restaurants. So for us, example, you know, my wife is like a huge fan of Din Tai Fung, and we Oh, yeah. Never eat there because it's far away. But one of the advantages of this is you can, you know, you can go 10 times faster, but you can also go a lot farther. Mhmm. Which means that you get access to a whole bunch of different like amazing options or brands that you wouldn't have access to with car based delivery.
--:-- Speaker 2: Wait wait. 10
--:-- Speaker 3: course meal in your home and it's just they're each being delivered.
--:-- Speaker 2: One at a time?
--:-- Speaker 3: Maybe. Yeah. We actually do that. Course
--:-- Speaker 2: it out for me. Yep. Assembling your best.
--:-- Speaker 4: Think about it. If you're having like a big dinner party for 10 people, you know, the idea that you have all the food delivered and it just sits there and gets gross and cold over the course of an hour is not not how the future's gonna work.
--:-- Speaker 2: I love it. I love it. So... Amazing. Yeah. We...
--:-- Speaker 3: It's been amazing. I've I've I've loved every like, it just... Getting getting all these snapshots.
--:-- Speaker 2: Yeah. It's been really fun....
--:-- Speaker 3: History has been has been awesome.
--:-- Speaker 4: Yeah. You guys are welcome to come. I mean, definitely come visit the factory next
--:-- Speaker 2: time you're in
--:-- Speaker 4: the Bay Area.
--:-- Speaker 4: Mean, we we have to build 50,000 aircraft a year here. That's nice.
--:-- Speaker 5: And, you
--:-- Speaker 4: know, so it's gonna be... And yeah, this... Think this scale of growth, like, there's so much that America can do in terms of Yeah. Aerospace over the coming years. And I think, you know, there are lot of people who had thought, oh, you know, The US is losing in terms of drones. Like, The US might be losing in terms of, you know, four pound quadcopters.
--:-- Speaker 2: Sure. Sure. Sure.
--:-- Speaker 4: But these are like totally different classes of vehicles, and, you know, it's all to play for. And this kind of infrastructure matters lot in The US. It also matters in all these other countries that
--:-- Speaker 3: are Cool.
--:-- Speaker 4: Decide whether they're gonna build on top of like, The US tech stack, or one of our adversaries' tech stacks.
--:-- Speaker 4: And it's really probably only two options. Yeah. And so, you know, it's really... I don't know. It it inspires me. Like, this is an area where America is winning, and and there's a lot of hard work to do, and to see the technology now scaling very quickly in cities across The US, and you know, benefiting families, letting families spend more time with their loved ones, less times having anxiety about errands. Totally. It's going have a big impact.
--:-- Speaker 2: I love it. Thank you for what you're declaring order inbound. Backing up the truck. Great talking to
--:-- Speaker 4: have speaker we have a speaker on the next gen droid. Should we like play the Call of Duty?
--:-- Speaker 3: Definitely need... Sound files... After you
--:-- Speaker 2: get your second delivery, it hits... Scrappy. Another one.
--:-- Speaker 3: And then I think you might... It might be a little too scary for the general population, but you can... We... If we can set that in our preferences.
--:-- Speaker 2: Successful delivery? Yeah.
--:-- Speaker 3: Okay. We got another. Keller, give our team the best. Incredible progress. Can't wait for the next update and we'll we'll see... We'll we'll stop by
--:-- Speaker 3: time Goodbye. We're in the
--:-- Speaker 4: Awesome you guys. Thanks.
--:-- Speaker 3: Good man.
--:-- Speaker 2: King in the castle. King in the castle. Let me tell you about public. Invest across all asset classes. Automate anything with AI agents, run trading strategies, risk management, money movements, and monitor markets with AI agents for investing on public. Speaking of finance. Speaking of finance. Hi, finance. We got Rahul Sonwalkar from Julius AI.
--:-- Speaker 3: There he is.
--:-- Speaker 2: Fucking absolutely diced and shredded as always. How are doing, Rahul?
--:-- Speaker 7: Doing fantastic. How are you guys?
--:-- Speaker 2: We're doing great.
--:-- Speaker 3: It's great to see you.
--:-- Speaker 2: Always good to have you on the show. Take us through the latest in your world, in Julius' world in San Francisco. Take us wherever you wanna go.
--:-- Speaker 7: Alright. So we just released Deep Finance. Mhmm. It's the first ever long horizon high finance benchmark.
--:-- Speaker 7: So the goal is to see how good models do on real world big deals that you would see in investment banking
--:-- Speaker 2: That's good. And
--:-- Speaker 7: private equity.
--:-- Speaker 2: We love this.
--:-- Speaker 7: It's giving... Money users. Exactly.
--:-- Speaker 7: So we add... We we work with experts who have experience from firms like Evercore Sure. JPMorgan UBS, and Harvard Business School
--:-- Speaker 7: To help build this benchmark so we can understand how good the frontier models are.
--:-- Speaker 7: On an actual real deal.
--:-- Speaker 3: Yeah. So... So how does it like like... It's very cool, but like I'm very curious how this... Like the the complexity in a deal ends up coming, you know, you... Let's say post term sheet, I don't know where you kind of try to start in in...
--:-- Speaker 2: Yeah. Where does this start? Where does it end?
--:-- Speaker 3: The complexity comes from like the, you know, emotional dynamics between all the different individuals involved and combining all these different preferences. And so how... Did you have to like simulate the interactions that come after you go from like a term sheet into the actual, you know, let's say like purchase agreement in the case of, you know, an m and a deal?
--:-- Speaker 7: Exactly. So what we start with is real bare bones data room with a lot of messy data. Mhmm. You know, what what does an actual deal look like? An actual deal looks like, hey. We are looking at this company. Here's a bunch of files and a bunch of data. Go figure out if it's worth pursuing this deal. Mhmm. What does that look like? Can we take this to the investment committee? Mhmm. It's a super high level open ended instruction. Mhmm. And we wanna evaluate these models on is, well, can they fully understand the business Mhmm. In a way that a private equity or investment banking professional would? Do they just look at revenue and just assume that, okay, that's the revenue? Or do they actually go trace the revenue down to the to the numbers, into the sources, and see if it all adds up? Mhmm. In real world, you see a lot of discrepancy.
--:-- Speaker 7: You see, like, the management report one number, and the audit report another number, and then we actually do your own math, you find out that it's something else.
--:-- Speaker 7: And the models deal with that complexity. Mhmm. So these workflows are actually designed to to reflect that robot complexity. So there's, you know, a lot of emails in the tasks. There's raw data. There's some financials. And then the models are tasked with coming up with a... You know, financial model, like a DCI, an LBO model Sure. And come up with a memo to go pursue a deal or not.
--:-- Speaker 2: How do you think about the the business impact for Julius on this? I mean, seems like you're getting close to maybe you already have built like an RL environment around this. You could sell that to a big lab. You can use it to partner with other model companies to fine tune things. You can integrate directly into your product, build a harness around it. Like, there's so much that you can do once you have the data, once you understand the problem. How are you planning to to actually deploy it for financial gain?
--:-- Speaker 7: Absolutely. To be honest with you, don't know. Okay. So we just launched Julius research. And the goal of Julius research is to go pursue interesting problems that are relevant to Julius and we think are gonna help impact the model progress on on on knowledge work.
--:-- Speaker 7: Right? And so one of the things we did with with this launch is we specifically did not measure the models on our own harness. We use the native CLI. So for open AI models, we use codex.
--:-- Speaker 7: For Clot models, we use ClotCode. Yep. And just to be independent and really understand where the models are. Mhmm. And so that's the first step, is push with the curiosity and see if we can build the first ultra long horizon benchmark for finance workflows, and we did. And now what we're doing is understanding where do those different models stack up, what are the different idiosyncrasies in how these models pursue these tasks. Yeah. So one of the things we noticed is models that are really good at coding, you know, they tend to search a code base. Right? They didn't search a code base to understand it. That doesn't always work in finance. Yeah. If you just search for revenue in the documents Yep. And you see a number, you can't just assume that's the revenue. You have to see if it all adds up.
--:-- Speaker 7: And so...
--:-- Speaker 2: Well, many many modern deal makers aren't even looking at the revenue. They just ask, like, who else is in over a text message, and then that's their criteria. So you you should fine tune a model on that. They just ask ask ask who's who's leading and then and that's the entire that's the entire criteria.
--:-- Speaker 3: Oh, you want me in the round? Which round?
--:-- Speaker 2: Which one? Am I in the trunch? We'll figure it out. Yes. Can you get me up to speed on the latest and greatest in Thinking Machines world? Sort of a quiet company. There's a leak that it sounds like they're they're closing around 5,000,000,000 at 40, incredibly impressive. Some of the open source models have been really good. I heard that they're the biggest partner to to Reality's fund, believe. Is that right? But it seems like there's some traction there. You have some data. What's the latest in TML world?
