SPEAKER_00: what you'll find is the build quality is pretty amazing this is why the tariff wars are upon us i think a lot of the eu the united states they're all like yeah you're not going

SPEAKER_01: to be able to sell this in america without a 100 tariff or a 50 tariff or it will wipe out when i say wipe out i mean wipe out all european car manufacturers all american car manufacturers

SPEAKER_02: it would be devastating and that's why places like korea don't allow these things to be imported

SPEAKER_04: this week in startups is brought to you by superpower visit superpower.com twist to get fifty dollars off your membership this offer is only for the first 100 twist listeners who sign up lemon.io hire pre-vetted remote developers get 15 off your first four weeks of developer time at lemon.io twist and pilot focus on your product let pilot handle your bookkeeping pilot provides the most reliable accounting cfo and tax services for startups and small businesses head to pilot.com

SPEAKER_07: twist and get 1200 off your first year all right everybody welcome back to this week in startups i am your host jason calacan has been doing this since 2010 oh my lord holy crap yeah it's a long time

SPEAKER_12: and my co-host alex wilhelm is here how are you alex uh i'm good it wasn't ten thousand degrees

SPEAKER_13: today in the northeast it actually rained a little bit so everyone's coming out of their hiding and

SPEAKER_07: no great it's nice we have uh heat has been an issue in the country but in austin we're having a very nice summer it has not been hot for austin standards it's been in the 90s which i love but not over 100 because when you have bulldogs no bueno when it hits 100. oh yeah yeah yeah tough for

SPEAKER_18: them to stay cool don't they have to pant a lot to kind of like get rid of the heat that's it they have

SPEAKER_07: five ways to dissipate the heat panting with their tongue and then their four paws you never want to pour water over a bulldog because it will quickly their fur will get hot and then they're just wearing a hot

SPEAKER_01: wet blanket ah but if you pick them up my understanding you can check with your vet if you put their feet in cold water their paws will cool them down quite quick and i've done this a couple of times when they get overheated put a little ice in the bathtub put a little water in the bathtub just up to their ankles and put them in there and then all of a sudden nice and cool and eventually they lay down in the ice cold water cool them right down all right there's your bulldog tip

SPEAKER_22: of the day and let's get into it uh lots in the news including my captain oh captain my captain

SPEAKER_13: my boy travis is in the news i want to start there yeah so this is a story that i did not see coming my favorite type of news story but for context travis kalanick uh former co-founder of uber former ceo of uber and left the company under slightly acrimonious terms around eight years ago well now he might be teaming up with uber yet again because uber may help him purchase the u.s arm of chinese self-driving company pony.ai and i love this for like 17 different reasons before you talk though jason i want to say pony.ai stock did go up 12 on the news and uber picked up a couple points as well so the stock

SPEAKER_22: market seems to like it what was your first thought well you know i've been speculating for a long time

SPEAKER_28: that travis might come back and become the ceo of uber this speculation is just wishful thinking on my part i have no inside information dar has done a fantastic job so there's no dig to him but eventually i think uh the founder should come back steve job style i uh obviously was the third or fourth investor in uber and an investor in cloud kitchens and i have no inside information on this this was a surprise to me as well and i have not talked to travis since so lest you think any of this should inform your investing uh don't because there's nothing here but i will say it's anybody's uh game the

SPEAKER_07: self-driving space and uh if travis has cloud kitchens kitchens cranking like he does there is an opportunity here and uh the opportunity is fairly obvious uh to provide

SPEAKER_01: self-driving cars in order to deliver food directly from their kitchens and uh doordash also has these aspirations they're running their own um their own drone delivery now i i don't know if that's public knowledge but i've heard this over and over again from multiple competitors so maybe you could somebody producer oliver that's where you have a chance to shine so uh there have been reports that doordash wants to get into that business it is public okay great they are indeed and yeah so doordash is making their own drones i understand and zipline has their own relationships we've talked about that countless times here and in fact i'm sure zipline is in the twist 500 we should have the founder back on the pod

SPEAKER_12: because i'm friendly with him and on the screen if you're watching the video that is the uh that is

SPEAKER_13: the doordash drone jason it is uh it is a beast i think that's because chicken sandwiches weigh quite

SPEAKER_35: a lot and if you want to order 17 gotta have a big drone i love it that's not the reason uh it is if

SPEAKER_28: you look at the zipline one it's smaller i think the reason is they're probably envisioning a world in which groceries get delivered as well and i think the doordash uh drone is going to be also for delivery of grocery so you got to keep that in mind currently zipline i believe is eight pounds uh is their design i'm not sure what that design but it looks like more right um so you have to think beyond just burritos and chicken sandwiches you could actually get to the point where your milk you know uh your cookies etc like 10 items get delivered and and that's going to change the world most people live in a city and they'll get served by that serve robotics which is a publicly traded company i understand yep uh and so that's the little four-wheel robot anyway this is all coming fast and furious the future is coming it's going to be here and i think the um i think the tesla uh rollout has answered a lot of questions and i think the question was how far behind are they how far ahead are they what's their timeline and i think the timeline is what i've said here which is no shame in the safety monitor game you it should take six to twelve months in each city's having uh safety drivers so no shame in

SPEAKER_01: the safety driver game i'd love and i think we've seen now with the rollout in austin that they're going to have safety drivers in there for some number of months rides etc and that's the way it

SPEAKER_07: should be done because there's lots of edge cases twitter right now is filled with even the small test the amount of scrutiny tesla is under is absolutely fantastic that kind of scrutiny from haters tesla q short sellers that's what makes the team get really focused on the edge cases so they're under a massive microscope uh so be it is it fair is it unfair who cares it is what it is and i think what we're going to see is they'll iron out those features but it's anybody's race right now volswagon pony we ride doordash zipline it's going to be 20 people and it's going to take so long for this to play out i think we're in the second inning is you know it's not the first inning the first inning was the last two or three years when people were preparing this technology supervised fsd waymo you know pilot cities

SPEAKER_01: now we're in the second inning getting a little more serious gonna have an impact on revenues not this year or next but maybe in 2027 and that'll be like the third or fourth inning the end of this

SPEAKER_28: decades the third or fourth inning when we actually will see the numbers become material to one of the players probably not google perhaps not uber definitely not tesla but they'll start to become material for maybe serve and pony ai we'll start to see those companies reach some level of revenue

