NEWSMAX

In a way, the funniest image generation tool. Because it's so bad, it's so hard to use the ui. It just doesn't give you feedback on, like, when is it generating it, always asking for, like.

Out. You know, going back my undergraduate degree was in computer science. It is in some ways offensive to me that iOS is a nearly 20 year old platform. It is a computer and it's the. It's a 20 year old computer on which you cannot make software for the computer itself. Yeah. And I totally understand why that wasn't the case for the first few years when it was more limited hardware and even a few years after that when the whole idea of the App Store was new. But at this point, I mean, an iPad Pro costs like $2,000. It has a keyboard and a huge screen. It's as powerful as a MacBook and you can't use it to make apps. It's kind of solid. Don't you think they'll find a way to allow this and make money from it? Because I would imagine. That's what I think. Yeah. Imagine they're. Yeah, they know people want this, but the main reason to not allow it is like one just like safety and integrity of software on the iPhone, security stuff. But then also, hey, we got to figure out how to make money on this the Apple way. Yeah. And there's obviously some technology that's already in a way of doing things. The whole test flight ecosystem, which is what Apple's beta distribution is for iOS. And it was a startup, I forget probably more than 10 years ago when it was an independent startup, but Apple saw the wisdom of it. This is a thing that Apple didn't invent. They should have invented it, but then they saw how clever it was and they're like, oh, we'll aqua hire these guys and build it into our platform. And so there are ways to distribute software now outside the App Store and it's just by limiting the number of people who can do it. I think the test flight limit is like 10,000 or something like that. And they could do something with AI where that limit is much lower. Like even if it was just like 10 people. Right. Like a consumer level of test flight distribution where you can make apps for your friends and family or yourself and distribute it on up to 10 devices. And it doesn't go through. Apple doesn't need approval. You just make it and distribute it and it's only limited to 10 people. Something like that. But there needs to be a story like that though. And I think again, only Apple can really make it a really good rich system where you can make apps that really feel like real apps. But the technology to make the apps, it's obviously there. We're all talking about it this last six months, it's obviously there and you could do it on the phone itself. And it's super frustrating that some of the third parties that were doing it like Bit Rig, and I forget some of the other ones, but Bit Rig was the one I'm most familiar with where they kind of, you know, they're not kicked out of the App Store, but they stop taking updates to it. And it's like super frustrating because it's not theoretical. It is an actual thing that was actually working and they took it away. Right? And it was super cool. And yes, it's disruptive to Apple's business, but in a way that the disruption is inevitable anyway. So why not go with what's cool and do the coolest thing possible that makes new possibilities available to your users and the developers on your platform? Okay, last question. Give us a recommendation of a recent favorite episode of the Equipment.

And coding has never been more blurred, for sure. I mean, listen, I think about when I got into the game, guys, 1999, 2000, and we had about 35 million people connected to broadband Internet. We all saw what Amazon was going to be. But where we got over our skis is we thought it would come a lot faster. And we forgot that there were only 35 million people connected to broadband Internet. Today we have 4 billion. 3, 4 billion. Like, the rate of diffusion and the magnitude of diffusion is radically, radically different. And think about this. We have a natural constraint on how fast we can go because we only have so many memory wafers in the world. We only have so many logic wafers in the world. We only have so much powered shell in the world. That means we can only produce so many tokens, okay? And it's almost as though in 1999, 2000, we could only lay so much fiber. And I've said this a thousand times, when we were putting down the fiber in 2000, we called it dark fiber for a reason. There was nobody using it, and we knew there was nobody using it when we put it in the ground. There's not a dark GPU in the world today. Yeah, okay. There's not a dark token in the world today. So I think it's a very different thing. I think it's a healthy thing. We have this wall of worry. We can't build that much supply. And I would say if I look at every company, what do they report on their earnings calls? Google was token constrained. They said if we add more tokens, we'd be able to generate more revenue. Same for Amazon, same for Microsoft. Same from OpenAI. Same from Anthropic. The world demands more intelligence. Intelligence can only be produced with tokens. And we have physical limits to the amount of tokens we're going to be able to bring online. So, yes, we will have these waves, but I think the rate, the parabolic rate at which these new models are going to produce intelligence, I think we're going to be blown away over the course of next nine months. You talk independently, you know, to Michael True and the guys at Cursor and now, you know, taking over X. Or you talk to the guys at Anthropic or Open AI and they kind of look you in the eyes with that Oppenheimer look and they're like, we're here. Yeah, right. Like, we're like. Like we are going to think about this. Open Air and Anthropic combined, to start the year, had 3 gigawatts of compute 3 combined, they're going to end the year closer to 10 and next year closer to 20. Yeah, we're making algorithmic improvements. We're making massive steps up the scaling law because the amount of compute we're going to have available to us think about, you know, macro hard and macro harder. That cursor is going to now be able to train a frontier level model on. So we've got incredible competition in America. We got the right amount of compute coming along. I don't worry about the bubble as much, even though I know that, you know, there will invariably be, you know, some months that revenue doesn't grow as fast. I'm really worried about making sure that America stays foot on the accelerator. Competing globally and winning the race like this is going to lead to a moment of. Of. Of abundance for our economy. And it's only through great national wealth that we can raise the floor for everybody else. Yeah, no, that makes no sense. There was some reporting this week that Metta is hiring fte. I was sort of surprised.

