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Torrid political convulsion of which he wanted no part. So kidder spirits. Yeah, I mean, ultimately it's this. Josh has put on an absolute masterclass of how to be an icon while being relatively in the shadows. Right. He just sort of like pops his head up in these key moments and yeah, I think when I think about what Josh and the Thrive team has built, it's actually, I mean, it's just like, it's almost unbelievable. Like the story end to end. By the fall of 2023, Thrive Capital, the New York based investment firm Kushner started 13 years earlier, had become an overnight sensation. In 2010, Thrive's first fund was 5 million and included companies Kickstarter and GroupMe. By 2023, its eighth fund was 3.3 billion, including a maniacally concentrated $2 billion investment in Stripe at a $50 billion valuation. He's like, here's two thirds of my fund. This is the Fifth Avenue strategy by Fifth Avenue. He talked about this on Invest like the best. And a $150 million check into OpenAI at a $29 billion valuation. The companies are now valued at 107 and 500 billion respectively. Along the way, Thrive's bet on Instagram, Spotify, Warby, Parker, Skims, GitHub, Slack, Robinhood and other companies had become conspicuous for being prescient, aesthetic and exquisitely timed among its most vindicated admirers. And for being absurdly priced, momentum chasing and too highly concentrated in dysfunctional businesses with unproven returns among increasingly sheepish critics. So. I like that they got Jony. I've to give a quote for this piece. Some people just have innately wonderful taste and intuition, said Jony. I've Apple's legendary former chief design officer who's now working with OpenAI on a hardware device. Josh has wonderful taste. I think it bleeds into his product Intuition, which is just fabulous. Another highlight here in 2010. Moreover, the unknown, Kushner's brother unknown little firm was making a bunch of large but weird sounding claims for itself. Like that it was a staged geography and sector agnostic venture firm that would concentrate all its investments in a very small number of companies. That it was not only an investment firm, but also itself a company that had incubated its own companies as well as invested in others. And that it didn't just invest in incubate, but functioned as a service provider, product creator and embedded operational commando unit for founders. By 2023, every self respecting investor on Sand Hill Road was also saying such things about themselves and even as they wondered how a New York firm made up of a handful of kids in their 20s and 30s, many of them with zero experience in venture capital and from the technology Bermuda Triangle of New Jersey, had become some of the most desired investors in tech and the ones most closely associated with the otherwise distinctly west coast boom in AI. Of course, Josh had a very untraditional pathway to venture capital. He went to Harvard for undergrad, while at the time, Mark Zuckerberg had just dropped out of Facebook. Later, he got a job at Goldman Sachs buying distressed debt and then went back to Harvard for his mba. It's a real miracle that he built. Of course, I'm joking a little bit, but it's what I appreciate about. What I appreciate about Josh is in many ways he was on. He was on the perfect trajectory to be a venture capitalist. And yet he has succeeded beyond what he has succeeded in a way that so many other thousands of people that had the same kind of pathway into the industry. By being in the right circles, like being early to a number of these different trends, he succeeded on a scale 100 times greater than many of the other people that were. Again, had the same kind of like pathway in the industry. Yeah. My read on it is that a lot of the VCs that started in the same like vintage, that did not become massive institutions maybe just got caught in the trap of diversification. Like I keep going back to that story of Josh saying he wants to buy Fifth Avenue, buy the best asset in the class, be concentrated, build a big allocation. And that takes guts that I think a lot of VCs kind of fell in the trap of like, I need to get a bunch of logos for I need from a whole bunch of companies. Or it's particularly cool. It gets actually higher status to be, oh, first check in this company. Or see, even if you have a tiny allocation that gets completely diluted down, like you're not actually making as much as many dollars. Like if you put 2 billion in stripe at 50 and it goes up to 100, you made $2 billion. Right. Versus you put 200k into some company gets diluted down, you make 50 million. Like you made way less dollars on dollars return, but it's like somehow higher status in venture to be like, yeah, I was like the first check in. And I think Josh has been early in a lot of companies, but I think that he understands the importance of like portfolio concentration, actually getting all the dollars in the companies that matter. And that's like, yeah. And I think early on my sense is that There was some like hunting early on, but they were when the fund sizes were very small. And that led to him having the track record and ability to put $2 billion into Stripe out of a $3.3 billion fund. And also the Thrive era, the era that Thrive grew in.

The system for modern software development, streamline issues, projects and product roadmaps and start building on linear. Delian said, bro, these foundation model companies already have pretty rough P&LS. Imagine if they also had to pay their pay to put their data centers in space. Yeah, the space data center thing there is like some sort of bull case. But every person who's sort of like an expert in building a data center what it takes to actually like rack and unrack GPUs. And what happens data centers in space gets on the perfect spac though. Yes, perfect spac. I mean, it could happen. It just feels like something that's like 10, 20 years out. It feels a little bit longer. Let's pull up. I think we got audio. Oh, we did, on the French tv. Great. Let's listen to that. Hopefully Henry is still around.

