SPEAKER_00: Hey everybody, welcome back to This Week in Startups. This is Alex and I have a treat for you today. Earlier this year, we hosted our liquidity summit in Napa, California. I flew out. It was absolutely fantastic. And then a couple of weeks ago, we shared two of the talks here on the podcast. You all absolutely loved it and asked for more. So who am I to disappoint? I have two more talks from that event for you today, and they are amazing.

SPEAKER_03: This Week in Startups is brought to you by Squarespace. Turn your idea into a new website. Go to squarespace.com slash twist for a free trial. When you're ready to launch,

SPEAKER_02: use offer code twist to save 10% off your first purchase of a website or domain. Command Bar. Seamlessly integrate an AI-powered guide into your software, making navigation intuitive and interactive. Visit commandbar.com slash twist to get a custom live demo. And Brex, the financial stack founders can bank on. Brex knows cash is king for startups, so they built a banking experience that takes every dollar further. Get the business bank account trusted by one in three U.S. startups at brex.com slash twist 24.

SPEAKER_00: So first up, we're going to hear from Antonio Gracias from Valor Equity Partners. You may know Antonio for his time on the boards of SpaceX and Tesla, but more recently, Valor put a lot of money into the $6 billion XAI round, and he sat down with Jason to talk about that and a host of other topics. Valor is a big name. This is a great chat. Sit back. Enjoy.

SPEAKER_09: Antonio Gracias is one of my best friends, and he runs Valor Equity Partners. He's been a VC for, if he considers, and we'll talk about it, but what most people would consider a VC, but a very operational firm that takes very big swings in some amazing companies you might have heard of. I really wanted him to come here today because he has such a unique perspective on the landscape. He just literally got off making his largest investment ever as a firm in a company called X dot AI, uh, Elon's, um, large language model. AI company. And then you helped with the fundraise, I assume. Uh, and this was a very large fundraise, a couple of billion, $6 billion, I believe. Uh, 6 billion and maybe counting and counting. Yeah. So this hasn't existed in our industry before. I'm trying to think of $6 billion raises. It's a very rare occurrence. Take me through what the thesis is of this investment, why you're raising so much capital and how it's going to be deployed. I know that there's a data center that's been acquired already and, uh, you've got to see it recently, but let's talk about what Elon's trying to do with XAI and why you place that. I think you put in six or 800 million. Six hundred million. Yeah. Big number. Yes. I mean, look, I think it's,

SPEAKER_22: um, the answer that in pieces, uh, this is the largest series B that I'm aware of. Um, there are companies, obviously like SpaceX have raised more money over time, but in, in a series B, a large series B I'm aware of, because the most capital is going to build a data center. And as the way we think about this investment, but I I'm speaking for myself and my firm, not for

SPEAKER_23: XAI or anyone else. It's just my, my personal opinion, the firm's opinion. There is a, um, we didn't invest in any model companies, any of the foundation model companies, because we believe

SPEAKER_22: they were basic commodities. The models are commodities, the, uh, capacity to train them, the data centers are commodities. The only thing that's not really commodity, is the train data and the reinforcement learning. That's it. So as we looked across the landscape, most of these models, uh, if you weren't inside the big platform companies, you didn't have real prior data and really great reinforcement learning. And even inside the platform companies, you have some prior data, but you have, um, reinforcement learning that's being done many ways with human intervention. So the example I'll give you, um, you know, why does Bard give you some strange outcomes when you ask questions. Number one, the train data itself is driven by advertising clicks. It's sort of the individual dilemma here. If you want to have a source of truth on data, it can't be driven by advertising. It's driven by something else. And then you have human intervention that is biased. So it's human bias. If you believe what we believe, that these models are one of the most important technology innovations in human history, more akin to electricity than say the internet, then you want to make sure that they end up with the least amount of human bias and really they are in view of the values of creators. So if the people that are inserting the bias have a certain set of values, what those are, they will be inserted into the system. The X train data we believe has the least amount of bias in the system because it is a debate. It is the modern version of the forum, the Roman forum, right? Where all sides are being heard. Whether you like it or not, there was a lot of controversy about this, but the reality is fundamentally X's data is driven by free speech. You can say it in the street corner, you can say it on X. Now you may not like that. That's what the constitution says, right? I have to be a lawyer by training and I have, I have a real belief in constitutional free speech. That train data plus community notes makes, we believe, the most effective train data for a system for an LLM because now you have all sides of debate and the system itself, just like training a kid, can start making its own decisions about what the right answer is with the minimum amount of implication of human bias in that system. That's why we believe it's going to win. Then if you add the other parts of Elon's ecosystem, let's say vision system data from Tesla, obviously communications with Starlink, the brain interface with Neuralink, all of those parts of the ecosystem don't exist anywhere else. That's why we believe this will be the most valuable company in the space, winner in the space. In addition to that, adding the very final piece of this is that the company is reconceiving from first principles what a large data center should look like. The largest data center to date today is about 25 megawatts. They're building one that is much larger to 100 megawatts and this is public in a very dense configuration and it's, it's playing to exactly what Elon and his engineers do so well. They're rethinking the entire system from first principles and trying to make it cheaper better faster. And so I've seen this movie at Tesla, SpaceX, other companies where it's, it's Elon, but also it's dozens of engineers being led in a mission to create the very best, most effective system possible to allow for the best training possible. Fastest training, best training, along with the, let's call it the clearest view of truth, whether it's complete truth or not in the training data and the ecosystem altogether. This is why we made the charge investment.

SPEAKER_33: What is the product that comes out of this, do you think? Because right now there's a big debate of, hey, and you mentioned it, the LLMs are commodified, like asking a question to an open source one, like LLAMA, asking an open one to a closed system, like closed AI, I mean, open AI, closed AI, closed AI, you know, chat GPT. If you look at the results that are coming out of it, they just leapfrog each other every couple of months with each release. And it does seem like there's parity already, even though open AI had a pretty big lead. So what is the business model going

SPEAKER_09: to be in these data centers? Who are the customers and are they going to be paying? Like, is it a competitor to AWS in your mind? How do you frame in your mental model what this will do? Or is it enough to get the data center up and running, get the queries and the reinforcement learning going,

SPEAKER_20: and then figure it out later? So I would say yes to both, actually. I mean, if the one way we

SPEAKER_22: thought about this was, if for some reason it doesn't work, which I think it will work, the data center innovations alone will be exceptionally valuable. Like, just like the asset value of that alone is exceptionally valuable. Um, but we have much more than that, right? So the first part today, any of you are using, using X, just go buy the premium service. I suggest you use it. It's great. I use it for you is like one of my most, um, enjoyable moments. And there, you know that I

SPEAKER_39: said, you said, yeah, we, we trade our favorite memes back and forth all day. It's pretty funny.

SPEAKER_22: Yeah. Um, but you, the grok button is there and you can use it. And so in the grok presentation itself, um, the day before the, they made some investor presentations, the Iranians had launched missiles at Israel and they asked kind of in real time, Hey, what's going on in Iran? And you had the other models say, don't know, we have something nonsense, nonsense, nonsense. And you had grok say, well, they, they're just missiles launched in Iran. Why? Because it was a real time source of data. Now that's very important for many commercial applications. So as an example, if you go to any trading desk in America today, this is just about, this is my opinion, not the company's. Sure. Um, if you go to any trading desk in America, you will find several screens up. There's a Bloomberg terminal that someone's paying several thousand dollars a day for because they want the best, best information in the world. You know what they also have? Twitter. Yeah. They're all up on Twitter. If you want the best, most update information possible of any ZLMs today, forget about this, the, the inference speed, which is the speed, which is a token, but the information right now you have to use grok today. And there is a monetization strategy right now, which is in a, uh, revenue share with, with grok on the X app that's occurring today. That'll be the first stage. Um, you know, the next stage will be agents. So, you know, I've looked at a couple of companies already that have hardware that are being integrated with whatever LLM you want that provide an agent. They'll be like a, you know, if they're seeing your ear or seeing your desk, whatever that agent will help you interact the LLM. Again, do you want a source of truth that to me, it's close to source of truth. That's got the best real time information in the world. Or do you want something that's influenced by the advertising clicks from the platform companies? And you just, you choose as a consumer, you all will choose. Do you care about source of truth or do you care about advertising? Right. When it'd be sold bullshit or do you want to actually have the right answer? I mean,

