SPEAKER_00: all right everybody first up on the show before my spectacular fireside chat with the fifth bestie brad gerstner i want to talk about this reddit situation as you may have heard reddit the most famous and successful forum or community site ever created in the history of the internet let that sink in is currently dealing with a strike a strike by the members and the community managers

SPEAKER_02: of their own website this week in startups is brought to you by linkedin jobs a business is only as strong as its people and every hire matters post your first job for free at linkedin.com twist vanta compliance and security shouldn't be a deal breaker for startups to win new business vanta makes it easy for companies to get a sock to report fast twist listeners can get one thousand dollars off for a limited time at vanta.com twist and eye connections is a platform to connect and meet with elite capital allocators through their online platform and bespoke events the first 25 vc funds to sign up for eye connections miami 2024 event in january of next year will receive a 20 discount head to eye connections dot io twist to sign up today why are they striking well the reddit moderators or for

SPEAKER_00: short mods are on strike because third party developers are revolting after reddit said they were going to charge for its api now for background what this means is there are apps in the app store when you type in reddit and you'll see there's a half dozen apps maybe a dozen in the early days of the internet there was a culture of apis where people could build around other services so if you had access to google's api you could use their search results or yahoo had one and it really started at yahoo they had something called search monkey and they inspired people to build apps and use their data reddit did something similar and so did twitter twitter said hey here's the api have at it why did they do that well they were constrained in the 2004 to 2010 era when a lot of these sites were launched uh there wasn't a lot of money available to startups and those startups had very few developers and developers were a precious resource they said hey if you want to build something like surmise was a search engine for twitter if you want to build tweet deck a desktop client for professional twitter users the developers would make it and the understanding was hey you're giving us free developer resources you own your code you're using our data but you're making our service generally more valuable and then once the services became big like twitter reddit etc they decided we're going to deprecate these services because they became cash rich and they wanted to control the experience with users and doing this means that there's going to be some hard feelings and the feelings have gotten people are a little sensitive so as of monday evening 8 000 subreddits in other words topics have gone dark this means either they went private or they stopped allowing new posts and you say how is that possible well the way reddit works is you can create your own uh subreddit now there is this illusion that you own that subreddit we've had people on this podcast who created wall street bets and other things who have felt bad about having their subreddits essentially taken away from them which if you're building your house on somebody else's land at some point they can take the land back and that's essentially what's happening here the people who are the mods are saying you can't post and you can't even see the content here so let that sink for a second now they could it's going to be very hard for reddit with this many subreddits going dark for them to fire everybody it would be essentially like turning off their entire community but there is a bit of background here you remember back in april we covered that the new york times did a profile of reddit's ceo steve huffman really brilliant

SPEAKER_03: entrepreneur who co-founded reddit with alexis ohanian the title of the article was reddit wants

SPEAKER_00: to get paid for helping to teach big ai systems and basically the article is about how reddit was going to start charging companies that use its api to train their large language models and we've been talking about lms ad nauseum on this program so you should know what they are by now you know in order to guess that third or fourth word in a sentence or try to essentially come up with good ideas you have to have a model what's one of the best models in the world of human content creation well one of them are newspapers right those serve a certain niche core is one twitter is one reddit's one and then of course you have things like open source projects all of those data sets are what modern llms are built on top of but you need permission and people didn't get permission from reddit so reddit said hey this is a way for us to make money and uh it's quite interesting because for my whole career as an angel investor and a venture capitalist now with a fund for the past i think 12 years i've been doing this people have always told me hey we're people somebody's gonna want to buy our data and it really never happened until now but actually there is a market for data we think it's possible that these language models will have enough free data that they can use that they won't have to pay reddit but if it was a reasonable fee why wouldn't you to make your large language model that much smarter for

SPEAKER_03: somebody like microsoft open ai closed ai or google there's no price that reddit can charge that's going to be too expensive or that twitter can charge but if you made a free version of a mobile app which