It's very hard if you come in and say write me something that's actually great. It needs to the hallucination is a feature, not a bug. For sure. Ara says your kidney can go for like 300k and you only need one to survive. God gave us all startup capital. You just have to want it bad enough you. Got to I would not go that far. I am against selling body parts, but if you do, make sure you pay your sales tax. And on numeralhq.com sales tax on autopilot spend less than 5 minutes per month on sales tax compliance. Chris over on X is highlighting the Apple TV plus.

The system for modern software development, streamline issues, projects, and product roadmaps. You can start building on linear. Delian said, bro, these foundation model companies already have pretty rough P&LS. Imagine if they also had to pay their pay to put their data centers in space. Yeah, the space data center thing there is like some sort of bull case. But every person who's sort of like an expert in building a data center what it takes to actually like rack and unrack GPUs. And what happens data centers in space gets on the perfect spack, though. Yes. Perfect spec. I mean, it could happen. It just feels like something that's like 10, 20 years out. It feels a little bit longer. Let's pull up. I think we got audio. Oh, we did, on the French tv. Great.

GPU's. And what happens? Data centers and spaces. Get on this. Perfect spac, though. Yes. Perfect spec. I mean, it could happen. It just feels like something that's like 10, 20 years out. It feels a little bit longer. Let's pull up. I think we got audio on the French tv. Great, let's listen to that. Hopefully Henry is still around so you can translate if you can hear the audio. Let's see. Do they go to Silicon Valley for this too? Who'd they talk to? Do we know what labs they want to get access? Here we go. Can we get Henry miked up? Yeah, she interviewed a French take, actually, because they're talking about how Meta is paying engineers and absolutely bludgeoning each other with high salaries. And the French are blown away by basically how hard American tech will go to find talent. Yeah, we just thought it was amazing that they, they. They came back from summer holiday and decided we have to cover the story immediately. We have to get our reporters to the west coast to figure out what's going on. Now covering these engineers are being traded like. Like athletes thanks to TBTN cards. So you're seeing the emergence of a whole new talent market, basically with active trades. This is a great translation. Thank you. You're doing this in real time. I'm here for hard. No, we need to get the new version of PES Manager so people can actually trade their own talent. Oh, that's great. That's hilarious. Is that Pro Evolution Soccer? Is that what you're saying? Yes. You got a gamer in the ultra dumb. Thank you so much, Henry. Thanks for the translation and for coming on. Thank you. And thank you to France for highlighting the Ultra Dome. It's a huge sign of respect. TVPN is the TVPN of Europe. It is. Sonnet 4.5 wrote a haiku. It said Sonnet 4.5.

Ty in the chat says if you cut to someone not on their battle station, they have to wear a part time podcaster. Thank you, Ty. Yeah, really phoning it into it. They're having fun. So yeah, let's get into this piece. Jeremy Stern profiled Josh Kushner in Colossus. It released today. It's not in print yet. It's going to be in print. Right, get ready. The New World. Where do you want to start? Where should we start? I mean, there's so much in here. I like this bit about Spotify. So in 2012, Thrive invested $6 million in a growth round of the Stockholm based Spotify out of $150 million fund, an allocation Kushner had regarded as a favor until learning nearly a decade later that Spotify CEO Daniel Ek was in need of exactly 6 million to close the round. So he's just like, oh, thank you so much for making room for me. This is amazing. I'm so glad I could get my 6 million. And Daniel Eck's over there being like, the round would have completely flopped if you hadn't come in. So thank you so much. But there's more to this anecdote. The reason Ek knew he liked Kushner was that a few years earlier, when Spotify was only available in Europe, Eck was notified by an executive that someone in the US had managed to register a fake UK app address in order to download the app via the UK App Store. They discovered it was Kushner sitting in the library of HBs. Wow. I pulled out some highlights from the piece. It's way too long for us to try to get through entirely, but some background. On November 17, 2023, Kushner was a 38 year old spouse of a supermodel brother and in law of American political royalty and founder and CEO of what had very suddenly become one of the most coveted venture capital firms in. He was also the grandson of survivors of the Novogrudec ghetto massacres. Indignant indigent refugees who over the course of the Cold War built a New Jersey real estate principality that their son Josh's father expanded into a multi state empire before his conviction on felony charges and sentencing to federal prison and before the White House activities of his older brother Jared put Josh in the crosshairs of a torrid political convulsion of which he wanted no part. So, kinder spirits. Yeah, I mean, ultimately it's this. Josh has put on an absolute masterclass of how to be an icon while being relatively in the shadows. Right. He just Sort of like pops his head up in these key moments and yeah, I think when I think about what Josh and the Thrive team has built, it's actually, I mean, it's just like, it's almost unbelievable. Like the story, the story, end to end. By the fall of 2023, Thrive Capital, the New York based investment firm Kushner started 13 years earlier, had become an overnight sensation. In 2010, Thrive's first fund was 5 million and included like Kickstarter and GroupMe. By 2023, its eighth fund was 3.3 billion, including a maniacally concentrated $2 billion investment in Stripe at a $50 billion valuation. He's like, here's two thirds of my fund. This is the Fifth Avenue strategy. Buy Fifth Avenue. He