SPEAKER_43: that is decent so you've touched on every angle of the story about the one that i was thinking about

SPEAKER_13: the most okay and that is why uber would put up i presume the capital for travis to buy pony.ai's us operations yeah uh is that a hedge is that them simply having something in their back pocket jason in case their partnership program don't work out are they worried about tesla coming into the game and

SPEAKER_46: taking away their market share yeah great question uh and a couple of good theories actually uh dara's

SPEAKER_28: a statesman dara's a statesman uh london was pretty pissed off at uber if you remember and uh uber was going to get kicked out of the uk somehow he pulled a rabbit out of the house smoothed things over uh waymo was going to run over uber somehow he figured out how to make a partnership dara's the ultimate soft power partnership uh statesman he could run for president if he did i would run the campaign dara is an exceptional exceptional uh executive in this regard if travis was going to go out and raise money he can raise money from any number of sources what this does is it creates a deeper relationship uh there already is a deep relationship between cloud kitchens and uber and what i would say is this sets up the eventual acquisition of cloud kitchens pony and uber uh into one company if that happens now you've got a really great formidable number one player by far yeah and doordash will be be the loser in that one so uh he'll yeah shout out to our immigrants they do get the job done uh and

SPEAKER_00: dara is an immigrant yeah uh like like many of our great founders here in the united states so

SPEAKER_07: anyway i'm really excited about it incredibly smart move by dara if it's true maybe they pop in a quick 500 million uh into it maybe some sovereign wealth funds maybe some other investors private equity they all get involved and uh you know travis is an exceptional exceptional executive and he thinks very big if you've built it you know what's now almost a 200 billion dollar company as you mentioned

SPEAKER_01: earlier uber is at its all-time high you know he's he's thinking about the chess board and then the backgammon board and the tennis court and wakeboarding all concurrently he's not playing 4d 5d chess he's playing 20 different games at once he's a master strategist and has a resiliency that is only matched or surpassed by elon in my estimation in terms of resiliency and effort these are just the two top executives pound for pound in the world right now founders are all about performance that's how

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SPEAKER_13: will he do with cloud kitchens if he takes over pony.ai's u.s operations that i think you just said the

SPEAKER_22: answer is why not do both so there we go yeah yeah it this is uh and and i did say countless times on

SPEAKER_28: this show that there'll be massive consolidation on the road to what i think is a 10 trillion dollar prize i think all of this put together is going to be you know somewhere in the order of 10 trillion dollars which would mean you know at three or four times sales it's probably three or four billion trillion dollars in market cap so or yeah so you could see you know an apple an amazon a meta

SPEAKER_07: an nvidia level player in this space and if you put doordash and uber together that's 300 billion maybe so that means there's a 10x a 20x in the space uh so you you'll start to see some massive consolidation and um it's going to be fragmented on the hardware you know what's really interesting

SPEAKER_61: about that jason is if you add up the value of all non-tesla ottoman automakers the dollar amount's

SPEAKER_13: not that big but our view is that the self-driving market is going to be that big and i think that's

SPEAKER_62: the power of asset light businesses that are less cyclical than literally stamping out doors and

SPEAKER_07: making f-150s yeah i mean the the the car business is a race to the bottom the network-based marketplace business is uh you know two or three players and uh you know high margin so if you need to own some of the hardware in order to make it happen so be it but it'll be commoditized the commodification that's going on i saw xiaomi had a big launch i think today of one of their new cars xiaomi is a

SPEAKER_01: handset manufacturer that decided to go into the car business and car aficionados are freaking out there are two things right now in the car industry that people are losing their minds over one is the new corvette zora uh which is like a zr1x i think is the name of it uh it was codenamed zora it's a supercar hypercar is the category 1250 horsepower for 200k or something that one is blowing people's minds and the other one is xiaomi and i'm going to get that zora but i'm going to get myself a supercar

SPEAKER_67: hypercar at some point here uh yeah that's the other big one is xiaomi and i don't know if we have the uh brand name but we can pull it yeah it's the it's the yu7 and jason what i'm about to

SPEAKER_13: show is their um their page on weibo which is kind of like the chinese twitter chinese x if you will and this shows what i think is the most interesting milestone uh they claim to have sold over 200 000 of these yu7 uh cars in three minutes and then that number went up to nearly 300 000 in an hour now deposits versus purchases i don't know but demand for this thing is absolutely off the charts

SPEAKER_69: and i think it just goes to show seven is what it's called yes sir would be good to show it let's see

SPEAKER_28: if we have a picture of it because i did launch today uh and the price has undercut the tesla model y yeah so i guess this is not the super fancy hypercar they are not hypercar they have one that is like a

SPEAKER_01: real sports car kind of competes with a porsche uh or a corvette um or yeah it's called the su7

SPEAKER_13: ultra and that one just beat its own record around the nurberg ring and if you're not familiar with the nurberg ring it's a semi-open famous racetrack in germany out in the woods and it is long as hell

SPEAKER_83: and super technical and difficult a great place to test road cars setting the record there is kind of like the equivalent of ella marina but for car makers i don't know what ella marina is but it is the

SPEAKER_07: number one place where they do these and i think the model s plaid hypercar is the current winner and i think the corvette's just beating it now like literally this week it's on the track um so yu7 is the model y competitor let's see what that looks like okay there's your frunk okay

SPEAKER_67: pretty big yeah it's got like a airport roller bag in there yeah

SPEAKER_88: it's kind of good looking jason i think i like it yeah scroll ahead to the uh interface in the

SPEAKER_01: interior because that's where these things really shine it's got 400 miles of range and it's 35 000

SPEAKER_07: so it is priced very low and you look it's an exact ripoff in the interface is the exact ripoff of the tesla which is crazy when you think about it like they literally copied exactly um

SPEAKER_91: yeah beautiful injuria yeah yeah let's take one more look at it see we can find this different just this screen here uh here we go yeah let's see the cockpit yeah here's a better shot of it and then they're going to turn around here and show us the back which looks fine yeah i could put two car seats in

SPEAKER_00: that what you'll find is the build quality is pretty amazing this is why the tariff wars um are upon us i think a lot of the eu the united states they're all like yeah you're not going to be able

SPEAKER_01: to sell this in america without a 100 tariff or a 50 tariff or it will wipe out when i say wipe out i mean wipe out all european car manufacturers all american car manufacturers it would be devastating and

