Funding the Future of AI? with Gregg Hill

[00:00:00] Speaker A: Hello, everyone, and welcome to the 241st episode of the Atlas Society Asks. I'm Jag. I'm CEO of the Atlas Society. I'm very excited to have Greg Hill, co founder and general partner at Parkway Venture Capital, join us to talk about his amazing journey and the future of investment in AI and emerging technologies. Greg, thank you for joining us. [00:00:26] Speaker B: It's great to be here. Thank you. [00:00:28] Speaker A: Yes. And I'm very excited that this is actually one of his very first podcast interviews. So we're going to try to give him a warm welcome and come up with some great questions. So I did a little bit of research. And growing up, early on, you embarked on the path of becoming a professional in tennis. How did that come about? [00:00:54] Speaker B: So my dad was a really great athlete and my mom was a cheerleader. So I kind of grew up around sports. And my parents, kind of going back, were. I think they were 17 when they met and they had me at 18. So they were just teenagers. And my dad, he didn't really come from. He came from a tough household, and he really didn't get the opportunity, even though he still holds all the records, like 50 years later at his high school, public and private. And, you know, he came from kind of an area where there wasn't much opportunity, including where I came from. And he just, you know, my dad and mom saw that I was playing with balls when I was a kid, always playing with balls, and I had really good hands. And they put me in baseball and basketball, but tennis courts, there was no tennis in our area at all. Like, you never drive by, like a tennis court or a country club or anything. So kind of out of sight, out of mind. I love sports, I love competing, and I love traveling with my dad because he was playing still semi professional over the weekends, and basketball and he had travel teams, and I would sit there and watch all the games all day. And then we would talk and he would be so. So he was so competitive and he would explain, next time that won't happen. What do you think? And it was just very intense, you know, household for. For winning and losing. And that's. That was just kind of how I, you know, that was kind of what I was used to. Right, yeah. [00:02:31] Speaker A: So if I understand correctly, you were about 9 or 10 years old, you were sent to train full time, and you never went home again. Looking back, was there a sense that you missed out on some of the more usual aspects of childhood? I know right before we went live, I was asking, how would you feel if, you know, your 9 year old, 14 year old decided to embark on this kind of career and start out as a child athlete. And you really kind of had to pause on that because you said, it's not for everyone. [00:03:06] Speaker B: Yeah, yeah, it's not for everyone. And it's kind of all I knew because it happened so early. I actually look back and I can tell you the movie I saw right before I left. And it's the last memory I have with my family growing up. I remember it vividly. So it's kind of like that was the last time I had a normal family life. And then it was just in the dorms training every single day and, you know, traveling around the world and trying to create my craft, you know, get better at it. I was, you know, I would call home once a week when I left, when Nick Bolletari wanted me to go down there and he told my parents, you know, best hands I've ever seen, you know, I'm gonna make him a champion. And my parents were like, we've never played tennis, this is crazy. And my dad said, if you're going to go down there, all I ask is two things from you. And he sat me down in the living room and he said, outwork everyone, want it more than everybody who goes there. And never call home upset, because if you call home upset one time, there's no way your young mother, her firstborn, she's gonna come and get you. So when I would make phone calls in that week, I would just make sure that I had the right mindset, you know, and I kept it light and everything was great. And then I just took the burden on if I was down and I leaned on my friends at the academy and, you know, coaches and things like that. But I never put that burden on my family. [00:04:44] Speaker A: And then there was that fateful event that effectively ended your tennis career. What happened? [00:04:54] Speaker B: Yeah, it was kind of a blink of a moment, kind of blink of an eye moment, I guess you call it, where your life changes forever. I was just finishing a tennis turn, a tennis match at a tennis tournament my coach had to go to. His grandfather passed away, so he wasn't there with me. He said, can I come back in two days? And I said, of course. So I was by myself, impatient because I finished the match, I won, and I'm ready to get back to the hotel. So instead of waiting for the tournament car, I get a taxi cab. Cause it's right around the corner. I mean, I could probably have walked it in 15 minutes. You know, it wasn't that far. Get in there and. Yeah, and an intoxicated driver hit us really hard. And a few