talked about this on Invest like the best. And a $150 million check into OpenAI at a $29 billion valuation. The companies are now valued at 107 and 500 billion respectively. Along the way, Thrive's been on Instagram, Spotify, Warby Parker, Skims, GitHub, Slack, Robinhood and other companies had become conspicuous for being prescient, aesthetic and exquisitely timed among its most vindicated admirers. And for being absurdly priced, momentum chasing and too highly concentrated in dysfunctional businesses with unproven returns among increasingly sheepish critics. So. I like that they got Jony. I've to give a quote for this piece. Some people just have innately wonderful taste and intuition, said Jony. I've Apple's legendary former chief design officer who's now working with OpenAI on a hardware device. Josh has wonderful taste. I think it bleeds into his product intuition, which is just fabulous. Another highlight here in 2010. Moreover, the unknown, Kushner's brother unknown little firm was making a bunch of large but weird sounding claims for itself. Like that it was a stage, geography and sector agnostic venture firm that would concentrate all its investments in a very small number of companies. That it was not only an investment firm but also itself a company that had incubated its own companies as well as invested in others. And that it didn't just invest in incubate, but functioned as a service provider, product creator and embedded operational commando unit for founders. By 2023, every self respecting investor on Sand Hill Road was also saying such things about themselves. Even as they wondered how a New York firm made up of a handful of kids in their 20s and 30s, many of them with zero experience in venture capital and from the technology Bermuda Triangle of New Jersey, had become some of the most desired investors in Tech and the ones most closely associated with the otherwise distinctly west coast boom in AI. Of course, Josh had a very untraditional pathway to venture capital. He went to Harvard for undergrad, while at the time Mark Zuckerberg had just dropped out of Facebook. Later, he got a job at Goldman Sachs buying distressed debt and then went back to Harvard for his mba. It's a real miracle. Of course I'm joking a little bit, but it's what I appreciate about. What I appreciate about Josh is in many ways he was on. He was on the perfect trajectory to be a venture capitalist. And yet he has succeeded beyond what he has succeeded in a way that so many other thousands of people that had the same kind of pathway into the industry. By being in the right circles, like being early to a number of these different trends, he succeeded on a scale 100 times greater than many of the other people that were. Again, had the same kind of like pathway in the industry. Yeah. My read on it is that a lot of the VCs that started in the same like vintage, that did not become massive institutions maybe just got caught in the trap of diversification. Like, I keep going back to that story of Josh saying he wants to buy Fifth Avenue, buy the best asset in the class, be concentrated, build a big allocation. And that takes guts that I think a lot of VCs kind of fell in the trap of like, I need to get a bunch of logos for I need from a whole bunch of companies. Or it's particularly cool. It gets actually higher status to be, oh, first check in this company. Or see, even if you have a tiny allocation that gets completely diluted down, like you're not actually making as much as many dollars. Like if you put 2 billion in stripe at. At 50 and it goes up to 100, you made $2 billion. Right. Versus you put 200k into some company, gets diluted down. You make 50 million. Like you made way less dollars on dollars return. But it's like somehow higher status in venture to be like, yeah, I was like the first check in. And I think Josh has been early in a lot of companies, but I think that he understands the importance of like portfolio concentration, actually getting all the dollars in the companies that matter. And that's like, yeah. And I think early on my sense is that there was some like hunting for logos early on, but they were when the fund sizes were very small. And that led to him having the track record and ability to put $2 billion into Stripe out of a 3. $3.3 billion fund. And also like, we're just like the Thrive era. The era that Thrive grew in is an era where venture changed pretty dramatically. I mean, we were talking about the Intel IPO, raised $6 million. Like, what is your role as a venture capitalist? Like deploy dollars and then wait for the IPO like a year later. And it was like that in the dot com boom. And Google IPO pretty early. Even Facebook IPO'd at what, 50 billion? And it was like the biggest IPO of all time. It was in like the. Yeah, there were. There were investments in that era that I'm sure the partners were underwriting. It is. I think there's 70% chance this company IPOs in the next two years. This is why we're investing Y and then they became compounders and over time it looked like. But they distributed and so a lot of the funds became RIAs. But Thrive has been able to say, yes, we're investing in a company at 50 billion because we expect it to grow and grow and grow and actually deliver. Like a venture style return or like a significant return. I appreciated this exchange between part of the article. The beginning goes into Kushner visiting Rick Rubin in Malibu. And Josh was telling Rick my deepest insecurities that I have these intuitions about things that I cannot explain to anyone. Kushner told Ruben as they sat in his garden overlooking the ocean. Sometimes I see or experience something and it makes sense to me. I fall in love. But I cannot explain why. Like when Thrive invested in Instagram or Spotify or OpenAI, I could not explain to anyone why the products made sense to me. It is my job to learn as much as I can for my team and teach them as much as I can. But often I have to push forward on my intuition alone, which is why my even deeper insecurity is, what if I lose it? Like, what if I lose the capacity to feel