--:-- Speaker 7: Yeah. So we actually... What's interesting is that they released InkLink too small yesterday
--:-- Speaker 7: Which is the same day we released our evals. Yep. And so our evals weren't public when they trained this model.
--:-- Speaker 2: Interesting.
--:-- Speaker 7: And when we ran their model on our eval, we found that it's actually the best American open source model Yeah. And second best open source model overall
--:-- Speaker 7: After Kimi. And so that's really, really impressive. Yeah. Especially if you see the leap from Inclink one to Inclink two Yeah. In a matter of months, that's really impressive. I think things are really really starting to work there. And especially if they're working with Reality's fund
--:-- Speaker 7: I can see why understanding how good their models are at finance Sure. Is important. And also, it's open source. So that doesn't mean that this is just how good Eagling Too Small is gonna be. You can actually both train it to be even better.
--:-- Speaker 2: Yeah. And a lot of financial institutions might want to have data sovereignty. They might already already... They might already have their own infrastructure in many cases. And so it's interesting that you're seeing like the bleed over of whatever they're doing with their very secretive financial partners that they don't talk about. It's sort of leaking in their open source models which is great because then that's something that everyone can benefit from and it also serves as top of funnel. Exactly. To It's see. Well Exactly. I mean Yeah. Please. No. No.
--:-- Speaker 7: I was gonna say, you know, especially with American open source models, I think that ecosystem really needs to catch up. Yeah. And it's so impressive to see that it's even better than Nemotron from NVIDIA. Yeah. Because that gives institutions, even government agencies, and private companies more conviction that they can actually both train these models and and not... Yeah.
--:-- Speaker 3: Since it's impressive because you assume that that, like distillation isn't like the the the main sort of like advantage Yeah. Of of of a team. Right? Just because obviously NVIDIA and Thinking Machines are going have way more scrutiny around how they're actually creating these models. Impressive. Major white bill. Major white I like it. Well, thank you so much for calling.... These days.
--:-- Speaker 2: We need it
--:-- Speaker 3: When you see one, grab a glass of water Yeah. Take the white Yeah. Hey.
--:-- Speaker 2: Have a great rest Good your
--:-- Speaker 3: to see dude.
--:-- Speaker 2: Have a great weekend. Talk to you soon, Rahul. Goodbye. Cheers. Let me tell you about CrowdStrike. Crowd... Your business is AI, their business is securing it. CrowdStrike secures AI and stops breaches. Here he is. We have our first in person guest. What's up? How you doing? Welcome to the show.
--:-- Speaker 3: Look at us. We're we're kind of twins right
--:-- Speaker 2: now. You guys are Stable. Okay. Introduce yourself for everyone.
--:-- Speaker 6: How's it going, Gus? I'm Max Siegelman, founder of Siegelman Stable.
--:-- Speaker 6: Thank you for having me.
--:-- Speaker 4: It's great
--:-- Speaker 2: business for us.
--:-- Speaker 6: Look at you. These hats, you look good. I like...
--:-- Speaker 3: There we go.
--:-- Speaker 5: Yeah. There we go.
--:-- Speaker 2: Actually, this is fantastic.
--:-- Speaker 6: The business. Yeah. We're a contemporary luxury fashion brand Mhmm. Based in New York. Yeah. Started in 2020 by accident. Okay. I was doing creative consulting and marketing for some athletes and music artists. Yeah. I was also head of social media and cultural relevance for Out Front Media.
--:-- Speaker 2: Oh, yeah.
--:-- Speaker 6: Billboard on the desk. Love to see it.
--:-- Speaker 2: Yeah. Yeah. Yeah. Yeah.
--:-- Speaker 6: That's not a home. Yeah. And then in the pandemic, started making hats and sweatshirts with my dad's racing stable logo. He trained racehorses Yep. His entire life. He also used his racehorses for equine therapy programs for
--:-- Speaker 3: Amazing.
--:-- Speaker 6: Special needs kids, veterans with PTSD, interested youth programs, invested $300, made some hats and sweatshirts Mhmm. Gave it to family and friends.
--:-- Speaker 3: Yeah. Like the the the some of the friends... Well, that was the part. Yeah.
--:-- Speaker 6: Some of those well, the the first run was like real family and friends. Yeah.
--:-- Speaker 2: And then
--:-- Speaker 6: I started posting them and some of the friends you're alluding to
--:-- Speaker 6: Were hip hop artists
--:-- Speaker 6: NBA guys and all of that.
--:-- Speaker 6: And so I did another 300 run and that's when it started to get interesting.
--:-- Speaker 3: Yeah. You're on the show you're on the show obviously because in in part because we've had horses have been a big part of our show.
--:-- Speaker 6: Almost took their... The first thing I saw when I walked in was a harness racing picture in in the room.
--:-- Speaker 2: Yeah. And then
--:-- Speaker 6: in the bathroom, there's another one. Yeah. I've never have I ever seen this anywhere I walk in
--:-- Speaker 4: that's in my house. We love
--:-- Speaker 3: horses. Yeah. We... You know, I... John doesn't have any daughters, but I but I say, you know, if your daughter's not a horse girl by five, you failed Yeah. As a father.
--:-- Speaker 6: Or or you're lucky.
--:-- Speaker 2: Yeah. Or or you're lucky. Also my sons are way too big to be jockeys even. So I think they'll...
--:-- Speaker 6: So drivers in harness racing?
--:-- Speaker 2: They can...
--:-- Speaker 6: Like my dad's my size.
--:-- Speaker 6: So you can be bigger. I think jockey and like thoroughbreds got to be Yeah. Yeah. Yeah. A little bit smaller. Yeah. Very
--:-- Speaker 3: cool. What... So you grew up going to a bunch of races and stuff?
--:-- Speaker 6: You think I did a lot of that. I like... Yeah. I think people think I ride a horse every day. Like I grew up forty minutes outside Manhattan. Yeah. Yeah. Most of my friend's parents like were lawyers or doctors or worked in the city. My dad trained race horses, so like a little So bit I had more access to it, but probably didn't take advantage of it much as I could have. Yeah. And then I think once this started, I started to like realize it and appreciate it a bit more. And so Yeah. I probably spent more time with horses in the last five years than I did in my previous...
--:-- Speaker 3: Totally. That's how it works sometimes. When when did you actually go full time on the business? Three
--:-- Speaker 6: years ago.
--:-- Speaker 3: Three years ago?
--:-- Speaker 3: And what was there like a certain like dollar amount that
--:-- Speaker 6: you... It's a good question.
--:-- Speaker 3: I was like... Because it if you have other income and you're trying to build a brand, there's some incentive to just keep doing the other things so you can buy more and more inventory.
--:-- Speaker 6: Yeah. I had I had it pretty good because I reported directly to the CMO of Out Front Media. Was amazing and let... And like knew what I was doing. Yeah. And it was like for fun on the side, but like we were doing drops on like a Friday like by myself and then my my wife now is creative director. So we had first started dating and we were doing good money on a Friday.
--:-- Speaker 4: And I was like,
--:-- Speaker 6: two Fridays, I'm making but I kept I kept reinvesting it for like three weeks.
--:-- Speaker 3: He's like, hey, can you help me out with this thing? And you're like, watch your watch your town.
--:-- Speaker 6: I mean, yeah. So now she runs the show. She's the boss and so... And she's the the real creative talent behind it.
--:-- Speaker 5: Like... Boss ever. Oh,
--:-- Speaker 2: no. Yeah.
--:-- Speaker 5: Got it. Got it. Yeah.
--:-- Speaker 2: Yeah. She
--:-- Speaker 6: was like a second mom to me. She was great. But yeah, I think we got to a point. Honestly, the biggest... Everyone was like, you gotta go full time. You gotta go full time. Honestly, Gary Vaynerchuk was the one who pushed me
--:-- Speaker 2: to be like
--:-- Speaker 3: Let's go.
--:-- Speaker 6: Dude, now's the time. Wow. And I know he was on recently. Yeah. So... But but yeah, I think there was a lot of moments. I was like, alright, let's do it. And then I think it took it to a whole another level when we started doing this full time.
--:-- Speaker 3: Totally.
--:-- Speaker 6: But we were a team of three when we started this year. We're a team of six now.
--:-- Speaker 6: So it feels like I already need it and so already not enough people. Yeah. Yeah. Totally. But it's been like a whirlwind of something that was never expected and a quick fashion education and business education.
--:-- Speaker 2: I I just wanna know about the, like, the distribution mix over time.
--:-- Speaker 2: Just building the brand. What what what you stayed away from? What you leaned into in terms of...
--:-- Speaker 6: Yeah. I think now, like, was a 100% DTC through our own website when we first started. Yeah. We were given opportunities to be in some bigger retailers and I wanted to protect the brand Yeah. And wanted to be really in control of everything and anything.
--:-- Speaker 6: I still am probably in too much control and maybe hold us back from a bit of growth. But like with understanding, you go through phases of business and some things make sense at certain points.
--:-- Speaker 6: So I think like at first, a 100% DTC. Yeah. We did a pop up probably too soon in 2022. My wife and I built the whole thing out in Williamsburg.
