SPEAKER_00: is now the time to create apps for AR. If you recall the Google Glass days, they had the little translation app. And so you could look at a street sign and it would auto-translate it for you.

SPEAKER_02: I got to play with that, blew my mind. I also got to play with the Microsoft HoloLens, which was AR, blew my mind. And I never got to play with Magic Leap, but I'm sure I would have loved it.

SPEAKER_00: And so it's funny how so many things that I don't like to use, like concur, kind of just like stay alive in the world of technology. And some things that were so great didn't quite make it.

SPEAKER_02: But I think we've now reached the point when the hardware's gotten good enough, there's enough good apps. Yeah, I think we're probably about to the point

SPEAKER_04: when AR and VR are gonna have enough consumer buy-in to be worth building on top of.

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SPEAKER_08: All right, everybody. Welcome to This Week in Startups. I'm Jason Calacanis. He's Alex Wilhelm. And we're here to go through all the news that is important to startup founders, venture capitalists, and tech enthusiasts, I guess, more broadly.

SPEAKER_11: What do we got on the docket, Alex? A lot to talk about today. Yeah.

SPEAKER_13: Yeah, so over the weekend, we saw SB1047, the California AI regulation bill that everyone had an opinion about,

SPEAKER_16: got vetoed. We'll dig into why we care and why it matters. Then we're going to talk a little bit about AR and VR headsets and what Jason is calling the startup graveyard. Then Swiggy's IPO and depending on time, a couple of notes on the open AI revenue trajectory and then a new twist 500 company. So Jason, quite a lot to get into. But before we start, we had a request from the friends and family out there listening to the show. I think this may have come from YouTube, but on an episode, a couple episodes ago, you said, we are on the precipice of the greatest super cycle in the history of business. And this person asked us to unpack that a little bit. So I figured let's start there.

SPEAKER_18: Okay, so let's define what a super cycle is. A super cycle is a technology comes out and it's so powerful.

SPEAKER_20: It's so transformative that it will push a bunch of founders to be part of that wave of technology. Fairly obvious when I mentioned them what a super cycle might be.

SPEAKER_21: The PC revolution when people started having PCs at their offices in the 80s. Well, that meant they needed Lotus 1-2-3. They had something to do with this computer. So Lotus 1-2-3, Microsoft Word, all these products started coming out. Then we had the network revolution and connecting all these computers together. Now you could do, instead of just Microsoft Word, you could do document management. You and I could work on versions of a document which became like super important for lawyers. And then eventually the idea that you had versions of a document is something that everybody, a college student, a high school student might have the ability

SPEAKER_23: to understand.

SPEAKER_24: Other super cycles, obviously the internet and then we had cloud computing, as you know, mobile. And then there were other things that didn't become super cycles. VR, AR, very famously three or four times we've had to have tried to start that up. This transformative technology didn't work. AI, we had it happen maybe 10 times in the last, I don't know, 50 years really, like even the 70s and 80s. And now it's finally hitting. Batteries, sensors, the iPhone, smartphones, people would probably consider that a revolution. If you look at that super cycle of battery and sensor technology, enabled everything from smart glasses which we'll talk about today as well as electric cars, right? The battery packs on the original electric vehicles were literally like the battery packs I think from smartphones and laptops. So now here we are. We've defined what a super cycle is. We're obviously in the AI super cycle and what I think makes this the greatest super cycle of all is how much it will impact every aspect of our lives. The smartphone was the previous one that impacted every part of our lives but the PC didn't, right? Cloud computing didn't. They affected a lot of our lives but not every aspect of our lives. And people, you know, this would be the, I guess, the smartphone would be the one I'd say was the biggest super cycle along with internet of our lifetime. So we have those two and then this one, AI. What's going to happen, I believe, in this super cycle is massive job displacement, the static team size and then bionic, you know, augmented humans, you know, somebody with AI being able to do the jobs of five or ten people, people who don't know

SPEAKER_31: how to use AI doing the jobs of instead of one person, one tenth of a person, right?

SPEAKER_23: So, okay, here we are. That's why I think this super cycle is the one to look out for. Now, in a selfish way, as an investor, I'm looking at it saying,

SPEAKER_21: if I can invest in and help, I don't know, a hundred startups a year, maybe 200 even, if I get more ambitious and we have the quality there, over the next five years, if I can place a thousand startup bets, which I'd like to do in the next five years, I have to figure out how to ramp that up intelligently, in those thousand, I've got a good chance of catching, catching in that debt, the next Amazon, Uber, Airbnb, Robinhood, you know, let's call it a 10 billion, hundred billion, or maybe even a trillion dollar company. And so when investors look at a super cycle, that is what I think defines a super cycle. And I think that's what makes this the greatest time ever

SPEAKER_23: to invest in technology companies, public or private, and the best time ever to start one.

SPEAKER_35: Yeah. So I agree with all of that, but to me,

SPEAKER_16: I think we're still underselling the point in time because everything you said is true, but I wonder if we're not going to see concurrent other super cycles. Like I think when self-driving cars give them three more years, really reach a greater level of market penetration. I think that could revolutionize how goods are moved, how people are moved, how friends move around, where we live, how we live. So I wonder if that couldn't also be a super cycle that could land at the same time as AI. And then frankly, I would say fusion if it works out, if we do get to net positive, you know, but I mean, can you imagine a world when AI is doing everything from robotics to, you know, AI SDRs, we have unlimited clean energy and the cars are driving themselves. I mean,

SPEAKER_39: that's science fiction.

