--:-- John Coogan: Let's check it out on the road to Christmas. Perfect. How many days until Christmas? We need to count it down. That's what you come to TBPN for. We have you covered on the road to Christmas.
--:-- Jordi Hays: 41 days until Christmas.
--:-- John Coogan: Sam Altman, 41 years old. Not his birthday today. Not today. Just generally, he's 41. Random number association. Fun fact.
--:-- John Coogan: Anyway, we are through most of the NVIDIA news. It feels like the week is winding down. It really crescendoed in the middle of the week. Yesterday was crazy. The most fallout, I think, of everything. As Jensen resigned as CEO and doesn't even hold a board position anymore. So there are a few lingering stories that we should catch people up on. But we do want to move on from this story because there's so much else to talk about.
--:-- Jordi Hays: Is there?
--:-- John Coogan: Yes, there is. There is. The mansion section.
--:-- Jordi Hays: Yeah, no, it's funny. I saw a comment from somebody this morning saying, "Alright guys, you've been talking about the Jensen story for nine days. We get it." And I know you want to talk about other stuff, but I think it's ultimately the biggest story in technology in my lifetime.
--:-- John Coogan: Yeah, in many ways. It has the most potential downstream impacts on everything happening in the private markets, public markets. We're not done. We're going to keep talking about it. The other thing is that when one of these big, all-encompassing, timeline-takeover stories happens, people do pull back on creating more news. On Monday, we were sort of like, "Whoa, weird timing for Anthropic to drop Fable 5.2. It's going to be hard for them to break through with that model." Whereas if it's a really slow news week, a bunch of people are going to be sharing, "Here's what I built with it. Here are the benchmarks. Let's debate AGI timeline, safety, blah, blah, blah." It was kind of just like, "Here's the release card, go for it." And it didn't break through nearly as much. That's something they clearly had planned in preparation for the IPO next week. They weren't going to cancel that, but many other companies are pushing back releases right now because of the Jensen story. If you have a funding announcement or some product launch, you know it's going to be harder to break through, so that gives us a little bit less to talk about. Fortunately, the good folks at the Wall Street Journal are still publishing the Mansion Section, so we will have plenty to talk about. But first, we should do a little review of last night. Jordy, how did you enjoy GQ Man of the Year?
--:-- Jordi Hays: Really fun. Great party. Really fun. First red carpet ever.
--:-- John Coogan: Yes, yes. We should get a red carpet in here for the guests to enter. Don't you think that's underrated? We have a couple black carpets.
--:-- Jordi Hays: But it was really fun. Honestly, we spent the entire time going around hanging out with all the media people.
--:-- John Coogan: Yeah, the business and media people. It's not really our scene, but we had a really, really great time. Louis Vuitton was kind enough to dress us.
--:-- Jordi Hays: Yes, thank you to Louis Vuitton. Fantastic. We felt incredible out there.
--:-- John Coogan: Yeah, it was remarkable. It was a movie. Chad's saying we need a green carpet. Green carpet. Okay. Yeah, maybe we do a green carpet. Dylan was there with us. We had a lot of fun. Anyway, the one interesting takeaway was hearing from folks in Hollywood about their take on the Jensen story. The Jensen story has broken through. We've discussed it as breaking through in the sense that I will see Instagram creators and Reels creators who normally their domain is just impressions or day in the life or doing something non-tech related. They're all taking the Jensen story and doing their version of content around it. But it's also broken through to Hollywood media broadly. It's not a pure tech story by any means. We know this. What was interesting was that we were talking to one individual who was saying that this signaled the end of AI in some way. That it was this ironic, beautiful story that something so human, an affair, would bring down the techno machine, the relentless march of techno capitalism.
--:-- Jordi Hays: His takeaway was that it was completely over. Like AI is done for.
--:-- John Coogan: Yeah. Which was fascinating. We had to be like, "We got some bad news for you." This potentially concentrates power in just a smaller handful of companies and might actually create more acceleration in a weird twist. Certainly nothing is slowing down in terms of model progress or AI diffusion. It's not really showing up in the numbers that way. This is a very, very different story. I'm sure we ruined that guy's night.