SPEAKER_00: these third-party developers have done well you probably are not making any money or a small amount of money so reddit started in 2005 and didn't launch its own mobile app until 2016. remember i said before these startups were typically constrained in terms of their revenue so they went 11 years before launching their own mobile app and reddit users have relied on third-party apps alien blue was one apollo those apps would not be possible without the api and reddit of course got more users to use the service on their mobile phones thanks to those folks but the api while it's great for people to tinker with the platform and to create these things when you start looking at how successful these apps have become well reddit wants to charge something around twelve thousand five hundred dollars for every 50 million requests and that's going to start july 1st but at that usage point one reddit app apollo says they would need to pay 1.7 million a month so let that sink 20 million a year so now apollo and a bunch of other popular third-party apps they announced they would be shutting down june 30th before the api costs kick in last friday ceo steve huffman did an ama ama and ask me anything on the api issue and he made 14 replies in the thread it's generally really poorly received about the api pricing the folks on reddit i mean they're largely from anonymous uh accounts and the currency of reddit is being dank uh a word for being dark slash funny slash irreverent let's say uh and so uh steve's reddit username has been spez s-p-e-z for since the beginning and here's one question that came in how do you address the concerns of users who feel that reddit has become increasingly profit-driven and less focused on community engagement valid question all right so he responds quite reasonably will continue to be profit-driven until profits arrive right reddit is trying to be profit-driven especially because they have an ipo coming up unlike some of the 3p apps third-party apps we are not profitable so in another exchange a user named shri yukin said the announcement of the api changes felt very abrupt your new york times interest suggests this was in response to the rise of chat gpt and other large language models lms were these api changes or in the pipeline prior to chat gpt or is this really a knee-jerk response to cut off get a cut of llm training data to which huffman replied yes and no two things happened happened at the same time the llm explosion put all reddit data use at the forefront and our continuing reference to raining costs to make reddit self-sustaining put a spotlight on the tens of millions of dollars it costs us annually to support the 3p apps third-party apps so again that's a super fair response he's being completely honest with the community and when you look at these third-party apps well they uh are siphoning off the top users why are they siphoning with top users well the reddit app is not as good as these apps these apps have been at it longer these apps only have to do one thing reddit has to do everything so they're always going to be uh slightly better than reddit's app or chances are if you have this you're going to have two or three apps that are better than reddit's what does that mean the top users then are going to go to these apps so for reddit which wants to make money from advertising and perhaps some of these apps like the twitter third-party apps which have been deprecated as well in a very similar fashion those apps were taking out ads on in twitter's case so not only were they uh removing ads they were taking the top users away from the platform who advertisers covet the most so a lot of this has to do with the top users and you know having insights into them remember these third-party apps are getting all the data of all the usage as i said 8 000 subreddits with over 28 000 moderators have gone dark some subreddits will be shutting down indefinitely whatever that means i think that means until uh they run out of fish sticks and hot pockets but you know they could be back sooner uh three reasons why uh this is super interesting to me you know a lot of reddit's value is created by these unpaid moderators and they are doing subreddits really because they're passionate and they found friends so it's affiliation in some cases it's recognition you know being on the leaderboards uh some of them could be on the edges you know drunk on their power but they don't get to participate in the profits and some of them probably do also the ipo is coming and they need to get this revenue going so it couldn't be a worse time i think the reddit members are doing this because they know they can and it's interesting because ai is forcing their hands now there are a couple of hot takes i have number one i think it's all going to blow over pretty quickly what they could do and here's a nice middle ground that i'm sure steve has thought of and maybe he'll deploy is i would offer to either buy the third party apps and hire those folks who become developers and then maintain them uh so you have maybe different apps that you know have different focuses and and different themes so one could be for power users who are using the site all day one could be for mods etc i know it's a lot to handle but that could be a path forward where they buy these folks out give them some equity turn them into you know advocates and promoters of reddit as opposed to detractors so if you think about these folks they're the ultimate promoters of reddit who have now been turned into detractors and you you want to flip that so how do you flip it either you buy them and give them equity in the company and say carry on or how about saying this to the different apollos of the world in these apps we'll split subscription with you revenue with you 50 50 so you can be an official third party app we want 50 of your revenue you know we get control of your subscription data or whatever we have co-access to it we get data about the users and then we'll give you 30 of the revenue that people see and we'll know that because we'll know the number of views you get in your app everybody wins revenue take and you make it a five-year deal or something so now these folks are going to make more money and you can feel free promoting them in other words you let them eat you let them get their beaks wet and that would solve the entire problem and then if you think about the top mods uh at reddit i had offered back in the day when i was at aol we had a uh a clone to dig and reddit uh or inspired by farc and and which is really and slashed out which are really origins of these news plus community sites where these community news sites and we just hired i think 20 people from reddit and 20 people from dig and we just offered them a thousand dollars a month so i went to aol and i said listen for a half million dollars i can get you 40 of these people who are already doing it to program the home page and program some topics and it worked so i think you could offer the top mods a job in mod support so you keep the mod structure and this maybe they're doing this already at uh reddit but the ability of hey if you get your subreddit to a certain level of critical mass hey maybe we'll hire you for five thousand a month or maybe we'll split ad revenue with you this could change the entire nature of reddit you have to be careful because again a lot of people who are doing this are not doing it for the money and then if they do it for the money they're going to compare it to their day job so if you're a developer making a quarter million dollars you know at uber you might not want to make you know an extra fifty thousand dollars a year from your subreddit in advertising but if you're a journalist and your subreddit makes fifty thousand dollars a year you might feel great and you might quit your journalism job to try to double that fifty thousand get to a hundred thousand so i would think of a sub stack patreon like model here where you could enable mods to make some money i.e i subscribe to this specific subreddit i give a dollar i give ten dollars a month whatever and that gets split 50 50 70 30 however uh reddit wants to do it and that would be very appealing i think to the folks on wall street i know if i was going to buy the stock right now as an ad based system with a little bit of a possible data business it's not super interesting to me but if it had a revenue share like youtube that would be groundbreaking and that would be what i would pursue if i was steve interesting take from our guy arty bucco uh you know arty bucco from the sopranos went on to a great career in venture capital doing bucco capital he says reddit is walking a tightrope now need to choke out third-party apps to serve ads on core app have now pissed off all their free labor mods who are now revolting ben thompson put a while the adventure that is the end of free money continues and that's really referencing zerp zero interest rate policy if reddit is a worth 10 billion dollars or 20 billion dollars at some point the free money uh invested into companies like reddit wordpress whoever they're gonna need to basically demonstrate revenue and go public and it has to be consistent revenue and the zerp part of this where there's free money everywhere is truly over you see that with airbnb and uh uber most of all those businesses were in dogged competition uh with infinitely funded competitors that were taking all the margin out of these businesses same thing with doordash and luckily that zerp phenomenon is now over and we're actually getting the nature of these businesses and the nature of airbnb is it's printing money the nature of uber is it just tipped over into free cash flow and is going to you know start printing billions of year billions a year in free cash flow i