--:-- Speaker 2: Okay. So did you... You did a short term rental on a physical
--:-- Speaker 2: like couple 100
--:-- Speaker 6: pandemic. Gimme empty space. Wasn't being used. We outfitted out with literally things I was finding in my parents' garage in the trash.
--:-- Speaker 2: The furniture and stuff.
--:-- Speaker 6: It was the best fucking thing of all time. Can I curse on that show? Yeah.
--:-- Speaker 6: the best thing of all time. And then like fast forward to where we are now, the pop up model is unbelievable for us. Okay. And so we open next week for five weeks in Soho in New York. Yes. A pop up in... That will be amazing for us. We use the space as an event space outside of retail hours for dinners and other stuff. What
--:-- Speaker 2: is your opinion on line culture in New York? Lines outside this... Waiting for? Is that... Yeah. Yeah. But but is that a sign of success? Is it a requirement for or is it something actually you want to avoid and it's a sign that, okay, you didn't quite match demand with supply? What's thinking?
--:-- Speaker 6: It's a it's a mix of both. Okay. I think one is like does the size of the store fit? Yeah. The other thought on that same thought is like what's the experience for the customer? Like if the experience for the customer is I'm a packed store and it's miserable
--:-- Speaker 6: Get me out.
--:-- Speaker 6: You don't want that. Yeah. And so there's a there's a balance. Yeah. Like is a line amazing? Yes. Yeah. If we have a line, like, I will bring out coffee. I will bring out stuff to like people waiting because I them I'm not a line person.
--:-- Speaker 6: But like, there is a bit of like, let's keep a line. It looks good. Sure. But it's also the balance of you don't know on the business side is like, I wish I could have more sales people in here helping you guys out and I want this experience to be just as good for you as it is for you and the next person.
--:-- Speaker 6: And so it's it's a balance but line culture is...
--:-- Speaker 2: What's the coolest thing that you're putting into the decoration to the design of the...
--:-- Speaker 3: You got a truck in there?
--:-- Speaker 6: Through a truck?
--:-- Speaker 3: Yeah....
--:-- Speaker 6: We're putting a sulky in this one which will be our first time putting a sulky in the back in in a store.
--:-- Speaker 2: Will it be for sale if someone comes in and they demand to buy?
--:-- Speaker 6: I always say there's a price for everything.
--:-- Speaker 2: Thank you. So I am 100% agree.
--:-- Speaker 6: We have this trophy Yeah. That we put in all of our pop ups. Yeah. And my mom we in Chicago was our first pop up this summer that we did for the first time. Was a trophy on the table. Yeah. And someone comes in they're like how much for the trophy? It's like, oh, I can't sell it like...
--:-- Speaker 3: Family area. Yeah.
--:-- Speaker 6: It's my... It's one of my dad's trophies. My mom like in the back is like, we got more. I'm like, I'm like, dude, let me at least get the price before we say it's over. Yeah. Yeah. There... I mean, there's there's things that I've sold in the store that aren't actual things that we make and sell. So like
--:-- Speaker 2: Yeah. Sure.
--:-- Speaker 6: Come on in and
--:-- Speaker 3: Yeah. Let's do it. Add new SKU.
--:-- Speaker 6: Excellent. Shop by Grapevine by the way.
--:-- Speaker 3: Yeah. Shoes. That's great. How... Like what is your... How do you think about timelines for building a business? Building a true luxury brand is possible. You just need thirty, forty years. It feels like. Right?
--:-- Speaker 6: Need time. I think like the biggest misconception is like how fast can we get to the biggest point and like for
--:-- Speaker 3: us Yeah.
--:-- Speaker 6: It's never been a sprint. It's always been a marathon. Yeah. We've never been in a rush to get to the next thing. Yeah. Though it feels like it on a daily basis like the amount of inbound...
--:-- Speaker 3: Yeah. You have to move quick but understand that like there's a million things you could do to juice your revenue this year that would ultimately...
--:-- Speaker 6: Yeah. It's it's it's the long play
--:-- Speaker 2: for us. Costco.
--:-- Speaker 6: And it's a business decision. Like there's there's brands that launch and it's like how much can we make in a year and can we sell it? Yeah. Like that's not the game we chose which is probably the harder long game.
--:-- Speaker 3: But Yeah.
--:-- Speaker 6: I think for where we want to sit as a business, as a luxury brand, it's thing to do.
--:-- Speaker 3: Yeah. How do you... Yeah. Where... What other... Like is 30% of your revenue coming from New York? Is it more?
--:-- Speaker 6: Is it is it... I mean, New York's definitely like our top our markets like New York, LA, Chicago, Dallas, and it's crazy we haven't done anything in person here yet.
--:-- Speaker 3: But Yeah.
--:-- Speaker 6: Hopefully announcing soon that early twenty seven we will. Maybe...
--:-- Speaker 3: All of the the the Idaho's, Montanas, the the Wyoming's? Yes.
--:-- Speaker 6: Listen, there's still good markets for us. I think like the appeal of just the look of a horse. And I also understand our price point is on the higher end. Like a dollar hat is not a cheap item Sure. And that's our lowest priced item, maybe not like a key chain or something like that. Mhmm. But when we first started and I was embroidering on blanks, it was $42. I was... We were in a factory in Downtown LA yesterday and I said the appreciation I have for an $8.99 t shirt in Target is completely different than you asked me about an $8.99 t shirt in 2010 before I was even part of the fashion industry. It's like all the investment that goes into that from the time of the person making the tech pack to the pattern cut to all that, that's money.
--:-- Speaker 3: Yeah. Yeah. Now we were doing our first ever merch release this coming Thursday.
--:-- Speaker 6: Awesome. That's
--:-- Speaker 3: up. And it's crazy looking at the numbers, like our cost for the items and like, again, the merch is for us is not a way to make money. We just want like... We enjoy making the products. But it's crazy looking at our cogs and thinking like if we were running a brand, the level to... Like, the amount we would have to mark this up to to be in business is just crazy. And obviously, we're not at scale. We're making like a couple 100 of this, couple 100 of that, but it's a...
--:-- Speaker 6: Goes back to like the distribution. It's like it's why a lot of brands fall into wholesale and why it makes sense. They're buying a big bulk that helps get your price down.
--:-- Speaker 6: And it's also marketing and awareness sales in general which helps you hit that Middle America that you're also talking about.
--:-- Speaker 3: Yeah. What about what about paid media? I... There's a big New York brand that's that's like trying to sell right now, like everyone listening would know it. And they... And I didn't really realize but they're effectively spending like not not actually zero but effectively zero on paid media. Like they don't spent like...
--:-- Speaker 6: What would you consider effectively zero?
--:-- Speaker 3: Like I just mean like maybe there's something you could classify as a paid media budget but they don't have like ads running at all.
--:-- Speaker 2: And be protected with Google keyword or something.
--:-- Speaker 3: Yeah. Some something like something like that to prevent like you know, scammers. But but they're not... It's not part of the strategy at all. It feels like it feels like the right approach is like some, you know, some middle ground where you're not.
--:-- Speaker 6: We we have been to date like a non spend on that. We have started recently like testing some stuff out on Google and on Meta. I think it's like an amazing brand awareness opportunity like you're kind of missing out if you don't. Yeah. It's like when we first started the whole the whole part was like scarcity is your marketing. You end up on secondary markets at a high value. Yeah. That's still a piece of our business when we do some like collaborations and special projects. Yeah. And then you phase into other parts. And so at some point, you're kind of missing out on your own business by not doing some of that. So we do it at a very very small scale, but a lot of it is awareness. So we'll we'll push that our pop ups opening in New York in a 50 mile radius of New York City in the next week.
--:-- Speaker 3: So Yeah.
--:-- Speaker 6: Yeah. Things like that.
--:-- Speaker 3: What about... What are you doing on the... Where where can... And do you spend dollars that's like maybe non traditional channels outside of retail? Like, you partnered with any, like, various groups or athletes on the on the, like, equestrian side? Or you...
--:-- Speaker 6: Yeah. We've never paid anyone to ever wear our stuff. We've had this, amazing organic adoption of athletes. Obviously, majority like New York, like the best quote of the NBA run was like we've become a additional logo of the New York Knicks.
--:-- Speaker 3: Yeah. Hey.
--:-- Speaker 2: How did that come together?
--:-- Speaker 6: We started doing a local license with the Knicks. Meaning like there's no like paper It's like they put in a wholesale buy. We sell in arena only. Can't sell through our channels or in person. Yeah. And we built up this relationship with them that was this in person release.
--:-- Speaker 3: And you knew they were gonna win the championship.
--:-- Speaker 6: Well, it's a risk take. Yeah. I mean, when Jalen first moved to New York, he became just like an organic fan of the brand, started wearing our stuff and like we became ride or dies before he was Jalen Brunson.