SPEAKER_28: that's why places like korea don't allow these things to be imported uh just way too cheap i also think there'll be some safety standards that they don't reach build quality to start but we said the

SPEAKER_01: same thing about uh the products coming out of japan and then eventually they exceeded so all right there

SPEAKER_48: you have the folks a lot of big news going on yeah kia was a joke when it came out now it's not all

SPEAKER_13: right um one of our favorite things in the world jason is keeping track of what's happening you and i both love a wager a bet a gamble and that's why prediction markets have always been kind of up on our list uh there's some big news from both calci and polymarket that i want to touch on today first of all calci uh raised 185 million at a valuation of around 2 billion that's an enormous amount of money at a very high valuation and don't forget they've also partnered with robin hood so they're doing quite well as far as we can tell and then the other item is that polymarket their arch competitor uh is reported to be raising as much as 200 million at at least a billion dollar valuation and i believe founders fund is pipped as the lead investor there so we're about to see this uber lyft kind of competition between these two well-known companies go insane because they're about to each have nine figures of extra cash on hand which i think is going to lead to a lot of innovation and advertising but uh i do worry about burn a little bit when i see two competitors raise this much money so quickly

SPEAKER_00: you know we're in a different era these are asset-like businesses i don't think they're trying to like do what uber and doordash did or lyft and doordash where they're losing money on every transaction um and i think the polymarket valuations misreported um i'll leave it at that uh it's yeah i mean polymarket's a big company it's um these things are becoming i think these things will replace

SPEAKER_07: in some ways expertise uh or augment it the idea of like listening to a journalist or a podcaster or a news reporter or a newspaper kind of predict the future or try to report the news there's a group of people who are going to just say like why would he even bother reading this story or listening to

SPEAKER_22: you know whatever it is fox business cnbc i don't need to hear somebody pontificate on what's going to happen in this election in this sports event i can listen to it if i like the you know the commentator i'm just going to look at the polymarket i'm just going to look at calci i'm just going to look at these prediction markets and i'm going to start there so starting with

SPEAKER_01: what the sharps the most uh skin in the game individuals think will happen is where people are going to start so these things are going to you know really um change the world

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SPEAKER_28: smarter visit lemon.io twist and there was one if you look up in trade the idea of a prediction market is 20 plus years old in trade was something that vcs used to um share information on and it went away uh maybe you have to look at the wikipedia page but it was a web-based trading exchange whose members traded contracts between each others on the probabilities of various events occurring they had to exclude us traders in 2012 uh they suspended all trading in march 2013 so this thing in the early

SPEAKER_22: 2000s you know uh and it started actually in 1999 i guess um maybe when did it start yeah it says

SPEAKER_13: found according to according to intrade.com uh it was 2001 that was founded in dublin um and did take part in the 2008 2012 u.s elections and was uh known for its accuracy in those events here's my question though i we have a polymarket segment coming up and i go through polymarket on a daily basis to keep tabs of what people are interested in betting on predicting whatever phrase you want sometimes though i'm a little surprised that there's analogs elsewhere in the market you know we talked the other week about the nba finals and how polymarket was um essentially handicapping that event well we also have sports betting that has odds uh there's things about the fed and so forth people are also making bets on fed movement in other parts of the market so what i kind of like about these isn't that they're always creating new territory of information but they're bringing what used to be relatively spread out information into a single location i think that's great for people who don't have access to you know

SPEAKER_101: expensive financial information or every betting platform for example yeah it's uh it's just the start

SPEAKER_00: these things are going to get bigger and bigger and they're kind of acting in real time now so that is

SPEAKER_07: one of the nice things about them whatever's happening in the world they will pop one up for and you know there are infinite applications for these from the entertainment value of them to people who actually have skin in the game and need to hedge some outcome so if you lived i don't know somewhere during fire season instead of buying insurance you know maybe you buy a contract and you know what's the chances that there are huge fires in this area santa rosa right or you know napa for the chances there's a major fire that burns over 500 acres in napa it's a whatever it is a five percent chance okay

SPEAKER_01: your house is worth a million dollars you decide you know what every year i'm just gonna put five thousand dollars on that outcome uh happening eventually i might hit it if i don't hit it great my house didn't burn down and i just don't get insurance uh so there's gonna be really interesting

SPEAKER_28: concepts like that uh maybe it you do this for your car maybe you do it for other situations like that right all these insurance concepts might be able to be uh done by prediction markets and it's really

SPEAKER_35: exciting future yeah so prediction markets then become sports betting economic markets insurance

SPEAKER_13: replacements and a way to get rid of cnbc all at once how can you not love it yeah i mean i we don't

SPEAKER_22: have to get rid of cnbc it it just becomes a tool for cnbc right and i think that's what you're starting to see is people mentioning it in news stories like we do here right in fact that's why i wanted to do

SPEAKER_28: the deal we did with polymarket we have a deal with them here and then all in has a deal with them and part of the deal is they'll pop up markets for us or we have a fast track to making markets with them and that's really good for us so we could create a market right now on the chance that you know who does the most rides in ride hailing you know where the chances that travis buys pony ai we could literally make a prediction market for that so you could bet on the public stock pony ai you can't you might be able to trade secondaries in cloud kitchens i don't think they allow it but theoretically you could and you could create a poly market so imagine that if you had three of those bets going it's all different ways to hedge and understand the world better i i just love that

SPEAKER_07: this exists what i really love about it for young people uh for commentators for journalists for you know people who are hosts of shows is you have to up your game you really have to be thinking uh in bets and understanding possible outcomes so i just think everybody's gonna get much more

SPEAKER_13: well i think it makes you smarter i'm learning stuff from polymarket i picked a market for us today and i was trying to think what is something that jason loves and i know you and lon producer lon are big fans of movies and i'm a big fan of formula one and i happen to find a polymarket that makes everyone happy so if you take a look at this right here people over on polymarket are making bets about how well the upcoming f1 movie with brad but uh is going to do in its opening weekend not aggregate performance not total box office not lifetime sales not ranking on rotten tomatoes just open weekend open weekend very simple very easy to find out and to my surprise after i looked through this data which if you can't see the the video here um there's currently a 52 chance that it opens and does more than 55 million in its first weekend 35 people think 51 to 55 and then 11 46 51 and then below that's a little bit lower uh but what's interesting jason is that this is contrary to what the market currently thinks i looked into it and according to reporting from variety uh the insiders in the film industry think 30 to 40 million dollars worth of ticket sales in the first weekend polymarket folks are saying actually it's going to be higher so we're going to have a fun test here of who's right um but everyone's thinking this movie's going to do quite well i pull the list of the largest opening weekends in the us this year and 55 million