SPEAKER_24: I mean, it's science reality. Science fiction is always like the roadmap of technologists. And so here we are. I do think fusion would create a super cycle. Unlimited energy means unlimited clean water, unlimited clean water, and heat means unlimited food

SPEAKER_42: because that's what photosynthesis is, is like, you know,

SPEAKER_24: light plus water. So, okay. And so, and then robotics and AI combined, so I'd put AI as like a subsection of that would be free transportation or, you know, close to free transportation. And free fuel. Oh my Lord, you're correct. There are super cycles coming that I think are going to, dare I say, change everything. And then the question is, how do you play a super cycle? Can you be too early or too late for it? The two stories I wanted to talk to you about today are two that really dovetail with the AI super cycle in a major way. Founders, do you want to sell to bigger customers? I know you do.

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SPEAKER_50: Yeah, let's start with SB1047. So, if you have been under a rock

SPEAKER_23: for a long time. Is that a Star Wars character? That's a Star Wars character? I think it was in the Empire Strikes Back?

SPEAKER_16: Yes, it was green. It was shaped by three balls stacked on one on top of each other. No, it's a bill. It's entitled the Safe and Secure Innovation for Frontier Artificial Intelligence Models Act because everyone knows that people who legislate

SPEAKER_02: are great at naming things. Jason, the news over the weekend is that SB1047 in California was vetoed by Governor Gavin Newsom and up

SPEAKER_16: went the fireworks but take us behind the scenes. What was the reaction on your group chats that we don't get access to?

SPEAKER_46: Basically nothing. People have come to the conclusion that our government is captured

SPEAKER_24: here in the United States largely and that the winning hand is going to be no AI regulation. In Europe, probably be the opposite. There, you know, you have, if anything, business is captured by government in Europe and it'll go the opposite way.

SPEAKER_08: So I think it'd be a tale of two cities.

SPEAKER_16: Yeah, I think that's right. So I want to go over a little bit of what happened, why we're afraid and then we're going to wrap this section with what it means for startups so stick with us here. Jason,

SPEAKER_00: how much about SB1047 should we tell people and should we give them like a rundown of what it was going to do and the concerns about it or do you want to be a little bit faster today?

SPEAKER_46: I think that's, well, I think we should explain maybe the top two or three concepts of how they were going to throttle, monitor, AI because there are fears that people have and the fears should be real.

SPEAKER_24: The fear of job displacement is obvious. We're going to have on 1010 the robo-taxi from Tesla. We have BYD, Waymo and four other companies partnering with Uber on automation. So the idea of being a taxi driver

SPEAKER_21: or a truck driver is going to radically change in our lifetime and it might change in, I would say, between five and 10 years depending on the jurisdiction.

SPEAKER_20: So that's very real. Now, what the government should do about that, if anything, I kind of wonder as a libertarian leaning kind of person like with coal workers, I kind of feel like it's a small number of people that drive a lot of votes. Maybe, you know, in society we just say here's,

SPEAKER_21: you know, when these markets come apart, just here's some training maybe and if you choose to take it, you know, here's five, $10,000 worth of training, a nice thing, a mitzvah for the government to do,

SPEAKER_18: but otherwise you have to be responsible for your own future

SPEAKER_20: and see that coming and make changes in your career choices and or spending

SPEAKER_23: as an individual, right? Like this is part of living in a free dynamic society as opposed to a protectionist society.

SPEAKER_21: So anyway, let's go through the top two or three things. The fears are real. I don't think the fear of like they're going to come and kill us is real. I think that's like the 1% science fiction 10, 20 years from now, but I do think the job displacement

SPEAKER_20: is the one that unions and individuals should actually

SPEAKER_02: realistically care about. Well, that I think breakdown is why some people were opposed to SB1047 because this is the bill all about catastrophic risk.

SPEAKER_16: And so what that means is what they call critical arms. It was talking about like avoiding AI systems, helping create WMDs that result in mass casualties or mass casualties and mass damage from cyber attacks. So essentially this was the bill that was thinking about the far future, the biggest models and the biggest risks. And that is how it was set up. So one of the reasons why this bill was so controversial is that it had a definition of essentially what models had to obey its rules. And those were ones that had computing that were built using computing power over 10 to the 26th integer or floating point operations or that cost $100 million or more to make. So Jason, you know, this bill wasn't about job protection. It wasn't about rescaling. It wasn't about UBI. It wasn't about the stuff that I think you and I really care about. which is people. It was about trying to put some guardrails in place to prevent AI from the future from becoming Terminator. And that's what I thought was kind of silly

SPEAKER_02: because it felt like it was waving at a future that we should maybe be afraid of and then trying to harm the present to get us there. And the way it did that

SPEAKER_16: was essentially adding civil and criminal penalties to companies that make AI models over a certain size if they did not follow the rules, cover models, building kill switches, filing lots of paperwork, showing code,

SPEAKER_02: listing where they got data and so forth. So there was a lot of regulations for these large models. And now, no.

SPEAKER_24: Yeah. So if you were to regulate large models in California and California is on the vanguard of creating regulations and creating new trends. So just having been a California resident for, I guess, maybe close to 20 years of my life and a New Yorker for 30 and now coming from the proud hill country of Texas outside of Austin, what I'll say is, you know, California

SPEAKER_46: is beautiful in that, you know, yoga, crystals, organic food, you know, a lot of trends start here and you can goof on it, but that part of the freewheeling spirit that I loved about California, it accepted anybody even to the point of absurdity.