or experience these things? He's basically having this exchange because of course, Rick Rubin notoriously is just going off of raw intuition and vibes. I think the other. I mean, it goes into his entire. His family's crazy history dating back to Europe During World War II, getting out of Europe. But the I think can't be understated how formative it was I think for Josh to go through this sort of, you know, right as he was the quote here. By the time I was in high school, my father had accomplished a tremendous amount. He was deeply impactful in both the business and philanthropic worlds. And then overnight, our family were outcasts. The world treated us all One way for the beginning part of my childhood. And then suddenly they treated us very differently. That experience showed me how the world work and why you should not care too much about what people think. Of course, his father was embroiled in a, you know, wild crisis and ultimately went to prison for a couple years. But I think Josh says elsewhere in the piece that he wouldn't. I forget the line exactly. But something like wouldn't wish what he went through on his worst enemy. But at the same time, wouldn't. Wouldn't is sort of grateful for what kind of turned him into a monster, basically. Very kind monster. Well, if you want to try and reverse engineer Thrive's returns, dump all that data in Julius and chat with your data and get expert level insights. It's the AI data analyst that works for you. Tyler, what are you thinking about? Kushner? I think there's also underrated. He seems very or a pilled. Right. He has this kind of nonchalance about him. Yep. There's a good quote I think that relates to this. It says it's about Andy Golden. He's the Princeton Endowment head. He says golden later recalled a Happy hour for VCs in Cambridge in 2010 where he saw a 6 foot 3, emo looking kid in a black cardigan standing apart from the group, staring at the floor. I mean, that is just pure aura. Pure aura. Yeah. Apparently we're on French TV right now. Thank you for the notification. Send us the link if you can find it. We'd love to see that. Yes, there seems to be somewhat of a correlation or inverse correlation between just how much content and availability, how available you are in your aura. Ilya never does any press. Yeah, he's very mysterious. Very mysterious. The mystery allows people to build this idea of you. Exactly. You're like, oh yeah. Even when Ilya posted yesterday, like, great, the best day ever. Everyone was like, clearly this is. Hm, like Bubble is gone. I mean, we're going to keep going, we're safe. And it's like, that's not what it was about at all. He was talking about geopolitics and the end of the Gaza war. But so Rimke in the chat says, we asked for a link and Rimke says, France too. Oh, you just have to go. Just go to France too. France 2 is the channel name. Yeah, no, I know. Go find it. Is there a way to name that or something? We don't have French cable here. I would love to see. Go sign up. Try to sign up for an account. Did they translate? Did they Put sub titles over us. I'm so. I'm so curious about this. Anyway, while we dig in, this is a very nice. They just have the interview. Yeah, yeah, but I'm wondering, because they could have put French subtitles over us or they could have dubbed us with 11 labs or something. Ask LeChat how to get access to French cable. There is more details on how the OpenAI deal came together in this article that are pretty interesting, which you should go read. I feel like I'm allowed to trash investors because I was one for most of my career. Sam Altman said most investors don't work that hard. They're usually not available for midnight at calls and won't drop everything to fly across the country on short notice to do you a small favor for you the next day. Josh is consistently willing to do all those things. He's incredibly hardworking for his companies. He'll do whatever it takes, any amount of time. Nothing is too big an ask. During that crazy week where I got fired and rehired. He just put his entire life on hold. He didn't leave his hotel room for 72 hours. He just worked nonstop, very strategically, very effectively to get things back on the rails. Thrive had first gotten involved in OpenAI in early 2022 when they met Altman to discuss a new round. They'd been given preview of GPT3, the foundation model that preceded ChatGPT, which Kushner reportedly became so obsessed with, he almost seemed haunted by it. Now that's. That needs to be, like, corrected, because GPT3 came out in 2020. So I think they're either talking about GPT 3.5 DaVinci002, which was really popular, or it's just a preview of ChatGPT because investors were getting previews of ChatGPT beforehand, and it was, like, blowing everyone's mind. But it was a really good, complicated deal, and a lot of people passed basically for the wrong reasons, in my opinion. So on one, on Kushner's work ethic, he was. We met up earlier this year for coffee and he was. He was. I had, like, gone to sleep. He was still on the East coast. It was like 2am he's texting, like, yeah, do you want to, like, I'll see you at like, 10 or something like that. I'm like, you're on the east coast. Yeah, it's 2:00am for you. You're gonna get to the west coast and be ready for. And so that is part of the story, obviously, is just insane, you know, insane. Work ethic. Yeah, I see. In the chat, somebody said, we're on France, too. And Taylor says, dang. They released a sequel to France. Tyler's MVP of the chat this week. Yeah, sorry, Taylor. Taylor's been crushing it. Tyler has been struggling to learn French. I thought you studied French. You took French? I took two semesters of French. I found it. Yeah, let me. I'll screen share. Okay. Yeah, yeah, yeah. Let's figure out. I'll keep reading. So OpenAI at the time was a cap profit subsidiary controlled by a nonprofit board with the mission of safe AGI development. Taking legal precedence over profits, Microsoft's $1 billion 2019 investment gave it a dominant position in OpenAI with complex revenue sharing agreements and preferences, differential access to the company's technology. That, and the company was reportedly valued at 29 billion while doing a trivial 50 million revenue. What a ramp. From 50 mil to. What are they doing now, like, 10 billion, 12. 