David Friedberg: would put it ranked at seventh so not bad yeah i think this is where you can start to wonder why

SPEAKER_07: right why does the film industry think it's going to do worse than this market and then how this reconciles so there could be some reconciliation of this wager bet prediction market that causes that kind of difference and so it might be how they record the weekend if they're including thursday

SPEAKER_01: friday saturday international versus domestic who knows but that's the devil's in the details you got to get into that um i you know i i guess the box office has been terrible people don't go to the

SPEAKER_22: movies anymore but f1 is you know riding a really hot wave so it has some sort of endemic audience so

SPEAKER_01: that's i guess what you're betting here i mean if i was going to take this i would go with i think i'm taking the under so i might take the the first couple of categories like under maybe maybe i put the bat on 51 million and under so i would take like 51 and under and i guess that takes you down to 47 and

SPEAKER_00: under i would take some combination of the under i don't think it's that strong the odds are quite

SPEAKER_13: great because uh people only are giving it a two percent chance to come under 43 million in the first weekend um there is by the way on the polymarket page if you're curious a lengthy rule section that breaks down the exact length of the weekend and so forth if you want to get deep into it i'm just glad that people are making wagers on my interest which makes me very happy it's kind of

SPEAKER_124: interesting when you look at it uh minecraft movie 162 million dollar opening lilo and stitch

SPEAKER_28: which is ip captain america ip how to train your dragon ip thunderbirds ip mission impossible ip final destination bloodlines ip so we take all those together and everything is ip based

SPEAKER_01: ip bases and like you know these are sequels or based on a video game with a big following now is

SPEAKER_127: f1 ip based or not i think it is right i think it is yeah i think it falls under that bucket yeah like

SPEAKER_07: minecraft does right so it exists in the world with a fan base so that would argue that it's going to do well i don't know how big it is that actually might be how i'd back into this how many minecraft players are there versus how many people in america what how many people play minecraft versus how many people watch f1 in america and then you might be able to figure out how does the how do those two things relate right that could be very interesting and then you could do it with the barbie movie like how many people buy barbies every year or have bought barbies unless there's some sharp person in the world who is doing this who works at a movie studio and then there's an even smarter person who works at home and hangs out on reddit or in the polymarket forums also doing this so to to the

SPEAKER_02: point there's like a career of being a sharp here um and figuring out what you could correlate with

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SPEAKER_13: best investigative journalists i mean every short seller does reams of research right he wouldn't hindenburg or someone else drops a report it's it's in depth and all that would go to making the prediction markets more accurate to give us a better view of uh what's going on in the world so shout out polymarket for all that they do we love taking a look uh jason i want to talk a little bit about open ai and microsoft they're in an interesting tiff right now and i'm hoping to talk about what founders should think about strategics just for folks who don't know right now open ai the famous ai foundation model company is trying to rejigger its corporate structure essentially jason formed a public benefit corporation so that way it can eventually go public there's a stumbling block called satya nadella the ceo of microsoft who not only wants a large equity chunk in that business but also wants protections for his own company not a surprise given the money he's put in but the current sticking point is not so much the equity stake it's more about the definition of agi now that matters because in the initial open ai microsoft contract once agi is reached by open ai agi being artificial general intelligence then they don't have to get their technology to microsoft anymore otherwise they have to share it till 2030 and so as the two companies are trying to sort out this uh marital dispute you might say there's actually a really tough problem of figuring out what agi is and when have you reached it and jason i don't think anyone has the perfect definition

SPEAKER_135: of what agi shouldn't that be in the contract agi is in the contract the definition was sufficiently

SPEAKER_13: squishy that microsoft was worried about that at the time but they decided that one they were behind enough in ai that they were just going to do the deal anyways and also keep in mind a couple years ago agi wasn't this thing with a three to five year timeline it was uh well maybe in 2200 we'll have it

SPEAKER_35: so it's kind of bitten them a little bit what is the definition do is the definition in the contract

SPEAKER_07: been released or discussed uh by anybody leaked i have not seen any language leaked about the the

SPEAKER_13: formal wording about a definition of agi but i do have some notes from satya about how he thinks about

SPEAKER_07: it that might provide a little bit of context so i mean human level intelligence and the ability to learn uh and understand as if you were a human is what most people say there's also super intelligence which is like a new term people are throwing around you know this is going to be very easy for i

SPEAKER_01: predict depending on what's in the contract um and if anybody has the contract please send it to us or send it to me jason at calacanis.com i'm curious what exactly it says in the contract because the devil would be in the details here and if it was if it does come down to that definition that would take years to litigate that would be like an unprecedented legal case so if that does happen i think microsoft can run out the clock here and cause massive damage to open eyes ability to flip and when they say public benefit corporation which want to make sure people are aware of what that is

SPEAKER_28: it's just it's a corporation it's not a non-profit it just means it has a stated mission and it's no different than a for-profit shares will trade publicly traded it's essentially a virtue signaling for profit if you want a virtue signal start a b corporation you can look it up online but essentially you state a mission i don't know to index the world's information to make it freely available to people and then the board has to take that into consideration along with the shareholders it means nothing it was a clever way for i think uh open ai to put a little shine on this and maybe say oh well we're still going to be a benefit corporation we're not going to you know just like a non-profit a non-profit is distinctly different than a for-profit or a benefit corporation

SPEAKER_01: a benefit corporation is exactly the same as a for-profit with that little tiny nuance it has nothing to do with a non-profit they have a certain amount of time to do this what

SPEAKER_07: happens if open ai cannot flip to a for-profit because wasn't the masa deal somehow connected because he was going to invest some tens of billions of dollars that they need but that would require them to be a for-profit yeah so i think there's an enormous amount of pressure on the two

SPEAKER_13: companies to come to a deal and look there's been a lot of reporting about tensions between the two businesses already this is just one layer on top of it and by the way jason the journal reports that to declare agi the open ai board just has to do so in quote good faith now microsoft could respond