SPEAKER_78: I want to be recognized as a puppy, you know, like literally we'll have regulation that like people who think they're furry animals need to be protected, right? It's lunacy, you know, you might put it under woke, I thought it was kind of comical until maybe it wasn't, but you know, it's great that we got yoga,

SPEAKER_20: it's great that we got meditation and people would take that seriously and be part of the avant-garde and then on the east coast what I found growing up, cynicism, right? And then we just have to

SPEAKER_31: and people would be cynical about yoga or whatever until they try it and then 10 years after it's popular in the west coast it's popular on the east coast. Putting that together it's a long-winded way of saying, I think California likes to try like regulations and getting up in people's business in a very big way. Texas, Florida

SPEAKER_20: live and let live New Hampshire live free or die there's like lots of different flavors in our country and so California's going to California

SPEAKER_21: and this is obviously like kind of ridiculous to create all this regulation I know some people like probably Sam Altman and OpenAI or Microsoft might actually want this because it creates $100 million a year in legal fees or $10 million a year in legal fees that will stifle other companies or make it impossible

SPEAKER_23: for startups to compete because the legal bill would be greater than their team size

SPEAKER_21: and their staffing bill. So anyway, good riddance to this one. Europe will probably have 10 times worse and really the focus I think that the government needs to look at is what are we going to do if we have cataclysmic job displacement and you know what we had cataclysmic job displacement multiple times in our history

SPEAKER_24: wars COVID stock market crashes and we have this concept of unemployment. We have this concept of stimulus that we drop people you know $1,000 on people's heads like three or four times so I'm not worried about it if we have cataclysmic job displacement we're a strong country with the ability to manage it. I do think it could create civil unrest though. I'll leave it at that.

SPEAKER_87: Yeah, there's always a risk of that in the near term and you know what's funny

SPEAKER_00: is talking about this stuff it's how broad the impacts of AI could be and therefore that's how scattershot the AI regulations are. So when Gavin Newsom vetoed SB1047

SPEAKER_16: he also kind of flexed that he had signed a lot of AI bills I'm not going to go through them all by name and number here Jason to save everybody but they were working on things in California like not using AI to create child sexual abuse material. Good. You know what I mean? No cloning dead people without permission. Pretty reasonable. Disclosing that an ad was AI edited. Reasonable. So there have been in California some nibbles at AI regulation but to me they land on the side of use. Do not misuse this technology that has been built because that is the risk versus looking at the models themselves and that to me was always the mismatch with this bill versus everything else because we can sit down and say hey let's not let teens make sexual deep fakes of one another for about 8,000 different reasons. Right? No one's really going to be opposed to that except for the most hardcore libertarian but there's like seven of those

SPEAKER_02: so we don't need to worry about it too much. but to me the idea of regulating at the model level was a big mistake.

David Friedberg: I think by the way that's like a really

SPEAKER_24: great point that I didn't even get to which is you know Esther Dyson who was like a mentor of mine when I started in publication

SPEAKER_93: she had a publication release 1.0 she always made time for me thank you Esther for that

SPEAKER_24: and you know it really informed a lot of how I think about technology reading release 1.0 that she did with Jerry Mikulski

SPEAKER_08: and her and you know she said you don't have to use this technology you could opt out of it if you disagree with what the company's doing and you you could not buy their product

SPEAKER_24: so if you disagree with Cedar or you disagree with Microsoft and how they're running things there are alternatives vote with your dollar and then the second thing she had said to me at some point was are we going to blame Volvo when a bank robber steals a Volvo and robs a bank or is there like another place to put the blame as opposed to Volvo and so you know that that analogy

SPEAKER_20: is a really good one until it isn't you know if somebody makes an AI drone specifically designed to target a person by photo and murder them by attaching like a gun

SPEAKER_21: to them you know okay slightly different but the drone and the gun you know that you use

SPEAKER_18: for hunting or that you use for making pictures those people maybe shouldn't be at fault if a lunatic puts a gun on a drone I'll just

SPEAKER_104: you know end my TED talk there

SPEAKER_18: but I do think you're

SPEAKER_20: I love when Lena Khan takes action against specific things like

SPEAKER_21: I don't know the app stores are a good example the tax in app stores or bundling those seem like really interesting tactical things to go after philosophical

SPEAKER_23: things I think you get yourself in trouble right because now you're kind of like philosophically I want to stop technology in progress or philosophically I don't believe people should be able to own a firearm it just kind of shuts the discussion down and that's why I wanted you to just break down tactically like you did wonderfully here

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SPEAKER_00: let me grab just a couple of quick things before I move on first of all we have a tweet from Martin Cassato from Andrews and Horowitz I just wanted to show this to point out the tone of many VCs who were very public about this bill and of course Andrews and Horowitz major investor in AI companies

SPEAKER_16: so Martin says unbelievably grateful to Gavin Newsom for doing the right thing and vetoing SB1047 this is the path to sensible AI policy and maintaining California's global leadership I like that and then I'm going to grab one more AI funds Andrew Ng also the co-founder of Coursera made a very important point Jason he said looking ahead let's keep on