--:-- Speaker 6: so yeah, it's like a little bit of risk and luck and like relationship building. I think a lot of businesses are built on relationships before you start spending money. Yeah. And so so we've done that with the Knicks over the last couple of years which has been an amazing partnership. We just did a deal with Mitchell and Nest. We'll now allow and we haven't rolled anything out yet that allow us to kinda do any team, any league. So we'll start to do some more licensing opportunities, not just NBA and MLB which we've done before, but other ones which we're super excited about and they've been an amazing partner from the start.
--:-- Speaker 3: What about other other brands? Have you done any? I don't I I can't...
--:-- Speaker 6: Yeah. We've done collabs with other brands. We've we also like we've done Super Bowl last three years or four years with Don Julio forty '2. Oh, that's good. Talking to we're talking to an auto partner now about a long term deal. And so I think like there's a little bit of a shift that's like how many collabs can you do and we try and release two things every month, whether it's our own season plus a special project or a collab, it doesn't matter how big or small it is. And so we've done a lot of these smaller quick release collabs and I think where we're at now is maybe, let's say, phase four where it's these longer term partnerships where you can put out, more releases over time or include them within seasons. And so like verticals like auto and luxury travel goods and things like Yeah. That I think are the things you're gonna start to see come about over the next couple of years.
--:-- Speaker 3: What about with other fashion brands, luxury brands?
--:-- Speaker 6: We haven't with any other. We have been in conversations with some that are Yeah. Very exciting.
--:-- Speaker 3: Like I feel like you guys should hold out to work with, like you gotta go straight to the top.
--:-- Speaker 6: Name a brand.
--:-- Speaker 2: Tap out.
--:-- Speaker 3: No. I just think there's a lot of there's a lot of brands that like would would basically want to tap into this like overall interest in like country like aesthetics
--:-- Speaker 3: That are maybe like like you know, basically older school luxury brands that would wanna figure out an angle to do it in like Yeah. A more authentic way than just doing a show that's like kind of like equestrian theme.
--:-- Speaker 6: Yeah. I think like... But I
--:-- Speaker 3: can imagine like there's brands that would have like having horses actually walk in a runway show would be like insane. Yeah.
--:-- Speaker 6: Yeah. It's like you're in our office. I think like those brands that fall under LVMH, those brands that fall Yeah. Under Keating Group that you're kind of alluding to. I think like Yeah. We're one big project with one of those away from being recognized maybe more so in that bigger luxury space. But again, it's not a sprint, it's a marathon. And so I think like we've been in good conversations so that we've been noticed.
--:-- Speaker 3: Yeah. Yeah.
--:-- Speaker 6: And I think like we'll just continue to stay our path until it's the right time for it.
--:-- Speaker 2: It's cool.
--:-- Speaker 3: Love it.
--:-- Speaker 2: the AI companies need to do to beat Vinted in the App Store? Do you have any idea why Vintage is so dominant?
--:-- Speaker 6: I I don't. But honestly, the amount of AI that we use Yeah. In our office on a daily basis, especially our COO and lawyer who's definitely watching because he's a big fan Yeah.
--:-- Speaker 3: Does... Thank you.... For your service.
--:-- Speaker 6: But not even just him. Even my wife is creative director like Sure. Building these things in Claw that fills into Monday and like the amount of things that we do and optimize as a six person team but it kinda feels like we need...
--:-- Speaker 2: Focused on...
--:-- Speaker 6: Yeah. And so it's been a big help for us. On the design side, like we haven't much yet, but it's coming, I'm
--:-- Speaker 2: But on the operations side, it's huge.
--:-- Speaker 6: Yes. Very much so.
--:-- Speaker 3: Yeah. Anything that like can be hand drawn, like it feels like it will feel like it'll... It will just naturally feel more right. And then if you can hand draw something and then reproduce it across...
--:-- Speaker 6: Yeah. I mean, one of the the graphic designers we use is still all hand drawn. I think there's something really good and special about that. And like going back to this logo, like
--:-- Speaker 3: favorite designs ever to get back is like something that, as much as I love Figma, like when a designer actually like draws something out and then you can see like that just like organic like you can... That has like much more character.
--:-- Speaker 6: The human touch. Yeah. Yeah.
--:-- Speaker 3: sure. Other other SKUs? Like like like... Are you guys gonna do a bunch in like leather bags, leather goods?
--:-- Speaker 6: Yeah. We haven't played in the bag game a bunch. I think the only leather pieces we've done is like belts and maybe card holders, wallets, passport holders, like Yeah. The smaller accessories. I think like the focus for us... Like people know us mostly for headwear. The focus for us over the last couple of years is building into our like luxury ready to wear. Yeah. We've done suits in May. I made a tuxedo and a suit for my wedding. My wife made her dress so like maybe wedding wear is is on the horizon. Cool. Not yet.
--:-- Speaker 3: That's not
--:-- Speaker 6: like an announcement. It's not happening. But like Except for the beats. I would say the focus for us has been like the ready to wear, the outerwear, the luxury loungewear Sure. And like kind of like your everyday wear. And again, it's it's not yeah. It's part of our our fall winter coming out soon. We had Jadakiss in our fall winter release. It was great. He made us look good. But yeah. And that's been the focus and we'll continue to expand it and do some more probably female specific SKUs too. Like I think a lot of people see us as a very male dominant brand where we're, like, pretty close to fifty fifty, which is a good spot to be at. So... Very cool.
--:-- Speaker 2: Are hats somehow, like, building a brand on easy mode to some degree? Because the hat is one item where the logo is expected.
--:-- Speaker 6: It's the billboard of your head. The billboard of
--:-- Speaker 2: your head. But but I mean... Billboard... You can put a logo on it but there's plenty of jacket brands that don't have a logo.
--:-- Speaker 4: Yeah. Also, one...
--:-- Speaker 2: But you can wear a hat every day.
--:-- Speaker 3: One size is a massive difference.
--:-- Speaker 2: So was that was that was that thought through? Was it happy chant, happy circumstance, luck?
--:-- Speaker 6: Pretend I'm smart and say it was thought through. But think it was it was more like
--:-- Speaker 6: I've always been a hack guy my entire life even as a kid. Okay. So... It it was a hat and a sweatshirt. Yeah. I didn't know anything about fashion anything about clothing. I was like, oh, I like this blank. Yeah. I can remember auto o 69. That's the blank I bought. That's what I embroidered
--:-- Speaker 3: It's o t t o?
--:-- Speaker 6: Yeah. Yeah. Yeah. A ton of brands Yeah. For merch for a restaurant or whoever. And then, I think at first we were using like Gildan crew necks that we were printing on. Yeah. Like, literally the first person to wear something of ours was gonna post it on Instagram and
--:-- Speaker 4: music... Way.
--:-- Speaker 6: He was wearing like probably $5,000 pair of leather pants and like a $9.99 Gildan with our print on.
--:-- Speaker 3: The funny thing is like Gildan Gildan used to be like people would use that to drag brands Yeah. And then I discovered that like Gildan has some like amazing like silhouettes Wow. And fits. Yeah. Yeah. And I would just go by when I was 22, I'd go on Amazon, I'd be like, give me like Yeah. 30 gildan blanks. Yeah. I would just wear them, you know.
--:-- Speaker 6: Yeah. I mean, all I wear now is like our blank samples.
--:-- Speaker 3: Yeah. That's great.
--:-- Speaker 6: I only get the fucked up stuff and the blanks. That's all I get.
--:-- Speaker 3: That's awesome. Organic. Awesome. Well, dude, thank you for...
--:-- Speaker 6: Appreciate you have me.
--:-- Speaker 5: Yeah. Enjoy the hats.... For coming on. Yeah....
--:-- Speaker 2: Hat? Look at... Take a tour of that hat.
--:-- Speaker 3: Woah. Time is money. Save both. The...
--:-- Speaker 5: Good. Appreciate that. Great.
--:-- Speaker 2: Thank you so much. Me tell you about Codex. Codex is a powerful workspace for getting work done with AI agents, whether you're writing code, analyzing data, creating content, or automating business workflows. Codex helps you move projects forward from start to finish. Yeah. Yeah. Great to see you. How you doing, man?
--:-- Speaker 3: The man.
--:-- Speaker 2: Welcome. Welcome.
--:-- Speaker 1: Guys, this feels so good.
--:-- Speaker 3: Yeah. I mean, Over here. Ultradome.
--:-- Speaker 2: Yeah. Ultradome.
--:-- Speaker 1: And we've got a socialist mayor in LA.
--:-- Speaker 1: But you guys are waging a capitalist revolution here in Hollywood. I just feel very
--:-- Speaker 2: lucky to be here in
--:-- Speaker 3: the midst. A capitalist revolution. Yes. No one talks about capitalist... Underdog now.
--:-- Speaker 2: So... Are.
--:-- Speaker 3: You guys are crushed. You gotta rise up. Rise up. Congratulations on it.
--:-- Speaker 2: We're stronghold.