Paying attention early in December, you could see that coming. But we started the year with the market very skeptical as to whether or not revenues would show up. And let me tell you this, had Anthropic not delivered its revenues that it's delivered this year, I think the stock market would be down 10 or 15%. I think it's that important to the entire narrative because the fact of the matter is OpenAI has not blown away their numbers. Google has not blown away their numbers. Like numbers have been good, but the fundamental driver of, of of outperformance in terms of offtake of AI revenues has been anthropic, which is the fastest growing company in the history of capitalism. So that buoyed the entire segment and it was when they started posting those numbers and then they said on top of that we're doing it at high gross margins in a way that in Q2 may in fact actually lead to free catch some positive free cash flow. The market really ascended or remember two months ago, the market was basically down on the year and a lot of these returns, we just had two of the biggest months in the history of altimeters public funds. That's 18 years. I mean we're going back a long time, but that's, you know, listen, I think we picked some pretty good stocks, memory logic, etc. But I also think it's just a function of the market delivered, these companies delivered. You saw Dell's. I mean listen, Michael Dell, one of my best buds and you watch the act, you know that he's delivering. With Dell they just had a server, revenues up 750% year over year went from a $1 billion business to a $16 billion business. This stuff is real. But in order for it to stay real, we have to continue to see usage by consumers that they're willing to pay for and growth in the enterprise, small, medium and large that they're willing to pay for and growth in the sovereign domain. I think it will occur, but oftentimes, you know, there'll be some pockets along the way here where, you know, where revenues won't be as strong as people think. We'll have some pullbacks. We could have 10 to 20% pullbacks in the semiconductor stock as just like run of the mill consolidation. Yeah, yeah, right, run of the mill consolidation. I mean Micron has gone from a couple hundred bucks to a thousand bucks. Dell this time last year was I think $80 or $90. It's now at $400. These are seismic moves, right? Fortunately we were pretty bullish when other people were skeptical. Yeah. It feels like there's this natural reaction. Anytime there's good news, someone has to dig up something that's a little bit bearish. Right now, we're.

He retweeted me and I was like, no, he definitely didn't retweet you, but Mark did. So shout out to Mark. That's awesome. And that's, you know, I think that we are. What people. There's a lot of despondency in California. I'm going to take a contrarian position here. Spencer Pratt's going to be the new mayor of Los Angeles. The wealth tax will be defeated. We will pass the Retirement and Personal Asset Protection act as, as a referendum in California, which will prohibit people from stealing your retirement money or your personal assets. That will get passed. Ok. That will send a shocking message to the rest of America. The rest of America thinks that California is as blue as it gets. It turns out California is pretty purple. Right. And I think that common sense initiatives are going to reassert themselves in the election in November. And I think it's great because we're the fourth largest economy in the world. I know some of my friends moved out and said, listen, California's got it coming to them. My own view is this. As California goes, so goes the country. We cannot see California. It is where we're going to battle for the best ideas that are consistent with the founding of the country and we're going to win on those ideas. And so I think we're seeing a lot of progress. Shout out to Sergey and building better California and the incredible work that they did to get us moving in the right direction. That's fantastic. Well,