SPEAKER_02: protecting AI open source and innovation and one concern that people had was okay so these rules that SB1047 would have put into place with penalties and regulations and boards all were aimed at for profit companies it felt like

SPEAKER_16: so what do you yeah who's responsible yeah and people were worried that it was going to chill the heck out of open source AI development well now we don't have to worry about that and I think that's good for startups because it means they don't have more competition more good products so we're going to have greater vision greater tension more competition I just love it I think this isn't that

SPEAKER_24: don't trust certain people at open AI to be reliable and in the way that people don't don't trust Zuckerberg right and if you look at Zynga you know Mark Pincus had his business destroyed by his quote unquote friend Mark Zuckerberg who was like yeah you know what I'm just going to destroy Zynga poker Farmville and then they have to pay us if they want people to play the Apple changes and how he had to be like subservient to the platform of the iPhone

SPEAKER_23: and I tweeted like how ironic that was considering he destroyed Zynga and countless other startups to

SPEAKER_20: which Mark Pincus was like how does it feel Zuck to be Zuck and so you don't want to get Zuck which rhymes with another word and you don't want to get Altman I think and that doesn't mean I think Altman is not trustworthy but a lot of people have said to me I don't trust Sam Altman with my business and I wouldn't limit that to Sam Altman I think any platform you should not trust if it's a closed platform and that's why about 60-70% of the people who are building with chat GPT in a study recently that

SPEAKER_21: was shared with me said they when brave people say you know what I'm going to give up the six month lead that I get with chat GPT and I start investing in the open source project so this is a great mitzvah that Zuckerberg has done here there another kerfluffle going on with a YC backed company that forked an open source project and got funded for it and was like it's our project now bitches basically so there can be little kerfluffles in the open source world but generally you can fork your way out of them if you don't like what the you

SPEAKER_93: know the leaders are doing in those projects so please support open sourcing I

SPEAKER_00: think I saw this was that the company in the latter case pair AI which is being built

SPEAKER_76: by the guy frying pan on Twitter correct and I guess

SPEAKER_24: it you know he basically YC funded the project they forked it and I guess there's like a smoking gun of

SPEAKER_125: their lunatics in the best instances there are lunatics who will do whatever it takes to win that's

SPEAKER_78: what we're self selecting for folks I'm sorry I have no F's left to give I made my money I'm more famous and have more influence than I ever thought I

SPEAKER_20: being a rebel is the goal of coming to YC or even our programs now that doesn't mean we endorse breaking the law but it does mean that there's a reason why they put Sam Altman in charge of Y Combinator Y Combinator and Paul Graham specifically likes the rule breakers who you have to go clean up after if and in my personal experience when I knocked stuff over sometimes I did in the market and I think we kind of like people like that to back because the people who are trying to be liked or follow the rules

SPEAKER_21: generally do not go as far as the rule breakers I think Steve Jobs made a commercial thanks for coming to my tattoo

SPEAKER_16: yeah yeah well also it reminds me of a really nice quote that you know I think has been shared widely which is well behaved women rarely make history and I think I think that point is definitely made in a feminist context but it applies very specifically here

SPEAKER_136: if you are well behaved the best you can become is a VP at McKinsey there you go you know Airbnb

SPEAKER_138: is like okay you can't

SPEAKER_24: have a hotel out of your house but nothing says you can't take a donation from a friend for renting them your couch there you go okay let's

SPEAKER_20: take it to court and find out and that's how society moves forward so I have a high tolerance for the rule

SPEAKER_31: that one out of a hundred I probably had four instances in my entire career I put one or two of them in the book angel I'll put three or four of them as composites you know I make a composite like here's

SPEAKER_23: a little storytelling time

SPEAKER_21: yeah of

SPEAKER_23: and when you are a shareholder in those situations you got to extract yourself right so important discussion

SPEAKER_20: to have with your mentors in the space of are you bending rules are you reinterpreting rules are you committing fraud and generally the people committing fraud are just bad actors who know they are the people who are bending rules are trying to move society forward and if you can always tell by what's that term it's a Latin term like key benefit who benefits qua bono qua bono

SPEAKER_149: that's my Italian Latin c ui space bono who benefits

SPEAKER_76: who benefits if

SPEAKER_152: the public benefits because Lyft got you a cheaper ride and they created the category of ride sharing

SPEAKER_24: and sidecar those two really get credit for not uber they created it first uber reacted

SPEAKER_124: to it actually when I interviewed Travis at the all in summit he actually talked about that and

SPEAKER_24: the second is like Airbnb who benefits the homeowner and the guest benefit

SPEAKER_46: and then you're like oh I

SPEAKER_24: in context it feels like they benefit

SPEAKER_31: last and the consumer and the seller benefit first and foremost yeah

SPEAKER_16: I think we can do a naval based summary of your

SPEAKER_00: point about founders so no one wants to back someone in

SPEAKER_02: knows it will follow a rule or two and therefore you won't end up in a fraud situation Boba Fett Boba

SPEAKER_24: Fett is not taking on the empire he's not taking on the rebellion he's picking up packages he's delivering them to the highest bidder whether it's Jabba whether it's Darth Vader and that's it and he's done just gonna do a couple

SPEAKER_76: of jobs I need to watch the

SPEAKER_02: I still need to watch that show can we just do a quick sidebar on open AI because you brought up Sam Altman and all that so

