NEWSMAX

Business is. It's a great business. It's like 100 million plus a year. But the growth is now like all the other stuff we do. So we have like a travel line, we have luggage, we do like 10% of all men's wedding rings in America. So we have like a huge double digits of the tam. Yeah, it's like a very boring monopoly. We sell a ton of like men's wedding rings and they're coming for it all. You won't be able to get married. They're actually going for regulatory capture. You won't be able to get married if you're not planning to use a ridge ring. Yeah, I'm like a big pronatalist now because I'm like get married. So you're behind all of that? Every time I see some podcaster about the fertility crisis it's you. You're behind defunding it all. And the big thing now is like the.

So the hand is roughly the same. Yeah, that's a good one. The hand is roughly the same strength as an average human. Really. It needs to be able to do the full capabilities of a robot. Right. So the robot can deadlift 150 pounds. So the hands need to hold the bar of 150 pounds, not because deadlifting is useful in everyday life, but because it's a good metric for, like, how capable we are. So we really worked hard to make that kind of power to weight ratio also about the same as human. So if you look at the general hands in the market right now, this thing is roughly three times as high force as the other hands. And that is really also something that's going to enable a lot of new applications, because in the end, your AI will be as smart as the diversity of the experiences that you have lived and experienced. Diversity of data is directly correlated with the intelligence of your model. And if you are a third as strong as a human in your hands, there's a lot of tasks you just can't do. Yeah, I have one.

I'm like, oh, yeah, Gucci's getting crushed. And. And it's like, yeah, it's going to continue to happen. Why is that? You know, it's. I think it's just a generational change is really what it comes down to. Like, each one of those brands have good assets, but, like, Richmond is still tearing. Right. Hermes is doing great. Coach is on, like, a generational run. Like, the best performing stock of the past, like, two years. Right. I think last year it beat Nvidia in performance. No way. Coach. Yeah. So it's publicly trade under Tapestry. You should pull them up. Okay. They own Kate Spade, too. Spade's like a nothing business. So it's just a generational rotation. Right. Ralph Lauren also on a tear. So you talk about, like, American dynamism. There's American luxury. Like, America wasn't old enough to have luxury brands, but, like, LVMH bought Tiffany's and now it's like, look, Ralph Lauren's crushing. Coach is totally crushing. And I think the old stodgy LVMH of the world, the Gucci of the world, one, they got overexposed. Like, they really rely on the middle class. And if you ever look at, like, their sales demographics, it is like 80% of their revenue come from people making under $150,000 a year. And it's like, that's just a big disconnect when you're trying to sell whatever. Right. So there's going to be a shift towards, like, you know, true luxury. There's also some concern that, like, El Catterton is just personally investing in all the great assets and not bringing them into the portfolio. Like, they own Chrome Hearts and they haven't brought that into lvmh. Oh, interesting. Yeah. Okay, well, but when you say personally investing, it's El Catterton is investing. Got it. Okay. And Alcadon is the investment vehicle of lvmh. Yeah, that makes sense. And I know that they do a lot of deals in the private equity world, but. And then. Oh, yeah. Why. Why doesn't lvmh, like, they're actually. Imagine the rnos are like, yeah, we want to own the hottest. Like, you would think they would do everything they possibly could to own Chrome Hearts. There's a divestment in brands right now. They're actually trying to push stuff out of their portfolio. I think they just liquidated off white. Right. And off white ended up being, like, a target. Like Costco brand. Like, there's. Yeah, there's, like, photos of, like, Costco off White, like big Palatine delivered. They're actually doing a divestment right now from Brands, and Tapestry just divested from Stuart Weissman. So they're actually trying to go bigger down on winners. But, yeah, then there's just a whole Mad Happy is a great brand. It's invested via Alcadderton, not inside of the portfolio. And the whole idea was there was supposed to be a scout fund to then bring it into the main portfolio, but if there are no family and you own 90% Alcadverton and only 45% of LVMH. Interesting. Yeah. Yeah. But I mean, you could, like, Richmond owns Cartier. Cartier is having a great time. You know, they own Van Cleef. Van Cleef. Still having a great time. But those, both of those are way more true luxury brands than an lvmh. Yeah. So have we hit peak.