20 billion? Something like that. It was all very weird. There was no reason. There was a reason. No other investor submitted a term sheet for that round. Wow. After several conversations with the investment team, however, Kushner marshaled his case. Forget the nonprofit structure and Microsoft and all the red flags, he argued. If you can create this much enterprise value, everything else is solvable. In any case, colleagues recall, he kept repeating things like, I saw the future, and this is the one great call. Great, great, great call. Extremely hard. I know some other investors literally passed on that round because they were like, yeah, like, we talked to our lawyers and they were like, this doesn't make any sense. Or like, we couldn't understand, like, how we were getting it. Like, there were lots of smart people that passed. How early did people feel like ChatGPT was a going to be a meaningful threat to Google? That probably started in, like, March of 23, but I. But, like, November. I mean, people, when ChatGPT, when GPT 3 came out in 2020, people were starting to say, like, you could use this to. You could ask it a question. You had to. You really had to prompt hack because you couldn't just ask it a question. You had to, like, ask it a question for a list of bullet points and put a couple. A couple. I'm just laughing at RIM K saying, it's live now on news. It's on France, too. It's on the news. It's on the news. We're trying to find it. It's on the news. And so Thrive submitted a term sheet.130 million from its main fund at the $29 billion valuation. In November of 2022, OpenAI launched ChatGPT. Within two months, it became the fastest growing consumer app in history. By summer of 2023, Thrive was working on a $90 billion round. And in August they agreed to anchor 400 million of a $500 million employee tender offer. Critical leverage in the exploding war for AI talent against OpenAI's publicly traded competitors. By November 17, 2023, Thrive had committed around $700 million to the company. So pretty, pretty remarkable results. And really just goes to show you that there are certain pitches in venture like seeing ChatGPT before it launches that you need to really, really, really, really, really swing hard at. And Josh swung at the right pitch at the right time, which is like fantastic and much harder than I think people think. It's so easy now that everyone uses ChatGPT all the time to just be like, oh yeah, I would have made that deal too. Yeah. And ignoring the FUD and just like doubling, tripling, quadrupling down every single possible. Yeah. I mean when that initial round was happening, I was also like, I mean I wasn't an investor, but I was thinking like it just makes a lot of sense. I was looking at the team and I was like, if you just make the bet on like you have the CTO of Stripe, Greg Brockman, you have the former president of Y Combinator. Just the resume of the founding team at that time everyone was really it. Curve response was the corporate structure. This isn't a C corp. It's breaking the rules. I don't fund non C corps like. I'm out, but just going back to basics of being like the founding team who's running the company. Are they the best? Is this an important category and do I have the best team? It's like it was hard to make an argument against it at that time in my opinion anyway. Should have invested I guess, but like doing content instead. It's more fun. In other news with OpenAI, they did an interview with the Broadcom team and Sam Altman shared a little bit more about the custom chips that they're working on. Before we tell you about that, let me tell you about Fall, the generative media platform for developers. The world's best generative image, video and audio models all in one place. Develop and fine tune models with serverless GPUs and on demand clusters used by. Adobe, Shopify, Canva, Quora and many more. So Sam Almond says to zoom out a little bit. If you simplify what we do in this whole process, you know, melt sand run energy through it and get intelligence out the other end. As we realized we were going to need the whole system together to support this, it's just gotten more and more complex. So it turns out Broadcom is also incredible at helping design systems. So we are working together on that entire package. We are able to think from etching the transistors all the way up to the token that comes out when you ask ChatGPT a question and design the whole system. All of the stuff about the chip, the way we design the racks, the networking between them, how the algorithms that we're using fit the inference chip itself all the way to the end product. And so it feels very much like, like even if they're not, you know, fully like plateau pilled, like there's a lot more research to be done, there's a lot more improvements. Like there are at least pieces of the ChatGPT architecture, pieces of the system, whether that's, you know, 4O level inference reasoning tokens that should effectively be baked down onto a chip. And so that's what OpenAI is working on with Broadcom at this point. Stratecheri, Ben Thompson had a great deep dive on OpenAI and Broadcom and sort of laid out the argument for them working together and baking stuff down onto a chip. It's. It's a fun read. You should go check it out. Should we move on? Yep. I was just going to try to figure out what. Well, while you do that, let me tell you about Turbo Puffer Search. Every byte serverless vector and full text search built from first principles and object storage. Fast 10x cheaper and extremely scalable. Broadcom was a $220 billion company the day that ChatGPT launched. It is now. Wow. It's almost 1.7 trillion. Almost a 10x. Wow. Nvidia too. Nvidia was much, much smaller. That might be a 10x as well. Yeah, Wild, wild growth across the entire category. Basically everything has 10x'd in price or something like that. Roughly. Yeah, it's