--:-- Speaker 7: I'm gonna I'm gonna fight
--:-- Speaker 3: back by setting up a street food stand with just steaks. Caviar.
--:-- Speaker 2: Or or a private credit stand that's unpermitted and and outside of Dodger Stadium. Yeah. And when someone stumbles out, they can get a hard money loan against their property or something like that.
--:-- Speaker 3: Or there's... Finance data center.... Revenue.
--:-- Speaker 2: Yeah. Whatever they need to do. Whatever they need to do. Loans. Loans. Loans. Yeah. Finance. Yeah.
--:-- Speaker 3: Love it. Love it.
--:-- Speaker 1: It's actually finance.
--:-- Speaker 2: Finance. I think you guys
--:-- Speaker 3: know that. Heard you guys earlier. We try to say it Yeah. Properly.
--:-- Speaker 2: The fortress of finance. Yes. Yeah. Introduce yourself for the viewers.
--:-- Speaker 1: Well, I'm D. A. Wallach. I'm a big fan of TBPN. Okay. And that's my primary identity. Sure. Sure. But in terms of my First and foremost
--:-- Speaker 1: I've had two careers. Yeah. I was a I was a rock musician.
--:-- Speaker 1: That's what brought me to LA. Yeah. And then over the past fifteen years, I've become a professional investor.
--:-- Speaker 1: I run a biotech and healthcare focused firm.
--:-- Speaker 1: And then I I love finance.
--:-- Speaker 1: So we can we can talk
--:-- Speaker 2: Do everything.
--:-- Speaker 1: Anything. Whatever you guys wanna take...
--:-- Speaker 2: Maybe give a little brief overview of the investing milestones, the career. Like, at what point did you know, okay, it's working.
--:-- Speaker 3: Also, yeah. How did you how did how did how did you just stumble into... Like, what... At what point did you decide, you know, I'm I'm ready to become an allocator first...
--:-- Speaker 1: I'll you some deep history.
--:-- Speaker 1: So... And I'm gonna tie this into a recent guest here, Jimmy Iovine. Yeah? Yeah. So I was a college student.
--:-- Speaker 1: I got a call on my cell phone from Kanye West.
--:-- Speaker 1: And he said, come out to LA this weekend. Okay. And I landed here and we we were... We spent the weekend not far from this studio, the Ultra Dome at the record plant. I you guys work out near this. Yeah. That's right. Right across from the record plant, there was a glory hole facility called The Zone.
--:-- Speaker 3: Didn't go there. I didn't
--:-- Speaker 2: go there.
--:-- Speaker 4: record plant. Okay. Good good and
--:-- Speaker 1: then we ultimately got signed by Jimmy Mhmm. To Interscope Records...
--:-- Speaker 3: Was Kanye, like, just told...
--:-- Speaker 1: We we ended up in a bidding war. Mhmm. My first experience of real finance. Here we go. Yeah. A bidding war between Kanye and Pharrell. And Pharrell had a partnership with Jimmy Iovine...
--:-- Speaker 3: You were
--:-- Speaker 1: a college kid at
--:-- Speaker 6: this point? I was a
--:-- Speaker 1: college kid. Was I was senior.
--:-- Speaker 3: You hadn't technically dropped out yet?
--:-- Speaker 1: No. I never dropped out. Wow. And we got so lucky with the timing because...
--:-- Speaker 3: Scott's fired it.
--:-- Speaker 2: Were you studying music, bio, No.
--:-- Speaker 1: My my degrees are in African American studies. Okay. And I have a minor in Kikuyu Okay. Which is a language spoke in in Central Kenya.
--:-- Speaker 1: It's a Bantu language.
--:-- Speaker 1: It's not not too distant from Swahili.
--:-- Speaker 2: Got it. Okay.
--:-- Speaker 3: And... Do you still know how to say one beer, please?
--:-- Speaker 1: I don't know how to say that. Can say,
--:-- Speaker 2: you know, Okay. Okay.
--:-- Speaker 1: Okay. These are
--:-- Speaker 2: some Yeah.
--:-- Speaker 3: The things I These say
--:-- Speaker 1: if I met a woman in in a strange place.
--:-- Speaker 1: So I'm out here. Mhmm. We get this record deal.
--:-- Speaker 1: And as a as a young artist...
--:-- Speaker 3: What does the first record deal look like when you're a college kid and you're in a bidding war?
--:-- Speaker 1: Yeah. For Allah. First off, you got to lawyer up.
--:-- Speaker 1: Yeah. First rule of business. Right?
--:-- Speaker 2: Yeah. Course.
--:-- Speaker 1: So we lawyered up.
--:-- Speaker 2: Mhmm. We had a
--:-- Speaker 1: great lawyer called Owen Sloan, Frank Zappa's old lawyer. Oh. Elton John's old lawyer. Wow.
--:-- Speaker 3: There you go.
--:-- Speaker 1: And we said, Owen, we need you to talk to these guys. Need you to get...
--:-- Speaker 3: Kind of sound like an industry plan.
--:-- Speaker 2: Yeah. Just rolled
--:-- Speaker 3: it out. Got the top lawyer. I'm getting a car.
--:-- Speaker 1: It was a soft landing. And what does the deal look like? Well, the record industry was in a transitional moment at that time. What what people had realized was you were decreasingly making money off of the music itself. Mhmm. All the income was coming from touring, merchandise, endorsement deals, that kind of thing. Mhmm. And so what the record label started to do was so called three sixty
--:-- Speaker 2: Three sixty deals. I remember these.
--:-- Speaker 1: We got one of the last non the whole fight with the label was to sign a non three deal
--:-- Speaker 1: At the moment that they were trying to default everyone into that. Yep. So we signed this deal.
--:-- Speaker 3: And and Yeah. The the complaint around the $3.60 deal is that an artist effectively ends up as like an indentured servant.
--:-- Speaker 1: You're just giving the man more of what you make. Right?...
--:-- Speaker 2: The album but then you go and do a movie and they take a look at that or something.
--:-- Speaker 3: And like there's literally no way to make money without the big man getting...
--:-- Speaker 2: Getting his cut.
--:-- Speaker 1: At that point. Yeah. Yeah. Because it's $3.60.
--:-- Speaker 1: they slice get of everything.
--:-- Speaker 1: So anyways, it's not unlike being a little company with a big venture fund in you. As an artist, you get signed to one of these big conglomerate record labels, and now you're one of a 100 artists. Yep. And you're vying for their attention
--:-- Speaker 1: Their investment, their promotional muscle. And so one of the only sources of leverage I had with Jimmy was I said, I can introduce you to Zuckerberg. Mhmm. Because I had gone to school with him. So I was like user two thousand and five Woah. On Facebook. I mean, I was literally on Facebook the night it came out. Yeah. My first investment lesson was failing to invest in Facebook.
--:-- Speaker 1: you know, I mean, in retrospect, I was so stupid. I was going and having burritos with Mark
--:-- Speaker 1: And all I cared about was getting his permission to spam people to promote my band. You know,
--:-- Speaker 2: much... Instead of some Yeah. Yeah.
--:-- Speaker 1: So so anyways, I bring him up to Silicon Valley to meet with Zuckerberg. Mhmm. And in that meeting, I learn about Spotify. Wow. One of Mark's right hand guys at the time, Dave Morin
--:-- Speaker 1: Also a Silicon Valley...
--:-- Speaker 2: Been on the show.
--:-- Speaker 1: Dave Morin tells me about Spotify and he says, I can get you an account. And at the time, it was only available in Sweden because it hadn't been legalized in the other markets.
--:-- Speaker 1: And I started using this product and I was just like, this... I know enough about the music industry, this is gonna work.
--:-- Speaker 1: Yeah. And so that was my first investment. Mhmm. And then I became the artist in residence at Spotify. Wow.
--:-- Speaker 4: I very... Investment is crazy. You're like
--:-- Speaker 3: I should have invested in I should have invested in Facebook.
--:-- Speaker 2: Missed it.
--:-- Speaker 3: Said I was focused on spamming, but I got Spotify.
--:-- Speaker 5: It... It's
--:-- Speaker 1: really good. You know, Better Lucky than Smart.
--:-- Speaker 1: And and then I thought, wow, investing's really easy. Mhmm. Because it's just like, you know, I'd read a Peter Lynch book.
--:-- Speaker 2: Yeah. One Up on Wall Street or something. Yeah.
--:-- Speaker 1: Yeah. You know, it's just... He talks about it in that book. You just go into the grocery store and you see Legg's hosiery is sold out. You buy it. If the container's empty, this thing must be working.
--:-- Speaker 2: Yeah. Buy it
--:-- Speaker 1: stock up. Yeah. Know, I... It's probably pretty smart.
--:-- Speaker 2: Yeah. Still good.
--:-- Speaker 1: That was how I thought about it. Yeah. And then it was a it was sort of a golden era, as you guys know, of startup formation. So I met Elon really early, invested in SpaceX in 2013 or something like that. And I found Ripple really early. But I also missed some good ones.