SPEAKER_49: you guys do what you want. No one knows your product like you do, but knowing how

SPEAKER_52: to build something customers want is only half the battle. You have to sell it to them. And that's where Squarespace comes in. Squarespace is the e-commerce tool that you need. We all know Squarespace builds beautiful websites, right? I say Squarespace, you see a beautiful, stunning website. But did you know, Squarespace payments makes it super simple to earn online or that Squarespace has the marketing tools. You need to reach new customers. And that Squarespace can help you with email analytics and even design. Just like you're the best at building your product. Squarespace is the best at websites and e-commerce. There's no doubt. They're the best. They've been at it the longest. They make the best product. They're relentless at listening to their customers and making great features so that your business can grow. So check out squarespace.com slash twist for a free trial. And when you're ready to launch, go to squarespace.com slash twist, and they'll give you 10% off your first website or domain purchase. That's squarespace.com slash twist. You know what would be really helpful? Go ahead and tweet or put on LinkedIn. Thank you to Squarespace for supporting this week in startups. If you do that, you know, just like five of you do that, they see it. And they're like, yeah, you know, cool people listen to the pod. And we should support that pod. They're the longest running partner we've ever had on this week in startups. And for

SPEAKER_20: that, I am so grateful. The next layer, which is quite important, is how do you get to AGI?

SPEAKER_22: A machine that lives inside of a computer is not embodied. And I believe, and I think many people believe, that to actually reach human level intelligence, and I don't mean, look, right now, the systems are smarter than humans. Machines could add and subtract and multiply and build bottles faster than me two years ago, five years ago. It didn't matter. What does it mean to be a human? What does consciousness mean, right? What kind of values do you want those systems to have? You get that when you actually have an embodiment of the system. This you will have inside of robotics. Tesla already has a robot, the Atom system. It's functioning today. It functions today using the vision systems that Tesla built with millions and millions of miles, a huge unassailable moat, autonomous driving. If you integrate an LLM with that, you get an embodied system. And that is how I think we achieve an AGI that is more compatible with a benign future for humanity. Ultimately, our brains, at the center of our brain is amygdala, which is a seat of both compassion and anxiety. We want the machine to think like we do in the sense that it cares about us the way we care about each other. How do you do that if you can't feel and touch? And these robots, when do you think,

SPEAKER_09: having seen the experience with Tesla, how long before a robot like that could be in our, you know, in the world, from Tesla, Humane, from whichever company, but we would start interacting with a robot at an event like this and it would be refreshing the coffee or, you know, you know, be the valet or carry your bags to your room. Carry your bags to your room. How about that

SPEAKER_69: as the bet? How many years till a bellhop? It's usually my job, carrying your bags to your room.

SPEAKER_22: Yes. Well, you do it well. I tip well too. You do it well too. It's true. It's true. Look, I retired from the Tesla board in 2021. So I have, again, the opinion here is my, my own. I have no information. Sure. Disclaimer, disclaimer. Yes. Disclaimer, disclaimer. I have had a chance to see the system some months ago. And what I think is going to happen is there are several robots with lots of companies, some small, some large, some very specific use. The, the Otis robot is, it's actually 5'8", weighs about 150 pounds. It's the same size as me. You may have done a perfect human. Yeah. Maybe. Right. Right.

SPEAKER_77: Well, certainly average. Certainly average.

SPEAKER_78: Sorry. It was just, you put it up there for me. No, they built it to be average. They built it to be average. In terms of size, because if it's the average size, then it can navigate the world correctly. So.

SPEAKER_81: Exactly.

SPEAKER_78: When will one of those be, you know, a bellhop, do you think? Yeah. So I think. You had to pick a year.

SPEAKER_20: So I would, I would say, right. I'd say today it's deployed in the factory. I think doing simple tasks.

SPEAKER_22: What's going to happen is it'll do simple tasks in a, in the factory, which is a huge advantage for training data, learn that. And if I had to bet, I would say three years, two, three years. I don't think it's five.

SPEAKER_84: It could be a bell, it could be a bellhop at a hotel.

SPEAKER_22: Yes. I think within, I think I'm not sure they will, that they will go down that, the use case, but I think that, um, if I had to bet, I would say inside of five, probably three. Wow. I bet a dollar it's within five.

SPEAKER_09: So this, I think leads to some conversations you and I have had about the pace of all this. Um, we've both been, we're the same age. We've both been, you know, in the industry with the same amount of time and the pace now is very different. Something has fundamentally changed with the pace of innovation. So what do you think, how do you reconcile what the next 10

SPEAKER_36: years will look like when compared to the last 10? It feels different.

SPEAKER_20: It feels way different. Yeah. I mean, the, the pace of change is definitely changed. It's

SPEAKER_22: definitely the slope. So the second derivative is, is very, very high. And the challenge we have as capital allocators, like I think about, as you know, we think about ourselves, not as venture capitalists, but as risk allocators because of how we run our business, how we think about developing asymmetric information over time. The number of opportunities coming in that look amazing are just through the roof. The problem is it's a little like the internet in this case, in this way, in that it's very hard to separate signal from noise. Most of these companies will die. Yeah. And so, and there might be five working on the same thing. You know, if you look at the, we look at our strategy and AI is both, um, it's infrastructure, so-called data center chips, beyond the, beyond the chip software and hardware that will basically go faster. And then verticalize applications that have proprietary, uh, data and reinforcement loops. The number of opportunities we are seeing is, I mean, it's mind boggling. We've had to build software, as you

SPEAKER_93: know, to keep track of all this stuff. Right. Right. And to be clear, you've built inside your firm

SPEAKER_09: software to analyze companies, um, and opportunities. Yes. Yes. And help us triage our top

SPEAKER_22: upon a pipeline and then keep track of how we're at, how we're tracking the information of our companies. We can no longer do it with human brains. It just, we can't scale horizontally, fast enough to keep up with all the information coming in. We're using, and we're using our intelligence. So you are correct that the, the pace of change is, is, is dramatically different of technological change. And the number of companies being created is finally different. And very importantly, especially I think for the folks here and for you is that this is the first cycle I've been in, and I've not been in this, it's changed it's 20 plus years. We existed in an industry that was an oligopoly. They were like, you know, five firms, you can name them. You can probably throw, I don't know, a rock, not from here, but from Sand Hill Road. And hit all five of their offices. Yeah. Um, and these are great firms, by the way. I, we do business all of them. They're amazing. And occasionally one will break in, you know, founders will break in or someone will break in. But something happened with this technological revolution and with COVID that I think has

SPEAKER_101: disrupted that oligopoly. The venture oligopoly.

SPEAKER_22: Yes. The early stage venture oligopoly. I, I think that that oligopoly has been disrupted. I think even Wycombe has been disrupted by firms like yours. And because there is so much happening and so many new people in the industry that, and that they, and they don't have the same brand affiliation that you might've had. It's kind of like, you know, I have a son who goes to a fancy school in East coast, got a great brand. It doesn't matter as much today as it mattered three years ago or five years ago. And the same thing's happening. Um, what matters is, are you adding value? And so firms that are the, I think our reason our deal flows up so much is, you know, our, our whole deal of the world is our customer is the company we're investing in. We design our, our scale group products that serve our operating products around serving those customers, our LPs, our partners. That's how we think about it. I think you brought it to you about the same way you add value, your company is the same way. And entrepreneurs are getting really smart about this. They're like, yeah, the brand was great, but you know what? Capital is kind of like available,

SPEAKER_104: but I really needed some of the help. Right. And it's, I can give you a distinct

SPEAKER_33: story about this. We had a founder, uh, Marco and Jonathan who created a company at Thumbtack. I was happy to be the first investor. I met them when nobody would invest in the company and they, Jonathan came to me, I don't know, a year ago, maybe six months ago. And he said, Hey, you know, I just wanted to let you know how much you helped me at. Can I take you to dinner? How much you helped me with Thumbtack? I said, yeah, that's great. Thank you. Um, it makes me feel great. And he said, well, I started a new company. I want you to be the first investor. I said, great. Um, I said, what is it? He said, Athena. He said, uh, what I really need your help with is picking a venture firm to go with. And I said, well, who are you talking to? And he gave me the list and it was like all the blue chips, uh, as well as yourself. And so, you know, a couple of upstarts. I mean, everybody wanted to be on the company. I'm a brown chip, by the way. What's that? I'm a brown chip. Yeah. You're a brown chip. Got it. I get it. Uh, and I said, he's, you know, I said, well, before I told him, you know, that we know each other and I said, well, what's your ranking or whatever. And he said, well, I just like Antonio and Valor the most. I said, why is it? Just look at what they do for companies. And I said, well, that's the right answer. You know, that's, that's somebody who's going to really help your firm. Um, and he, he made the right decision and you invested in Athena as well. Tell me with that company, which is doing virtual assistance in the Philippines, uh, matching them, their ARR is going through the roof. It's been pretty incredible. Maybe you could tell us about the non-obvious thesis for that company