SPEAKER_16: I have a little argument that I want to throw at you I think it can be argued that open AI is it expects and this is per their reporting 11.6 billion dollars in 2025 revenue which against a 150 billion valuation is only about a 13 X next year's revenues which isn't that expensive I don't think for a company that's going to grow by over 200 percent in the next year if it hits its targets so to me I kind of get the number now Jason the thing that I'm confused about is how do they expect to grow by like what $8 billion next year if you and I both think that open source AI models have as much traction as they do and will have in the future so if they hit their numbers cheap if they

SPEAKER_24: details are what matter I think I'll give you the bull bear case according to me the bear case I think is that Siri Google search Android and browsers and social media apps are going to intercept 90% of queries 95% of queries and that the only people who are which you and I are addicted to and I use all day are you know just really high end users and that those products will be free by big iron Amazon meta Microsoft and Google can afford

SPEAKER_20: to give those products out for free and what they said about the user base of ChatGPT

SPEAKER_21: is that when they allowed people to use it without logging in their user base went bonkers which is Google right you don't have to log in to use Google so they follow Google there I think what's going to happen is we

SPEAKER_20: might experience peak consumer usage of ChatGPT

SPEAKER_23: during this time period and then people will say why am I paying 20 30 40 bucks a month for this when it's built into my

SPEAKER_21: jobs better and corporations might not seems like a pretty good deal right and I actually pay for the professional version for everybody on our team so we're paying 20 bucks times I calculators or flashlights

SPEAKER_176: they

SPEAKER_21: don't they don't pay for notepad apps so when people pitch us those we're like what's your plan here and they're like well we're going to be like Evernote and it's like okay Evernote had its window but you AI are 70% of the revenue 80% of the revenue according to reports and consumer fees are 20 to 30% yeah so I think they're an enterprise company and their partner is Microsoft for enterprise and

SPEAKER_183: Oracle Apple are not going to give their business to Sam Altman and I

SPEAKER_24: think you're starting to see cracks in the Sam Altman deal making which let's be honest he might be the Barry Diller of our generation right now he might be the Mike Ovitz of our generation to the point at which it's almost comical right like people are like my God is there anything this person can't convince somebody to convince Elon Musk to

SPEAKER_46: it's become like almost like a meme like

SPEAKER_24: hey this guy could come in and just literally take your shirt off your back and you would give him 20 bucks and get sunburned and then he would charge you for like sunburn lotion cream after doing that so shout out Sam he's incredible but that can only take you so far I

SPEAKER_20: okay I think Tim Cook came to his senses we'll use you we won't give you money we'll use you we'll learn from you we'll we'll use it as a bridge but ain't no way we trust an open AI you you

SPEAKER_21: yeah um because I don't think they trust him

SPEAKER_157: and I know the startups don't trust him so wait I mean trust matters yeah Jason is this the bull case or the bear case

SPEAKER_196: I

SPEAKER_157: don't know where

SPEAKER_24: I was I think it's like the bull case for Sam's like the greatest deal maker of the century and the bear case for when you are not going to empower open

SPEAKER_152: AI any further I think they're realizing they may have created a monster okay

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SPEAKER_16: I want to ask this question flipping around kind of what you're saying is it

SPEAKER_24: you have to have the coin to buy the most dragons and or scorpion you know things that shoot the dragons down right this is a game of dragons a game of tanks a game of pick the arena you know you either need to have the best gladiators the best battleships the best fighter planes whatever it is and in this battlefield that happens to be data centers and so

SPEAKER_20: whoever has the energy the nuclear power plant the nvidia chips or other chips wins and I think the key thing to look at here is I think Sam might get outgunned because if you they're losing five billion a year and they're making three and a half billion now that's according to reports yes sometimes people get burn rate and spend

SPEAKER_24: confused all right there's three numbers when you're looking at a spend you do the math on those two numbers and you get to your

SPEAKER_210: burn rate they're saying they're burning five billion and they're making 3.6 billion am I correct in what the press

SPEAKER_212: reports are 3.7 but let's not let's not fight about that yes you're in the exact ballpark okay and they say the burn is 5

SPEAKER_20: billion yep burning per year 5 billion they're raising 6 billion or so this startup might have less than a year of runway is that what I'm reading into this that they have three months of runway six months of runway and they need another 6 billion to make it through the next year is that what's happening here with open AI depends a lot

SPEAKER_02: on how fast the revenue ramps and we are dealing with run rate numbers and we are

SPEAKER_210: confirms this is going to be a five or six billion raise yes how much cash is left in the bank would be the question you want to ask and if they're burning let's say five six billion they're burning holy cow 500 million a month just under that's a lot of money so if you're burning 400 million a 17 hundred okay so 2000 at 500 thousand apiece you know you start doing some math here for the first billion that means 4 billion in data center electric legal whatever but let's just call it for maybe a billion in salaries and comp for that team they were incredibly highly paid which is revenue into you know one of their biggest uh customers xai microsoft google apple these are all the big customers so yeah I think there's like an exit I'm not going to say an existential crisis here but they're they're having a hard time

SPEAKER_219: keeping up I think so I would read these numbers slightly

SPEAKER_16: less um worriedly and here's why the company was so much smaller at the start of the year in revenue terms that presuming they had a similar amount of compute costs they were burning way more capital in January than they were in July so I think their pace of losses should decelerate and given their expected growth I think also we could see them become on an operating margin basis quite a lot less unprofitable that enormous amount of money so I don't want to