SPEAKER_03: believe that and i'm still holding a large percentage of my shares from the seed investment

SPEAKER_00: reddit is expecting a 15 billion dollar valuation on their ipo the last known revenue number was 400 million in 2021 but 2022 was a horrible year for advertising i wouldn't be surprised if they didn't grow much maybe they had a flat year 500 million 600 million but i don't think they're tripling revenue or doubling revenue it might be like 30 percent and that 15 billion number based on the 2021 10 times 400 million is 4 billion 20 times 30 times 40 times is 16 billion is it worth 40 times top line probably not especially if it's growing less than 30 percent 40 percent year over year in which we don't have that number so maybe it's going to be worth 20 times revenue 15 times revenue we're having a little bit of a tech rally but i think they need something exciting and fun i really hope they consider my proposal of sharing revenue with the mods sharing revenue with the app developers all right let's get to this awesome fireside chat with my bestie brad gerstner from altimeter we talk about macro macro macro trends and it's an awesome fireside chat that happened at our angel summit the angel summit is a hundred capital allocators vcs lps angel investors fund to fund sovereign wealth funds endowments etc coming together for three days in napa we have it every june the one that just passed was amazing and hey steve when you're out of your quiet period or whenever the time is right please do come back on this week in startups okay here's brad creating a job post and finding qualified

SPEAKER_28: candidates can be time consuming we all know that it's insane right like just the amount of time it takes to find somebody unless of course you use linkedin jobs because linkedin is closing in on 1 billion users as i predicted well over 900 million members now and think about how many insanely qualified people are out there right now looking for work just go post an open role right now on linkedin and you're going to be a hundred percent certain that you have access to the most qualified candidates available in the world and guess what first one's on me your boy jay cow that's right go to linkedin.com twist to post your first job for free you got nothing to lose everything to gain and one of the things you're going to gain is that purple ring you ever see the purple ring around people's profile that means that you're hiring and when you see that everybody in your network is going to know you're hiring and you get some friends of friends you know those are always the best candidates anyway one of your friends says hey i know a great sales person they were laid off or they were part of a riff no fault of their own and maybe you land that person who is a game changer a bar raiser for your startup that's exactly what i did for launch for inside and i found so many amazing people on linkedin jobs it's a faster way to find better candidates all right i'm doing some programming right now in your brain i say linkedin you say better candidates faster linkedin jobs better candidates faster linkedin jobs will help you find qualified candidates that you want to talk to faster post your job for free linkedin.com twist as linkedin.com twist to post your first job for free terms and

SPEAKER_33: conditions apply next up is brad gerstner from altimeter capital brad you were in the room for mars