SPEAKER_20: that the public doesn't see yet. Well, I'm going to tell that story and I'm, I'm going to, I'm gonna finish your story with, uh, with, with, um, the end of how it,

SPEAKER_22: the F value add has come around, right? Which is, um, this company has, it started out really as a lifestyle business where the founder wanted to create outsourced EAs to the Philippines in a call center because Thumbtack was a call center business basically. And then realized that LLM's occurred that, okay, this is a great way to develop train data to build an LLM that could be an LLM assistant. Like this is the idea of having the virtual assistant to get to know you. And it's not that all the EA jobs will go away, but if, you know, if there's one EA per one executive, you might have one EA for four executives or no, you like use a couple of these. I know yourself, I have two servicing four people. Yeah. So it's, it's, it's really great. And they are using an LLM to train the A's to make them more effective over time. And this leverages them dramatically. But the interesting part of the story is, so Jason kindly did, um, did help us, uh, invest in this company. They then came back to Jason and said, okay, Jason, you've got a media brand that's very valuable. Will you do deal with us in marketing? And, um, Jason started a, uh, website that's called Athena. Wow. And he has this really cool kind of funny, um, whose voice is it, man? It's, uh, yeah,

SPEAKER_117: Christopher Walken. Wow. Wow. Wow. It's guys. Yeah. Virtual assistant. Yeah. I wish I could be,

SPEAKER_23: I wish I had your, your, your ability to be funny, but it's, it's quite funny. It's really funny.

SPEAKER_22: Actually, it's, it's funny. And it's great. It grabs people and they turn the thing on. Um, and it blew up the Legion system. It's like the fastest growing thing we've seen, probably faster than Uber. It's on, they can't even process it. So you think about like how you add value. Well, what does an early stage company need? We have a whole system of corporate relationships. We help our early stage companies get revenue from us. One of the things they want from us, they got from you, was actually your brand and your ability to reach hundreds of thousands or I don't know, millions of consumers. Millions. Yeah. Millions of consumers. In business. Yeah. Yeah. Who need this product. Yeah. And so your, your ability to help them in that co-marketing program has been, I mean, I saw the numbers recently. It's like off the charts. They have like two years in a man. They can't feel we're like scrambling now to flow demand. Yeah. They had 1400 people sign

SPEAKER_121: up. Um, and they were getting whatever it was, a 15 or 30 people a day, steady state, and then boom.

SPEAKER_20: And now they have no inventory. And I think there's a, you know, a hundred thousand person plus backlog now. Yeah. It's something, it's so insane. It's going to be nuts. Yeah.

SPEAKER_52: Founders. I know a lot of you listening to this podcast, you build software for a living, right? We love doing it, but we all know it's hard. You know, the pain of trying to onboard new users and get them up to speed quickly. Worse. Most chat bots and guides built for the task are annoying as heck.

Chamath Palihapitiya: Users tune them out because we all hate random popups. Thankfully, there's one company that uses generative AI to help users onboard without annoying them. And it's called command bar. It has a chat bot that gives personalized responses to user questions instead of a basic Q and A. And it shows users around your product, like a live guide, cursor included. Even more command bar can detect when a user needs a nudge, giving them a product hint or special offer to close that important sale. Command bar is used by Unicorn Juno, HashiCorp, Gusto, Sixth Sense, AngelList, List and others. So here's a simple call to action. You've got to check out this product. Integrate an AI power guide into your software so your customers can navigate your product intuitively and quickly. Visit commandbar.com slash twist to get a custom live demo.

SPEAKER_09: The same thing happened with Uber to a lesser extent because I had a smaller following then, but I got probably the first thousand people for the LA. Yeah. Uh, when they, when Travis launched LA, I was in LA and I tweeted it and dah, dah, dah, dah.

SPEAKER_133: Yeah. The rest is history. But this is, I think very important to S to sort of meditate on in this

SPEAKER_09: room, which is the field is open right now. There's something that's happened where, you know, we talked about your history a lot privately, but you weren't a darling, uh, to say the least of like the classic endowments. And when you started raising your funds, you had to go to other sources. You were pretty pioneering in that, especially, uh, in the middle east as well. And, uh, and other sources of capital, the, you don't need to follow the traditional venture playbook. Things are different.

SPEAKER_23: The game on the field has changed. Yes. Yes, for sure. I mean, look in, and there's a lot of people out here. Our view is just that we want the most viable, um, be valuable of our companies.

SPEAKER_22: We also want investors valuable to us. What does that mean? That means they're easy to deal with. They commit easily and quickly. And if we have a question, they're always willing to help us and, and, and they're good people. Right. And so as we went out in the world to raise money, we realized that there were certain segments of the population that liked us. You know, they just like we were, we did very well with entrepreneurs, family offices, people that built companies and understood our operational talent. We did a little less well. We have some now, but as you know, in the early days, we kind of foundations and endowments who were operating in a certain playbook. You know, we did not spin out of some big firm and, um, like had a bunch of guys fancy degrees. Right. We started out as operators. We built like a connector company. My first real job after Goldman Sachs was running a plating line, like as a plan manager. Right. So this was not a traditional background. It was harder for some of those investors to see, see that and see the value in that. That's changing now, 20 years later. But in the beginning, you're right. I mean, it was hard to get through some of those systems, but the clients that saw through it and had been loyal to us over the years have been well-rewarded. You know,

SPEAKER_145: it seems like today it is extremely, extremely cheap to get started and then to win its capital

SPEAKER_09: intensive. And this requires different levels of capital, different levels of focus. Maybe you could talk about how easy it is for founders today to start businesses and then these inflection points

SPEAKER_17: that occur. And what's the proper governance and funding system? Because it seems like there was an anti-governance, anti kind of VC vibe that was going around for a little while. People didn't want to have board meetings. We just saw a lot of during peak ZERP noise. And it's very hard to do the job when there's noise and actors behaving irrationally. We would see a DO want to be in

SPEAKER_09: business with that founder. And they'd say, well, I need an answer today. And we said, well, we haven't even talked to any customers. We haven't done due diligence. And they said, well, these two other folks didn't do due diligence. I said, I can't really make this investment. I guess I'll talk to you the next round and I'll meet the customers next week. And then you can let me know when the next round is, but there was a lot of chaos. And now it seems like the game's very different in terms of the pace. So maybe you could talk a little bit of that. Yeah.

SPEAKER_23: Yeah. Look, I think in, in, um, in the zero rate environment, uh, there were crossover hedge funds

SPEAKER_22: came into the, into the business and fundamentally in the early stage business, not the late stage business. They were doing, you know, series days, series Bs. And this fundamentally changed the speed and pace at which these investors are happening. And on top of that, you had, um, COVID. So people weren't traveling and they could do meetings over zoom, which I never did. Like I refused to write a check. Even during COVID, I would fly somewhere and see somebody. I wouldn't do it. I can't, I, I'm too old and too old fashioned without looking across the table and say, Hey, I trust you or not. Um, but why were they doing this? It's very important. And anyone who's a capital alligator here, I'm going to get in trouble saying this to my friends who are probably running questions, but this is actually volatility washing. So what happens is if you're running a public portfolio with a private sleeve and you're being marked up and down every day, your volatility numbers, so you're sort of Tino and sharp ratios is how we think about paying portfolio managers in addition to return. They get better. If you add privates that mark less often,

SPEAKER_17: it looks like the volatility is lower. So, oh, this was a little gamesmanship of putting a foundation. Yes. And, and lowering vol. Yes. So when you lower volatility, you by definition,

SPEAKER_23: even with the same return will increase your sharp ratio and your shortino ratio. That's the way the

SPEAKER_22: math works. This is what drove it. In addition to that, they thought it was easy to write checks and in early stage companies, cause they all seem to win. Well, I got news for you. They don't. And I mean, look, I remember having a conversation with one of our friends in the, in the least. And they'd asked me about one of these funds. And I said, look, I wish I was smart enough to hire Bain to do my work. That'd be great. I mean, I've got, you know, 30 guys in operations, 30 public investments. I mean, I just feel like a fool, a fool, cause I've got to manage all these people and take care of them and pay them and make sure they have good careers. Yeah.