--:-- Jordi Hays: He had a good time. Right at the start of the...
--:-- John Coogan: Yeah. I think he took it with a grain of salt. We were also asking for his opinion on different tech leaders. Loves them all.
--:-- Jordi Hays: Loves them all. Equally.
--:-- John Coogan: Equally. Which is negative 100% love.
--:-- John Coogan: But the other interesting discussion downstream of this is just lots of people are rallying around Jensen, not just in the venture capital and startup ecosystem, which was the first community to really rally behind Jensen. The employees are now rallying behind Jensen. Of course, there are 42,000 of them, so hard to say exactly what the approval rate is. But Zoe Schiffer over at Wired and Paresh Dave have reported that some NVIDIA employees are calling for Jensen Wong's return, even after his multiple reported extramarital affairs and abrupt resignation, according to internal correspondence reviewed by Wired. An internal suggestion box post submitted before Wong's resignation by a longtime engineer at NVIDIA urged the company's board to take employee sentiment into consideration prior to taking any action. The submission has attracted more than 1,600 comments since then, with several asking board members to find a way to bring him back. "If you believe in the mission, bring back THE BOSS," all caps, wrote one anonymous commenter. So 1,600 out of 42,000 employees. Interestingly, it's not just private comments. This was a public Instagram post from someone who works at NVIDIA, "bring him back," very clearly stating her opinion that he should be brought back. I thought this was interesting because this account is normally focused on engaging with the startup ecosystem. The person that runs this was using this opportunity to rally the troops. "NVIDIA is nothing without its people." A lot of OpenAI folks were saying, "Go read the original letter that Mira and Ilya and everyone signed during the blip, during the OpenAI blip." These things can kind of flip back and forth. There was some speculation that he might be back at some point. I was trying to get people to weigh in. Both seem unlikely, but Jensen at SpaceX running TerraFab versus Jensen back at NVIDIA — which is more likely between those? Most people would say the most likely scenario is sail off into the sunset, maybe do some investing, maybe start some philanthropy, maybe even start a new company, robotics space, something interesting where you can be surrounded by engineers, but you're sort of out of the limelight. If he were to go back to NVIDIA or go to SpaceX, he would be very much back in the limelight. Those both seem low probability events, but which one do you think is more likely?
--:-- Jordi Hays: I think going back to NVIDIA is probably more likely than being a founder for 30 years and then going and working as an employee effectively at SpaceX.
--:-- John Coogan: Yeah, I don't know. At the same time, Michael True such a wound up working at SpaceX, such a tough information environment. It's all speculation at this point. It's just people guessing. You can see why employees want it back. Look at why shareholders want it back. Look at the stock. The discount that the business is going to have without Jensen is undoubtedly going to be extreme. Not all the impacts will be felt immediately for obvious reasons. It's a unique culture and extreme talent density. It's an interesting thing where I feel like people are sort of normalized to extreme variance among individuals. Looking at Elon, you have some things that are just absolutely incredible about Elon and then some things that are maybe less ideal.
--:-- Jordi Hays: Demon mode, demon mode.
--:-- John Coogan: Right. As Walter Isaacson talks about. In the bad column, you put demon mode. In the good column, you put Diablo abilities.
--:-- John Coogan: But I think people are so used to understanding individuals as extremes. Mercurial and all about trade-offs. Jensen is on the cover of the Wall Street Journal again, taking shots at Collette Kress, the new interim NVIDIA CEO. The headline: "Before his ouster, Jensen belittled the executive replacing him. Interim CEO Collette Kress has questioned some dealmaking. He called her a 'deer in the headlights.' He said that she was more of a reporting CFO, not someone who could help him define a strategy or make decisions." There are two reads on this. One is she was wrong. She wasn't risk-on enough. She was holding him back during the greatest economic boom in this industry in history. The other is that leverage is risky and that for such a profitable company, it is more financially responsible. It is doing a duty to the shareholders to be a little more risk-off and not act as the central bank and not use as much leverage and not do so many circular deals. So there are two sides of this coin. We'll see what happens to NVIDIA if they continue to run the Jensen playbook with a new CEO who's just as risk-on in the deal-making world and just as much of a fast action mover and shaker. Or if they go to someone like a Tim Cook or a Collette Kress who would probably be a little more buttoned up, a little bit more restrained in the deal-making. Who fits that deal-making CEO archetype to come in?