minutes later, and, you know, just, you know, my whole body was a wreck, and I was in the hospital, and it took me years, years and years and years to recover just to be a normal, walking out of pain, human being after that. And tennis was just pro tennis ended that moment. [00:06:03] Speaker A: So, you know, recently here in Malibu and elsewhere, we've been dealing with the recent fires. I lost my home here in 2007. And when you go through something like that, a traumatic loss, I like to. Every bad situation can be made worse. You can either try to stabilize and rebuild your life, or you can let grief take you down and you start to lose other things. So when you had this horrific accident and you lost this dream of a tennis career, what resources did you draw on to overcome and to move forward? [00:06:44] Speaker B: That's a great question. I didn't really. I didn't really talk to anybody about it. I actually felt so down that I didn't want to reach out. It's almost too painful, right? So you don't want to really talk to anybody about it. You want to be by yourself. And the first thing was get out of pain. Right. I got to figure out a way that I'm not in pain because I didn't want to take painkillers and all that stuff. They were putting me all this stuff, and, you know, I've never taken that stuff in my life. It's really uncomfortable. And I was on a. I was on a. My goal was to get out of pain. And in my mind, I still thought I could come back, of course. Right. The typical athlete, you know, no matter what the doctors say, I'll be back, you know, because I didn't know anything else. Right. I mean, I was a. I was a tennis, you know, professional, and I wasn't just a tennis professional. I was like, you know, worldwide known and the heir apparent to Agassi. And I'm in every Nick Bolletary book, and I've been on 60 Minutes and with Kournikova, and I mean, I was the future of tennis. I wasn't just a tennis player. I was one of the best talents in the world, and I earned it. And I knew this was my destiny. And now I have to think, oh, you know, was I wrong? Like, what was that all for all that sacrifice? So dark nights, dark moments, ptsd, you know, starts kicking in and. But I remember when I was a kid when I went through really hard times when I was really Stressed out. The best thing for me was always to get active. You know, just use your mind, focus, have a schedule. So I started trying to create a schedule. Every single day. I wake up in the morning, I do the same thing. And little goals, like little goals. Right. Little goals every single day. And I, I, I that the rituals and the, and the activity. Even though I couldn't do much right because I was in pain. But I, my goal was get healthy. And I had a five year plan. In five years I'm going to come back and make the greatest comeback ever in tennis, which didn't happen. Obviously would happen, but you know, you have to have something to look forward to. And I was so down. I needed to have some inspiration because my parents, my family, they didn't know how to talk to me. They wanted to console me at some level. But what do you say? What do you say to. They know how much I sacrificed. It was almost like words were more painful than no words. So I went with the. I was, it was a lonely journey for a while. [00:09:29] Speaker A: So what did you do after that? You know, how did you shift gears with your career and when and how did the pivot come to investing? [00:09:40] Speaker B: Oh, gosh, it was a long journey to get to investing. I didn't even know what investing meant. You know, I'd have to look it up probably at that point. Yeah. So once I got out of pain and I started feeling a little better about maybe two years later, it was two years where those were the toughest years. I decided to go back to move back to Los Angeles. And that's where I met my business partner from Parkway, Jesse Coors Blankenship. He was living there and that's when he's a technologist. He was a young professor at Columbia and kind of we can get to that later. But he was looking at the world very differently, seeing everything where technology was going. And we talked about it all the time and I was always talking about what it takes to get there and the strategy and the dedication and all that. We kind of picked each other's brain every single day and we hung out all the time. It was almost like he helped me heal. And he was also came from situation with his family. I think we met at the right time where we needed each other in some ways, like it was like really meant to be. So that's when I got the bug for technology and you know, I started, you know, diving in. And then over time I, I joined ypo, you know, the young president's organization. And I got introduced to venture capital. And I started making investments in Silicon Valley and I started, you know, I didn't come from a financial background or Goldman Sachs, but I started seeing the industry maybe differently than others. I didn't like a lot of things about it, just to be honest, wasn't a big fan, but I thought there was a better way to do it, investing and supporting the