SPEAKER_20: Um, boy, it'd be better for ourselves to Bain. It'd be great. Uh, turns out it doesn't work so well.

SPEAKER_121: Yeah. So management consultants can't do the bespoke work of entrepreneurs and venture

SPEAKER_20: capitalists. Yeah. Go figure. Go figure. Yeah. I think it's still got no offense to the guys at

SPEAKER_22: Bain and McKinsey. They're very smart, but they're not doing what we're doing. And they're, they're not at risk the way we are. So outsourcing your fiduciary decision and most of your, most of your research is somebody who doesn't have the same capital risk. That's just an agency problem. You're trying to drive capital through at high speed because of this weird dynamic

SPEAKER_09: of what I call volatility washing. Let's talk about the state of, I don't want to get into politics,

SPEAKER_33: but the state of the balance sheet in America, we have really over the last two, and this makes it super not partisan. The last two administrations just really went wild spending. Well, whatever their pet projects were, COVID, whatever, tax breaks, student loans. But the country feels like, um, it is reckless in how it is managing its finances. And that seems to me to be, uh, something that is really gonna be harmful in, I don't know, it's the near future, but certainly in our kids' future, how do you think about the debt we've been running up, the interest rates, and this, what seems like a, a bit of chaos in how we're running the enterprise that is the United States. And then let alone putting on top of that recklessness, this, uh, anti entrepreneurship, you know, kind of vibes in certain pockets of the culture.

SPEAKER_160: Yeah. It feels like a very dangerous combination to me.

SPEAKER_20: Yeah. So I, I, I think this is correct. Let me give you a few, um, additional data points.

SPEAKER_22: So the, the federal debt numbers are through the roof, everyone knows those numbers, and they are, it's okay to have debt if you're investing in productive capacity. The problem is here, we're investing in just giving money away to people, right? And what, what happens? In about, in the, call it the mid seventies, when women entered the workforce, the employment population ratio, which is the, the total number of people that can work that are working was about 63.8%. Okay. If you look at the curve, it went up, peaked somewhere in like the two thousands.

SPEAKER_162: Yeah. 69%. Yeah.

SPEAKER_22: Yeah. Just under 70 and exactly. And then it came back down during COVID went to about 62 and change. And now it's back at 63.8%. What does that mean? That means that about half the population came to the workforce, but the number of people working are actually the same as it was before they came in. This means that there's a lot fewer people that could be working that aren't working. And so I think that, look, the debt is a real problem. Okay. But it can be solved in the, we're not at a place where debt to GDP ratio is like 110%, I think something like that. We're not like at 140, 150. We're not like Latin American numbers. So the dollar can definitely be at risk at some point if we keep going. But the real problem is we don't have enough productivity. GDP is very, very fundamentally a function of number of people working, pound productivity, productivity of capital and, and productivity of those humans, right? Which is driven by capital. If that doesn't go up and we don't have more people working, then we will have a real problem because the dollar will be devalued by a function of our low productivity levels relative to our competitive trade partners. That's the real problem in my mind is, and this is where the culture of, I'd say, anti-entrepreneurism you're talking about and anti-work is a problem. And we have to work.

SPEAKER_09: What area around the world excites you? If you, if you think about entrepreneurship, you know, we had, uh, Ibrahim from Ubalali here, we're talking about UAE, very exciting. What, what, what regions make you excited in terms of capital, capitalism, entrepreneurship, and people

SPEAKER_22: who want to change the world for the better? So I would, I would say I still am a huge fan of America. I mean, I would not move anywhere. I would not go anywhere. I love this country. I'm raising my children in this country. They're going to work in this country. So I would say

SPEAKER_169: still number one is America. You still believe in American exceptionalism? Yeah. I believe in,

SPEAKER_22: well, let me, let me actually go double click on that. Sure. I believe that we will, we were, we were in a bipolar world. We're now in a multi-polar world and we'll be, have to come accustomed to the idea that somewhere around Gulf War one, we started exporting American values as opposed to American interest. We need to return to a policy of exporting American interests. Are we exceptional? We're not exceptional. I don't really care. What matters to me is we have the ability to live well, live freely, and respect other people's cultures. I think that's what matters, which is where we were prior to Gulf War one. I believe we will turn to that over time. So I wouldn't say it's exceptionalism necessarily, but it's, it's the American ingenuity that we can have partners that are equals to us. That's okay. No problem. We can, we just don't have to fight with them. We can be equals. The second place I would go in the world, the biggest delta between what is happening on the ground and what's being reported in the US, I think is actually the Middle East. You know, you and I have both gone there and spent time there. It's extraordinary to me how much the, these countries are sort of running the Singapore playbook, except they have resources and they have land, right? So if you think, think about if Lee Kuan Yew had lots of capital and lots of land and a very, very young population that was well-educated, which is what you have in these countries in the Middle East. Culturally, they're different than us. However, I think we should respect these cultural differences and find the commonality we have to work together. The second area which I think is obvious to people, more obvious than the Middle East is India. Again, demographics are

SPEAKER_24: destiny. Look at the Middle East and India. They have a very high population growth. Let's end on

SPEAKER_09: immigration then, because I think it's a super important topic. A couple of million people come into the country every year. They seem to come in illegally and we don't seem to have

SPEAKER_17: any thoughtfulness on either side of the aisle of a strategy or a discussion of who's coming in, or the number of people coming in, or how those people coming in match to the needs and the interest

SPEAKER_09: of the company, country rather, today and in the future. How, if you were president, how would you architect our immigration policy for the next, for this century? I mean, I would run exactly a company.

SPEAKER_20: I'd say, okay, we want the very smartest people. Let's figure out how to find them. Just open,

SPEAKER_22: open up the top of funnel for the very smartest people in the areas we need them and give them H1B visas to come in and turn off the nonsense at the, at the other end, right? So we do need a, I do believe we need a guest worker program for labor that is 15, $20 an hour. I think that's probably a smart thing to do in a controlled way was where we were, you know, 20 years ago. The H1B program is totally broken. We need some, we need reformation there. I think it's become political football between the left and the right, um, which is not good for America. I hope it gets resolved soon, but for sure I would, we would never have a company that just brought people in and hired them without any qualifications, which is what's happening right now, right? You just walk in

SPEAKER_136: and start working. I think we need to reframe it from immigration to recruitment because companies do recruitment and recruiting what we need and the highest quality people would give us a distinct advantage because if you were to recruit the best of India, the best of Japan, the best of China, the best of Russia, they lose that person. You get a great player on your team. The other team loses the

SPEAKER_17: player. You win twice. The advantage doubles and people want to come in, but we've created this bizarre

SPEAKER_128: architecture where you can come to the border and 80% of it. It's not a political issue. 80% of the

SPEAKER_20: country's in agreement. We should have some control down there. No, look, I just spoke to my parents and my father actually volunteered for the Vietnam draft. To get to this country. To get to this country.

SPEAKER_22: Yeah. To get a visa, to get a green card. And I'm sure your, you know, your grandparents, your parents, someone did something similar. It's hard. Yeah. And, um, I still believe that if we allow, created a system where the best people could come, they would come. We'd never recruit them.

SPEAKER_122: We just open up and have, you know, however you want to qualify, they may come.

SPEAKER_09: Yeah. I mean, Canada, New Zealand, Australia, all point-based systems. Like it's very obvious that this needs to shift to a recruitment-based one. What gets you excited these days? Just generally speaking.

SPEAKER_20: I mean, I flew here to talk to you. That was pretty exciting. That's been pretty exciting for me. Yeah. I even wore my collar boots. I'm pretty excited about that.