--:-- Jordi Hays: No, no, no. I don't think there's anyone outside of Sam.
--:-- John Coogan: Sam, yeah. Who else is doing stuff? I don't know. It's hard.
--:-- Jordi Hays: Yeah, it's rare. It's very rare to be moving that quickly. I don't know who else would be coming in.
--:-- John Coogan: Satya did, to his credit, make that very weird deal with OpenAI early on. Everyone was like, "What is this?" And that panned out incredibly well.
--:-- Jordi Hays: Yeah, exactly.
--:-- John Coogan: So it's not only the domain of founder mode CEOs. I would put Satya in the founder mode CEO, even though he's not a founder. He's not the founder of that company. Whereas Tim Cook has been very restrained throughout his career at Apple, but the stock didn't suffer because of it. There's a world where NVIDIA switches into this manager mode, more committee-led, but they still manage to produce incredible growth, incredible cash flows, and the stock appreciates a ton. We're looking back at, "Oh, yeah, the actual succession era. Sure, it wasn't the Steve Jobs era anymore. It was more like the Tim Cook era." But NVIDIA has performed incredibly well because they were set up for success and the manager that was able to come in delivered. So that's another possibility. But we'll see. The other interesting thing is there's been some debate over Jensen's character or who he really is because he's doing a ton of press, a ton of events. He's always around, always traveling. He's also incredibly aggressive on dealmaking and doing all these deals. But then he's also a technical leader. He's also an engineer. How much time can he really be spending looking at architecture of new chip designs? We talked to Dylan Patel about that a little bit yesterday. I think I now understand it. There's this piece of lore about Jensen that he has like 60 direct reports and no one-on-one meetings. He's reading a thousand emails a day. It seems almost too much to believe based on the travel schedule, all the other things going on in his life, especially with the new revelations. But the interesting thing is that I do think that part of the founder mode purpose is to purely be there to break committees. That actually is not a very time intensive piece of the job. I think there's this world where an Elon or a Jensen can come in and see and read the room and understand that lieutenants have been battling it out and working really hard and bringing their best to bear.
--:-- Jordi Hays: Making their case and you understand the history.
--:-- John Coogan: Exactly. Individual and their track record and what their biases are and what their individual aims are. Even if you're sometimes not 100% on the technical architecture because you haven't done all the research yourself and you're making a gut call, you're going to be right because of the 30 years of experience. You're going to be right like 80% of the time. But basically 100% of the time, you're speeding up the organization because you're like, "Look, we're going to disagree and commit. We're going with Steve's plan or we're going with Collette's plan on this. I want to do it this way. Everyone fall in line. We're going full tilt on this thing." That's the benefit of this founder mode aggressive CEO. That doesn't mean 80 hours a week working on that one decision. It can be a 15-minute meeting or an hour-long meeting. But just having that authority in the room to say, "The buck stops with me. I'm going to be dragged over the coals if this doesn't go right. So you take the pressure off, but we're going with this plan. We're going to move forward accordingly." Finding someone to fill that role is very, very difficult. But yes, people are debating this left and right, both in the founder CEO community and the venture capital community, also with the employee base within NVIDIA, obviously. More important than ever, we have some more news on cybersecurity today. Toby Lutke chimed in. He said, "Generational blunder, at least based on the information that's available," and he's quoting the NVIDIA newsroom which was announcing the CEO transition. "Rinald Vice is 33 years as CEO and no permanent successor already." The blender started way earlier. This is just like an AI response. This is basically how AI bots respond on X. They just sort of add some fact, then a more relevant real fact, and then their take. But it's not really a take.