SPEAKER_83: with a suit but there's not some like iced out formal definition that i can see from the reporting that would say here's the definition you have to meet so this seems like a pretty big miss on microsoft's part back at the negotiating table years ago but if they don't let open ai convert and if the relationship falls apart then i guess microsoft just gets access to their tech through

SPEAKER_07: 2030 and then they they walk away from access to the weights and the whole model so they don't need open ai they get that um oliver saying here the two companies report reportedly signed an agreement last year stating open ai has only achieved agi when it develops a systems that can generate at

SPEAKER_28: least 100 billion in profits is that a quote oliver or is that that's a tech my understanding of that

SPEAKER_83: this is there's a higher level of agi called sufficient agi and that is predicated on the ability of the systems to generate enough money to essentially repay microsoft which is a slightly different point than the agi point which is the technology uh shifting points there's actually two different competing definitions but we're not at agi yet i think the idea of having another layer above that is today about as far-fetched as agi felt three or four years ago so let's stick to my point

SPEAKER_148: here for a second this is in that story from tech crunch this is what i was referring to open ai can

SPEAKER_13: also declare a higher tier of agi called sufficient agi when its ai systems are financially capable of paying microsoft the future profits to which it is entitled that i believe is the same hundred

SPEAKER_83: billion dollar uh milestone that tech crunch is reporting okay so open ai can decide they hit agi

SPEAKER_07: if they generate 100 billion in profits they're at 10 billion in revenue they're at zero billions in profit they are negative to make a hundred billion in profits would be they would probably need to have i don't know if they had a 50 margin they would have to be at 200 billion they'd be 20 times they're not going to grow 20 times anytime soon that's a colossal amount of revenue huge so they're not going to hit that so then there's somewhere which we don't have another definition of agi that's in that contract is that so am i correct am i understanding starting at the lower tier

SPEAKER_83: open ai's board can say we've reached agi the requirement is good faith and at that point they don't have to share technology with microsoft the higher tier is when their systems are able to generate some enormous amount of money tech which is 100 billion the journal says the ability to repay microsoft all of its future profits essentially these are escape hatches for open ai to break free from its ties to redmond but i don't think we're going to see either one broached breached broken through because my my guess here jason is that this is a lot of spitting on each other in public to kick the tires on a deal they're going to land in private like do you actually think there's a chance that these two companies cannot find a deal that works for both sides well satya nadella hey he

SPEAKER_22: makes this uh point i see in the notes here us self-claiming some agi milestone that's just nonsensical benchmark hacking to me the real benchmark is the world growing at 10 percent so he's putting it on uh and this was on um the quantum what podcast is this it's the uh i forget his name it's the dwakesh podcast dwakesh parka so i guess he sees this coming and he is you know sort of

SPEAKER_28: getting ahead of this negotiation and saying that publicly uh wall street journal says the contract only requires that opening eyes board to clear agi in good faith though microsoft could easily sue the company in response risking a drawn-out legal battle okay so to be more clear here i think the clearest way to say this is opening i can do it anytime they want good faith is a very squishy term

SPEAKER_01: so they will probably do that at some point and then microsoft will sue them there's also this nonsensical massive amount of capital that could be a massive amount of profits that could also trigger it since that's not going to happen this is going to come down to one person claiming it the other person not claiming it and based on what satya nadella has said here he's not going for that definition

SPEAKER_07: so he's going to wreak havoc on open ai is my prediction he's going to slow roll this he is going to scuttle them in order this is what a cutthroat person would do a cutthroat person would and and satya is one of those um he this is a pretty significant competitor they have and he will make their lives

SPEAKER_22: miserable sue them block anybody from investing claim all kinds of interference and not allow them

SPEAKER_01: to get away with it they will try to get away with it and then the question is does this become so

SPEAKER_07: distracting over the coming years that it will give microsoft and consequently other competitors the ability to beat open ai who has run away with it in terms of consumer adoption so i think that's what's

SPEAKER_158: going on here i i would have bet you a hundred dollars you were going to say look they're going to sort it out this is just them you know picking a fight in public okay so that actually makes

SPEAKER_07: further there's no upside to picking a fight in public the upside is in winning the whatever the ai race is worth so if you put it through that lens microsoft's biggest competitor is open ai microsoft's biggest competitor is open ai everybody's biggest competitor is open ai if everybody goes to open ai to solve every business problem every search they're competing against microsoft office they're competing against uh the hardware platform apple has with their new johnny ive product they're competing against every piece of sas software in the world they're that's what agi would do therefore

SPEAKER_01: his most strategic mission is to win ai therefore he has to beat open ai what's the best way to open beat open ai is to have all their technology build parallel technology so you've got every you've got all their innovations plus your own then starve them from compute while you build up your compute

SPEAKER_28: force them to try to raise money to keep up with the compute race and then they can't keep up with the compute race because you just blocked masa from investing so what microsoft should do is sue

SPEAKER_01: anybody who wants to invest in open ai and say this company is stealing from us there did something you know untoward and then that might scare masa from investing in it right all right well that is

SPEAKER_13: very machiavellian and satya is a person that i have known historically a little bit um always very nice in person uh i've never done a deal with them so i'm going to take your your word on that jason but i want to loop this back to startups because i'm curious what the lesson here is because when they signed this deal it was strategic people were very excited about it uh do investments from strategic partners into startups often go wrong clearly on a lower scale but like is this a common okay

SPEAKER_166: situation to be the only reason for a strategic to invest in a startup is to own their business

SPEAKER_28: eventually and because they see them as a threat okay that's it people will delude themselves into thinking that there is some kumbaya you know future world in which everybody gets along and splits revenue as this contract tried to do this was something sam needed to do desperately to get money and to get compute power he did it it is a mess and yeah it's all and then he did the same thing with the corporate structure he needed bucket loads of money so he did a non-profit so now he's got to fix that mess he then had a mess of a board who was missionaries and he had to get through that

SPEAKER_07: and get uh and and win a power struggle internally and all his co-founders left to start competing products so he's got three battles he set up here one with the people who funded the non-profit one with the co-founders of the company and the board who wanted to do a mission driven company one with the state attorney generals to make this a for-profit and then one with microsoft i mean he's battling four or five things that rock the foundation of this company and at the same time he's built this incredible skyscraper on top of this foundation now does that mean the skyscraper is going to fall it's quite possible that any of these could be i don't want to say like it would kill the company but it could make it impossible to flip into a for-profit they might not be able to flip into a non-profit or it might be massively costly what if they have to give the non-profit