Well, I would say probably like January 2012, when Facebook ads. Just probably the best time. But now is the second best for sure. I mean, one, it's molded from AI. Like, I would hate to be trying to sell software right now. Right. And a lot of services. I'd hate to be in that business. People are going to buy stuff forever. Right. You have birthdays, you have Christmas. The American consumer is still incredibly strong. We really just had the best Q2 of all time. And that's with a war in Iran, like in inflation and all sorts of stuff. Yeah. And like, it all actually, like, looking at consumer confidence is so low, even though consumer spending is holding, there's always nervousness about will there be a pullback. Yeah, there's been nervousness for like six years. But I'm telling you, the Ukraine war in 2022, there was a noticeable decrease in E commerce activity. Really? And right now it's not happening. Things are actually ripping. So I think it's a great time. Total vibe session. Yeah. Total disconnect between what people say in the Pew research and then what people actually do. If I had my Shopify notifications on, it would just be chiming all day right now. I think people are. Yeah, it's definitely a vibe session. So it's a great time to be selling stuff. That's great. What are you thinking on the creation.

Like inventory planning and buying is a solved problem that is like the biggest problem that is plagued like demand forecasting. Yeah. Like all of that is like sending a proposal to a supplier or in your case like the actual factory to understand how many you're going to sell by month when they need to be delivered with the shipping timelines. All of that's just a bunch of Excel work normally. Yeah. And it was huge teams and if you got it wrong, it bankrupted your company. Right. Like you have bad inventory or you get like shorts in December. Right. Like it ruined a bunch of businesses. AI is totally solve that working directly with codexes of the world. Right. And just putting in all of your your business information. Such a huge unlock for the global economy. That's crazy to think. You got to tell we got to tell consumers that don't like AI Your favorite brands are doing perfect forecasting and that means that you are going to get the perfect article of clothing right before your trip to Hawaii. Even though you waited until three days before to order it. You'll always have.

Just really, like three times faster. So, you know, we're not at all hitting a wall here in, like, how fast we can do computers. Yeah. Can you talk about how the role of member of technical staff is evolving? Because you're talking about Sol Ultra going off and working for days at a time. And at a certain point, your job sort of evolves to. If you have a launch tomorrow, don't kick off a task that takes four days. Even if the model's capable of it and will deliver something great in four days, you need it tomorrow. And so you have to size your workloads appropriately. How are you thinking about sizing work and actually delegating the right chunk of work at this stage? Yeah, I find your question very interesting because it actually highlights a shift in our thinking over. Since we had five sixes, you don't really instruct it necessarily for a task that's going to take four days. You tell it all the information that you have. So you're like, hey, I have a launch tomorrow. And then keep track of the time and understand that the PR needs to land by midnight or by 2am it was just reason over it. You're not the one that needs to manage all of that extraneous complexity. And so that's what you're seeing as well. It's your relationship with the agent changes over time as it gets more intelligent and you're just like, oh, yeah, I can just talk to you. Another super smart human. Yeah. Talk about the efficiency of the model, what work went into that, why it matters what kind of conversations you're having.

Between you and the agent. This is also why we decided to ship it just in Tatu. Talk about progress in computer use. What is actually driving progress there? Is this just something that sort of comes for free with scale and model advances, or is there deliberate data collection that's happening and some sort of flywheel that's unlocking new capabilities in computer use? Yeah, we've done a lot of effort, bespoke effort on Windows, Mac and mobile computer use, phone use as well. And so there's an entire team working on this. It doesn't just come for free, but what does come for free is like every time we push the efficiency frontier and the model gets more efficient at thinking and acting and it just costs less tokens and it gets compressed in time. It also gets better at computer use because it reduces the latency and reduces the cost. And so the two compound. We have a lot of gains that we're getting from also visual understanding. And every time it improves, the model just gets more precise so it doesn't have to correct itself. And it was like, maybe it misclicks the button and they're just like, oh, just like, wait, I have to redo that. So every time it's more accurate and more token efficient. Computer definitely benefits from it. And when you compare it to 5.5, it's like just really like three times faster. So we're not at all hitting a wall here in how fast we can do computers. Yeah. Can you talk about how the role of member of technical staff is evolving? Because you're talking about sole opening.