--:-- Jordi Hays: You think this account is AI?
--:-- John Coogan: Yes. It has a blue checkmark and 25 followers, Jordi. Come on. That stretches the imagination.
--:-- Jordi Hays: No, but Toby engages. He says, "There's no replacing. I don't care if you're AI." Ratios him out of the solar system. Wow! 13,000 likes.
--:-- John Coogan: Silence bot. "There's no replacing a founder like Jensen. There has never been and there can never be a true succession for a founder like him. NVIDIA ends today. What does that mean? It is replaced with a thing cosplaying NVIDIA. It will be run by custodians trying and failing to preserve the flame he ignited." People are going back and forth in the comments to this. The good news is the AI trade has a new potential bull case.
--:-- Jordi Hays: Which is?
--:-- John Coogan: Jensen coming back.
--:-- John Coogan: Right? It's like back to the war. The war started, but that means there's a bullish catalyst. There hopefully is a bullish catalyst.
--:-- Jordi Hays: Sure, sure, sure. Yeah, that makes sense. DHH says, "It takes 10 years for the culture of a great company to fall apart once the CEO seat is given to someone without an engineering or product background. That's been the story of Boeing, Intel, and now Apple. The degree to which it's over for NVIDIA cannot be stated. You cannot have bean counters in charge." Cannot be overstated. You cannot have bean counters in charge of a technical organization like that.
--:-- John Coogan: Okay. Yeah. So here's my view on this. It takes 10 years for the culture of a great company to fall apart once the CEO seat is given to someone else, to someone without an engineering or product background. The crazy thing about Jensen is he has that engineering background and the product background and also the deal-making machine, which is a huge factor in NVIDIA having so much market share. Your belief that they're going to continue to maintain a huge amount of market share, that they're continuing to make the best products in the category. The potential impacts are not — I look at Apple where Apple now struggles to make new products that people really love that seem to work and they feel kind of stuck in time. It's lighter, faster, thinner, more breakable than ever before. It's playing out Steve's legacy and it's the biggest company in the world, it's a fantastic business, but Steve wasn't playing the role of the central bank of an entire industry. He wasn't doing this deal-making. The difference is that I do believe that is just so important. That's a real part of NVIDIA's moat — Jensen's deal-making. Now you lose the engineering and product leadership, that founder-led company, and you lose the deal-making. That's how you end up in just a — that's why every single shareholder that I'm seeing, all these employees are saying, "Bring this guy back. He has his flaws. He's shown poor judgment. But if these investigations happen and there's no smoking gun and he was just selling computers to the best of his ability within the letter of the law, then I can see at this point — the intensity of the story earlier this week by Tuesday, it was like I can't really imagine him staying in the seat. Now it's like you're starting to see a world where he could go back.
--:-- Jordi Hays: Interesting. Another thing on the deal-making side is that it feels like one of his advantages there is being the engineer and being able to clock technical teams. A lot of the investments that he's made, he's able to move very quickly on the finance side, but he's able to evaluate — maybe this company is overvalued on a revenue basis, but are they building something real? Is the team there real? Being able to correctly clock the technical abilities of teams is really important in those fast deal-making scenarios.
--:-- John Coogan: Taylor Swift might be in the running. PopBase is reporting that Taylor Swift is making a big announcement today on Good Morning America. Paul Graham says, "Now I'm really starting to wonder about NVIDIA's board's judgment." I don't know. Put her in. I think she might be good. Who knows? We should move on because otherwise we'll just be here. And we have Takeam joining at 11:30 to discuss this more. Is there anything else you want to talk about with NVIDIA before we move on?
--:-- Jordi Hays: Last post from Hunter SPX Thompson. He says, "Alright, this is tough. Huang had once found a soup vendor in Japan, he said, with a long line of customers. He joined the line and after a long wait, enjoyed one of the best bowls of soup he'd ever had. When he asked for another serving, the soup seller told him no. He had too many customers waiting and not enough soup for all of them. 'He's a better businessman than all of you,' Huang told the cloud computing CEOs. 'The soup man doesn't sell out all his inventory to one or two customers, but instead keeps prices high and his customer base diverse,' the CEO said."