SPEAKER_22: Um, look, I'm, I, this is the most exciting time in my career. It is, it really is a moment where I feel like, um, there is, you know, we, we, we, we have this investment thesis, which is called, uh, pro and tropic, right? Lots of chaos going through the world. And we want to invest companies to make the world better. These two things are more important than ever. It's investing companies to make the world better that are good at helping us manage through the chaos that's going to come. And the chaos is getting worse, not better. So it's very exciting. And the number of young people I'm dealing with daily, both inside the firm, outside the firm, the systems we're building, scale, which we're operating, all this really does excite me. And it, it excites me partially because it is scary. Like it's not just exciting because it's all benign. You know, it might be benign if we make it benign, but it could also be dystopian if we don't really work to make it a great outcome. And I think we, that people in this room, we had the opportunity to do this, right? We live in a system in America and I'll, I'll moralize for a moment, which is in many ways it's ethical, but we drifted toward being a moral. We think about what the legal thing to do is, not always the right thing to do. And I think this is changing. I think people are actually thinking more about not just, Hey, is it, is it legal, but is it right? And if I can leave with one thought is just think about that as you analyze managers, analyze people you work with. I know Jason, you look at what that way is not just, man, is this, is like inside the law, but should I actually do this? It's the right place to put my energy, my life's energy and that on my team

SPEAKER_09: on this company to succeed. Yeah. And we make mistakes and we change the world and everything in between. Uh, and it's just such great work and it's great to work with you as a partner. Everybody give it up for Antonio. Gracias. Thank you.

SPEAKER_52: Okay. Most of us in the startup game have heard of Brex. Not only have they perfected corporate cards for startups, they've also built the financial stack that founders can bank on. Nearly 40% of startups fail due to running out of cash. So to help founders, Brex has built a banking experience that takes every dollar further. It can help protect your cash and extend your startup's runway. How? By combining the best things about checking treasury and FDIC insurance into one powerhouse account. Brex's banking solution offers 20 times the standard FDIC protection through program banks industry leading yield on your cash and the ability to send money worldwide at lightning speed. So here's your call to action. Brex is used by one in every three us startups. Amazing. Get the financial stack founders trust at brex.com slash twist 24 at brex.com slash twist 24.

SPEAKER_00: I hope you enjoy that as much as I did. I always love hearing what Antonio has to say. Now, next up, we have Gavin Baker. He's the chief investment officer over at Atreides Management, spent nearly two decades at Fidelity running their OTC portfolio and also helping lead their venture capital activity. He talks to Jason about investing, humility, and which big tech companies are moving the fast and

SPEAKER_201: doing the best work in AI. Enjoy. I try not to do many fireside chats here. I like to make everybody sing for their supper and, and really put a deck together. But last year, uh, Gavin Baker, come on up, Gavin, um, from Atreides, um, sang for his supper. And most people said you, when I asked people, who's your favorite speaker? Good to see you. Appreciate you coming out for me. And Gavin and I have become, you know, colleagues and then friends over the last couple of years. And I said, Hey, you know, I have this event probably not worth your time, but I would love to, you know, like introduce you to, you know, people in my orbit and he came last year and he gave a talk and almost universally, people said that was the best talk of the event, but it was, there were a lot of good talks last year and even this year as well. And I said, you know, at this year, just come back for the fireside. You don't have to do any work if you would be willing to come back. And he said, Jake L for you, I support everything you do because I see how relentlessly supportive you are of Antonio and our friends. So thank you for coming back and we'll do a fireside chat here. We just get to wrap out and you didn't have to do any, any prep. By the way, I didn't prep last year.

SPEAKER_206: All right. I didn't have any slides. You did have two slides. I don't with the, if so, that's news to me. You didn't, I had no slides. You just spoke extemporaneously.

SPEAKER_209: Yeah. I have a strict, no preparation ever for anything rule. Okay. I did just want to reflect on some of the things Megan said. Um, cause I thought that was one of the best conversations I've ever heard. That was amazing. I don't know if she's still there. The lights are quite bright. She's one of my favorite Twitter followers. I learned from her weekly email and I am, um, I am rarely starstruck when I am introduced to someone. Um, and Brad is a good friend. Yeah. But Brad introduced me to Megan, um, in Miami, maybe, I don't know, three months ago. And I was actually starstruck. Um, so Megan, uh, that was great to meet you. Um, they were very busy. They had to run off. Um, it was great to meet Megan. Um, also love Brad and I loved her talk. And I would just say a few other things because it feels like maybe there's some people in the audience who are trying to raise funds, like just really quick riffs and reflections on what she said. The first thing is, is it all feels so personal. Like I know I'm sure it feels personal to you and it still feels so personal to me, but it's just not personal for the people on the other side of the table. You know, it just may be like, they love you. They don't have an opportunity. They really like you. They don't do just, they've got a lot of other things going on. Um, and just recognize it's not personal. And that really helped me because, um, I still find it takes a big emotional toll, uh, because the rate of rejection, you know, is incredibly high. Um, you know, I would say like 99, probably everybody in this room, you succeed at most things you do. Um, and probably a lot of people were good students and it's like, there's like a 1% success rate raising money. And so the 99% of the times you get rejected, they take a big toll on you. And just understanding that it's not personal, um, was really helpful to me. Uh, I would also say,

SPEAKER_220: maybe they're just not that into you. Maybe they're just not that into me. No, no. I mean, to your point, I think the other side of the table has their own multitudes of issues they are dealing

SPEAKER_223: with. And I had some people pull me aside. This is when I actually took this to heart because to be

SPEAKER_226: totally honest, I am really not used to any kind of rejection. It never happens. Like it's a very

SPEAKER_206: strange thing. I particularly understand it after seeing how good you looked in white last night,

SPEAKER_201: Jason. Thank you, sir. No, I'm not, I'm not even talking about romantically or anything like that. I'm a happily married man, but I'm talking about just in generally speaking, I, I am so used to making friends or get, you know, in a seat space, like, you know, there's always room for me in a deal. I have people who reopen rounds. I've, I've had people reopen around six months every day to then go me with the LP community. And then this is when I realized it took two or three of these for me

SPEAKER_228: to realize, oh, this is not about you, Jago. When two or three different LPs said to me after the call, they did a followup and they said, Hey, um, I really enjoyed our call. I just wanted to talk to you real quick. And I said, yeah, I don't know how long I'm going to be here exactly. So, uh, what's it, I mean, venture, like, what's it like on that side of the table? And I was like, you're looking for a job. It's like, well, I'm considering some options. I was like, oh, I'm meeting with people who their situation is so acute that they're expecting to be fired or laid off on their side. So that changed my whole dynamic. Like, oh my God, they're taking the meetings because they have to take meetings. That's the job. They have to take 200 meetings to make one investment. Yeah. Just like we take 200 meetings to get one, to get one investment. Oh, this is just what founders go through every day. And once I had that empathy and I was talking to a friend who was raising his fund and he was catatonic at that, he couldn't get any yeses. And I said to him, now, I guess we know what it's

SPEAKER_209: like to be founders a hundred percent. And it's actually, um, I was always surprised, um, before I did this, you know, uh, I generally show up to meetings with company CEOs or founders, you know, knowing their name, knowing the name of the company, you know, having done some work on them, having thought about some questions prepared mind. Yeah. Prepared mind to quote our friend, uh, Brad, who loves to say that. And I was just always shocked by how much it seemed to mean to the, to the founders, but it's like, sometimes you'll go to a meeting, you know, with, uh, I've let, let me not speak ill, but just, um, it is, you know, it's not, every once in a while,

SPEAKER_234: every once in a while you get a, who are you and why am I meeting with you? And it's like, okay, let me, let me set the stage. You are an LP. I deploy capital. I've done well.

SPEAKER_239: Yeah. But having said that we have, you know, lots of LPs are amazing and great, but I did just,

SPEAKER_209: I do have a lot more empathy, like you say, for founders and, you know, just things happen like, um, before, uh, before my firm Atreides launched, um, I ate people from a very prestigious, you know, university endowment, uh, came to our office. They spent five hours with me and I was just like, oh my God, this is amazing. They all followed by Twitter. They were asking me all these questions about tweets. I was so happy. Um, and then the next day they're like, oh, we're definitely not going to invest. And then I went to lunch with one of them and I was like, oh, you know, what was that? I thought there was great meeting. They're like, oh yeah, we, you know, we love you, but we're just not going to deploy anything into your sector for many years. And we just want to be with you because you're interesting and we thought it'd be a good use of time for us. And I was like, well, did you think about like, I'm trying to launch a firm like, but anyway, it's just some other things to riff on things, uh, Megan said, which I thought was great, but just, it really is a journey. It takes a lot of, it takes a lot of time. You want to invest in those relationships and there are, you know, truly world-class LPs who will, who I think will go along with that journey with you. Um, if you kind of follow all of Megan's rules, um, it'd be really supportive through thick and thin. And, uh, karma is also very, very real. Um, that just resonated with me so much. Like one of my rules is just always be super nice to everyone. And if someone is going through a hard time, be really nice to them. Um, not only is it the right thing to do, but it often, yeah, I try to bounce the ball to a lot of people. The people who consistently bounce it back are the people who I reached out to or tried to be helpful when they were going through a hard time. And I think that's a great rule for life, but also for raising money. Um, and the last thing, and then we can talk about AI or software or whatever you want to talk about is just also something, uh, Megan said is like, you have to ask. Like, you know, like just even with people who, you know, it's very rare that somebody is going to say, Hey, just here, take my money. You have to ask people want to, people want to be asked. Um, and I think getting comfortable doing that, uh, it is important. But anyways, those are just some thoughts inspired by Megan's epically awesome talk.