Of progress against the anti air narratives. But the whole point of the prosperous society is, my sense is, you know, a lot of these investments, they're going to push the economic constraints away from production and towards just distribution, right? They're going to make distribution the binding constraint. And so because you just have this, this, this flourishing of content creation. And so when that becomes the actual problem with distribution and these AI investments go into things like ads platforms, digital advertising, Rexis, recommendation systems, then actually commerce, the economy becomes much more efficient and it's a really good thing. And you just generate a lot of value by pushing that binding constraint to the distribution layer. And then as a result you get a lot more heterogeneous product development because you can actually reach those people economically. Right. So what is the constraint now? It's like, well, can I reach a big audience? Can I reach a big enough audience to support a business? Because, well, I've just got this kind of like blue blunt tool. But if these AI investments go to making recommendation systems better, digital ad systems better, reaching these, these, these, these pockets of people that have these very specific interests that were totally unserved before, then you enable a lot more commerce, right? And then, and then, you know, you support this like flourishing of people making this wide diverse variety of goods. You get rid of this idea of like the Pareto principle. We have to serve, you know, the 20% that supply 80% of the commerce. Well, no, now you can serve everybody and they can pay what they're willing to pay. You reduce consumer surplus. Sorry, you reduce consumer surplus. You just, you create this flourishing of, of, of everyone getting exactly what they want. Yep, right. And that's the prosper society. And so the way I frame it is kind of a reaction, or like call it a conversation with John Kenneth Galbraith. He wrote the Affluence society. Right. But this was written in the post war economy. It serves kind of as the degrowth or handbook and in my sense is like, you know, John Kenneth Galbraith is a brilliant man. I'm not saying he's wrong, he was wrong when he wrote the book. But I'm saying it just doesn't apply anymore. Right. He was talking, he had this idea of the dependence effect. Advertising actually is a way to whip up demand so we can maximize production. Because that was what he called this conventional wisdom at the time. You should be maximizing production. But the reality is in the time he wrote this book, 1958, you had people moving to the suburbs, getting big houses. The GI Bill helped them buy these Homes, you had the suburb. The idea of the suburbs was being deployed. And so people needed washing machines, they needed cars, they needed refrigerators for the first time. And so you had these big companies that made these mass market goods. They advertised in mass market media. And John Kenneth Galbraith's idea was like, well that's just creating demand. There is no actual inherent demand for these things. It's creating it through advertising. And my point is the opposite. We don't have this homogenized society anymore and we don't have people that need these homogenized goods anymore. And we have a lot more particular specific media now and we can reach people and advertise to them the things that they have demand for, for products that weren't economically viable prior to these systems, these distribution systems. And that is the prosper society is being able to reach to meet the demands that they have with the products that they couldn't access before with ads they wouldn't otherwise see absent these systems. And so I think it's, you know, I think it's very, my sense is like you can make a very credible bull case that that's what AI delivers to us. And it's not about wiping out white collar labor because the reality is like that's going to create more jobs. And we're seeing that now. Like there's no, there's no justification for that skepticism. It just doesn't exist. We're seeing an increase in hiring, maybe not at the entry level and you could discuss if there should be some intervention there. But my sense is like AI actually if you look at the data and there's a Financial Times article about this the other day, if you look at the data, it doesn't support that bear case. And so that bear case should be absolutely eliminated as something that even enters the conversation. Yeah, no, I completely agree. That was an amazing speech. I don't know if I have anybody else. Yeah, no, I love this idea. We've been talking about it a bunch, just more customization.