Have, you know, basically like have tokens to sell because they would potentially get more pricing power. How do you think? It's bad for everybody. Bad for everybody. But most importantly, it would be horrific for America. Yeah. And lest we be overconfident in Silicon Valley, let's remember the activists. A small group of activists shut down supersonic technology, and a small group of activists shut down all nuclear clean energy in this country. Okay? We have 100 fission reactors being built in China. We have one in the United States. It's a disaster that happened. And so we can't take for granted that the kooks who are calling for data center moratoriums, Right? Which just think about this for a second. All of our GDP growth is coming from the fact that we are building data centers and driving AI and driving productivity improvements in the economy. A data center moratorium would thrust us straight into a recession and, and high unemployment. Secondly, it would cede the entire global game to China. Like overnight, we would lose to China in the global AI race, which is not just about AI, it's about economic security, it's about jobs, and it's about national security. So it literally is insane that we would do this. I can't even believe there are people talking about it. However, why are they talking about it? Because people are concerned. Local communities are concerned. I just got back from celebrating my mother's 90th in rural Indiana, you know, over the Memorial Day weekend. And what I'll tell you. Happy birthday. Happy birthday. Thank you, boys. She's incredible. She is so incredible. But you think about a place like Mishawaka, Indiana, where, you know, they're building a data center. I mean, folks here, they're worried about their jobs, they're worried about their kids having jobs. And then they're told by these crazy activists who show up in their town, they're not gonna have any water and their electricity bills are going to go up. So can we blame these people for being a little agitated about what's going on? So I'm actually working on an initiative I'm not prepared to announce today, but with like everybody in the value chain, all of the cloud companies, all of the Nvidia's and AMD's and, you know, and off takers, etcetera, and the white House that would deliver a very tangible and profound dividend to the communities that we're building. There we go. And I think, I think it's that there's a very elegant solution there. You're the guy to do it, you're the hero. That American capitalism deserves. You got Trump accounts done. I feel like this is a good, good next act for you. Well, I'm in the mix. I'm happy to do my part. There are extraordinary people around the table. But here's the thing. We have to build the socio political bridge for the next three years. Right? In three years it's going to be obvious, I think the abundance and the benefits that AI is driving for us as consumers. And everybody's going to have their own personal assistant in their pocket, right? For next to nothing. Think about that can do your calendar, can order your food, can get you a new black T shirt, send mom a birthday present, all the things. And every enterprise is going to have things that uplevel us all as humans. So I am firmly, just like John Maynard Keynes was at the start of the industrial revolution, I am firmly in camp optimism about technological progress. But I'm also not head in the sand about the disruption and the concern people have for the next three years. So we have to give them tangible benefits that get us over that bridge. I think we're going to do it. I'm feeling pretty optimistic about it. But you're right to bring it up and you're right to be concerned about it. We cannot take it for granted. Yeah, the, I mean this just goes back. I think it's.

We all saw what happened in the market, but there's been some really good news lately. How have you processed that? Well, I popped on CNBC for a second yesterday and was talking about Snowflake as an example, and the stock was up what, 35% yesterday. Now, of course, just to be fair, it's only up 10% for the year compared to a company like Micron, up 200% for the year, a company like AAM, up 200% for the year. But they did bounce back. And what I think we're starting to see is the bifurcation. There are companies that are in the token flow. So all these software companies, we just lump together, right? We treat them as though they're all equal. But there are certain software companies, Databricks, Snowflake and Clickhouse, all of which we're investors in, which very clear to me. They're in the token flow. As you consume more tokens, the amount of your database queries goes up. I see it at altimeter. Right. In fact, our database queries are growing faster than our token usage, to give you a sense. Yeah. And this is, I think so now they've proven they're in the token flow, so they're starting to get some love from an AI multiple perspective that's very different than a company, I think, like, like Salesforce. And I love Marc Benioff. And you know, if anybody can, you know, get in the token flow, it'll be him. But the reality is the front facing solutions that they offer are more competitive with the models than something like Snowflake. Snowflake's the enabler of the models, whereas I think that Salesforce competes a bit more. So it's going to be more challenging. But I also, I've heard so much about this SAS apocalypse. And listen, I did a POD with Satya, I don't know, 18 months ago where he caused a stir by saying software is a thin user interface on top of a CRUD database. And Benioff and everybody freaked out. They're like, what are you saying? It's way more than that. Right. And Bill and I did a pod. Is software dead? So it's not like this is new. But then everybody started freaking out in December, all these multiples reset. But the question is, what did they reset to? Okay. And this is what I want to focus on here. So if you show this slide that I prepared for you, fine esteemed gentlemen. You know what this slide shows is that the multiple correction just took software from a place where they were way more expensive than the market multiple and brought them into the category of the market multiple. Right. So now they're trading at about 22, 23 times real SBC included, Gap earnings. Yep. That's about where the market is trading. Yeah. So now just follow me on this. Software is trading, mostly software names are trading at a higher multiple than in video. Yeah, Right. Nvidia is trading about 13 times, earning for 70% growth for the thing that is the most essential thing in AI, and they're, they're, they're at twice the multiple. So, like, when I hear everybody crying that, hey, these multiples aren't fair, it looks to me like the multiples reset from an above market multiple where everybody thought the software revenues and earnings were impenetrable to. Now they're saying, well, I don't know, some of this, maybe three, four or five years out will be replaced. So we're going to raise the discount rate, we're going to lower the multiple. They've only lowered it to the market multiple. Let me just suggest that there's a possibility these trade well below the market multiple. Sure. Right. I'm not, I'm not wishing for that, but I'm just saying there's a distribution of potential outcomes here. If you get on the train, if you get in the token flow, you're going to get above market multiple. If you don't, if you slow down, and it looks like every time that computational intelligence improves, your business gets worse, then I promise you, they will trade below the market multiple and there's, and there's more room to the downside. So for us as investors, you know, Warren Buffett has this, you know, this old metaphor. You know, there's the easy basket, there's the hard basket, or the yes basket, the no basket, the too hard basket. Yes. For me, software today is generally in this, in the too hard basket. It's notable because you've been saying that.