--:-- Speaker 2: Sure. You know?
--:-- Speaker 1: Of course. If I knew which ones were gonna work,
--:-- Speaker 3: I only would've done those.
--:-- Speaker 1: We go. Nailed it. It's Skunk. Skunk was. Great success.
--:-- Speaker 3: So TBPN. Ultimate Skunk. Yeah. Now you've made it. Great. Now you've arrived. This is the moment. I
--:-- Speaker 2: was all in service
--:-- Speaker 3: I've of the story one on one, but you're you know showbiz so you really just perfect delivery. But then how how did you end up... You you you back all these incredible companies and then you're and then you're like I want to go into biotech. Was like... You got to be honest was like was biotech investing like the hottest thing? Was it like the web three or the AI of the time and you were like chasing the hot thing or did was there...
--:-- Speaker 1: No, I'd say it was decidedly not hot. Yeah. And and... No, but it's
--:-- Speaker 3: gone through periods where it it hasn't over the last twenty years, it's gotten...
--:-- Speaker 1: Oh, goes up and down.
--:-- Speaker 3: It's very
--:-- Speaker 1: cyclical industry, very rate sensitive industry.
--:-- Speaker 1: Yeah. And when I got into it, you know, I I was just kinda trying to get the big directional bet right. You know, I thought if you were starting an adventure in the seventies or the eighties, basically all you had to do right was call computers.
--:-- Speaker 1: If you just said computers and then Internet Yep. You probably do okay.
--:-- Speaker 1: so I thought, well, what's going to happen over the rest of my career? And it seemed like maybe life sciences would be the most dramatic area. Yeah.
--:-- Speaker 3: You were wrong.
--:-- Speaker 1: Few years into it, it's probably
--:-- Speaker 3: still computers.
--:-- Speaker 2: Yeah. Yeah. It's still computers.
--:-- Speaker 3: And then a few years later, software as a service. And then a few
--:-- Speaker 1: years later... This is... I mean, look, we...
--:-- Speaker 3: But now you look like a genius.
--:-- Speaker 1: It's... Well, don't know. It's it's it's happening, but it's happening slowly.
--:-- Speaker 2: Yeah. Yeah. What is actually happening?
--:-- Speaker 1: Well, what's happening is I think the fulfillment of a lot of promises that people saw fifteen, twenty years ago conceptually, which were like medicine's going to become preventive. Sure. Right? It's not just going to be an industry that's focused on people once they're sick.
--:-- Speaker 1: The addressable market is not just sick people, it's all people.
--:-- Speaker 2: And GLP-one is probably the best
--:-- Speaker 1: example GLP-one of is the first blockbuster
--:-- Speaker 2: Preventative.
--:-- Speaker 1: Preventive medicine. You could call this maybe the first longevity drug in some regard because it's going to reduce all the other risk factors for the other diseases that get us. And there's going be a lot more of that to come. So I think the industry is increasingly consumer focused. You see that in the strategies, say, of Eli Lilly, which is the leader in the GLPs. Their strategy is they want to have a whole pharmacy shelf of different profile products that fit the needs of different customers. Mhmm.
--:-- Speaker 3: Yeah. It's interesting like you can imagine a lot of people they go in, you know, they're in a medical setting and they're like, you currently taking any medications? And like if you're under 40, I think a lot of people are hoping, or 50, they're like, no. You know, hopefully the answer is no. Otherwise, you already have like...
--:-- Speaker 2: Because they're off cycle and they're
--:-- Speaker 3: not on deep ball... Yeah.
--:-- Speaker 4: John is... Now I'm I'm Wolverine stink.
--:-- Speaker 2: Wolverine stink.
--:-- Speaker 1: Wolverine stink. Stink. Wolverine stink and cigarettes.
--:-- Speaker 2: Yeah. We're good. Yeah. Get. And a doctor.
--:-- Speaker 1: It's changing. So basically the not sick are now part of the addressable market of pharma. So that's a big shift. And and then, you know, the the slower but really important work that never ends is trying to chip away at these horrible diseases that kill
--:-- Speaker 3: all of us.
--:-- Speaker 2: Of course.
--:-- Speaker 1: And in the past decade, a number of cancers are now curable diseases.
--:-- Speaker 1: you can see it around the margins, but slowly but surely the industry is making progress in solving these really big problems.
--:-- Speaker 3: Yeah. So let's let's... You know, we're all thinking about it. AI. Sort of the...
--:-- Speaker 4: What is that?
--:-- Speaker 3: This is sort of the elephant in the room. Yeah. I ask you about it. Yeah. No. But but I wanna get right into it which is like people are talking about where the next leg up comes in AI revenues. Simple answer is just like continued diffusion Mhmm. Through a bunch of different businesses and consumers, whatever. But obviously, people think life sciences and biology is gonna be pretty big. See that signaled from the labs, you see that signaled from, you know, Dennis and the work
--:-- Speaker 5: that he's
--:-- Speaker 3: doing. And now I saw for the first time this week somebody like say, global r and d spend is some number of trillions of dollars. Like AI can easily capture 2030% of that. And that was the same exact like logic of like looking at like white collar work which was like, oh
--:-- Speaker 3: This much spending. So of course AI... Because AI can do some percentage of that. Mhmm. And the question I I keep coming back to that I'm curious to get your thoughts on is, say I am a drug... You know, I'm in the drug discovery business or I'm a pharma company and I come up, like, I can use the models to come up with like a thousand new ideas. Mhmm. There... We are so far, it seems, from being able to simulate the human body perfectly enough that you can like close the loop where it's like, I have a thousand new ideas for drugs and now I'm gonna simulate the trials for them and tomorrow I'll know if we have a a hit drug. Right? I assume that eventually we would be able to like simulate human biology well enough that we don't need to run a five year human trial to figure out if our idea is valid. Right? But like the problem is right now, if if I'm Eli Lilly and I'm using, you know, the latest models, great. I came up with a thousand new ideas. That's like potentially, that's like many many billions of dollars of new money that I need to then go spend on figuring out if they're valid. And so you're back to this idea of like, well, we can only take so many shots, you know, we can only actually run with so many of our ideas. Mhmm.
--:-- Speaker 1: Oh, that's right. I mean, that's that's the bottleneck is Yeah. The only way
--:-- Speaker 3: to find out if things are safe active is in a human. But like, was the bottleneck ideas?
--:-- Speaker 1: No. The bottleneck is not ideas. Yeah. The bottleneck is translation.
--:-- Speaker 3: But but like the potentially exciting thing is that as you see like things like Navier Stokes fall, maybe there's just things that humans have been missing and like we'll get a bunch more new ideas. And again, we're not bottlenecked on ideas, but maybe we'll just get some like better ideas. Is that...
--:-- Speaker 1: Well, we almost certainly will get better ideas. And as with all the other AI opportunities, it's both going to come from the AI generating ideas and from the AI giving leverage to really smart scientists who were trying to come up with ideas before but now are going to be supercharged in their effort to do that. I think the sort of challenge right now, even before AI, was that we have a super abundance of good ideas for new drugs. And you can go look at any university in America or now in China and Europe. There's great science everywhere.
--:-- Speaker 2: It happens every time a new blockbuster drug comes out. I do the research on where it came from. It's like, well this guy invented it in the eighties and then it was used for some really small thing in the nineties and then they finally got it to scale in the twenty ten's.
--:-- Speaker 3: Or they were using it for this other thing. Realized it was actually
--:-- Speaker 1: Yeah. Another The GLPs are one of those stories. Yeah. And it's kind of an indictment of the startup ecosystem, the biotech world. That didn't come from a startup.
--:-- Speaker 1: yeah. Right? I mean, the story in big pharma has been all the new drugs come from M and A.
--:-- Speaker 2: Yep. Totally.
--:-- Speaker 1: But the GLPs are the biggest and They they were like a twenty year hard won project inside of big pharma.
--:-- Speaker 3: It came from the Gila monster. That's right. Exactly.
--:-- Speaker 1: I mean, look, there are a ton of good ideas out The challenge is how do you prove whether they're safe and effective in humans, which is, to your point, it's very time consuming, it's very costly. And AI, from the standpoint of a big pharma company, is going to chip away in incremental ways at a million different things
--:-- Speaker 2: Speed up data analysis, speed up capture of notes from the trial.
--:-- Speaker 1: It's everything. FDA filings, It's legal going to be incremental and you're going to add up a lot of tiny efficiencies to accumulate and it's going to look more like, oh, maybe a drug's development time goes from twelve years to eleven years and then maybe to ten years. Now, the average blockbuster drug is selling, I think, 3,000,000,000 a year. So more or less every day you can accelerate its time to market is worth millions of dollars Sure. For a sponsor.
--:-- Speaker 2: Yeah, it's
--:-- Speaker 1: valuable. So anything you can do with AI is going to be a great thing for the industry. But is it going to cure cancer overnight?
--:-- Speaker 1: Is it going to solve aging overnight? Yeah. Those are sales pitches.