Got it. Anyway, great. We were just talking about Meta. They just launched Muse Spark 1.1, their LLM. They're selling that over API. They're also selling some compute. But I want to, I want your take on the image model specifically and why that is an important technology for them, why vertical integration makes sense there. Why specifically is is their image model like, it feels like it has a different business case around it than a Nano banana or ChatGPT images. Yeah. So I think this is brilliant, right? Like, this actually gives them the narrative firepower that they need to. To sort of undermine the skepticism that investors feel about the investment. Right? So like I was at this dinner, I did these dinners a lot like these ideas dinners, like a research company will bring me in and talk to like a bunch of their hedge fund clients. And like I was talking about, you know, why these investments that matters making right now are bearing fruit right now. Like 33% advertising revenue growth last quarter on $55 billion in revenue. That's incredible. You look at Google search was 90%. Amazon, which is much smaller, was 24%. They're outgrowing everyone except for AppLovin and Reddit and people don't believe it. And I asked somebody, okay, what would it take to convince you that these investments are actually productive in this moment in time? And they said 40%. 40% growth on 55 to 60 billion dollars in revenue. Where did that number come from? This is pulled out of thin air. This is what they need to do. They need to be able to point to something and say, you see that ad that was created by our AI investments. When you talk about gem, GEM is a foundation model, Meta trained, a foundation model for ranking. That's important, but you can't see it. It's hard to convince. First of all, the research, like, you know, a lot of the research analysts, they're really smart people, but they operate in this paradigm of like spreadsheet says this, I get it. I can understand why ranking investments would actually be really beneficial for the company. But I put a number in the spreadsheet and it spits out something. That's the tool I have to work with. And like, these are really smart people. I think they conceptually get why these are good investments, but they have nothing to sort of tie it to that's quantitative. I think when you can point, you can point to the ad was created and you say, look, this ad was created with data that only we have. It's the image model that we built, the foundation image model that we built, that is trained, trained, not fine tuned, but trained on our own data can be verified against that. We've got our own custom evals. Everything about the training was built with data that only we have. No other frontier lab can, can, can fine tune their own models for this use case. Only we can do that. And then I think if they can point to the output and they say that ad that you saw in your Facebook Instagram feed was created only as a result of our ability to train on this data that only we have, then I think you can kind of make the case. So I think bundling those two, integrating those two things together is like a really smart move. And I kind of, you know, I understand, like they, you know, they restarted the efforts and this is the whole, you know, this is the MSL rebrand. But my sense is like this might be more convincing than anything that they've been able to say with the ranking infrastructure and the transfer learning infrastructure. I'm talking about Lattice, I'm talking about gem, so we'll see. But my sense is like if you can actually point to some output and say, look, this only exists as a result of our ability to train this model on this proprietary data that no one else has, my sense is you can make the argument more robustly. And if you ask advertisers what is the bottleneck to spending more on meta, they will almost always say it's great creative.

Stanley Tang, co founder and CPO over at DoorDash, says, I have an insane magic trick that so far none of the models can figure out, including Mythos. It's a bulletproof trick that I've shown to a hundred plus people, including magicians that couldn't figure it out. It's not anywhere on the Internet. Only way to know it is through first principles reasoning. Told everyone I'll believe in AGI when it can crack this trick. Well, GPT 5.6 just did how I want him to. I want him to actually open like well now. Okay, like give us now that now that a model cracked because I feel like a lot of magic tricks are like sleight of hand. So is he uploading a video or something? Like well yeah. So John Palmer says, I have a hilarious joke that so far none of the models think is funny. It's a bulletproof joke that I've told to 100 plus people including comedians and no one laughed. It's not anywhere on the Internet. Only way to know it's funny is a first principle sentiment. Told everyone I'll believe in AGI when it tells me a joke. The joke is funny. Well, 5.6 just did. Huge, huge news. Huge news. Huge. Yeah. People are going back and forth. GPT 5.6 is a poor schables like.