Coming quarter. But how do you think that shakes out? Well, I mean, if I, if I size up the debate in Silicon Valley. Yeah, right. There are the bears who've been bearish on AI for, let's call it a while. And anything that comes out, anything that comes out is actually just right. And so now they're saying, oh, all this AI revenue is. First they were saying it won't show up at all. Yeah, and then it showed up. And then they're saying, oh, it's all. Because it's all token maxing and, and there's no roi. So that's one side on the other side of the people who are super AI pilled and they're like, oh no, this is perfectly Pareto optimal. Everybody's spending the exact right amount of money on tokens, which we also know is not true. And the truth lies in the center. Okay. When you have millions of independent actors all making self rationalizing decisions like altimeter on buying tokens. I don't like to waste money. I'm spending money because I'm getting a return. Now will we experiment with some things that don't provide a return? Of course. I actually sent you guys a slide on this. I think it's pretty fascinating. I don't know if your team can pull up, but this is independent research that we did on this question of token maxing. And what we did is we went to 300 enterprises, right? And we just asked them, are you starting to optimize your spend? And if so, how much do you expect that you're going to spend year over year over the course of the next 12 months? And if you leave that chart up, what you will see, guys, is that in the first category, these are all people who are actively optimizing, but they still expect to grow revenues at over 50% over the next 12 months. The second category are people who are planning to optimize. And even if they're planning to optimize, they say they're going to grow revenue at 90% and so on. So here's my point on this, right? And this is across 300 firms who use a multiple of AI solutions, this is what they expect of their AI, you know, API token usage. Yeah. So what do we, what does that tell us? It tells us that of course people optimize along the way, but we are so early in the adoption curve, Right. They're barely using coding today. They're just getting on the coding train and they haven't really even started on using AI for knowledge work more generally. Yeah, so we're low in the use, the penetration of coding as a use case. We're almost nowhere in the penetration of knowledge work more generally as a use case. And then remember this, there are very few enterprises globally that are even using AI. So we are really early in the curve of the people who are actually using AI. So I'm somewhere in the middle. Of course, I believe that optimization will continue, but my hunch is that Anthropic and OpenAI, these companies will continue to grow right through the optimization because the growth curve on penetration of both enterprise and use case is so steep. But, you know, we'll see. Yeah. Is this, is this a zero sum market?

You said, coming up on 10 years in the league, what advice would you give to the young Kyle Kuzma on private markets with what you've learned so far? You mentioned some of them. Work with smart people, build the right network. But if you were to summarize it, I have a really big friend in the space, and I asked him this question, like, what would you do? Or what type of advice would you give to, like, a young investor like me? And he told me, don't be stupid and follow the money. This is the most simplest thing you can do. You know what I mean? Because like I said, there's so many people that are much smarter than me, much smarter than all of us that do all this due diligence, that understand the landscapes of every industry, every science, every biotech, every defense space company, you can name it. And I think that following those guys leads as much as you can, but also making your own critical thinking, educated guests on certain things is super important. Yeah. Trust your guide every once in a while. Yeah. Well, thank you so much for hopping on.

And 60s and not have the toll of the physicality on their body. Take us through American Dynamism, Industrials, Anduril, SpaceX, super interesting companies. How did you get interested in those? How did you get up to speed? What was exciting to you about those companies? Well, when I think about that, I think that. And this is just like my perspective of investing and there's a lot of tensions and a lot of stress going on. Geopolit and I love where I'm from, I love America. Right. I'm sure we all do because it's given us all this platform to even be speaking here. Right. I like that. And then, you know, I just believe that if you're an investor, like, why are you not focused on investing into one serious things, but then two things that have, you know, America's interest best at heart, right? And you think about space and you think about defense and where we're at in this world, you know, prime example, space is a crazy economy that's about to open up. You obviously hear about SpaceX and you know, all the other companies that are getting a lift from valuations within it. But, you know, our counterparts and our other people, other countries in the world, they are focused on space and they're focused on getting to the moon and they're focused on all these satellites. And, you know, whoever really rules space is probably going to rule the world because, you know, when we fight wars and we do certain things on Earth, a lot of things is, you know, horizontal because, you know, we're fighting on this realm, but up there is linear. You're looking down and there's a lot of things that could, like, really go wrong if we're not focused on, you know, preserving, you know, America. So that's a fantastic SpaceX bull case. I love it. That is extremely convincing.