David Friedberg: presentation i'm curious when you hear her framework for picking hits at the early stage um juxtapose that with where you spend a lot of your time public markets and frameworks for making decisions about picking future hits there and working with those founders and supporting those founders in the context of you made a big bet on nvidia recently before the big run-up that seems like a pretty good example snowflake seems like a pretty good example from your portfolio from the private side and then of course maybe supporting founders sometimes with tough love in the example of facebook so a lot of places to go but let's start with just what you thought of her framework

SPEAKER_36: just that just that okay but it's gonna give us a good i'm giving you the only question for the next 30

SPEAKER_38: minutes exactly i'm giving you a good versus great to be here and um wow like i i think you know mars

SPEAKER_40: presentation you know i'm sitting over there taking pictures i'm a lot i was live blogging mar your blog or your presentation to the besties right and she had that slide and it was mike moritz and bill gurley and there was jay cal and of course they love that they're having a field day with that okay and uh gurley's like he's because he didn't put his hand on his chin if you notice moritz and gurley both had their hand on their chin rodan style i usually you were like you know so it's like not gonna

SPEAKER_44: happen for but i'm gonna try i've been leaning into you know the steve jobs five fingers pose okay

SPEAKER_46: yeah that's it that's a really super important one to master it's i have to workshop it a bit more

SPEAKER_48: but yes but that was a that was a great presentation listen i totally agree with her it comes down to

SPEAKER_40: picking and picking is picking whether you're in the public markets or you're investing in snowflake

SPEAKER_49: when it was pre-revenue and one of the things she talked about you know clive talked about is that luck befalls the prepared mind and what what what links those three people together what links the besties together is you have people who spend 20 hours a day thinking and preparing the mind and debating and messaging one another with analysis with rebuttal sometimes quite sporty and we're deeply passionate about how technology is moving humanity forward and unless you like authentically feel that unless you

SPEAKER_40: get up every day studying that trying to learn with a curious and a fresh mind i think then

SPEAKER_49: is very difficult to compete because the byproduct of doing that is that occasionally you have an observation about the world that is orthogonal to the observation that other people have and yes there are patterns that get get developed along the way but you know everybody you know when i went to harvard business school they taught about the efficient market hypothesis right that everything is known or quickly will be known and so things are priced efficiently nvidia was priced at 125 a share in

SPEAKER_52: january of this year of this year the consensus sales forecast was that data centers would be down six percent this is all the world's best sell side analysts goldman sachs morgan stanley etc thought that data center growth in the year of ai would be negative for nvidia instead it's up 80 percent right that's how wrong they can be and so i think people take comfort in crowds they build models that all look the same with linear deceleration and you know like and they they don't want to be too far out of the crowd because it's an uncomfortable place to be there's career risk there etc but when i have entrepreneur after entrepreneur walking into my office saying the single greatest bottleneck that we have in the world of ai today is our access to h100s like you can't get an h100 for three years we'll pay any amount of money for it right like and you start studying right these patterns it was not hard for us to get our head around that and by the way gavin baker is going to be talking later today he he's forgotten more about silicon and about you know uh chips than i'll ever know but sometimes that's a burden not an advantage and i think one of the advantages for us is i tried to take a very fresh look at these super cycles just listen to what i'm being told look at it relative to what the consensus thinking is and you know snowflake when it was pre-revenue the consensus thinking was that cloud was too costly was not as performant it was less secure that was 2013 that was the state of the world right but if you went and you talked to every entrepreneur did they like having to set up a data center do they like having to rack servers did it so and you looked at the trends that were happening it was pretty clear that those lines were going to cross and if they did cross the biggest winners in this thing called cloud were going to be databases that were re-architected cloud native um and so we found

SPEAKER_49: the founding team out of oracle you know who had been working on this for two and a half years with some great early investors that were in it we took a chance i think another incredible example is when

David Friedberg: we watched uh revenue and the headwinds that the advertising market was facing google facebook snap and we were looking at how fat these companies had become and just how much money they were spending in the down market we started having this conversation at poker and just in group chat about well if the earnings are going to go down and they're going to get compressed well if you stop spending money and you cut costs well then the earnings can go up and there was this incredible resistance that nobody would ever do that it was just nobody had the sheer will of force to say you know what maybe we don't need as many people maybe we don't need as many departments maybe we don't need to give the free lunch or whatever it is and you and i were talking about facebook and i was like god it just seems i heard your whole sort of rationale of how they could turn things around by just changing maybe how they thought about spending and that's sunday night we were having the conversation and i saw you say look they're cutting 10 000 people tomorrow and i said whoa if zuckerberg doesn't like to lose he's only won his whole life well it brad thinks that he can do this i'll just buy some shares that was at 91 a share or something and that one turned out to be except exceptionally correct again a non-consensus thought silicon valley could do more with less when we just lived in a culture of just keep spending it all works out in the end so maybe you could talk about that call that you made which is a really great call obviously it's up i think two or three x since then