SPEAKER_01: all the profits up until some grand number or they're in litigation with microsoft and become so distracting that something comes out in discovery i mean it sounds crazy but um this is um this is a distraction that even sam altman and this is a amount of convoluted structure that even sam altman might not be able to navigate and he's really good at navigating these things clearly he's a deal maker so yeah um but then again success tends to solve all problems but it didn't for youtube

SPEAKER_28: right youtube had to sell so you look at the youtube situation they had massive amounts of lawsuits they were not able to get out from under those they wound up selling the asset and then it was google's job

SPEAKER_01: to settle these maybe that's what happens here i don't there's not somebody who's capable of buying a 350 billion dollar company right now maybe apple like nvidia microsoft maybe they could the top four

SPEAKER_13: or five companies yeah ah see i i like that that would be an audacious deal between two two parties by the way great moment for a poly market will microsoft and open ai resolve this deal before august 31st i would take the other side of that one uh but on the point about there being quite a lot of competition in the space we do have some news from the meta side of things meta of course the social network company and also owns now a vr business and an ai business so meta is building a quote super intelligence team jason mentioned that term earlier in the show and they are out in the world trying to hire people that are well-known ai researchers the best of the best essentially well they have snagged three people from open ai's zurich office that's lucas bear alexander um kolosnikov and shahuasai and as far as i can tell just and i was trying to really nail this down but i'm like 90 sure that's the entire open ai zurich office so they essentially just they hired these three people originally the three were from google deep mind they stayed with open ai for a bit and now the three are going to their third company meta to work on the super intelligence team there's been a lot of speculation in the market about how much money meta is willing to pay for this talent and people were saying hey we've heard of this 100 million dollar number maybe these guys got it well lucas bear did a tweet or an x post if you will and he says yes we are joining meta but no we did not get a hundred million dollar sign on i'm sorry i was hoping they were going to but they have publicly confirmed the transfer of talent over to meta kind of a coup is my read jason i think this is quite a good result for

SPEAKER_07: for zuck um i maybe i i guess the question is um are you know are these truly a players or not um and will they truly make a difference it is talent talent is moving because talent might have been mispriced last year uh given what uh zuck is willing to pay now so almost everybody's contract is mispriced right now so that means either people have to renegotiate with their current employer or get a competing offer to do it the question i would have is for these three individuals on their

SPEAKER_00: linkedin when how long were they at deep sea uh yeah deep mind at google that's their ai subsidiary how long were they open up ai and then how how long are they now that they're at meta that second that

SPEAKER_07: second piece of data is the key where that open ai for a year for five years if it's four years they're fully vested you know if it's two or three years they're two two thirds vested etc so looking at this um just looking at one of them alexander uh was at google for six years eight months obviously did really well he's a member of the technical staff um and he was a staff research scientist at deep

SPEAKER_43: mind he's only been at open ai for seven months lucas same thing with lucas bear seven months six years four months at google on the deep mind team so these people are moving person uh i have not pulled

SPEAKER_01: them up is uh five months so this is super interesting they all spend five six seven years

SPEAKER_28: at deep mind they've only been at open ai for five months and that is super interesting uh they were

SPEAKER_190: yeah wow not much not much so and they came as a team they came as a group and they're leaving as a

SPEAKER_108: group interesting they must be just besties over in zurich just three nerds really good at ai enjoying

SPEAKER_22: chocolate you know i guess you know this is the thing deep mind was based in europe and i think

SPEAKER_01: there were a lot of people um yeah based there um interesting interesting that uh zai zhao zai who is in

SPEAKER_28: zurich now uh went to nanjing university and peking university where he got his phd so incredibly well

SPEAKER_48: known and prestigious kind of that's like harvard and stanford if you need a comp chinese phd right

SPEAKER_01: and this is like uh you know what we need to keep in the united states so this race is international as you can see and um yeah there's gonna be a lot of talent moving around i wonder if this is like this

SPEAKER_13: is like the world's smallest union because these three left deep mind to open ai together and they're leaving to to meta now did they just have a like a pact between the three of them like we only go

SPEAKER_07: as a group if you want one you get all three um they probably are working together on some projects so if we were to look up like their names in papers that's you know i think what i heard zuckerberg is doing he's looking at people's research papers finding people's name and research people papers getting the email addresses contact information whatsapp phone numbers whatever and he's personally reaching out to them to discuss these things so we're talking about a small cohort of low hundreds of people who are in these research papers who are leaders in this um all right so you pulled up lucas

SPEAKER_28: bayer um who got poached by open ai spent five or six years at deep mind and this is google scholar that shows his citation so what we can see here in the top right in this chart if you're watching us is uh how many times he was cited and uh you'll see who he was cited with and if you look on the

SPEAKER_197: right underneath that graph who are the top two people the other two people that he's joining meta with

SPEAKER_28: his besties yes so jay and alexander are i guess the people who have collaborated with him a bunch and what you're seeing here is he works in vision so these are vision it looks like um everything he's done lots of uh uh articles here uh and vision models so this means this is the vision team from open ai they probably worked on um what's the uh open ai vision product uh there's sora and then they

SPEAKER_62: released their new yeah studio ghibli thing yeah so this is sora this is probably members of the sora

SPEAKER_07: team and so there you have it folks if you want to understand where to find these people go to google scholar go to linkedin you can see the background this is what a recruiter is doing for zuck and uh mira who also was doing sora remember she left to do her own startup there was just new she raised 2 billion at a 10 billion dollar valuation thinking machine labs yeah okay so now you have her leaving and this is an amazing way to frame all this alex if you build a mental model okay 10 billion dollars

SPEAKER_01: in market cap was just created by mira right yep perplexity's got tens of billions of dollars in market

SPEAKER_00: cap meta has decided that their next trillion dollars in market cap is going to come from this

SPEAKER_01: all of that opens up stock and future equity that people can start claiming now so it's almost as if

SPEAKER_07: we went from if you thought about it in a real estate way okay we had a certain number of acres in manhattan now what if manhattan became 10 times bigger now you've got 10 times as much land to divvy amongst a small group of people these phds who are extremely valuable people are starting to realize the market opportunity is bigger than people anticipated zucks realized that mira's realized that investors have realized that now all that equity is sitting on a cap table so mira's got to go okay what do i have to give these folks i'll give them one percent of her new company what's her new company