SPEAKER_188: So we can, you know, I think this is the talk that matters actually. And by the way, in terms of the rule for life, I, it's very strange where you pick things up, you know,

SPEAKER_201: like childhood actually like really is formative. And you know, one of the things I learned was like, when somebody gets their asses kicked, like you, you gotta go like, stand up for your friends and, and like, that's, that's like, that's the moment in time of friendship, not the moment of time when

SPEAKER_223: like, you know, they win the lottery and you go pop champagne bottles with them and you're like, Hey, you won the lottery. This is fucking great. You know, it's like when they actually fall on their face. And so it just very naturally came to me when people got their asses kicked that I should just immediately call them or come to them and say, Hey, let's get a, let's get a dinner or drink or go for a hike or something like that. And I kind of just expected everybody had that in

SPEAKER_228: their DNA. That's not in people's DNA. The, the shot, the reaction is, Oh, I just read a horrible news story about this person. Something terrible happened. I probably should give them some space. Yeah. And then that person is sitting at home alone on a Friday or Saturday night saying, I am a fucking loser. I have no friends. I am falling on my face and nobody has called me.

SPEAKER_247: And they interpret it as I've just failed at life.

SPEAKER_217: Yeah. Well, I will, I will share, um, I'll share where it came from for me and,

SPEAKER_209: and I'll admit it was not intuitive to me. Um, but one of my best friends and mentors, and I was like 25, 24, 23. And somebody had gotten fired, um, in a terrible way, um, from the firm where we both worked, you know, not for anything unethical, but just, you know, probably bad performance. And I said, you know, Hey, you know, I, I really liked that person. You know, I want to reach out, but it just doesn't feel like the right thing to do. I should give them some space. And she said, no, you should definitively reach out. And then I'm, I'm sure I'm, she's very close friends. So hopefully it's okay with her. And if it's not, I'm very confident she will forgive me. But she, um, she told me about how her dad had died when she was very young and she'd been very close to her dad when she was very young, when she was 30, her dad, they'd been best friends. It was really, really hard, you know, even, you know, 35 years later, it's hard for her to talk about, but she said, you know, when my dad died, um, there were all these people who are good friends of mine

SPEAKER_252: and they reached out and I was like, Oh, thank you. I really appreciate that. Then 80% of people didn't reach out and it took me a long time to understand why they didn't reach out and to forgive them. And I just, I had to understand they didn't know what to say and they felt awkward. He said, but the one group of people I've never forgotten are people who weren't good friends and reached out and just said, I'm sorry. I don't know what to say, but I'm sorry. I remember their names 35 years later. And so it's just,

SPEAKER_206: and they weren't good friends yet. They were good friends yet. And now they are. Yeah. But just kindness. Like, I just think in the short term,

SPEAKER_252: sharky, aggressive people often get ahead, but in over any long-term timeframe, being kind, being loyal, being ethical, doing the right thing, standing by people when no one else will. Um, even if it's really important, they just matter so much.

SPEAKER_220: And if you superimpose this on what we do for a living, we make investments.

SPEAKER_258: Not bets. We make investments. Yes. By the way, I have that problem too. We did. Yes. What are you betting on now? Exactly. What can we double down on? Exactly. Fuck it. Let's ship these chips all in. Yes.

SPEAKER_259: And the LPs were like, why are these people so crazy? Yes. And why are we giving them money? Yes. Yes. I mean, I had one time, one LP just decided they were like double clicking and they were like,

SPEAKER_261: tell me about this company that, you know, like failed. And I was like, wow, that's interesting. You bring that one up. The founder absconded with the money, never talked to us again. And

SPEAKER_201: they just literally took the 150K that we gave them and like, just burned it. And they never responded to our emails and we're still chasing them to try to dissolve this company so we can get

SPEAKER_261: attacked right off. Yes. They're, they're in an, uh, they're in a non extradition country. And I was like, they're like, what was the diligence process? Like, I was like, what do you mean? Like due diligence. Uh, and this is back in the day when, like, when you gave a hundred

David Friedberg: K check, you would just take a flyer and like, you know, like diligence. That's not, that's not what

SPEAKER_266: you do now, Jason. No, that is not what you do now. Now there's a very careful process.

SPEAKER_201: Oh my God. The diligence we do, we have founders complain, like you're putting in 250 K and the person who's leading the round didn't do as much diligence as you.

SPEAKER_223: I was like, what does that tell you? And they're like, ah, oh, you've made stupid bets before. Yes. But if you superimpose this discussion we're having about friendship, about loyalty, um, and karma,

SPEAKER_188: and then stuff, tell it with Megan's incredible presentation, legendary presentation. What we do is

SPEAKER_223: place a series of bets and we humbly place those investments and hope for the best. It's going to take time. Did you do that on purpose? Did you do that on purpose?

SPEAKER_258: I kind of, I, I go for like cheap laughs sometimes. Okay. Okay. That was just like a soft. Yes. It's like, wow, it's just hanging up there for me to smash it. But you have to be humble because

SPEAKER_228: the truth is we don't know if they're going to pay off to what extent they're going to pay off. And most importantly, when. So somebody who is just getting smashed by wave after wave and getting sucked under could hit it. You've had this happen. You've gotten your ass kicked and you've hit huge waves. So I want to talk about maybe that experience for you. Cause when you were at Fidelity, man, you beat 99% of your contemporaries. Then you made your own fund and there have been bumps in the road.

SPEAKER_209: There are always, uh, bumps in the road and public equity investing. I was actually just reflecting if you're a public equity investor, you have no issue staying humble because I would say the world's the world's best investors are actually wrong 60% of the time. And then I would say your average good professional investor is, you know, probably only right low fifties percent of the time. Like I've seen batting averages on a lot of investors. So you're wrong a lot. Um, and even when you're having a great year, all you're consumed with is what you, what you could have done differently. And then when you have a bad year, um, yeah, it's public equities are very, very humbling. And I do think particularly for public equity investing, but in venture, you go back to the comments about being a journey, resilience and grit and tenacity are the most important characteristics. If you want to have a career, because no matter how good you are, you're going to go through really hard times. And I've, I mean, I've had many hard times in my career as a public equity investor.