founders. And I felt like a lot of the people that were supporting these companies, they really didn't have a story. You know, they were academics and, you know, they hadn't really lived a life of like I had. And they were missing. Their instincts were just, There weren't instincts and I, I was seeing all this stuff and eventually I started just joining the boards and being the major investor in these companies because I always seemed to feel, I always seemed to sense and help the companies. So they, they never went under and they always had a success and. [00:12:25] Speaker A: Right. [00:12:25] Speaker B: That's what I'm proud of. Yeah. [00:12:27] Speaker A: Yeah. Any great entrepreneurial success or journey always begins with identifying here's a lack, a gap, some needs that are going unmet. And it sounds like you did that with regards to the way you interact and support the entrepreneurs that are the startups that you guys are investing in. So you said something that triggered me in a good way when you said that at, at that time, you had to look up what finance is and what investment is. And I worked for many years for the financier Ted Forstman of Forestman, Little and Company. It's a, it was a private equity firm specializing in leveraged buyouts. So I think to some in our audience, you know, private equity, venture capital, hedge funds, you know, that it just might seem like, well, we're all doing kind of the same thing, but they're really not. So help us to understand where venture capital fits in in the world of finance. Like, what's the difference between a VC company and a hedge fund or private equity firm? [00:13:49] Speaker B: Yeah, they're all so different. We don't even really play together at all. Every once in a while we bounce off each other. But I think they, they say private equity. It's private equity and venture capital. And it's, you know, it's, they put it together. Venture capital is more earlier stage. So series A, like when. Or seed investments. When a company's founded, they need venture capitalists to support them. So, you know, you don't necessarily always have a balance sheet or, you know, a lot of revenue. It's, it's a new innovation, like a new technology. A lot of Times or an existing technology is getting better and you're betting on team, you're checking boxes that private equity can easily check and replace because they're more later stage. And it's a, it's a business that's more, it's been around longer and it's got a lot of more historical, you know, success year after year. And, and you know, it'd be an example of like Google. Early on there was nothing to invest in for a private equity firm. It's, it's an idea, it's a team and becomes one of the biggest companies in the world. But venture, private equity would never invest that early. They're going to wait six, seven, eight years before so they can have more predictability. So the returns in private equity are much lower. And in venture capital they would say is riskier because you don't have that balance sheet. But that's in venture capital the biggest returns and the most billionaires have been created out of the venture capital world in history. [00:15:32] Speaker A: So it does seem that among these various approaches, venture capital carries significantly more risk than, let's say private equity. Higher upside, higher downside. But does that, I don't know, complicate the way that you approach potential investors in your fund? [00:15:57] Speaker B: I mean I think, you know, we have a track record now and even before in venture capital I didn't get to it but you know, I started with, I, well, you know, I backed and I was the largest investor in one of the best, earliest AI companies with, with my friend Jesse. So we had a five year run together and brought a really amazing technology to market. And we created a new market called Generative Design. It was essentially automating industrial parts like mechanically engineered parts like for cars and heavy machinery, airplanes, things like that. And that's his research at Columbia. We spun it out and we created a company. So I, you know, in five years we had a great exit and now about 20, 25% of the world's products are designed with that software. Today, even our port, even our portfolio companies, they're using that software to design humanoid robots and autonomous vehicles. It's amazing. So I got my, even though I'm an investor, I got my start as a, as like a tech, you know, in the tech world, you know, as a, as a co founder and a, and a board member. So I took that, I took that lessons learned as just an investor first and then when I got a chance to actually back a startup and get really involved, you know, it was, it was such a strategic company that if you would have just been asleep at the wheel for even a couple of days, that company never would have been successful. So it was a lot of instinct, a lot of smart decisions. And you know, it created the industry and all the comps. Now, the highest comps in that entire, I think it's like a $10 or $20 billion industry now. All came out of the company that we, that