--:-- Jordi Hays: "You're not establishing the value of my products," he said.
--:-- John Coogan: Wow. That's a great metaphor. So elite, because that's exactly what he's doing. That's very funny. And encouraging his customers to do. I love it. TSMC was hacked through an outside cloud provider that stored records on its current and former employees. The company confirmed the leak after dark forms and breach forms listings offered 6.9 gigs. The seller says it holds around 46,000 employee records. The price is three Bitcoin. It's awfully cheap. Around $220,000 with a threat to dump everything free after a week unsold. We should buy it and just mail them nice care packages. "Thank you for your service." If we're going to get all the TSMC employees, we could just send them nice Christmas presents.
--:-- Jordi Hays: That's right. Or at least a card. Put them all on the nice list. Make sure that they're on the nice list.
--:-- John Coogan: So do we know what is actually in the employee records? Is it compensation?
--:-- Jordi Hays: It's 19 fields per person, including national ID numbers. So basically social security numbers, addresses, bank details, and emergency contacts. Very, very bad if this falls into someone who wants to attack TSMC employees. Very, very bad if you just want to create a bunch of fraud alerts and identity theft and all sorts of stuff.
--:-- John Coogan: I'm thinking the corporate espionage angle is potentially really bad.
--:-- Jordi Hays: Yeah, and then also, a lot of companies are starting to keep their broader employee bases a little bit more anonymized. Who would ask for — if you're going to ask for money?
--:-- John Coogan: Yeah. Who silly enough to like, "I have all of your employees' data and I will leak it to the world creating massive downstream implications for their safety and the safety of your corporate secrets, and I am asking for $220,000." If you're TSMC, you're just thinking, "Do we pay the ransom or not?"
--:-- Jordi Hays: Yeah, it's very binary.
--:-- John Coogan: If the ransom was like $100 million...
--:-- Jordi Hays: Yeah. I don't — the trick is that you pay the ransom, who knows if there's another ransom. It's always hard. The game theory there is always tricky.
--:-- John Coogan: Do we have an update to the naughty list? The nice list? We've been tracking. I think we got to put these hackers on the naughty list.
--:-- Jordi Hays: Oh, we got a graphic to the naughty or nice list.
--:-- John Coogan: Oh, Microsoft Outlook has been added to the naughty list. It went down. It has been down for a while. The latest direct from Microsoft TLDR: This is very, very bad. Status.cloud.microsoft, if you're checking up. There's service degradation on Microsoft 365. Is it still down? And Microsoft consumer products. Some people are saying that they're able to log in, but not all emails are being transferred. Tyler Cowen had a post on his blog, Marginal Revolution, that said, "My GMU Outlook email is down. Go figure out my Gmail if you need to get in touch with me." And he was like, "Or try Twitter."
--:-- Jordi Hays: Yeah, Microsoft's status page is still saying service degradation.
--:-- John Coogan: Yep. So very, very rough. Tyler, can you figure out the most significant outage of Microsoft 365 or Outlook in history? This has to be. Going for now past 24 hours? If you're Microsoft Outlook, Jordy, and you get added to the naughty list, what is your reaction emotionally?
--:-- Jordi Hays: If you're Microsoft Outlook, you get added to the naughty list. There's potentially a bullish catalyst, which is getting the service back up. I think if you're Microsoft Outlook and somebody says you're down in the worst outage ever, there's only one thing to say. There's only one way to go up. There's only one word to describe what you're feeling.
--:-- John Coogan: What's that?
--:-- John Coogan: Good. You have the opportunity to make the nice list. If you're on the naughty list, you need to lock in. You need to say good, so you have the opportunity to make the nice list. And if Microsoft Outlook comes back and there's no information stolen and they learn a lot, I'm putting them on the nice list. You heard it here first.
--:-- Jordi Hays: Yeah, so I believe this is the worst Microsoft 365 outage ever. In 2023, there was one where it was down for around five hours in the worst case.