You know, the cost, different thinking. So is. Is AI changing basketball in any way? I imagine you guys are accessing new tools all the time, using the models to do analysis. But how. How. How are things. How is AI changing basketball? I think most of us kind of hate. Hate it a little bit, you know, just the analytics standpoint. Oh, sure. Because it's like, you know, it's like being micromanaged. It's like, oh, you could have been. You could have been an inch over here. Yeah, bro. It's like. It's like literally like a computer telling you, hey, you should not be taking this shot, but the computer is not the human. And I'm sitting there, I'm like, yo, I'm wide open. You're telling me. Tell me not to take this shot, but I open, and I'm a professional basketball, but I've made this shot. Shut up. That's beautiful. I don't know if you guys seen this, I think. And I'm not too super educated into it right now, but saw Adam Silver, he talked about implementing something like Hawkeye or something. Sure. For, like, out of bounds and replays, which I think that's a great idea. Yeah. Because, you know, we had these coaching challenges and, like, you know, stoppages during the game where, you know, five minutes of, like, real time may, like, go off, and we're just sitting there. And I think that, like, making the game faster in that aspect would be huge for us. Yeah. Just enforcing the rules. But you're not trying to get. You're not trying to get micromanaged by a computer. Yeah.

Anyway, we should move on. First we gotta talk about the fossil hunt. Big spenders are pursuing Tyrannosaurus Rex skeletons. This was on the COVID of the Financial Times. It's the most important story in the global economy according to the Financial Times as of Thursday. This is an old edition, but this is interesting. Sotheby's is to auction a 67 million year old Tyrannosaurus Rex two years after it sold a Stegosaurus fossil to hedge fund owner ken Griffin for 44.6 million. I thought Ken Griffin was, was. I didn't know. I didn't know we're getting up there like. Yeah, I did know that. You know, I feel like T Rex is up here. Yeah. Desirability and then everything else is. Yeah. You know, way T Rex is the Ferrari of dinosaurs. Stegosaurus. I was like that kind of a minivan of dinosaurs. Minivan. I was going to say Lambo. I was going to say Lamborghini. They're on a rise. You know, the true, the true dino heads know that there's something there and they're starting to pick up momentum, but they don't have the heritage. They don't have as much of the heritage. I don't know. Yeah, I'm more of a. I think I could get into an Ankylosaurus. Oh, Ankylosaurus, okay. Ankylosaurus, yeah. Triceratops too. Yeah, I mean the brontosaurus, like the big guys, that's special. You gotta have a special, special viewing area for that. Well, this T Rex is named Gus after Gary Gus Licking, the rancher whose land it was found on in South Dakota. It'll be auctioned at Sotheby's with an EST 20 million and 30 million, the highest for a dinosaur fossil on July 14. I was at a buddy's house recently and he just pointed over at this box and it was a dinosaur and he hadn't taken it out of the box. He's like, I've had it for a few years now. Well, is it a glass box that you can see in. No, no, no. It's a wooden box. It's just a crate. What's in the box? Schrodinger's dinosaur let the dino breed. Maybe the planned sale in New York highlights how the auction houses betting on the fossil market as a place where the wealthy will spend big. The pre auction estimate for Apex, which is the citadel boss Griffin's stegosaurus was 4 to 6 million. He wound up says Brachiosaurus. Brachiosaurus is a go to. Brachiosaurus has a crazy Odd Lots did a podcast about this amazing. We gotta listen to that. The overwhelming majority of fossil buyers still want to lend their purchases to a museum. Apex is now on display at the American Museum of Natural History. That is fun story. If you're in the market, go pick it up. Go pick up a T. Rex. You got to do it. It's the ultimate. The ultimate collector's item. It's the Pokemon card for boomers or something like that. Prepared.