SPEAKER_02: diminish the burn I just I would be shocked if they're still at that pace of burn at the end of this calendar year and with that much money in the bank they have probably more than 12 months of runway but I wouldn't say it's more than two years unless

Chamath Palihapitiya: they need to increase their

SPEAKER_210: spend to keep up with Amazon Microsoft and Apple and Google I have a feeling that they need to increase their spend so your theory would be

SPEAKER_229: and then the cost of the data centers which is the cost of this business right

SPEAKER_231: it's not the 2000 employees really it's the data center cost which is a new experience here for startups and this isn't really a startup if they're making this much money

SPEAKER_233: so you

SPEAKER_210: centers and they're at 150 billion they're only the 6 billion they're raising right now is only diluting them 4% 5% if they raised 20 billion at 200 billion now they're diluting 10% yeah I don't I this cap table is going to be fascinating to look at but this is cash crunch or massive investment one or the other you know or both and open source this is

SPEAKER_230: this is high stakes this is a I would not make this investment

SPEAKER_16: yeah no you said that before which is why I wanted to bring up the new revenue projection for next year but it's interesting because we were talking about you know can you build the next trillion dollar company without owning essentially your own mass network of data centers and several nuclear power plants the answer kind of feels like no and to me what that means is that the ownership of digital brains data

SPEAKER_134: centers and power which is just heat essentially foils water makes steam spin stuff around but it's always the same process it's

SPEAKER_16: basically heat and smart sand if

SPEAKER_00: they really challenge the big iron companies

Chamath Palihapitiya: if big

SPEAKER_23: iron itself is the answer to the question is they're not going to compete with them on this battlefield this is not the arena that they will compete with them

SPEAKER_31: just like you don't see startups competing in the arena of hard disks or storage or cloud computing like when's the last time we had a cloud computing startup like the last volley was like rack space 20 years ago right so the arena is not going to be storage or data

SPEAKER_210: centers it's going to be verticalized apps and if it's true that spoke I think is where startups win just like YouTube and Dropbox did not win based on their hard drives and Dropbox tried right Dropbox built their own data centers they thought that would be a technological advantage and they could never use Amazon's S3 or whatever and they wound up I think doing exactly that and getting rid Google was going to own you know and other purple people felt they needed to own the hard disk space YouTube didn't

SPEAKER_31: Dropbox did so I think this all gets abstracted away and commodified very quickly and that's the other danger for open AI is they need to make money off of these products and services Microsoft and Apple could take all the margin and Apple intelligence is free and they use llama and they join forces with Facebook or they buy some small anthropic like company and they start their own open source project and all Apple needs to do is make Siri work for what

SPEAKER_240: they said it would work for for the last 10 years and I think they

SPEAKER_13: what Google has put together because why would you

SPEAKER_134: share when you can have it for yourself I know there's a lot of money involved but long term I think you'd rather own more of the consumer than own a near term portion of Google cash flows so and

SPEAKER_229: to add to that there's a legal case that the default that Google has you know is an antitrust issue and that was my prediction here on the program was eventually Apple will have a lightweight search engine I competition so if you're listening Lena Khan in your last 90 days oh wait you're out of here in your last six months I hope she gets a

SPEAKER_242: job in the next administration just because I want to see the blood vein in your forehead explode

SPEAKER_229: on camera she's going to be a guest on here I guarantee she's working for Andreessen Horowitz I'm calling it

SPEAKER_13: 80% YC 10% Andreessen 5% founders funded after that but I think it's going to

SPEAKER_252: YC twice already

SPEAKER_229: yeah she's she's getting up in YC I think she wants to be a partner she's young she's in

SPEAKER_240: to your chest super cute

SPEAKER_255: should have seen how much how much baby spit I had on this part of my body in the last 24 hours it's nothing

SPEAKER_243: like dealing with baby liquids all over your body all the time dude

SPEAKER_255: yeah we don't have time to go

SPEAKER_13: off topic about it but I had way too much baby liquid in my life so Bloomberg has a story talking about AR

SPEAKER_00: and VR and headsets and efforts Jason I'm a long-term bull on AR and VR but a short-term pessimist but it seems that the the winds might be changing so we have some clips coming up but

SPEAKER_31: would take folks to the graveyard of startups because there is an important thing with timing when you are going to be part of a platform revolution whether it's AI or it's augmented reality or virtual reality consumers have to be ready for it the platform has to be ready so if we were to look at for example AI there were 3.5 to get to chat GPT 3.5 and consumers embracing this technology

SPEAKER_240: and the technology not spitting out garbage and so here we are you can do something like

SPEAKER_48: tax GPT or any number of generative AI startups or copilots and they actually work well enough that people are willing to pay for them congratulations the timing of that from inception

SPEAKER_229: and like the platform being built out seems like there's about 36 months okay

SPEAKER_48: let's compare and contrast that to AR VR augmented reality we did I used to do a conference with tech crunch called tech crunch 50 here is a company called tonchi dot that made a camera and when the first iPhone added a camera they demoed this demo if you haven't seen it we'll just play the video

SPEAKER_229: because it was done I think 20 years ago at tech crunch 50 the event I used to co-host and I created with Mike Arrington at tech crunch he was