interesting. It'd be interesting to go back and do the math and the VCs. There was some reporting in the Financial Times a couple days ago talking about who actually owns OpenAI. And it would be probably interesting and painful to look back at the investors, how much they invested in OpenAI versus just like market buying. Nvidia, Broadcom and some of the other beneficiaries. Would they have made more money? The OpenAI didn't altimeter do both? Yeah, I'm sure the players like that did both. But OpenAI's expected ownership after the company restructures. Microsoft is going to have about 30%. OpenAI employees are going to have close to 30%. OpenAI, the nonprofit, is going to have 20 to 30%. But that doesn't mean you shouldn't still donate. If you're thinking about doing some charitable giving this holiday season, consider writing a donation to OpenAI the nonprofit. Prioritize tipping your cap table first. Yes. And then after that consider donating to OpenAI the nonprofit. But anyways, Microsoft at 30%. OpenAI employees around 30%. OpenAI nonprofit at 20 to 30%. SoftBank about 10%. And the remaining is Thrive, Khosla, MGX and a number of bedrocks in there. I wonder how accurate that reporting is. It feels like directionally correct. I think it's directionally correct. I wouldn't. But there's some pretty big error bars on either side. Yeah, but still, I mean you just look at some of these numbers that we pulled up. It's like what was the original OpenAI deal that thrived it? It was at a 27 billion. 130 million. At 29 billion. So 29000. So that initial deal was half a percent of the company. Right. And that was like a whole round. And so that was a very low dilution round even at that time. Yeah. What's notable is looking at this kind of rough cap table. It's just astonishing to end up in a situation where VCs have the lowest ownership out of the employees. A non profit, a strategic partner, SoftBank kind of makes sense. But yeah, it's all hands on deck in the chat. Trying to find France too. Thank you for everyone's service.

Good morning, John. Good morning. 2.6 million. Let's go. Good morning, Rav. Good morning. Bobby Johnson in the LinkedIn chat. You're watching Christmas TV. We are cozy, maxing. It's rainy in Hollywood today and we decided to put on the fireplace, make the light a little bit warmer, kind of enjoy the warmth and, you know.

Right and he was wrong. I mean he was right in that obviously the depression took a really long time so he actually probably is righter than most. But and this is the question for most investors, the market between the beginning of 28 and September of 29 was up 90%. So if you had not been in the market during that time you would have not participated in those ups. And so that's the question. You know I was talking to Paul Tudor Jones about a week ago and he said I was asking him this question about bubbles. He said I think we're in maybe like October 1999 right now. And I said oh that's interesting. Okay, 99. He said but there's still if you said if you remember October 99 there was still a 40% upside. Yeah. For six months. You got to know when to get on and off the train and that's the hard part. Yeah. How do you think about tariffs then versus now because.

Do in a moment when the economy is faltering. So I think there's so many different things. And then setting up the SEC was super important because so much of what was messing up the market was, in truth, manipulation. That wasn't really illegal at the time. So talk about insider trading. There were groups of people, they called them investment pools. And in fact, I would say it's sort of similar to what goes on with some of the meme stocks, where people have, like, telegram groups. Retail armies. Yeah, Reddit. So these were the original retail armies. These were the original retail armies, but they were typically the wealthy. So it was the elite doing this. This wasn't a democratized version. And they had it all set up. And they would almost be like actors down on the floor of the exchange saying, you know, I'm going up for a hundred. You 200. And it was sort of out of the open. Like, some people knew that there were pools in, like, for the next two weeks, there might be a pool in a stock. And so then other people would try to jump on the train and hopefully try to jump off the train before the rug got pulled, but obviously didn't happen. Who was on the right side of history? The right side of history, like, as in. As in right now. Right now, everyone's calling it a bubble, right? So. And presumably that's so that they can go back and quote, you know, two years from now, they can see, like, look, I called it, right. And there's actually some. In 2021, there's an iconic post from Keith Raboy where he basically called the top to the actual day. And so there's a lot of incentive to call the top and get kind of the aura of having that insight at the right moment or maybe just getting lucky. But I'm curious if anybody pre1929 was basically saying, like, two people. So there was a guy named Roger Babson, if you know, Babson University, by the way, he founded it, and he created what was called the Babson Break. It happened in September of 29. And he had been. But he had been out there. So this is a little bit like, you know, the clock strikes midnight. You know, it is going to get there eventually. He was out there for like a year or two or three before saying the whole thing was going to come undone. So that's one. Cassandra Charles Merrill of Merrill Lynch. He was out there in 28 saying, There's a problem. And then I would say the big winner was a guy named Jesse Livermore. Jesse Livermore was a short seller who made probably, like, about $100 million. He's the most interesting character. I mean, if you get into this book, it's just fascinating, all the things that were going on with him. But he was a real trader, by the way. He lost most of that money a couple years later. He made some of it back, lost some back, and then, in truth, ended up killing himself up on Fifth Avenue at Sherry Netherland in the cloakroom. Literally went in there in 1940.