--:-- John Coogan: Is there any news on what's going on? Are they under attack? Or is this just somebody was vibe coding and shipped something accidentally to prod that they shouldn't have?
--:-- Jordi Hays: I don't think it's a cybersecurity breach or anything like an attack.
--:-- John Coogan: Interesting. Yeah, but I don't know technically the reason. Burning the scale too much. Maybe — GitHub was going down because of all the agentic coding traffic. It is possible that there's just higher load from agentic emails being sent across Outlook. You have to imagine that a lot of Outlook addresses are the targets of agentic, effectively, spam. So it might just be a load balancing issue or something. I don't know. Will DePue has been digging into the top four Chinese AI labs: DeepSeek, Moonshot, Minimax, Ant Group. He claims that they built their newest models on NVIDIA's most advanced Blackwell chips, which are barred from import, so they shouldn't have been. These Blackwells should not be making it to China, yet he was digging into the training methodology, the code bases. Dylan Patel chimed in and said, "This is widely known because you can just look at the code and see that DeepSeek open sources it, and if you just look at it for 10 seconds, you can figure out that it's trained on Blackwell." But Will is replying and saying, "Yes, but we need to be more explicit about this. We need more investigation and analysis." This moves Dylan Patel's insider knowledge a little bit forward and a little bit more out into the open. What's very interesting is just how small, how few Blackwells you need to train one of these models. For a few reasons, the big labs have much more compute, many more Blackwells. But when it comes to the methodology of the American labs, first, they have to serve their models, whereas the open source Chinese models often get served from other clouds. So you don't have to hold back. If you only have so many GPUs, you don't need to be like, "Oh, we got to save some for inference," or "There's a lot of inference demand for our previous thing. We can't take that offline." Also, a huge amount of training compute goes towards experimental training runs where you don't know if it's going to work or not. If you're doing a distillation model where you're a little bit more sure that it's going to work, you actually wind up needing less compute to basically catch up or stay near frontier. So interesting that you can do this with — I don't think they're talking about hundreds of thousands of Blackwells going there. It's probably a much smaller amount, probably in the billions of dollars, which of course makes the NVIDIA story with Megaspeed and the other affiliates even more problematic because it's a small amount of revenue relative to NVIDIA, but it's been a huge thorn in the side of everyone who's been worried about the impact of open source. Of course, there are a lot of people that are excited about open source, so it's been a hot debate for a long time. I think that's it for today, folks.
--:-- Jordi Hays: Yes, it's been a crazy week. Crazy week. Touch grass. We were sick. We got through it. We're very excited that you all are here with us. I'll hopefully have some merch.
--:-- John Coogan: Thank you for tuning in to TBPN. We'll be back on Monday. I think we have an early show Monday. We're at Tomorrow X on Tuesday and Thursday. Tuesday and Wednesday. Thursday is GTA. I think the Anthropic IPO should be going out that day. That's going to be a wild story. So tune in. Don't forget to subscribe.
--:-- Jordi Hays: Yeah, crazy timing. Ring the bell. Anthropic IPO happening on International Men's Day.
--:-- John Coogan: Yes. It will be a very surreal moment for Dario and many of the others.
--:-- Jordi Hays: You think it's about International Men's Day? I thought it was because it's Tyga's birthday on next Thursday.
--:-- John Coogan: I think they were kind of like, "Happy birthday, Tyga. Here's an IPO. Here's some liquidity. Maybe you're an early investor. You don't know." There's the hidden cap table. He could be in the line of successors. Under the founders, there's a hidden list of people that succeed. Tyga could be one of them. In a multi-layered SPV. He also might be in a multi-layered SPV. You never know. It could be a little bit of a treat. You never know where that guy's going to pop up. Tyga. You never know. But we'll be covering it. So leave us five stars on Apple Podcasts and Spotify. Sign up for our newsletter, tbpn.com. And we will see you on Monday. Goodbye.
--:-- Jordi Hays: Cheers. Goodbye. Have a great weekend. Have the best weekend ever.