SPEAKER_263: a bombastic writer who you don't know anymore

SPEAKER_264: if you're

SPEAKER_229: a young person but here's the iPhone original that's the original yeah with the hard thing so you can see the original iPhone was the let's just hit play here and we'll pause it when I say pause but you got somebody going down with this camera and

SPEAKER_48: this was Tonshi Dot this is from Tech Crunch 50 in 2009 15 years ago and you see he's clicking on

SPEAKER_31: items on the menu in a restaurant and getting like a Yelp like experience yep and it's augmented reality without glasses and then you know he's looking at things in a museum and seeing the details

SPEAKER_240: that would normally be on the Wikipedia page for a piece of artwork with his phone

SPEAKER_268: and so

SPEAKER_31: and then here the great example of like I'm at the subway and I'm trying to get information so this startup 16 years ago 2009 15 years ago and they're talking about like

SPEAKER_229: how the really cool feature was you could post an audio comment on anything in the real world so if you saw I don't know let's say you were at a monument you're at the Eiffel Tower and you want to just leave a message you can leave a message there for your friend was the idea when your friend comes and they would get an alert hey I

SPEAKER_48: was like a big deal like twitter

SPEAKER_229: was a had just emerged in 2009 facebook etc and so no keywords no search you just watch the world was what they were saying at the event and that you could leave messages for your friends that was a weird one or you could leave items for video of them presenting brought the house down

SPEAKER_240: because it was so revolutionary were you there by chance I

SPEAKER_13: actually

SPEAKER_04: was there because I remember Red Beacon winning

SPEAKER_13: and they had the cupcake delivery

SPEAKER_00: during the finals pitching and I think this is the one that Bing sponsored all the bars and didn't card me and I blacked out on the

SPEAKER_16: bringing down the house and people were so excited about it because it was a way that melded the digital and the real and it felt like finally there was

SPEAKER_229: web was a conference my friend used to do it was originally called the blogs and it was in France and then it became the web which became like the tech crunch 50 of Europe and so here we'll play and this is AR nav an augmented reality started from the web in 2011 what you see is a tablet these Android tablets became a thing and the concept was you would hold up your tablet and here it's showing you walking through little squares as if you were in a Tron light cycle and it's giving you augmented instructions of Google maps and you know the dialogue here is kind of funny because they're just talking about all the technological limitations what's the processor speed in there how does it work in watches or Google maps and this is where they started a long winded way again of saying you got to time your

SPEAKER_240: startup correct and so the question I'm going to put up here Alex is these chunky glasses Apple person John door and the guy in the middle is from Google Ventures to come to me in a second I

SPEAKER_282: know him as that guy from GVA to talk to

SPEAKER_240: Maris I believe somebody will fact check me there and here they are Google created a

SPEAKER_31: hundred million dollar venture fund and this was the announcement of it and they all wore these like alerts so just imagine like the notification window being there so you can leave these on it would give you notifications in the real world like Google directions so this was a stop along the way Google got it right this navigation they all got it right but they are no longer here and so a big part of running a startup is having the runway the fortitude as the founders to survive long enough for the revolution to arrive or to be smart enough to sell your company

SPEAKER_240: and cash out before you know you run out

SPEAKER_31: billion dollars would that company have survived on its own well magic leap no did magic leap survive I don't know you know okay so this is back to the the the big boy and the big girl game right the big table this is the big

SPEAKER_85: poker table you're going to have to have 50 billion which is what I think met has spent on these things so far and I'm sure that's what Apple spent 10 or 20 billion on their goggles and we're still five years away from it being a reality so the question for you Alex is and I'll just get your general reaction on the story of your concept here and your memories of it is now the time

SPEAKER_00: to create apps for AR I want a three month mulligan on that question to see how the new Quest 3S headset sells so this is the new meta headset and the reason why I care is it's $300 which is finally at that high quality low price combination that I think the AR VR world has been waiting for and now Oculus definitely more VR than AR but it's funny how much of stuff that is amazing isn't always a great business and if you recall the Google glass days they had the little translation app and so you could look at a street sign and it would auto translate it for you I got to play with that blew

SPEAKER_02: my mind I also got to play with Microsoft HoloLens which was AR blew my mind and I never got to play with Magic Leap but I'm sure I would have loved it and so it's it's funny

SPEAKER_00: how so many

SPEAKER_02: I don't want to shoot myself in the foot and clip this in five years and mock me but yeah I think we're probably

SPEAKER_04: about the point when AR and VR are going to have enough consumer buy-in to be worth building on top

SPEAKER_93: whatever $10 a year a month whatever and you know it's obviously not happened but there

SPEAKER_240: are some number of people using this technology every day it's

SPEAKER_31: nowhere near smartphone penetration so then I guess the next question for you Alex is do you want AR glasses do you want when we're talking here notes coming up instant messages coming in your door dash order your Amazon arrivals all in your glasses all the time do you want that future do you want to be with your baby wearing your glasses and having

SPEAKER_299: while you're looking at your baby so

SPEAKER_02: make me anxious all the time because my walk would do like

SPEAKER_16: sub stack notifications and emails and slack and go away I think that if we allow the

SPEAKER_134: notification creep of the current mobile world to persist into AR and VR it's going to be a garbage technology I don't think we should take the

SPEAKER_02: existing and put it over there but when it comes to unlocking the world for me as someone who only speaks a couple languages awesome

SPEAKER_163: someone who likes to game and wants to have a better bigger screen awesome there's a lot of things that work