Are common problems across all aspects of the enterprise. And so I think the future looks a little bit like Jevons Paradox. Of course, when something becomes more efficient to use, people often end up using more of it, not less. And then also Goodhart's Law. When a measure becomes a target, it ceases to be a good measure. And so we live in a world defined by Jevons Paradox and Goodhart's Law. And you put those together, the combination of those, many people will call that Coogan's Law. Coogan's Paradox, Coogan's Paradox, both Jevons Paradox and Goodhart's Law are true. And the synthesis of these two things is, in fact, what's important if you're trying to run an efficient organization. So Madison Mills over at Axios had some good reporting on it. We were on a flight when I found out, when I saw that reporting that someone had spent half a billion dollars a month kind of accidentally. And we'd heard just imagining the conversation of the first person to kind of like, find the number and then, you know, hey, maybe we should talk to the CTO about this. Okay. Yeah, probably time to bring the CFO in. Yeah. Hey, boss, we accidentally spent half a billion dollars in the last 30 days. It's a lot of money. All right, what did we make? What did we do? How did we spend? What did we get done? It's tough. What did we get done this week? And there was a lot of, like, there was some conspiratorial posts, people saying, oh, how circular deal. Yeah, how convenient for Amazon, who obviously owns a lot of, you know, the big labs, to spend all this money on anthropic. Right. When they're raising around and they got this revenue multiple, blah, blah, blah. That's not really how it works. Like, it wasn't like this round. Like this round wasn't like they were just, okay, we're going to give you XX revenue. And there were plenty of hyperscalers that don't have active positions that were doing the same thing. Yeah, like, this was a broader trend, but yeah, it is a crazy skyrocketing cost. But, I mean, we see this overall, I think it's healthy how quickly things corrected. It's not like this was. I mean, and of course, some companies won't. Correct. But it is a healthy dynamic that companies were, hey, we got a little bit ahead of our skis for a couple months now. Let's be a little bit more stack, rank the tokens, cut all the unnecessary token spend, keep all the good tokens But I mean we see this all the time with there'll be some vibe coded project out there that's like incredibly high token cost with very little value. And then on the flip side, you'll have someone that actually built something really cool with just like their default $200 a month subscription. And they didn't actually have to token max to get the product to where they wanted it to be because they knew what they were building. They used the tool like a scalpel, not a hammer. And they got a good outcome. So the Wall Street Journal has some more coverage of this. Corporate America is starting to ration AI. As costs skyrocket. Executives are scrambling to track returns on AI investments as the bill for massive computing needs come due. We talked to Spencer Rascoff from Match Group about this. He was sort of sharing a very reasonable token spend, I think in the single digit millions. But he was still saying that one of the tasks that him and his team will be embarking upon over the next year will be understanding the ROI on that investment because you should be tracking it. Just like digital marketing dollars that go out the door. What was your roi? How did it move the needle? So use of artificial intelligence by big companies is exploding. And the soaring costs has some of them pumping the brakes in a way that could complicate AI's triumphal march across the economy. Are they pouring cold water on it? We'll see. Executives across industry this year have urged employees to integrate AI tools. Wired has a whole AI for business deep dive that you can go take their survey into their work, spending freely to encourage experimentation and seeking to send a message to Wall street that their companies won't be left up behind in a coming wave of disruption. All that enthusiasm has resulted in skyrocketing costs for so called tokens, the basic units measurement for AI computing. Now corporate leaders are scrambling to bring down expenses by finding ways to ration AI. Top technical executives for Uber, Meta, Microsoft, Salesforce, Doordash and other companies have all talked about new efforts to ensure AI use contributes to productivity or have taken steps to reduce the availability of some tools for certain employees. You get nerfed if you're not putting up big numbers anyway.

Across all aspects of the enterprise. And so I think the future looks a little bit like Jevons Paradox. Of course, when something becomes more efficient to use, people often end up using more of it, not less. And then also Goodhart's Law. When a measure becomes a target, it ceases to be a good measure. And so we live in a world defined by Jevons Paradox and Goodhart's Law. And you put those together, the combination of those, many people will call that Coogan's Law. Coogan's Paradox, Coogan's Paradox, both Jevons Paradox and Goodhart's Law are true. And the synthesis of these two things is, in fact, what's important if you're trying to run an efficient organization. So Madison Mills over at Axios had some good reporting on it. We were on a flight when I found out, when I saw that reporting that someone had spent half a billion dollars a month kind of accidentally. And we'd heard just imagining the conversation of the first person to kind of like, find the number. And then, you know, hey, maybe we should talk to the CTO about this. Okay. Yeah, probably time to bring the CFO in. Yeah. Hey, boss, we accidentally spent half a billion dollars in the last 30 days. It's a lot of money. All right, what did we. What did we make? Yeah, what do we do? How do we spend? What did we get done? It's tough, but we get done. And there was, there was, there was a lot of, like, there was some conspiratorial posts, people saying, oh, how circular deal. Yeah, how convenient for Amazon, who obviously owns a lot of, you know, the big labs, to spend all this money on anthropic. Right. When they're raising around and they got this revenue multiple, blah, blah, blah. That's not really how it works. Like, it wasn't like this round. Like this round wasn't like they were just, okay, we're going to give you XX revenue. And there were plenty of hyperscalers that don't have active positions that were doing the same thing. Yeah, like, this was a broader trend, but yeah, it is a crazy skyrocketing cost. But, I mean, we see this overall, I think it's healthy how quickly things corrected. It's not like this was. I mean, and of course, some companies won't. Correct. But it is a healthy dynamic that companies were, hey, we got a little bit ahead of our skis for a couple months now. Let's be a little bit more stack, rank the tokens, cut all the unnecessary token spend, keep all the good token spend. I mean, we see this all the time with there'll be some vibe coded project out there that's like incredibly high token cost with very little value. And then on the flip side, you'll have someone that actually built something really cool with just like their default $200 a month subscription. And they didn't actually have to token max to get the product to where they wanted it to be because they knew what they were building. They used the tool like a scalpel, not a hammer, and they got a good outcome. So the Wall Street Journal has some more coverage of this corporate America.