SPEAKER_61: but more important than that call the the sort of operating philosophy and how that's impacted these

SPEAKER_62: companies and maybe we'll use as a way to segue into some slides after i answer it briefly

SPEAKER_49: listen we've been talking about this for a year right uh over poker on the all-in pod it's you know etc and we actually had a rant about it on the all-in pod the week before i wrote the letter i think or maybe two weeks before i wrote the letter and the world had concluded you know that facebook was dead

SPEAKER_52: that mark panicked he threw a hail mary renamed the company metaverse this thing that nobody really understood what it was but it was a bet bigger than the apollo project and things must really be bad okay and then the very next quarter they missed they were bad and then it got bad again

SPEAKER_70: because we started as 22 and we started heading into like you know this recession and so that was when

SPEAKER_52: you know i had been an owner of facebook since 2012 right so getting back to this contrarian thing right my first i was not in the private market you know i had passed on the pre-ipo rounds in facebook why because it was trading at 40 or 50 billion dollars and i thought it was ahead of itself and we were making this transition to the iphone and i wasn't sure how that was going to play out they were building their app in html5 there was a lot of questions about that and if you remember it was on the cover of baron's magazine the big proverbial red arrow broke the ipo price went to 17 a share and it said facebook's you know facebook's over this is about the transition to the iphone and as i was looking at the iphone and looking what was going on in china infinite scroll seemed to me to be way better experience than being tethered to the desk and looking at facebook so it didn't just like it didn't jive with me clive davis style i was like yeah like i actually think mobile's better but they just kind of it screwed up they didn't build a native app so they built a native app they started sandboxing it and you know experimenting with marketers and i happen to be out in phoenix at google zeitgeist conference where they have all the major cmos in the world and we're on a hike and so i just started asking these cmos is anybody here playing with facebook in the mobile sandbox they're all like oh yeah it's the day literally that you know it's bottoming at like 17 bucks a share and i was like how is it working they're like incredible like it's it's working great and i was like oh this is easy like go buy some facebook right and it wasn't like this was inside information anybody could have done the research but it was way easier to jump on the baron's bandwagon and say it's all over for facebook rather than do first principle research you know and study it and

SPEAKER_73: ask the questions right and so we became such a key point there though like actually doing first principle thinking and doing a bit of like on the ground research if you're in the audience and you see janice japlin and you see the audience's reaction you know everything you need to know

SPEAKER_76: if you talk to marketers you kind of and you talk to customers you know everything you need to know

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SPEAKER_80: right and so you know fast forward a decade it was summer 2022 i start talking with with mark's team who

SPEAKER_49: we had built you know these are i live in silicon valley my kids go to school with these folks you know we play poker like these are our friends and you know so we had built trust and credibility with

SPEAKER_52: the leadership team i'd been on cnbc defending facebook for years against a lot of the attacks that were being levied at facebook because frankly i think there's a lot of good that comes out of social media and sure there's bad that comes out of social media i don't think these are bad people who are trying to cause cyber bullying no more than larry and sergey were and so i built some credibility we started having conversations and i think what happened is in the age of excess in the age of covet everybody working from home these companies had doubled in size and there were a lot of adverse consequences that the the people leading these businesses were just kind of unaware of like we were all unfit our firm like we were working from home we weren't as good you know and we just we started having this conversation and then you know i i saw the lights going on for mark and for the team and you know and then you know elon at twitter like was a huge catalytic moment in silicon valley to show people what was possible and the courage there and and um and i i i've been so impressed watching what meta did but it was a risk i was outside the consensus i mean when the monday that i dropped that letter and the only person i had shown the letter to was girly on friday

SPEAKER_49: um i shared it with mark and and susan at meta and then i i published the letter on monday and you know and immediately everybody on twitter and everywhere is like oh you're such an idiot mark