Just seemingly don't at all. It's just the same kind of behaviors over and over. But the truth is, and this is the part that I'm always grappling with, and I know you guys spend a lot of time with these amazing startup founders and entrepreneurs. You need some speculation in the system. We always say speculation is a dirty word or a bad word, but the original investors in SpaceX or in Tesla, who probably thought the whole thing was insane, were speculating. And you need some of that. You really do. And so the question is like, how do you create a line where you have enough of that to create that innovation, but it doesn't go totally parabolic and out of control. Yeah. I mean, it feels like the answer is probably like you can't have some sort of systemic risk that just brings down the whole thing. Right. And I want to know about the reaction to 1929. I mean, you mentioned Glass Steagall. That's four years post crash. Yeah. What were like the, the tools in the tool chest. Yeah. And also the key, the key takeaways, like, hey, some of the speculation was fine, maybe that' that can drive industries forward, but let's not do that again. So I think a couple of things. First of all, leverage to me, and I wrote about this in Too Big to fail in 2008, leverage is to me like the match that lights the fire every time. When you have too much leverage in the system, that is the problem. You can actually have a lot of crazy things happening, but it's the leverage that really exacerbates it and is the accelerant. So I think you have to watch for that. I think politically, interestingly, you know, we talk right now about the Federal Reserve and Fed independence and things like that. Back then, the Fed knew that there was a problem with speculation and they didn't really do anything about it or enough about it, partially because they were worried about the politics. They were worried because they were such a new institution, they were born in 1913, that, you know, not just they'd get hauled in front of Congress, but maybe they, you know, the Fed would effectively disappear. And then once the crash happened, instead of flooding the money, flooding the system with money the way Ben Bernanke did, who by the way, learned that because of the Great Depression and studying that when he was at Princeton for his PhD, there was almost like a pullback. Nobody was flooding the system with money. Everybody was in this crouched position. But you almost have to do the politically unpopular thing and flood the system with money. Then you had a whole series of other dominoes. You had Smoot, Hawley, which was the tariffs. 1930 tariffs happen. Global trade drops by 60% as a result of that. Hoover's trying to raise taxes at this time. That's the worst thing to do in a moment when the economy is faltering. So I think there's so many different things. And then setting up the SEC was super important.

It's a little nerve wracking, but I don't think we're going off the cliff just yet, I hope. Yeah, well, we know who the characters are today, but I'd love to know who were some of the key characters that stuck out to you that you identified. Like, you want to draw extra focus towards this particular person. I mean, Churchill sticks out, but who else? Or maybe you could tell me the story of, like, how you thought to integrate Churchill into the story, and then we can talk about some of the other characters that stuck out to you. Well, Churchill was just almost an accident. I didn't realize. Churchill happened to be in New York literally the week that the crash was taking place. He'd actually been down on the stock exchange. What did he know? Big dinner that was taking place the night of the crash with every major banker, and frankly, every major character in this book was all going to dinner with him. And I thought, okay, so now I got to figure out everything about that because I got to set that dinner up and really understand. He was, by the way, in New York because he needed money. He was. He. He also loved the stock market. He was getting loans like crazy. He totally got the bug. He was investing. And he also, as you might imagine, lost. But really. The big characters in this book, a guy named Charlie Mitchell, who really was probably the. He's almost like the Jamie Dimon.

When to get on and off the train. And that's the hard part. Yeah. How do you think about tariffs then versus now? Because it feels like the narrative at least is that there's a bubble, is inflating generally, but also we're seeing high interest rates, tariffs. There's a lot of tools in the tool chest that could kind of come down if there was a sell off. But it sounds like in 1929 a lot of this stuff happened after the fact, like the, the government moved too late. What was the mood around tariffs? And just anything that was done beforehand that was a potential mitigator, like could it have possibly been worse? Well, you'll laugh because just like the past, call it six or eight months, all of his economists were writing these letters, open letters in the papers to Hoover saying, please don't do the tariffs, we beg you not to do the tariffs. The CEOs of the banks were all going to visit him in the White House and he had run on tariffs because he was trying to get farmers to vote for him when he was campaigning in 28. So he thought this was like a pledge that he had made that he had to follow through on. And that was a big part of what was going on, obviously. Similarly, like a thousand economists write letters to Trump saying, please don't do this. The distinction I think today is back then it was an across the board tariff. There weren't these bilateral deals. And so maybe you could argue today these one off, you know, individual deals are better deals. In fact, one of the ways they tried to fix what happened after Smoot Hawley was in 1934, they gave the President of the United States the authority, which is what President Trump is using today to make these sort of bilateral deals. So you could argue maybe it's more hopeful because there's a little bit more control today than what was happening then, which was just sort of broad based. Yeah, so you said there were retail armies, meme coins, circular deals back.