SPEAKER_280: What was the, what was the worst life? Um, that one, the worst was probably that one. I see it in

SPEAKER_209: your, the worst was probably 2011 or 2012. Um, and, um, it, I made two of the biggest mistakes, uh, simultaneously. Um, and, and, you know, there's good bets, bad bets, winning decisions, bad decisions. Um, but I had been a, uh, I'd run a telecom fund at earlier in my career and for a long time, a really easy way to make money in telecom is whenever in almost any market or particularly an emerging market where cell phone penetration was still growing, you bet on the company within us network, you always won. And the reason for that is the newest network is the best product and ultimately the best product wins. The reason it's the best product, it has the latest and greatest technology and also it's empty. Like no one can get a cell phone signal, you know, at grand central or pin station, you know, even, you know, at the, at airport cell phone. And that's just because they're crowded. The networks are crowded. A lot of people are there. And so if you have an empty network, it's an amazing experience. And then, you know, word of mouth is the best way to sell anything, whether, whether it's a firm or a, um, cell phone network, there's a company called next tell international. They launched, if anybody knows it went bankrupt, uh, just to cut to the end of the story, they had launched a brand new amazing network, um, all over kind of, uh, South America and Mexico, and it was by far the best. And they were coming into the market and they're a little levered, you know, three times levered. And then things just started to go wrong that were out of their control. A price war broke out between two of their biggest competitors. The exchange rate went the wrong way. And they, you have to pay for telecom equipment in dollars and the revenue comes in and other things, just all these things went wrong. And at each point you think, Hey, maybe I should, should reuse the position, but it felt like, Hey, there's been an overreaction to this. Um, and I had so consistently made money on this. Um, and I'm embarrassed to say, I think when the stock was maybe eight or $10, I wrote a letter to the board of directors demanding they buy back, not demanding. Um, you know, I was not an activist, you know, walking through the merits of buying stock back. I think the company is bankrupt 15 months later. So that was a pretty, that was a pretty bad mistake. But then I, I actually think the next year I had my, um, I had the best year of my career. Um, a lot of things came through and just kind of have to have the tenacity and the belief that, Hey, I've been doing this, you know, I have a process, I have a framework, I have a philosophy that works that has not changed. And I mean, I will, and, and just, you know, you, you have a lot of people, you know, people are not shy about sharing their opinions after you have a really bad year and you're human and that impacts you and you just have to have the resilience to continue making high quality decisions. But yeah, that was the hardest year. It was a really hard year. Um, I went from, I had two, I had two moments in my prior career when I was very young. I was, you know, the highest rated out of 200 analysts, just to make, you know, I was 24 years old. Ah, this is amazing. The next year they told me they're assigning me a new group. And if I don't get the stocks right quickly, I will be fired. And that terrible year that I had the year before it was, you know, we think you're amazing. We believe absolutely in your, you know, process and everything, you know, you're off to an incredible start. And then one year later, Hey, if you have

SPEAKER_188: another bad year, you might be fired. I mean, and there are some great lessons in this, which is,

SPEAKER_223: you know, there are highs and there are lows, and then there is your process. You, you kept referring to the process. And I think that's critical because the outcomes are in some cases out of

SPEAKER_231: your control. They're in public equities. They're almost, they generally are, you just have to have

SPEAKER_223: a discipline. Right. And then that discipline and process, you can actually improve every day. Absolutely. You can, you can get better every day at the process.

SPEAKER_209: Even if you're missing the ball. And I will say, quote, another great friend, a mentor of mine, Steve Weimer, um, you know, has a Warren Buffett-like track record on $150 billion. Steve has two things that always stuck with me in investing. There's only two things, numbers and excuses. And if you don't have the first, generally nobody wants to hear the second.

SPEAKER_294: Steve Wait, wait, wait, wait. It's what an excuse?

SPEAKER_234: Steve There are only two things in investing, numbers and excuses. Steve Numbers and excuses. Steve You don't have the first, nobody cares about the second.

SPEAKER_209: Steve Love it. Steve Love it. Steve The other thing he would say is the reason to never have a really bad year is that, um, people either try to help you or they put pressure on you. And both of those are the enemy of excellence and just, you know, you, you do have to, as a professional investor, manage the downside. Um, you know, it is, what is it? The disposition effect, or I can't remember, but people value losses between two and five times more than gains. Um, well, yeah,

SPEAKER_295: Steve I do want to talk about last year, you talked about, Hey, if you don't get your AI strategy,

SPEAKER_223: correct, you're going to be roadkill, essentially like the gap between the people who get it right. And the people who don't is going to be like the spread trade, the, the dispersion. It's just, it's going to be brutal. So here we are exactly one year later. AI has had quite a year in terms of

SPEAKER_201: the velocity of product releases and it being incorporated, at least what I see on the ground inside of startups who are the first to adopt these kinds of technologies because they're resource constrained and they always look for an advantage and an edge. And what I'm seeing is a hundred percent adoption of anything that can make their firm, you know, they're three or four person or 30 or 40 person firm, more competitive, eliminate jobs, uh, make the people who are working there more efficient. It is a ruthless, unbelievable, you know, sort of process. Now, what are you seeing in the big enterprises and with the companies that we were talking about last year, whether it's Google, Apple, Amazon, let's just go through the top 10 companies or so. And did they, did they embrace it? Yeah. Who embraced it the most? Who did the worst job embracing it and who kind of kicked the can down the road? Let's put them into three buckets. Yeah. Crushed it, fucked it up or like asleep at the

SPEAKER_209: wheel. Well, this is not a commentary on stock performance, just specifically about execution on AI. To me, if you think about Google a year ago, it was at dawn, we slept December 7th, 1941. They were, you know, they're, you know, there's, they're this company with a country called club culture. Um, and which I'm sure they still have who hadn't really shipped anything maybe in a long time. They have this, you know, searches, probably the world's single best business. You could probably run that and generate all of the revenue with no human beings. Um, it could be a 10 person company. It could be a 10 person company, literally. Um, and open AI comes out and, um, it was a question, will, you know, will the sleeping giant awaken, you know, Yamamoto after Pearl Harbor, um, wrote a letter where he said, Hey, you know, I've given Japan and the Imperial Navy an incredible victory and I'll continue to do so for a year. I will drive America across the Pacific and it will be an unbridled string of victories. And he said, but if America doesn't give up going back to grit and resilience, then eventually the steel mills of Detroit and the oil wells of Texas will overwhelm me and Japan. And after this first year, it will be continuous defeat. And that's eventually what happened. Cause America had resolve, which is awesome. Yay. America. Um, yeah, yes, by the way,

SPEAKER_306: I'm super paid. We also immigrated all the great scientists around the world to have us win the

SPEAKER_93: most important race that ended that, you know, tragically, you know, ended that. Bringing all the

SPEAKER_209: world's smartest Jewish people to America in world war II. Many of them, um, from Russia and Eastern Europe was an enormous win for the country. Perhaps a lesson we need to meditate on. Yes. Yes.

SPEAKER_188: Recruitment of, we talked, I had Antonio Grazos here. I think you've met him. Um, he was here yesterday and we talked about immigration and just, why are we not recruiting the smartest people

SPEAKER_209: we can find? No, it's the biggest advantage America has. I mean, outside of, you know, we have two oceans, incredible natural resources, but all the world's smartest people want to come here and we should take them all. Not only does it help us, but in many cases, it weakens our enemies. Uh, but I'm very pro American. I didn't say yay American lightly. I'm super pro American,

SPEAKER_234: very pro national defense and investing. I'm very grateful to, um, be a citizen. I think America's greatest country. Yeah. You can be patriotic. You won't get canceled. Yes. Yes. Yes. We've moved past that insanity. Yes. Now you can fly an American flag. Um, yeah. Yeah. Right side up.

SPEAKER_209: Yes. Um, fly an American flag right side up. And by the way, you could always do that. Just, you know, and you can do it upside down. It's your right. It's your right. Certain people, which is one of the great things about America. Um, but anyways, coming back to Google, um, which is also rich in resources, well defended with two oceans, you know, those, but asleep at the wheel, and they're, you know, America, we have the Pacific and the Atlantic ocean. They have Android and Chrome, which are really dominant distribution systems, but they woke up. They put Demis Hassabis in charge of AI. They've started to really lever, uh, leverage the fact that they do have their own compute infrastructure that is really unique and really differentiated. To this day, large language models have only been trained on three kinds of chips, NVIDIA, Cerebris, and Google's TPUs. And this guy Demis, um, is ruthless, effective, started DeepMind, which was the original open AI. Um, and you know, he's, you know, he is a wartime general and he is in charge. I think from my perspective, Jim and I was the first time that open AI was ever passed and it does have a really important advantage. Um, it can do context caching in a way that no other LLM can. I think it's going to take maybe people time to appreciate how powerful this is. But what that basically means is it remembers questions that it has been asked. And if it has in a, in a given use case, and if it's given a good answer, it just goes back to that answer. So for all of these enterprises that you're seeing, these startups that are trying to save money, the AI has to think again, every time it's asked a question. Because of Google's TPU architecture, they can do context caching. And we will see whether that is in the next generation of GPUs from NVIDIA or, um, AMD. Um, you know, Jensen has seen around so many technical corners. He's an

SPEAKER_252: exceptional CEO.

SPEAKER_223: So Google's back. Google's back. Okay. So they got it right this year. NVIDIA obviously is crushing it. NVIDIA has continued to crush it. Yes. Then we look at Apple asleep at the wheel or somewhere in between.