Entrepreneur, investor. He's with us in the waiting room and we'll bring him into the TDP in Ultradome. Very excited to meet you, Kyle. How you doing? What's up, boys? What's up? How are we doing, man? You've been tearing up the timeline. Yes. We love it. Thank you. Thank you guys for having me. Thank you guys for having me. I learned a lot from you guys, actually, so thank you. I have something new to this, but you guys help out a little bit, so thanks. Yeah. What got you into investing originally? Well, I mean, that really starts like when you first get into the NBA and obviously you have a financial advisor and then you learn about, you know, typical stocks and bonds. And then I had a lot of great mentors. Like, Kobe Bryant was a really good mentor for me especially, you know, he had a fund right before he passed away and he told me to get into it. And I think that was my very first, you know, type of access and, like, get in with the whole VC in the tech space with everything. And, you know, we can only play basketball for a certain amount of time. Yeah. And you got to make it count. But then you got like 40, 50 years to, you know, still live. So what else are you going to do? Because you know that money doesn't last forever. So. Yeah, what. What was Kobe's advice to you? Was it, hey, here's all the things not to do because you get into the NBA, suddenly you're making some money and you get a million opportunities thrown at you every day. So I imagine your financial advisor's primary job is like, how do we just make sure to not do all the dumb stuff? Focus on the basics. But what was Kobe's main advice for you? Well, the number one thing is probably just keeping the main thing, the main thing. And that's like, making sure you're focused on whatever your true primary thing is, and that's always basketball. Because there's going to be nothing that gives me a return unless I'm like an early investor into SpaceX or something that is going to propel me, like basketball will. But yeah, when you have a financial advisor, they. They try to keep you very, very conservative. And you think about the little things that you can get, you know, God willing, 10, 11, you know, annual return. But, you know, for me, I want more. And I think that, you know, when you start thinking about, like, the private investment side, looking into space and tech and all these things that have crazy, crazy multiples and are like, flying off the shelves right now, you know, that's where the interest is, at least for me. So. Yeah, yeah. How do you think about endorsements versus equity versus investing? There's so many different ways outside of basketball to apply your skills, make money, compound. But there are sometimes tensions, and sometimes an investment makes more sense. How do you think about these different trade offs? Well, you know, I mean, I'm going into almost year 10 in the NBA, right? And I think that as an athlete, overnight success. You have all these, you know, you have your agents, you have managers, and they definitely want you to get, you know, the endorsements, right, because they get their fee. And it's. It's a little bit harder for sure, you to really justify, you know, okay, what does this equity mean for me? Because, you know, 90% of things fail anyways. Right. So, you know, I think it's all about, you know, getting with the right people, understanding what you're getting into and, like, educating yourself. You know, for me, I'm not the smartest person in the room, and I think that's one of my best traits that I've had. Because anytime you can be inquisitive and you have curiosity, you have an upper edge on almost literally everybody. But you might have increased access, increased availability to just meet CEOs early, get into rounds. Have you ever thought about having other teammates or friends or even traditional investors tag along with you? Do you see this becoming a career like Kobe did with a Fox fund that other people could invest in? Oh, yeah, 100. You know, I think for me, over the past couple years, I've been, you know, kind of that singular investor and, you know, getting onto cap tables or, you know, hopping into other people's SPVs or, you know, in the VC space that I know and I hop in. But, you know, learning this space a little bit, you know, the money is, you know, having a fun, you know, being able to, you know, take the upside off of your access that you have. And, you know, I'm in such a unique position because as an athlete, everybody wants to talk to you. You know, everybody wants to be around you. And, you know, you can use that for multiple ways. You can use that, you know, to be cool and, you know, party and have a fun good time and be famous. But you can also use that as leverage to build your own platform if you're knowledgeable enough to then use that access to get into, you know, blue chip companies that, you know, can really change your life. So, yeah, yeah, those blue chip companies, I feel like there's a tight enough circle that you can probably take those meetings during the off season or when you're not practicing or playing. But have you had to turn away meeting invites to SEED Series A founders? Because just to see the landscape of everyone who's operating at that level would be just dozens of meetings every day.