we sold. So I learned a lot there as well. And I, you know, with Parkway, what's unique about us is, you know, because we had that success. So people are a little bit more willing to back you because you're, you're an expert in the AI world is how they see. Because you were there early and you're not just following the trend. I think anyone getting into AI now has like no chance of getting in the big deals because, you know, you need to be early or you're late. [00:18:20] Speaker A: Wow. [00:18:21] Speaker B: Yeah, it's like a startup, right? You're early or, or you're late. [00:18:27] Speaker A: And speaking of early, Parkway was an early investor in Figure AI with other investors including Nvidia, Microsoft and Jeff Bezos, among other huge names. News came out last week that figure is raising 1.5 billion at a 39.5 billion valuation. Can you talk a little bit about figure AI and its possible at home use and also in the workplace. [00:19:02] Speaker B: Yeah, yeah, we, we actually, we led their Series A, which was a big deal because in two years. [00:19:09] Speaker A: And this is just so people know this is. We're talking about humanoid robots. [00:19:13] Speaker B: Yeah, Humano robots. The robots are going into your house and revolutionizing manufacturing. They're already working at BMW right now, 24 hours a day, fleets of them. And it's like a 10x output on a single human, a humanoid. It's incredible. We're going to see a productivity level that the world's never seen before. Factories are going to be redesigned. Manufacturing can come back to the U.S. it's really exciting times. And Figure's the first group in history to commercialize the humanoid. We have a second customer that we can't speak about that we have like 85,000 humanoids. And between the two of them, it's many, many, many billions in annual recurring revenue in just a few years. It is the largest market ever and it's 10 to 15 times larger than the automobile space. It's, the market is tremendous and it's 80% of all the venture capital money this year is going into the space. It's really the only show in town. Nothing else is interesting anymore besides this right now in B.C. and yeah. So we led their Series A. And, and we're on the board. I'm on the board, Jesse's on the board. And I think it comes back to deep personal relationships. We knew Brett 10 years ago when we had our startup where I was speaking of in New York. And we were in the same cohort, like the same incubator. It was like Columbia guys, you know, NYU. And there was like 200, 250 startups. And the two, only two winners in there. The big winners were Brett's company and ours. And, you know, you just hang out together. And Jesse and Brett got to see each other a lot more, so they became really good friends, you know. You know, you fast forward and it's like, you know, he's got this amazing company, his third company, and he really wanted to work with people he trusted. And Parkway had just done a big deal before that, so he was really in Silicon Valley, so he was really excited to work with us. And then we were actually. The news that came out, if you read the article, we're leading that $39.5 billion round. Parkway, we're the lead investor even in that. [00:21:39] Speaker A: Yeah, amazing. So I can't help but notice that Tesla is also making a humanoid robot that, similarly to you, Elon Musk predicts could be the biggest selling product of all time. What are some of the similarities and differences between Tesla's optim and figure AI is figure01? [00:22:02] Speaker B: Yeah, Optimus is great. The two big players are Optimus and Figure. And yeah, Optimus is part of Tesla. So the only way to invest in Optimus is just to buy Tesla stock. But Elon feels that something like 90%, you know, he's thrown out a bunch of numbers of Tesla's future value is going to be optimus. He foresees 10 trillion in annual recurring revenue from Optimus, which would be, you know, 20 times the size, 15 times the size of Nvidia is how big he thinks this market is. So those are the two big players. Optimus is similar to Figure. It's a general useful robot that can do anything. You can ask it to do anything. There was a video that came out today and figure two humanoids. They put an apple, they put a banana, they put ketchup, they put all this stuff on the table and they just asked both of them, they said, figure out what to do with this. And they looked at each other and they were working together and they were putting in their fridge and they're moving together and it's, it's, it's More of a human and robot form than a robot. It's, it's a. It's. It's not like you're thinking where they're clamping and pulling stuff like this. It's soft touch and, you know, it's got the same gate as a human. It's. It's incredible. And the world you're going to see, and Elon saying this too, is in the next. Call it 10, 15 years, you know, maybe 15 years from now, there may be more humanoids on the planet than humans. It's humanoids. It's not just going to be isolated. They're going to be on the road. They're going to be your security guards. They're going to be everywhere. And