SPEAKER_52: controls a company super majority voting control he'll do whatever the he wants and it's like of course he will do whatever he wants which is why i did this because mark has the power and the founder authority to actually turn the ship and do the right thing and it's incredible like 38 year old founder who made a decision that had the mental flexibility he never had to talk with me his team never had to talk with me he didn't have to do any of these things he didn't have to double down on efficiency and ai like it's a little embarrassing to do that right you have to say well maybe this meta thing we need to make it a little smaller maybe we do need to double down on ai maybe we do that is the sign of greatness the refusal to talk to anybody who might have a different idea the refusal to actually be mentally flexible and so when i saw him do that we were i was like i'm pushing more chips on the table because he just told like we just turned over right uh you know the turn card and now we're in a much better position than we were before so warren buffett's has often said the art of investing you only need six punches on your card over your entire investment career right and he said the art of investing is not being anti-consensus right because the consensus is often right okay but the things that will really make the cash register ring the snowflakes them out as whatever it's those moments where because of your hard work your research you have deep conviction about something that is non-consensus it's nvidia at 125 before it goes to 350 it's you know the cloud before people think that it can be performant and safe do the work and if you find those moments when you're outside consensus and you have deep conviction push a lot of chips onto the table because those are the moments that produce outsized outcomes when you're chasing in the consensus right which happens a lot in silicon valley right when you're chasing and in the consensus it's very difficult because then you're competing against the biggest brands the biggest firms everybody's bidding this stuff up and as we just saw there were moments in the heart of the crypto madness where that was the consensus right the consensus does not always end well can i show a couple slides let's do it okay i think you know talking about being in the consensus this was the slide right that we we talked a lot with with sacks and you know everybody was bold when we were at peak multiples in 21. like remember everybody

SPEAKER_44: was chasing everything right because rates had gone to zero and the left axis is the multiple that things are trading at is the multiple things for sass companies right and the eight the the dotted black

SPEAKER_52: line is kind of the 10-year average and you see where multiples had traded to and at the beginning of this year i mean the argument that i was having around the poker table you know because chamath was is like was a little doomy about the world and he's like dig a hole climb into it buy treasuries like don't buy any of this stuff and i was like that was a fair argument to make when we were at the peak but now that we're down here the consensus is saying the world's ending the consensus was mike wilson at the start of the year he said after what's left this current technical rally we see the s p discount 23 interest sometime in q1 of 2023 and we're going to 3 000 on the s p instead we're at 4200 that's how wrong and he mike wilson was the guy who was most right in 21 but mental flexibility required that you changed your framework and at the start of the year the argument i was making to our team and to you guys was the framework has changed this is no longer about rates up and inflation up it's now about economy and earnings growth what relevance does that have for an angel conference this was out of consensus thinking this was the consensus mike wilson dig a hole get into it buy treasuries right we're going to 3 000 on the s p and it's hard to fight that consensus with my lps because they're like this was the smartest guy over the last year so listen to the smart guy so when i'm pushing chips onto the table they're like whoa why are you pushing chips onto the table now we've had our best start to the year in the history of the firm on the public fund side right and so again an example of being outside the consensus and this is what we said the reset has created fair entry so we're in the middle we're in the beginning of a major platform disruption multiples are below the 10-year average we see the platform disruption being ai correct again i'm skipping through a bunch of these because we're doing this but you know tech's already discounted it's the you can drop on your foot the tractors and everything that everybody hit in during covid that is now expensive so just think about again are you a consensus thinker or are you outside the consensus are you chasing what everybody else is talking about or are you not but here's here's the real thing at the end of the day all of this macro stuff that we do is very relevant for the public stuff but in the end the innovation that starts in

SPEAKER_49: this room trumps all that macro nonsense in the long run which was the point that got very heated on

SPEAKER_36: this last all-in pod that you probably heard we had this kind of big flare-up where it was like wow

David Friedberg: this balance sheet for america is unsustainable true there are geopolitical issues that are really troubling absolutely true whether it's china taiwan russia ukraine and there seems to be a culture war that's incredibly distracting and perhaps important to a small number of people but maybe unimportant compared to the bigger challenges the united states face is certainly not as important as having a solid balance sheet but during all of that i just keep looking at the companies we're seeing as compared to other global companies and when i meet with people from japan or when you and i went to the uae or i go to australia or i go to other countries they're all trying to replicate the innovation cycle

SPEAKER_96: here and the innovation cycle here i believe is the strongest i've seen in my lifetime listen when

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David Friedberg: innovation cycle let's pivot to ai right now what will that do to these four really important platform shifts obviously the pcs uh and servers desktop internet mobile internet and desktop internet

SPEAKER_103: was just huge but that mobile internet made it even bigger data cloud ai even bigger what will ai