SPEAKER_134: there I just don't want it to become another slate for notifications which becomes essentially an advertising

SPEAKER_12: vector as anyone who uses Uber Eats knows I

SPEAKER_229: object to these most is that right now we are just trying

SPEAKER_210: to come to a reasonable amount of manners for

SPEAKER_229: looking at your phone so I was at dinner and I was at the Minetta Tavern very nice place and when I went to New York for a couple days to see my dad shout out my phone

SPEAKER_210: in your pocket and I said okay he said it's not you when I see your phone it triggers that I should check my phone and I

SPEAKER_314: was like fair enough

SPEAKER_210: and I put my phone away

SPEAKER_314: and

SPEAKER_229: then I am on the cusp now that as good on email not as crisp when I get 80 or 90 and I really feel the difference so the eight sleep is keeping me accountable and I took the dogs out of the bed I took eating late at night out of the bed I had a little more discipline with caffeine after three night time thing is to just listen to a podcast or an audio book and it helps me go to sleep I'm going to try something else my point being these things are going to start this whole cycle over it's going to be another 10 years of us being at dinner or

SPEAKER_48: situations

SPEAKER_229: like skiing where I want to know my speed and what the trails are or walking around Tokyo I could see specific applications but I literally don't want to live in a society where

SPEAKER_48: these glasses have a camera on them I think they should be banned and the pendant should be banned in public spaces where people don't want them the same way cigarettes are

SPEAKER_240: and I think that's where society bags on the way into school just like they do at concerts in comedy halls and I think these pendants and glasses if you

SPEAKER_48: put them on because if you take your phone out and you

SPEAKER_240: can have them out you had to take it there were phone booths you could go to and it just made the place awesome to hang out at and so anyway that's what I hope I've been to some parties with high profile people in my life where they collect everybody's phones at the door best parties I've been and so these glasses are going to destroy

SPEAKER_85: another generation's ability to communicate with each other and they're going to make everything miserable again

SPEAKER_134: we're going to have another live news show on I think it's Wednesday Jason because there's a lot of stuff

SPEAKER_205: there were ones that no one can join no idea they never

SPEAKER_195: let me join well yeah they said no women no democrats no journalists which I thought was the funniest in that order

SPEAKER_02: I don't recall if it was that order but that's how clubs used to be right now though you mentioned Soho house you mentioned the battery I would say slightly less impossible to get into but with stricter rules about how you act once you're inside and I wonder if we're going to look at clubs as Bohemian club thank you like digital deserts as a feature as a perk and there's a club nearby where I live called the hope club and I was just trying to find the rules for it

SPEAKER_134: pictures of me and my family taken I don't mind my face being out there because whatever but you know I I'm with you on this and

SPEAKER_183: very subset of people who like almost like hardcore gamers I think there'll be something that will emerge like hardcore gaming where you have a PC and you care about the weight of your mouse I think that's VR um and I think AR is the version of casual game so I

SPEAKER_134: yeah both are great businesses yeah

SPEAKER_340: one of them attracts tens of millions of people one of them attracts billions that's all it's just different

SPEAKER_51: you slap an ARPU on that and we'll see who wins this argument Jason I don't know are casual games or that's a great question because

SPEAKER_346: I haven't kept up with it I just made

SPEAKER_345: casual games or what do they call them title A games or a

SPEAKER_134: is like your big games I play a lot of indie games but I think I actually made your point for you because casual games can make so much money that

SPEAKER_308: very important question no horses we are getting chickens we did plants

SPEAKER_229: and a compost pile and now we're going to do chickens donkeys goats and then if the girls

SPEAKER_124: take horseback riding we have two horse barns on the property because there was a horse ranch before I bought it so yeah that's the one

SPEAKER_13: thing I banned from my children as horses um because I don't want to take care of them I'm Sebastian Jason given the current

SPEAKER_16: hype around AI what key characteristics should startups focus on to build a sustainable moat I said unique data but I'm curious

SPEAKER_54: what you have to throw in there

SPEAKER_48: I

SPEAKER_240: are templates for Google sheets or Excel that do project management and that do CRM and then there's Salesforce and HubSpot there's notion and there's Coda and there's Asana and all these incredible tools uh this 37 signals what's their famous project base camp so you know you can um you know win by think

SPEAKER_31: luxury software which is superhuman kind of define the category is going to increasingly become a thing so if there was a version of zoom that was the

SPEAKER_240: elite bespoke version of zoom that had let's say 10 times the bandwidth per person and redundancy and you know just allowed for a crisper experience and you know I don't know if that would be the vector under which the speed or features and better recording you know people might go to that for example there's something called descript that a lot of podcasters are using now to build a transcript and edit stuff now you don't need that for transcription you can use the YouTube transcript

SPEAKER_85: but the Descript one is better you can use editing software audio editing software whatever but

SPEAKER_229: UX and design matters and I think training data to your point really matters and you don't need to you don't need to be that much better than what's available for free you

SPEAKER_48: need to build trust in your brand I think a really it doesn't change the price they're just like oh by the way you can sell content and memberships now and it's like oh that's interesting so you've

SPEAKER_229: added like a version of patrion's you know software or

SPEAKER_48: brand I

SPEAKER_163: think it's also a

SPEAKER_134: question that every VC in the world is trying to answer right now and I don't think anyone has the absolute be-all end-all answer but we

SPEAKER_16: gotta go friends we