Again, what else is in here? Oh, yes, I do think that. Didn't Dylan Abrascada write something about this? What was the essay he wrote about interactive memes and this idea of generative AI enabling these vibe coded mini games. We've been seeing a bunch of them with the copy bear simulator, the coconut simulator, where it's something that's just a joke, that's funny for a few people and normally, normally you would instantiate that in a tweet or maybe if you were getting really crazy you would do a Photoshop edit of a meme. But now you can go and create a full mini game, something that runs in the browser and soon something that runs in Unreal Engine and can actually be distributed on the Steam store. We are already seeing that with the data center simulators and all these funny simulator games that are going on Steam. All the advances in the coding model certainly speeds up the. The ability to actually deliver polished software. I'm particularly excited for like, yeah, Dylan's title was the Future of Entertainment is Interactive. Yes, yes. But yeah, that's part of what I honestly love about AI is there's a lot of things you can make now that never would have made sense to make because they would have taken you four days and it was good for like a small laugh. Now you can do it in four minutes and it's just fun. Yeah, I think there's going to be, there's. If you have some sort of like small custom, some sort of custom functionality in your business, it feels like there's. Is this the David Senra simulator? Why is this David Senra? Late nights in a Miami abandoned apartment complex in 2015, just recording podcasts and reading. This is very creepy, like horror back room.

I am trying to refresh my timeline, but the blog post is also very, very fun because it includes games. I'm a big fan of the GPT 5.6 launch games. I got immediately sucked into the sailing mini game, which is very high fidelity but also delightful to actually play. Should we play it? Yes, we should definitely play it. Yeah. Salt wind. You guys play it. I want production team to see what they can get. I think my time was 25 seconds. Is this hosted on a site? I think this is. I mean, this is hosted on the OpenAI blog, but I think the idea is that you could vibe code this in the latest GPT 5.6 in the app in ChatGPT and then deploy it and have someone. Are you trimming the sales appropriately because it looks like you're losing speed, you're losing wind. It's not working. I'm going to smoke you. I got 25 seconds. Wow. Amateur hour over here. Look at this. Yeah. Yeah. Well, the whole. The whole game, which you probably missed, is that there is a little bar there where you have to trim the sails to be in the sweet spot of the wind while you're turning. So as you turn, see the bar, there's a recommendation for where you put the sails. You got to keep that line in. See, it's moving over. You got to press the down s. Yeah, exactly. Keep trimming those sails while you steer the ship. This stuff is very, very fun. I am trying to open one interesting data point from.

But the other big news, OpenAI just released GPT 5.6. Let's go. Let's give it a new general purpose model with expanded coding and agent capabilities alongside GPT Live, which we talked about yesterday. A new real time interactive voice experience. Reactions are great to 5.6. Bunch of interesting details here. You had People have been identifying that while there is a frontier and there are just a few companies that are actually on the frontier, the frontier is spiky and they have different flavors to them and different reasons to pull different tools off the shelf. People are drawing analogies between Fable 5 being some recluse genius and 5.6 being collaborative co worker that you love chatting with or something like that. I said I don't know how else to describe it but Fable 5 is like Kendrick on Good Kid Mad City and 5.6 Soul is like Chief Keef on Finally now it makes sense to me. Thank you. So I just wanted to put it into 2010 really hip hop terminology really really clear there. Thanks.

Lots of debates there. Meta announced Muse Spark, a new agentic coding model, with Mark Zuckerberg returning to X for the first time in basically a decade. Three years ago, he posted one joke post about launching threads, but he has not been an active user. But the AI vortex sucked him in and he's got a post. Oh, I think he's an active user, John. You think so? He's just not an active poster. He's just not an active. He's not an alert contributor. You're calling him a lurker? I'm calling him a lurker. Calling him a lurker. I'm calling him a lurker. I think he's absolutely glued. You think so? I think so. You really think so? I think so. I feel like. I don't know, so busy, so much other stuff going on. I feel like he. I feel like most people, the busiest people I know. Okay. Are not active on X. Yeah, but they. They are on X a lot sometimes. But there are. There's a different class of person you can just quiz. You can just quiz them. Screenshots come to them via Slack or via text message because they have a team that's monitoring the timeline and then is delivered. This is the important. This is the important stuff. They're calling him Mark Lerkerberg.