SPEAKER_00: called uh thinking machine labs great so this would be a good opportunity to pull it up if there's a

SPEAKER_01: web page uh so if she's got thinking machine labs let's say she wants to give she created a cap in the cap table a 20 equity pool let's say she wants to get 10 of these great scientists here she might say okay 10 of the pool is going to go to the top 10 people i can find that's a hundred million dollars in equity each each point is worth a hundred million what's x ai worth they combined it with twitter and they put it at a hundred billion dollar valuations i think i read they were raising at so if that's a hundred billion then and half of it was twitter and half x twitter and half of was the new company that's 60 billion each point of market cap there is worth 600 billion so maybe they're offering i don't know 20 bips to everybody that equals 120 million dollars in equity so everybody in the space is worth a hundred billion dollars in equity you know 100 million 100 million in equity you know what that meant

SPEAKER_46: like 10 years ago you know what these people were worth they were worth a million dollars each yeah

SPEAKER_18: it's an insane amount of money and it's predicated on everyone being right that these companies will

SPEAKER_13: all stay worth as much as they are because thinking machines is only a startup now with an illiquid stock so its market cap is not quite the same but i i love your point and i think it just goes to show that meta's not nuts to go out there today and use all their capital to get these people not crazy at all

SPEAKER_01: it makes total sense that we're living in a world where this small group of talent who can make an impact you know it's it's you know what it reminds me of is hollywood if you go to hollywood and this

SPEAKER_28: is why um uh michael ovitz was coveted by mark andreessen and ben horowitz when they started andreessen horowitz they were thinking about developers and ceos the way ovitz thought about steven spielberg the

SPEAKER_01: director michael creighton the author you know and tom cruise and and you know other actors tom

SPEAKER_07: hanks etc they looked at them as like these incredible assets with a very small finite number of them that could actually make jurassic park that could actually make mission impossible whatever movie it was and um that's what we're seeing in our industry and it that vision existed 10 20 years ago for talent but now i think it's manifesting um because of this massive and people have to make a bet is this film that i'm doing that i have points and actually going to pay off in the case

SPEAKER_00: of jurassic park it did pay off all those actors and screenplay writers directors they all had massive

SPEAKER_141: upside in the eventual product one thing we've talked about jason is how we're going to have like

SPEAKER_13: the world's best driver and that's going to train the ai models and then everyone's going to have access to that best person just as a kind of a corollary i think we're seeing the individuals at the absolute furthest end of the talent and impact spectrum see their relative earnings compared to the the top performers go up which kind of feels like a similar thing like a concentration of economic value at the apex of labor and maybe less elsewhere on the curve during this transition

SPEAKER_00: definitely the concept of people who understand machine learning and who can build large language models and train them as a small number of people right now that will not be a small number of

SPEAKER_07: people uh forever if you are in computer science right now you know what to study just get in there

SPEAKER_01: and start building uh because this is um this is a 10-year story folks we'll be sitting here 10 years from now and there'll be a bunch of graduates going man i should have done that yeah you should

SPEAKER_13: have do it now now is the time if you want to stand out internships are great but everyone's competing for the same thing i think the best thing you can do to get a job right now is to somehow go viral on twitter with an interesting project because every single potential employer will see you and they might reach out to you directly you'll have access to the ceo versus the junior person on

SPEAKER_108: the you know hr recruiting staff that doesn't even know your name so yeah don't don't go through the

SPEAKER_10: front door these folks are not gonna yeah if you've got this kind of skill level build products

SPEAKER_01: with your friends and start a company and email me and apply to founder university or accelerator uh that's the other thing that's great here is any of these people uh those three people could have left and raise 50 million dollars 100 million dollars with an idea so they uh probably explored that maybe they didn't want to be uh founders and they just decided and i've been meeting academics who are starting companies now first-time founders who spent their time getting their phds and where academics have no idea how to run a company uh so we'll see it's going to be very

SPEAKER_80: interesting to watch should be quite entertaining i know this is we're going off base here from our

SPEAKER_13: last topic but i was talking to um i'll keep this very generic i was talking to the syndicate yesterday

SPEAKER_216: i was uh i was i did a presentation for the meeting and such yeah this is the syndicate.com for people who don't know i have an angel syndicate it's got 11 000 members 4 000 have done a deal we've done 300

SPEAKER_00: deals we share our deal flow with them and we're increasingly sharing their deal flow with each other so it doesn't compete with angelist but just my little curated uh club of investors

SPEAKER_13: one thing that surprised me was how much people wanted to talk about improving the connection between academia and business and i thought this has been you know we've been talking about companies coming out of cambridge for so long now you think that it would be a solid issue but they talked a lot about the pipeline problems of getting people off of tenure track positions and so forth and into industry so if you're seeing academics do more of this maybe something's breaking loose maybe the ice is uh finally cracking a bit because i think we could use a lot more of our ivory tower talent out you know

SPEAKER_01: kind of fighting in the streets this is um the investors are interested in that talent because of this specific opportunity uh we've seen it before nanotechnology material science 3d printing we had a moment where investors were like you know what i want to invest in a 3d printing company i want to invest in nanotechnology where are the nanotech founders and it's like yeah there's like 50 people who have written papers about nanotechnology and literally investors would go look at those papers and then go meet those people and say hey is there a commercial application for this and they'd be like i don't

SPEAKER_07: know i'm just writing papers and then you have to make a decision do you want to leave license it

SPEAKER_01: etc all of these universities have um ip departments that license out their innovations and then they you know can make significant money on it i'm curious what the largest amount of money mit or stanford i wonder what the largest amount of money they made doing technology transfer is the category there must have been some interesting technologies that came out of those labs that wound up in a license that generated massive amounts and usually they license about five ten percent for a royalty or something as opposed to getting equity so you negotiate a royalty so if the companies are really successful they just have to keep paying you know for that license indefinitely and then you know the

SPEAKER_222: devil's in the details of how much you pay for that you know surprisingly the answer to your question is

SPEAKER_108: not uh imminently findable but i'm gonna mark that down and bring that to us uh next time we do a show because i i want to know that uh and i want to know that in detail because i think that's a really