SPEAKER_40: look like on this chart yeah so i think the other thing we all have to get comfortable with is you have to hold simultaneous and sometimes truths that are in tension like i agree with friedberg we need a

SPEAKER_49: balanced budget amendment because politicians are incapable of not spending and i think balance sheet does matter i do think as chamah says it is a relative game right between other countries but at some time at some point absolutes become important too 20 years from now right what the uae perfect

SPEAKER_52: execution us bobbling this execution like that stuff matters silicon valley is incredible it's it's as dynamic today as it's ever been despite the state of california doing a lot of stuff trying to cook the goose that's laying the golden eggs but we would just imagine where we'd be if government was

SPEAKER_70: constructive and on our side or indifferent right or even indifferent different so i can share that strong

SPEAKER_52: belief and at the same time believe that the super cycle we're entering today will be bigger and more

SPEAKER_49: dramatic than any of our lifetime and a couple couple thoughts on that obviously we know um chat gpt is just you know i talked about on cnbc sundar somehow allowed them to breach the castle and now it's a verb for search and discovery in the age of ai and it's gotten there a lot faster than the iphone or the browser it's gotten there a lot faster than any mobile app did way bigger than than 100 million users today

SPEAKER_52: and two important points this is satia from microsoft all the value gets created in the few years around the major platform disruption uber airbnb insta bite dance tick tock etc think about the three years

SPEAKER_49: post iphone the three years post you know real internet coming along so we're in we're in that moment

SPEAKER_52: okay we're early iphone moment here this is a really important if you're going to work 20-hour days work the 20-hour days right now in the middle of the stasis of the 10-year super cycle you know that's when you know you make it to all the kids events today you have to miss a couple of the kids events if you want to you know if you want to be here for this and the second one was gay to listen i made our first ai investment in 2005. i backed the head of ai out of the university of washington we ultimately sold that company to microsoft in 2008. this has been a process undergoing for 20 years gates has been

SPEAKER_49: famously skeptical he sees chat gbt this is in 2020. i knew i'd just seen the most important advanced technology since since a graphical interface when you have you know the consensus right gates didn't

SPEAKER_52: say that about crypto satya didn't say that about crypto and and i'm not here to hate on crypto but i'm just saying that to me when i connect the dots between what's actually happy this is consumers voting this is enterprises voting with what the hyperscalers are doing with nvidia not being able to produce the product fast enough we are at the most fascinating time since all of this started and i'm sitting in the front row and it doesn't mean you have to be betting on everything today we've i think our ai anti-portfolio so companies we've said no to i think is 75 deep now on ai okay including all the foundation models okay so that doesn't mean that just because everybody's chasing these foundation models they're all great investments but the prepared mind demands that i meet with all of them i understand the differences i understand what's going on with llama at meta i understand what's going on with the uae's falcon model i understand you know and then we we wait because in 1998 we knew search was going to be big that didn't mean you should have invested in lycos or alta vista or you know go or info seek or any number of them but you wanted to be prepared in 2003 to invest in google okay that's the moment we're now in prepare the mind so that when you see the emergences of the google there are going to be trillion dollar businesses and videos at the tip of the spear

SPEAKER_56: that come out of this and now is the opportunity to do the work to prepare not necessarily to do

David Friedberg: how do you know the difference between chat gpt there being a legacy company that goes the distance

SPEAKER_114: or it being netscape yeah you don't know it's unknown and unknowable okay that's the truth and

SPEAKER_52: if you think you know that level of dogmatism will get you killed just like it does at the poker table right that doesn't mean that you can't stack the odds dramatically in your favor but intellectual humility requires you to think about the future as a distribution of probabilities right and i would say the distribution is so fluid right now because we are so early and i i'm i'm beyond impressed we have brad lightcap the coo of chat gpt at my place last week for a big event and a fireside chat that i led with him i'm so impressed by their execution right but they also just dropped price by 90 we also see open source models that you know can do incredible things in a very short period of time so i'm building the relationships i'm studying open ai i'm trying to be helpful to them we passed on the 29 billion dollar round um but i happen to think they're the most important foundation model in the world and they may also be the most important personal agent in the world so i'm in agreement with gates he said this at the goldman sachs event last week kate said listen i think the biggest the successor to search will be pi your personally intelligent agent right that's going to help you it'll you know be effectively a chatbot you got mustafa at inflection that's attacking that you got noam shazir at character that's going after that space you've got chat gbt that's going after i was playing with all three of them yesterday i was texting with noam shazir i mean the founder of the company wrote attention is all you need on the sunday morning and i'm like hey dude that you you know you're i can't find a character to help me make a french omelet what what gives like he's responding real time on a sunday morning and i'm testing chat gpt versus pi versus character on who's