Is not real. And so I think that you can, you can instill that over time. But we have our second guest of the show, Andrew Ross Sorkin, the author of 1929. There he is. Thank you so much for joining. Congratulations on the book and thank you so much for joining. Thank you for having me. I was just checking my score on my eight sleep. Oh, really? I was. Because of you guys. I'm a big fan of Mateo's Denver. They've done an extraordinary job and. But I was going to tell you, I really did not do well last night. Oh, no. What'd you get? 43. 43. Last night I got an 84, but my aura ring. Okay. I don't know if you guys ever compare. No. Oura ring has me in the 70s, so I don't know what to do. Sometimes I. Do you ever turn the mattress off in the middle of the night? I turn it back on because it's too cold. So sometimes it gets too cold. Okay. And then I need to get back to sleep. So I'm like, I got to turn it back on. Yeah, Yeah. I think you got to do a software update. You gotta get on autopilot. I have noticed that if I it's autopilot. Occasionally I have a bunch of kids. If they wind up piling into the bed over time, I will bail, go to a different bed. And then the eighth sleep gets all confused because it's like, why is this 4 year old in here? How do we track how he sleeps? Crazy heartbeat. Crazy heart. I've had that. My daughter slept in the bed. Crazy. Like, all of a sudden you're like, is there something wrong with it? Yeah. Yeah. There are limits to technology. Well, I think it's fair to not sleep that well right before a day like today. For you. Yes. Day that you've been working towards for how many? How many? Yeah. How long? We were hanging out off the air.

Wild growth across the entire category. Basically everything is has 10x in price or something like that. Roughly. Yeah. It's interesting. It'd be interesting to go back and do the math and the VCs. There was some reporting in the Financial Times a couple of days ago talking about who actually owns OpenAI. And it would be probably interesting and painful to look back at the investors, how much they invested in OpenAI versus just like market buying, Nvidia, Broadcom and some of the other beneficiaries. Would they have made more money the OpenAI didn't altimeter do both? Yeah, I'm sure the players like that did both. But OpenAI's expected ownership after the company restructures. Microsoft is going to have about 30%. OpenAI employees are going to have close to 30%. OpenAI, the nonprofit is going to have 20 to 30%. But that doesn't mean you shouldn't still donate. If you're thinking about doing some charitable giving this holiday season, consider donating. Writing a donation to OpenAI the nonprofit. Prioritize tipping your cap table first. Yes. And then after that consider donating to OpenAI the nonprofit. But anyways, Microsoft at 30%. OpenAI employees around 30%. OpenAI nonprofit at 20 to 30%. SoftBank about 10%. And the remaining is Thrive, Khosla, MGX and a number of bedrocks in there. Yeah, but I wonder how accurate that reporting is. It feels like directionally correct. I think it's directionally correct. I wouldn't. But there are some pretty big error bars on either side. Yeah, but still, I mean you just look at some of these, like some of these numbers that we pulled up. It's like, you know, what was the original OpenAI deal that thrived it? It was at a 27 billion, 130 million. At 29 billion. So 29000. So that initial deal was half a percent of the company. Right. And that was like. And that was like a whole round. And so that was a very low dilution round even at that time. Yeah. What's notable is like looking at this kind of rough cap table, it's just astonishing to end up in a situation where VCs have the lowest ownership out of the employees. A nonprofit, a strategic partner, SoftBank kind of makes sense. But yeah, it's all hands on deck in the chat trying to find France too. Thank you for everyone's service. It seems like they're making progress using VPNs, all sorts of stuff.

You know, you're like, here, look, it's fire, it's magical fire. There's something here's potentially still an art to it. Yeah. Here's potentially why you should still be bullish on AI roll ups is because you take a bunch of smart tech people and you bring them into businesses that haven't historically had a lot of great technology and they just build great software. It's possible to grow businesses faster, be more efficient, things like that, even if AI isn't actually doing the heavy lift. Yeah. So when I've talked to like a roll up founder and I'm thinking, you know, they've pulled together. In this case, they had pulled, they had pulled talent from like five of the best companies in, in the world. At least from, from, from a talent density standpoint. And they're, they're working in these categories. I won't name it because I'll, I'll, I'll dox the company. But they're working in a category that never in history had super talented engineers working on it. Yeah. And so they're probably going to do really well. Even if again, it's not like integrating an LLM into the workflow that's actually doing that heavy lifting. Yeah. So yeah, I mean that's, it's possible that like. Yeah. He says companies can ship a lot more software quickly. Complexity of the build out is no longer a moat, which I think is interesting revenue velocity. Yeah. But so the only thing is this kind of contradicts the. No, no. So one is, is it's hard to just go into a business and say no matter what your business is, I know that I can come in and drop AI into your manufacturing process or your customer support department or your finance operations department and, or your sales department and immediately see a result on cutting costs and increasing revenue. Like it's not a reliable playbook. Every company. Yeah, but I'm just saying, he's saying companies can ship a lot more software quickly. Complexity, the build out is no longer remote. So that would, you'd buy a platform software business that has a bunch of other products that you want to build. And if the second point is true, you could just let go of a lot of the engineering team and say we're going to cut, we're going to cut or we're not going to, we're not, we're going to change our, our hiring plan because we just don't need as many engineers. And you can grow revenue while keeping your costs relatively the same. Right. So. Yeah, but at the same time. Like. Like that software that you launch will be more competitive.