--:-- Speaker 2: How are you set up to invest? Do you you trade in the public markets? Do you have a fund? Do you have restrictions? Like where where do you see opportunity because the GLP one trade again didn't really happen in the private markets. Of course, were a lot of private market beneficiaries. But how are you investing structurally?
--:-- Speaker 1: We do both. So we have a private fund and then we've got a hedge fund.
--:-- Speaker 1: And you know, the the... Where the risk return is more attractive Yeah. Changes over time.
--:-- Speaker 2: I can imagine.
--:-- Speaker 1: Again, this industry is very sensitive to rates.
--:-- Speaker 1: So when you've... You know, when you're in a secularly rising rate environment in Yep. General it's tough for biotech. Yep. You think about it...
--:-- Speaker 2: Because the earnings are falling So we
--:-- Speaker 3: need to go back to ZERP for humanity.
--:-- Speaker 1: We need to go back to ZERP. For humanity. The bottom line. And I'm buying all the long dated treasuries I can but it's not moving the...
--:-- Speaker 4: Yeah. I feel like
--:-- Speaker 2: a Fed chair who came out and was like, we need to lower rates to save lives because we're going to cure cancer if rates are low. That's a really effective message.
--:-- Speaker 1: It's a good pitch. I think it's better than like, oh, need AI to add 2% real GDP growth a year, which to me is tall order.
--:-- Speaker 2: Was I was... Tall order.
--:-- Speaker 3: What's going on in the like biology and pharma data markets? Like is there is there That's a good question. Is there old companies that were dead and long... Effectively long gone that are being like, you know, that are suddenly worth something because they they had a bunch of, you know, they did a bunch of trials on something and that data is valuable and then I have a follow-up question.
--:-- Speaker 1: Okay. So when DNA sequencing first kind of hit the scene several years ago, there was this first wave of data is valuable as a market story. And I would say...
--:-- Speaker 3: It's new oil.
--:-- Speaker 1: Yeah. It's like the new... If we do a start up and all we do is we generate a boatload of data, maybe some big pharma's going to come and buy us for that data because they're going to mine new drugs out of it. There's really, to my knowledge, only one or two instances of that working. Amgen bought something called Decode, which is really interesting. Decode was a sequencing project for basically everyone in Iceland. Oh,
--:-- Speaker 2: I've heard of this, yeah.
--:-- Speaker 1: Interesting, quite genetically homogeneous population. Sure. That was good in some ways in terms of what insights you could derive from
--:-- Speaker 2: it. Yep.
--:-- Speaker 1: I believe it was from the decode data set that they actually figured out the mechanism for one anti cholesterol drug that's been very Wow. That still has benefits that will be harvested for years to come. Yeah. Now, the new thing that's happening is the AI labs are prospective buyers of biological data sets. And there's varying levels of sophistication inside of those companies. So Anthropic, a couple weeks ago, announced a number of partnerships with biotech companies. They're all trying to sell to the big pharmas in various ways. And as with all these questions of data sovereignty and so forth, the pharmas are a little bit in a difficult place.
--:-- Speaker 3: Apprehensive.
--:-- Speaker 1: They want to be innovative, they want to tell the street, they're doing everything on AI, but then they are a little guarded about their data. Mhmm. So I think it's going to be very interesting to see both how the big players decide to treat their own proprietary information and also how much the labs are willing to spend. Because, right, they've exhausted the Internet, they're paying Merkor and whoever else to go and generate expert style But this biological data, which really is intrinsically big data, I mean, you know, one experiment might create petabytes worth of information. You know, it it they think is an interesting place for them
--:-- Speaker 3: to try and suck up... How how is... How how do pharma executives view... Well, like what is their general view on the rhetoric within the tech industry around, you know, I think like this year everyone in AI was like, we really should cure cancer to help our popularity.
--:-- Speaker 1: When they're smoking cigs now.
--:-- Speaker 3: Yeah. Yeah. No sunscreen, all this stuff. Like what is the sort of pharma view on the rhetoric within tech? Do they laugh at it? Because they're sitting there being like, we've been curing cancer and helping... We're hated. And we're just hated. Yeah.
--:-- Speaker 1: Look, I think there's a mix of naivete and sophistication among the AI folks. So when they hear AI people say smart things, they go, cool. Yeah, let's run at
--:-- Speaker 1: Sure. Everyone respects Demis.
--:-- Speaker 1: yeah. But when Demis says we're going cure all diseases in ten years, think people who have two PhDs and have been doing this for forty years ago, come on, man. One, you're giving a sort of false hope
--:-- Speaker 1: To a lot of people who are legitimately out there suffering or have a loved one who's on death's doorstep.
--:-- Speaker 1: Like, that's a little messed up. Yeah. But on the other hand, they they also just think like it's not...
--:-- Speaker 2: Well, might be long tobacco So maybe he's pushing...
--:-- Speaker 1: I mean, I think it's an open question whether
--:-- Speaker 2: it's okay to just sort of
--:-- Speaker 1: sheep's clothing hedge fund manager. Probably.
--:-- Speaker 2: This this is a very
--:-- Speaker 1: long game that he's been playing.
--:-- Speaker 2: Exactly. Occam's razor. Occam's four d razor.
--:-- Speaker 1: I think it's legitimacy.
--:-- Speaker 3: What about robotics in a in a lab setting in an era like Kevin like Kevin Wheel has his his new company trying to sort of reassure stuff on the the R and D side. But but like that's been happening. Like people have said like we should automate labs.
--:-- Speaker 2: Every time someone picks a bottleneck goes and builds a business around it, the biotech community is like that actually wasn't the bottleneck. Like...
--:-- Speaker 3: Well, no no. But Kevin's Kevin's like strategy I think is more... It's honestly like a like a national security Totally.
--:-- Speaker 2: Think it's super valid. I I just think the biotech community is fantastic at getting something from the tech community and be like, yes, that is what that was a bottleneck but we have actually Right. 12 more bottlenecks for you
--:-- Speaker 6: to work Okay.
--:-- Speaker 1: I mean, this gives us a chance to talk a little bit about China.
--:-- Speaker 2: Please. You guys love China. Huge fans. We have Gong over there for China.
--:-- Speaker 3: Thank you.
--:-- Speaker 1: So the the... In in a way, a bigger a bigger shift than AI for the biopharma industry is the rise of China.
--:-- Speaker 2: Oh, yeah.
--:-- Speaker 1: This is real. This is already material. This is already changing the whole industry. So what's happened is over the past, let's call it five to ten years, China has both invested tremendously in early stage development, like discovery work. So this is the idea generation part. And then preclinical biotech outsourced labor. So before you take a drug into a clinical trial, you've got to run it through this whole battery of tests. You're testing it in mice, maybe non human primates, you're doing a lot of laboratory work. You're trying to characterize this thing as well as you can to minimize the risk to people. And then in The US, you take it to the FDA and you ask for permission to go and put it in people. In China, what they have tried to do is all of that work at a quarter of the price. And because the big pharma companies are multinationals, increasingly they've been comfortable doing that work in China. And just like any outsourcing, if it's faster and cheaper, why not send it there? Now it also turns out the quality of the work is outstanding. Because guess who's doing it? Lot of Chinese scientists who got their PhDs in The United States and then we kicked out because we're idiots.
--:-- Speaker 2: Yeah. Sure.
--:-- Speaker 1: So we've got all these... That's what I'm talking about.
--:-- Speaker 2: It's crazy. Mean, that's
--:-- Speaker 1: what it sounded like, right? Yeah. That's what it sounded like. So Stephen Miller out here kicking ass Yeah. Sure. Our new our new chief of staff. Congratulations. By the way, hear Susie Wiles is gonna be joining TBPN as a nice week. That's huge
--:-- Speaker 3: for you guys. Don't even know what's
--:-- Speaker 1: going on. China is ascendant And now Yeah. The lifeblood of big pharma, which is buying new drugs from little biotech companies Yeah. Now they are buying double digit percentages of their new drugs from China. That's what that's what I said when I heard this.
--:-- Speaker 1: And it's it's a normal... Buy American. Yeah. Yeah. Course.
--:-- Speaker 4: The new balance.
--:-- Speaker 1: Of course. You know, buy American, make American, buy American.
--:-- Speaker 2: Yeah. So
--:-- Speaker 1: this is this is a big story and and like as with a lot of outsourcing, the potential to bring...
--:-- Speaker 3: Here's here's like Got all it. Where we we potentially... So automation is one thing. The other thing is like so much general excitement around AI Mhmm. Is gonna push it... Has already pushed a huge amount of capital Mhmm. Into bets that traditional biotech investors would be like, I've never... Right. I would never... I could never underwrite that.
--:-- Speaker 2: Right? Sure.
--:-- Speaker 3: Sure. Because all the... Because like we're dealing with like, you know, the singularity and super intelligence and curing all disease within ten years. When you just have sort of like big ideas about things and they're not like based around, you know, decades of investing in the category. And so I would say that that's like prop... Maybe the way that America saves itself by having a bunch of new investors that aren't like experts just flood the space with capital. Because even if we get if we get...