SPEAKER_206: I think Apple is about to wake up and I think, um,

SPEAKER_301: So that could be a parallel to what we saw with Google.

SPEAKER_209: Yeah. And I do think Apple's strategy is generally not to be the first, but almost to be the last and the best, you know, um, the Palm, the Palm pilot came out in 2001. And I think at one point, Palm had a bigger market cap than like Apple, Dell, Hewlett Packard, Compaq, all these companies combined. And, you know, now where's, where's, where's, where's, where's Palm? Nowhere. Um, it's an operating system for LG TVs. That's that is literally where it is. Um, so being first isn't always, uh, most important, but if you're going to be last, you need to be best. And Apple makes more money off search than you want, but Google, because they own iOS, which is another toll booth on the internet, just like Android and Chrome. And I think what you will see them do, this is, this is what I would do if I were them. Um, I would have a small on-device LLM that is privacy safe and can access all of your information and you trust it because Apple has built a brand around privacy. And then whenever that LLM doesn't know what to do, it asks open AI, permission to go to the cloud. Yeah. Permission to

SPEAKER_201: go to the cloud. Yeah. I think you're right. Cause I, I noticed in my iPhoto library or which is just Apple photos. Now there's a little AI wizard button. And when you press it, it's like, that's a bulldog and you know, uh, whatever a Tesla behind it. And there, and you can see the power of exactly what you're saying on your phone. Every 10th photo has it. And they're just subtly going to make it. So when you go into photos and say, Hey, I need pictures of my bulldog when it was a puppy. And it'll be like, which one tourists or fondue or Toro or even more important, instead of doing

SPEAKER_209: searches, you'll say, instead of, you know, doing searches for, you know, best vacation in Italy, you'll just say, Hey, book me a vacation. You know, I will like, give me three choices in Italy. And then why don't you pick another country that you think I'd like that I didn't suggest, but it will say here, four options, press one, boom. And this is, you know, agents and actions and transactions replacing search. And I think this will happen. I think agents are going to be massive.

SPEAKER_231: Before I leave that, I will just say, this is a two-year-old iPhone. It's the first time I've had a two-year-old iPhone until it's cracked. Same with me. You skipped a generation. You

SPEAKER_206: skipped 15. Just because there was nothing that mattered. Uh, the camera's good enough, but

SPEAKER_209: to have that local AI model running, have my, have my Jarvis, have my Gavin AI that knows me and likes me and is friendly to me and, you know, will protect me. Solves problems. Protect, protect me in a, you know, the terminator world. Um, where we're, we're, we're worth upgrading. I can't remember if we're Gavin's angels or Jason's angels, but we're, uh, we're, we're in the resistance. This process, this has enough compute power to run that LLM. It doesn't have enough memory. And this is very important because right now the, the two rate limiting factors for AI, they're no longer compute in GPUs. It's power finding places to plug the GPUs in and to get to AGI. We're eventually gonna have to have a one gigawatts data, data center, and then a five gigawatt data center in our lifetime.

SPEAKER_231: There will be data centers that are bigger than Manhattan. Forget the Pentagon. Whoa, whoa, whoa,

SPEAKER_209: whoa, like vertically every way. Um, the, all the largest buildings, like in our lifetimes, the hundred largest buildings in the world will be data centers. And the world is now power constrained. There's only three places in the United States that you can, um, put in one of these data centers. There's a massive competition to have them. It's gotta be somewhere near. Nuclear reactors. You need multiple nuclear reactors that are unregulated within 50 miles of each other, given the current state of technology. But that's one constraining thing for AI. The other is something called HBM memory, high bandwidth memory. Um, this is the primary axis of competition, of competition. Who makes that? And most compute. Micron and Hynix today. Samsung has lost their way. And Micron and SK Hynix. It's a Korean company. It's a great company. To make high bandwidth memory, you need 4X more wafer space than the DRAM that goes into this iPhone. So if Apple doubles or triples the amount of memory in the iPhone, and then Google do the same for Android phones, at the same time to enable AI on the phone, that this is happening in the data centers, I think you could have the first real memory cycle since 1996. And in 1996, and we'll see this probability and it's not gonna happen, but in 1996, Micron was a 50 bagger. And you, the prices of DRAM, if it is the rate limiting thing for selling iPhones and AI, we'll see where it goes. Um, so I think that's important to talk about in the context of Apple, but please, what else?

SPEAKER_308: Uh, I think we got it. Okay. You gave it to us. Awesome. I mean, lightning round Amazon sideways,

SPEAKER_209: up or down. I mean, I haven't heard of people, I would say they have been sideways. They're trying hard. A core belief of mine is if you're a foundation model company and you do not have unique data and internet scale distribution, you are the fastest depreciating asset in human history. And I think most of these companies are zeros and there's like 10 of them. Yeah. And I think the only hope most of them have of getting the preference back is for Amazon to acquire them the way Microsoft did with inflection. Yeah. And then when we're on the other side of that, and we have AGI, I think those few companies that make it are going to be immensely valuable,

SPEAKER_349: but that's Amazon sideways sideways with AI. That's the question here. They could be crushing

SPEAKER_350: it in other places, but on that case, and then Microsoft obviously top of their game.

SPEAKER_209: Yeah. I would say top of their game, but everybody else has raised their game. Right. So the relative advantage got it has probably slowed down and meta is in a much better position than they were.

SPEAKER_287: And just, you know, to me, true greatness for Mark Zuckerberg would be to rename the company.

SPEAKER_217: Yeah. Again. Yes. Again. To what? Call it Facebook again. Call it whatever. Yeah. Call it big blue AI. Call it AGI. Just rename it. And I, I give the guy a lot of credit for being

SPEAKER_209: so publicly in on the metaverse, which by the way, I think will still eventually happen.

SPEAKER_354: Um, and in some ways that's going to be a legendary misadventure. Yeah. In CEOing.

SPEAKER_209: I think in 15 years, it'll probably look okay. Um, but it was just the metaverse. We just need many more cycles of Moore's law. So you can have AR glasses that work. Um, you know, the meta Ray bands are good. And then ultimately we need brain computer interfaces to work. And then you will have the metaverse.

SPEAKER_201: Nobody wants to, nobody wants to shit on their face, man. It's hard enough to wear ski goggles for a couple hours.

SPEAKER_217: I'd be, I'd be so into like, I, I mean, I have prescription glasses, but for goggles, no. Yeah. Not for goggles, but I mean, I would be very into if they can, that's what I mean. You need to,

SPEAKER_209: you just need six years of Moore's law, making these chips smaller, more energy efficient, be able to fit in, you know, whatever kind of glasses. They'll get it, but he's pivoted hard,

SPEAKER_201: hard, hard putting a search box on the top of every app is gangster. It's gangster. That is a

SPEAKER_223: shot across the bow of Google and anybody else in the industry. Like I am willing to take my top real estate, the top of the search bar on every fucking app I have on three, four billion phones,

SPEAKER_301: whatever he's got. And yeah, I'll just divert all your traffic. Absolutely. What's up? Yeah.

SPEAKER_217: And we're going to have an epic competition. What's up? What's up? Yeah. He's like, what's up? Gold chain. What? I'm going to MMA. By the way, I thought that that was real. The one of him with the, uh, with the coaching, the coaching. I mean, I was like, you guys, you guys want to get in my

SPEAKER_366: grill about meta. Yes. Fuck it. I'm going to, I'm going to MMA gold chain. Yes. Fuck it. This

SPEAKER_369: guy's coming out for Trump next. Yes. No, he doesn't care. All right. Give it up for Gavin. Awesome.

SPEAKER_370: Thanks everybody. Thanks a lot. Thank you. Thanks Jason. Good stuff.

SPEAKER_00: I hope you enjoyed all of that. I took a lot of notes myself when they were talking, but I'd be remiss to not give three more shout outs before I let you go. The sponsors of the event were fantastic. They helped make it happen. So a big thank you to eventus advisory. They are a leader in on-demand finance and accounting support. Then there's Vensure, V-E-N-S-U-R-E. They do in-to-in solutions for payroll, HR benefits, and even risk management. And then there's forge global, a very well-known secondary marketplace for startup shares. So if you're looking to buy stock in that company you don't work for, well, Forge might have the answer for you. I'm Alex. I'm at Alex over on Twitter. I write at Cautious Optimism, and I also write the Twist 500 newsletter here for launch. I'll talk to you soon. Goodbye.