SPEAKER_00: interesting place i think they're pretty promiscuous with it in other words i don't think that they try to extract as much value as they probably could if they were really trying to extract value they would start their own venture firm or have some venture partners in there and then but you know instead the endowments partner with venture firms give them money and and they probably have some um connective tissue there right if stanford's endowments in a dozen venture firms probably

SPEAKER_01: they probably t them will do introductions between their top talent and those firms and then they make

SPEAKER_207: the money there because it's not their best um skill set or use of time i don't know man u chicago my

SPEAKER_13: alma mater has 10.4 billion dollars i think you could crack off a bit of that and uh invest they also have a business school and they have a great economic i mean come on that does seem like a

SPEAKER_01: they invest in venture firms so the question is would they want to have a venture firm internally that's seeded things etc and i i think they've made the decision it's like it's too much in the weeds

SPEAKER_28: um and they should just let the capital markets figure it out because they're more aggressive so

SPEAKER_13: ring ring universities are lazy huh news at 11. like come on now i i did a a pitch competition at u chicago at booth when i was undergraduate and my team won good times uh there are so many smart people and now it's easier to start a company so i think even if that was the right perspective 10 years ago jason missed opportunity if they're not doing this the first university venture fund that's run by professionals and invest in their students is going to be also creates a little bit of a problem

SPEAKER_98: if the venture firm actually hits a google and then those venture capitals make a billion dollars each

SPEAKER_01: everybody who like gave them the money and seeded it is really upset this is why corporate venture has a problem like if you're in intel like uh you're getting a salary why are these people getting all this upside i'm not that's why they tend to spin them out but you know is what it is uh all

SPEAKER_28: different ways to do things do we have any um founder questions yes we do we actually have one that

SPEAKER_13: i'm really excited to bring up because this one really resonates with me all right so pulling from our dear friends over on the entrepreneur subreddit jason this is a founder who has built a business that people want but is struggling with one key point i'm just going to read a little bit of this for everyone listening in i have a killer business setup but i hate sales help desperately needed i've been at this for two years i go to sleep every night beating up myself for not being capable of pushing myself to sell my biz is in the payment processing niche every deal i make i can get between a hundred bucks a month to ten thousand bucks a month all i have to do is sell sign set

SPEAKER_48: it up and boom i make money my interest that i hate sales with a burning passion i really hate cold

SPEAKER_00: sales that's really like where you get the massive amount of rejection that first email that first

SPEAKER_231: phone call yeah so for this founder how do you get over yourself get over your anxiety and go out

SPEAKER_142: there and be shameless so founder-led sales are important early on because you learn

SPEAKER_28: uh about your product and how the market perceives it here he seems to have product market fit already to some extent if it was really strong product market fit people would be ordering it online if there was no product market fit he would not have said this key sentence

SPEAKER_01: i can make anywhere from a hundred dollars a month to ten thousand dollars a month in just one deal so obviously there is some product market fit here um and he actually says that all i have to do is sell

SPEAKER_28: signs set it up and boom i make money um but he hates the cold sales problem that's because

SPEAKER_00: when you do cold sales if you're not qualifying the leads or you're in that process it's going to be nine out of ten people 99 out of 100 depending on how qualified they are are going to be like please stop bothering me i don't want to do this there are people who love that rejection they take it as

SPEAKER_07: like a badge of honor now he says later in his thing here i can sell warm leads easy i have always worked those jobs um so what he needs to do is learn and take the same enthusiasm he had for creating his product to creating a replicable sales product a sales process and that process should be here are the

SPEAKER_28: people who i have sold to go find me more like that you can do that with an athena system go to athenowow.com hire one have them set up the leads you could do that with ai there's ai solutions to start doing this or you could hire a college grad for about 50k a year to sit next to you and do these first calls you write them a script you tell them what to do and you tell them listen it's going to suck but every time you do sell somebody i'm going to give you a 500 commission whatever the first month is i'm going to give you the first month up to a thousand dollars whatever it is and if they stayed a month six you know we'll have a customer support person and a customer success person they get month six so you get a thousand dollars when you sell it they get a thousand dollars a month six so you set up an incentive and then you see an outcome so this person just needs to understand that their chores suck nobody likes doing chores there's some dishes in my sink here i got to put them in the dishwasher nobody likes doing that it sucks but uh eventually you train people

SPEAKER_01: you know maybe your kids or you get a you know uh you know a housekeeper and you teach them how to do

SPEAKER_28: it and it's off your plate so so to speak that's all they have to do here look at it as a challenge just like building your product was a challenge get people who really do a good job at it and move on

SPEAKER_01: it's chores it sucks and you'll get through it and just take yourself out of that product do the first

SPEAKER_28: 10 and and you'll be fine hiring sucks sales people are difficult people to manage at least effective ones are a pain in the ass yeah the more effective so here's the correlation the better you at sale you are at sales the harder you are to manage it's almost a perfect correlation as the sales number comes up the salesperson has more opinions they have more hootspa they have more dexterity they have the better ability to communicate they have a better ability to communicate with each other uh therefore they're going to treat the customer in the same way they treat you as your as their boss why can't this be better don't you want the solution don't you want me to succeed don't you want this product they're going to use that same hootspa that same zeal that same convincing energy uh against you as the leader of the company so when you have one of these people and they're difficult embrace it congratulations you did it you found a great salesperson go find two more and then tell them up front my lord you're so great at your job and you're so difficult to deal with isn't that funny and then just laugh about it with them and go get a beer yeah uh and just check because the other option is they sell 10 as much 20 as much and they're easy to get along with and then they're so easy to get along with they don't want to bug the customers to you know sell them something these are unique individuals in all the world learn to do this and you'll unlock it

SPEAKER_13: and also sales people that are that good full employment any market any economy if you can actually sell i had a lot of friends that were working in tech sales back in the uh 14 15 16

SPEAKER_196: and they did they did great and it was lovely and fun to see them succeed all right everybody this

David Friedberg: has been another amazing episode of this week in startups this week in startups.com

SPEAKER_01: slash docket if you want to see us building the docket follow us on tick tock twitter all the other places and cautiousoptimism.substack.com am i correct sure or cautiousoptimism.news if you're so

SPEAKER_148: inclined oh you have the dot news very nice and you can subscribe to alex's amazing newsletter we'll see you all next time bye bye