SPEAKER_49: got the best chatbot to help me make a french omelet and it was chat gpt by a long shot

SPEAKER_117: yeah what do you think this is going to do to productivity inside companies and the size of

David Friedberg: companies and the amount of capital they need i'm watching a lot of startups that if given the choice to write a job rec and do a search and the amount of effort and time and cost that is versus i'm going to write some code and automate this they're kind of like ah the amount of time to find somebody to fill this position we could probably get 80 of it done if we just use some ai it does seem to me and i'm not a ubi guy it's got a whole you know slew of motivational problems i think there's going to be new jobs that will be created but i do think for what we do here and investing in companies companies it feels kind of like you're going to need a lot less people to hit your product

SPEAKER_118: roadmap milestones what is your thought on this yeah so a couple anecdotes and then you know the meta point number one i was with a writer yesterday a famous screenwriter i was took my 15 year old down to surfing at little doom and i was talking to her and she she said while i was writing this morning with chat gpt i was like you're not allowed to write you're on strike and she said don't tell anybody

SPEAKER_49: i just told you i just told us didn't tell your name and i said well she said another famous writer in hollywood said to her don't tell anybody but unless we use this we're out of business like and she's like it doesn't replace my idea but here's what i do i have an idea for a scene and i describe the scene i prompt the scene and it starts writing and it catalyzes me to think differently about the next part of the scene the next part of the scene she's like at a minimum this is going to save me a hundred hours per scene okay like she's long form stuff and she's like but but what's even crazier is i think i'm writing better she's like it's like she's like it doesn't write better but it causes me to get to the next idea in a way that i wasn't before so that take that's one thing though secondly i just hired an engineer four years at palantir who's building chat you know our how altimeter is leveraging chat gpt on the front end of our data stack so we buy we crawl we have a lot of data public markets private markets etc and you know last week he said brad using anthropic we can drop an entire the entire 50 page 10q of facebook into anthropic because it allows you has enough tokenization and now the prompt is a 50 page

SPEAKER_118: document right and now you start asking questions about that which is pretty extraordinary

SPEAKER_49: this will be a bigger productivity gainer boon for the global economy in the u.s economy than the internet itself was it will be drive 30 to 50 percent productivity in a lot many areas within the enterprise it will make us all bionic okay and so when i hear all these dummies telling me that like u.s productivity is over hyperinflation because we're never going to have productivity like we're about ready to have productivity like the world's never seen um and it will also lead to dislocation it

SPEAKER_52: will also lead to people who you know uh uh uh have quandaries over their purpose in the world all those things can also be true that we have to get our heads around listen to solcon listen to listen to solcon's talk um as ted talk 15 minutes on the impact it's going to have on education right every kid like this is the way that we're going to you know overcome these challenges of kids not having one-on-one tutors and teachers not having you know a wonderful teaching assistant we have 30 seconds left can i do the last slide do it and we're good together everybody's got to find their way to organize their lives and their business in order to prepare the mind i think the biggest challenge you all have

SPEAKER_49: is how many things are coming at you every day family business etc i encourage you read the book

SPEAKER_52: essentialism the art of doing less better okay essentialism is the organizing life philosophy and

SPEAKER_49: business philosophy it's the cousin to minimalism in product design i'm a minimalist in product design i don't want to see buttons and you know knobs on my iphone and i'm a minimalist in life design and it's called essentialism and this really captures it you know back to you know tying it to just being enthusiastic about life so every grain of sand passing through this hourglass represents 10 million human

SPEAKER_52: beings there have been 110 million 110 billion human beings passed before us the life expectancy the life cycle of those human beings was shorter than the invention cycle 110 human be 110 billion human beings in the bottom didn't see a single invention during their entire life they hunted and they gathered for food they were on grarian situations think about your life like at the top is the seven billion who are living today and you have a few grains of sand that go through the hourglass right and the truth of the matter is we are all lucky to live at the 30 greatest years you know our professional careers greatest years greatest years in the history of humanity on almost every dimension it doesn't mean every individual of course but it means collectively and we are seeing the cycle time on innovation is

SPEAKER_70: shortening right it means more stuff is coming at us faster right that's hard for a single brain to process so you have to have an organizing philosophy essentialism i think is a decent one find yours

SPEAKER_49: right where you say i got to figure out a way to tune out all this noise so that my mind's prepared when the winning idea comes i'll leave you with that thanks for having me amazing well done let's hear it for brad