--:-- Speaker 2: It flows the right way.
--:-- Speaker 3: Yeah. We we overbuild or we get, you know, we we a bunch of a ton of zeros as always where we get four or five new companies that become like, you know, flagship, you know, public public companies that that solve some of these issues. Is that like...
--:-- Speaker 1: I think that'd be great. I will say the Chinese approach to AI generally and to biotech seems very different and I must admit I think it's more intelligent.
--:-- Speaker 1: Which is, you know, writ large, China's strategy is make AI free, cheap and good so that every business person in China can use it and out compete whoever else around the world wants to give a run at something. Interesting. Here Yeah. We're in a way, we're throwing crazy venture money at these like millennium problems.
--:-- Speaker 1: Yeah. Insane like, oh, this would change everything. Now, I agree. If any of them works, it's worth it.
--:-- Speaker 1: But it's kind of odd to me that we're not focusing AI on the low skilled labor first. Mhmm. I mean, call centers, everyone, that's the first example. Of course, it makes sense. Like, why wouldn't AI replace all the call centers? But part of the challenge with biotech is it's like, okay, this is supposed to replace white collar labor. So let's start with the most educated, most sophisticated form of human capital that exists. Yeah. Like big pharma, and I'll be the first to say, they're big companies. They're bloated, they're inefficient, they're bureaucratic, all of that.
--:-- Speaker 1: They employ more PhDs Yeah. Than any companies in the world.
--:-- Speaker 2: Yeah. Yeah.
--:-- Speaker 1: Yeah. Okay? And they're they're not idiots. Yeah. So it's like the Silicon Valley is going to come and show the gray beards how it's done.
--:-- Speaker 2: It's sort of silly.
--:-- Speaker 1: It's it's going to fall.
--:-- Speaker 2: Do you think of the the electronic lab notebook, notebook like the dev tools play in Benchling. Benchling. I I was... A lot of people were pitching like, there'll be like a cursor for bio. And I was a little skeptical in the short term of that because Versus Code is open source and so Cursor was able to fork it. That doesn't really exist in the... I don't know what you're doing. Was just...
--:-- Speaker 3: Added a little Christmas lighting.
--:-- Speaker 2: Yeah. Oh, perfect. Perfect.
--:-- Speaker 1: That's nice.
--:-- Speaker 2: But but but there there isn't like an open source software stack for bio that I'm aware of. But at the same time, software development is so cheap now. Maybe you could bootstrap that quickly. Like is there is there a play for software for bio that you're excited by? Or is it a sign of just like a sideshow? Because it feels like an answer to your question of like how can you make things more efficient without needing to go after the no... You're not trying to replace the Nobel Prize winning PhD, you're just trying to make the average lab technician more efficient.
--:-- Speaker 1: Right. Look, I think in principle it's the right kind of thing. It's like go after the prosaic stuff. Yeah. So for example, big pharma's already seen a lot of yield increase when it comes to manufacturing process. Put cameras over the whole manufacturing line, you can do quality assurance much faster, that
--:-- Speaker 5: of thing.
--:-- Speaker 1: What you're talking about is the very early stages. Academics or researchers working in the lab.
--:-- Speaker 2: Historically,
--:-- Speaker 1: I'd say the bounty has been quite small for software and biotech.
--:-- Speaker 2: Yeah, yeah, yeah. They're really... IT spend is low relative to...
--:-- Speaker 1: It's low and it's all open source, right? Because it's
--:-- Speaker 1: It's it's a pipeline to analyze genetic Yeah.
--:-- Speaker 2: It might just be like a iPython notebook.
--:-- Speaker 1: It's a lot of notebook. Jupyter notebooks and stuff. Jupyter notebooks. It all comes out of some lab at MIT, some guy needs to do an experiment, he writes the code for it.
--:-- Speaker 2: Yeah. A little library for this.
--:-- Speaker 1: And I think there's also that kind of ethos, which isn't unlike software development where people just, you know, they're trying to cure disease. Yeah. There's kind of a bias against being proprietary.
--:-- Speaker 2: SaaS guy.
--:-- Speaker 1: Yeah. Like being SaaS guy.
--:-- Speaker 2: You're saying the industry needs a Mark
--:-- Speaker 1: We... Every industry needs
--:-- Speaker 3: a Mark Benioff.
--:-- Speaker 1: We need a dream force of of biotech. We need Tony Robbins. Need Metallica.
--:-- Speaker 2: On stage.
--:-- Speaker 1: We need all of
--:-- Speaker 1: Love it. For Tony.
--:-- Speaker 3: Ice... On the regulation on the regulation side Yeah. If you were running the show, which I'm sure you could get a job an admin. Don't know how long you'd last.
--:-- Speaker 2: Any any admin.
--:-- Speaker 5: Yeah. I'd lucky to...
--:-- Speaker 3: But what would you do? What would you do?
--:-- Speaker 1: If I were the regular, it's a good question.
--:-- Speaker 3: Bailouts for my whole portfolio.
--:-- Speaker 1: Listen. I
--:-- Speaker 3: think... We need to bail out my early stage book from my 2015 vintage.
--:-- Speaker 1: The the the United States FDA plays a really important function globally Globally. Yeah. Because everyone trusts us to be hard asses about drug safety and...
--:-- Speaker 2: And you'll see they just draft off
--:-- Speaker 1: of us. You know, go to a pharmacy in India. And they've got great scientists in India, but go into a pharmacy in India and roll the dice on whether the thing you're buying is what you think it is, whether the postal... All that. So the FDA I think does a really nice job keeping patients safe, making sure we trust the medicines we're getting. It's not perfect. The debate from the sort of tech libertarian wing, this goes back to Milton Friedman. Milton Friedman's view was the FDA should only clear drugs on safety and let the consumer decide whether efficacy is there. Right now, for the FDA to approve a drug, they've got to believe that the company has proven it is both safe and effective. And more effective typically than placebo. And then for the government to pay for that drug, they often want to know it's more effective than the drug it's competing with or replacing. So why spend more on something that doesn't work as well? So you know, we're in a place right now where this is being challenged by consumer health, wellness, peptides, and there are a lot of people out there buying peptides from compounding pharmacies that may not be safe, that may not be effective, probably aren't. Yeah.
--:-- Speaker 4: You know
--:-- Speaker 3: that horrible batch of DBAL.
--:-- Speaker 1: Yeah. What's been going on with you? How's rash?
--:-- Speaker 3: That's the old... No, know, but it's the OG.... Kind of sketchy pharmacy.
--:-- Speaker 1: We were short before you started these peptides.
--:-- Speaker 2: Yeah. In the leg lengthening surgery. There's been a couple things that have stacked up.
--:-- Speaker 1: So I wouldn't go that far. I wouldn't just let it free because the bottom line is this stuff is really complicated. Not unlike finance. Yeah. In finance everyone's trying to
--:-- Speaker 3: save you're saying almost peptides are like the web three of biology.
--:-- Speaker 1: Peptides are the hyper liquid of biotech. Right? And and it's like, I like that maybe, you know, maybe it's a good thing Sure. That perps on cal sheet
--:-- Speaker 1: Can allow us to bet on whether you're going to uncross your legs in ten seconds.
--:-- Speaker 1: I know people watching at home would like to... Boom. There we go. I knew it.
--:-- Speaker 2: Just hit it big.
--:-- Speaker 1: So, you know, people can send me the cut Yeah. My PayPal. Yeah. We'll put... You'll put that up on the For screen. It's like, you know, I think it's I think it's kind of dangerous, right? And we have an FCC for a reason. Like we... Yeah. It is paternalistic.
--:-- Speaker 1: The FDA is paternalistic. The conceit of it is Yeah. This stuff is complicated Yeah. And we don't want people to get swindled by snake oil salesmen.
--:-- Speaker 1: And you know, peptides are, in many cases, snake oil.
--:-- Speaker 2: Yep. Interesting.
--:-- Speaker 3: So what's your stack?
--:-- Speaker 1: The Wolverines. We'll start with a couple Diet Cokes every morning,
--:-- Speaker 3: couple of fridge cigs and take it from there. Take it from there. Yeah.
--:-- Speaker 2: Thank you so
--:-- Speaker 3: much for coming on the
--:-- Speaker 3: This was amazing. I'm so glad we get to go to lunch right now to continue to continue.
--:-- Speaker 1: I'll be back next week and every week thereafter.
--:-- Speaker 3: You're you're always you're literally welcome any day.
--:-- Speaker 2: It was a real pleasure. Was fantastic.
--:-- Speaker 3: This was fantastic.
--:-- Speaker 2: Yeah. Let's close out the show. Leave us five stars on Apple Podcast and Spotify. Sign up for newsletter, tbpn.com and we will see you on Monday at the last...
--:-- Speaker 3: Have the best weekend of your life. Good job.