The first is this insane video from Blue Origin. Very, very disappointing to see. Blue Origin's new Glenn rocket just blew up at LC. Landing LC36 while attempting to static fire ahead of NG4. We can watch this video because it is absolutely insane. Looks like a nuclear bomb went off. It looks like a, like a scene from Oppenheimer. It looks like Christopher Nolan movie. This is absolutely remarkable. Everyday astronaut says, oh my God, that was a very big one. I hate to see setbacks in progress. This is not good. That has to be extremely, extremely frustrating. Brandon Gorell broke down a little bit of the back and forth on this particular rocket initiative. Jeff Bezos Rocket Company suffered a catastrophic failure last night when its new Glenn rocket, a reusable heavy lift orbital spacecraft designed to compete with SpaceX's Falcon Heav. And we were talking about this in the backdrop of the SpaceX IPO and I heard Brad Gerstner talking about this on CNBC. I think someone was playing a Gerstner interview in the studio today and he was saying the launch business is fantastic, but it's not enough without starlink, which is a fantastic business, but that's not enough without the AI business, which is a fantastic business and growing. And so to just have a launch business and then have a setback like this has got to be extremely frustrating. And if you're competing with a company that's going to raise $80 billion, I don't know, I forget how much SpaceX is actually going to raise, but they're going to raise a lot of money. They're going to have a lot of capital to deploy in their march towards ever more frequent and ever more frequent. Blue origin started before SpaceX talked about this before. That's been hard. And yeah, unclear, unclear how much will set them back, but certainly disappointing. So the good news is that no one was hurt, which is incredible because you see the rocket, it looks like it's surrounded by a city, it looks like there's buildings around. And to see that much destruction with no one injured at all is a miracle. And I'm so happy to hear that. Jeff Bezos tweeted, Very rough day. We'll rebuild whatever needs rebuilding and get back to flying. It's worth it. And Elon chimed in with some words of encouragement. Space is hard. A lot of folks were sending their encouragement because I think even if you're a SpaceX Maxi, it is very exciting for America to have multiple heavy launch capability providers in the market. It's good. It was very exciting when New Glenn got to orbit. Came back. That was the second time that that sort of rocket technology had been demoed. And it was demoed in America, Sort of. Even our second best rocket provider is better than everyone else around the globe. What else do you have, Tyler? Yeah, just some added context. So this was the. This was the fourth test, or this was prepping for the fourth test. In the third test, if you remember, this is when the rocket kind of correctly went up, but then deployed an asts. Oh, yeah. Just in the wrong orbit. That was New Glenn. Yeah, that was the third test. That was pretty recent, so they're on a pretty good cadence here. But this is still a huge setback. It's down 16% today because of this, most likely. Interesting, interesting. So Elon Musk lent his support, tweeting, most unfortunate. Rockets are hard. That's an understatement. A lot of people were saying, like, if you think software engineering is hard, you could have been a rocket scientist. It is, after all, rocket science. The explosion caused extreme structural damage to its only functional launchpad. While Blue Origin has successfully reached space a number of times with other vehicles. New Glenn. And has had just one successful flight out of three attempted tries from 2006 to 2008, Elon Musk had three consecutive failures with Falcon 1 before successfully launching it. And so failure is a natural state of these pursuits, but never fun to watch it happen. There were some people that were syncing up the different angles. We can look at Sawyer Merritz. Oh, did he delete that one? There were some different angles on this that were absolutely crazy to see. Yeah. This one from Truthful. Truthful. This is the one that you want to see. Let's pull this up. Yeah. This is amazing footage from a local. This literally looks like a nuke went off. So scary. Yeah. Vertical footage. Absolutely crazy. Amazing footage from a local. I wonder what the reaction is from the people. Wow. That's really far away. It's far away, but it's also a pretty big mushroom cloud. Yeah. I imagine maybe they walk to their cars. Yeah. I saw some people saying, like, I don't want to hear about my carbon footprint ever again because this seems like an immensely disastrous explosion. Other people were saying Bezos did Roman's rocket launch from Succession irl. If you remember this scene, we can pull it up. Yeah. You haven't seen Succession. I've seen the Hearst season. I haven't seen the full thing, but he has a pet project. He does. Yeah. And it blows up. It blows up. That's certainly dramatic. I feel like that makes for good tv. Yeah, we were right before the show started, we were talking about the nominative determinism of blue origin. John said it blew up. Buh. Bump. Or blue, as in sort of sad feeling. Blue. Sad, sad start. But they will reboot. They will be back. So OSINT Defender says daylight reveals the.

We also have to say a little shout out to Jackie Shapiro from the Bronx. Apparently, she's one of our newest fans. Thank you so much for being part of the audience and tuning in. It's an honor to have you.