it's, it's. They're going to. Humans and robots are going to coexist and there's no stopping it. We're already. We're already bringing 150,000 of these right now out. You will see the first humanoids in the home. In the next couple of years, there's gonna be orders by the millions, and you're gonna walk into eventually every single person's house around the world. And it's like an iPhone. You're gonna see a humanoid that is doing chores. Watch, you know, you know, making you coffee, teaching your kid school at home. You can ask it anything. You're rearranging your books, you know, just, you know, making sure porch pirates don't steal your packages. You know, you name it. [00:24:42] Speaker A: Right? It's like putting out fires. That would be good. [00:24:45] Speaker B: Yeah. I mean, how great was. How great would have been to have, you know, a thousand of them around, you know, helping out? So this is what's happening. It's blowing people's minds. Jesse and I did a in Paris for JP Morgan. We did this event. It's the most powerful people out, you know, every. The top hundred JP Morgan clients. And we, we presented this and we're the biggest names you can think of there. And they were. They said, I've never seen anything like this in my life. I am just. They couldn't even speak, you know, because, you know, a lot of people think this is science fiction, but it is happening as, like, happening right now. And you're going to wake up one day and it's going to be at your doorstep. [00:25:35] Speaker A: Well, I can't wait for that day to come. So do you see a future scenario in which Tesla and Figure AI become kind of the Ford and GM competing? Are we going to have other entrants into the Market? [00:25:50] Speaker B: Yeah. [00:25:51] Speaker A: What do you anticipate? [00:25:52] Speaker B: Great question. They're definitely going to be competitors. There's room for both. It's not a winner take all business. There'll probably be one or two others that come, but there's not going to be 10 others. It's really hard to pull off. Like there's only five people in the world that understands the thermal system needed for a humanoid. Five because it's brand new. And it's just amazing because the humanoids, I think it's like 500 degrees it runs at inside. So if you don't have this state of the art thermal system, everything shuts down on you. So it's so much easier to build like an autonomous car than this. This is the the great. As Jensen, the founder of Nvidia, said recently, publicly, I don't know if you just saw the news, he called the humanoid space and he pointed to Figure because he was on stage with him. He said, this is the greatest product of our lifetime and it's the biggest market in, in history. And he said, I've never seen anything like this. Even Jensen, who's running Nvidia, knows that this is something that you know, you know it's going to make, you know, like that look like Apple size, look small. It's remarkable. That's why it's worth 39 billion, 40 billion in two years. [00:27:10] Speaker A: Right. [00:27:10] Speaker B: You know, so two years from now it'll probably be worth 3 or 400 billion and then it'll probably be the fastest, potentially the fastest company ever to 1 trillion. And we think it's just two orders right now and there's like a couple hundred billion pipeline. You can't manufacture them fast enough. So you just got to raise money, keep expanding and then eventually you start getting manufacturing going where you can, you can deliver millions of them. And then eventually between Optimus and Figure and a few others, there will be billions of these in the market. [00:27:50] Speaker A: All right, we've got some really interesting questions coming in from our audience, so I'm going to dig into a few of those. My modern Gault. Good to see you here, my friend. He's asking, what do you think is the hallmark of a good relationship between you and, and the owners of the startup founders of the companies that you're investing in? [00:28:14] Speaker B: Yeah, I'm a big believer in storytelling and getting to know people, you know, like we're doing today. You tell your story. I don't think you can get to know anyone unless you hear their story and spend time with them, because then you can understand, you know, their strengths, weaknesses, you know, pain points, and mine as well. So I like to get to know the founders. I want them to know where I came from, what I'm trying to accomplish, my goals. I want them rooting for me as much as I'm rooting for them. I don't want to be an armed distance relationship. That's the, you know, an arm's distance relationship. They're never going to text you when there's an issue and you may not be able to help, but you, it's nice when they text you first because you can at least be a part of the conversation and, and help, you know, and actually go find someone that can. I think the trust level, it gets really deep with these founders. But, but if you're just a finance person who's invest the money and says, I'll see you in four months at the, at the board meeting, you're never going to get close to the founder. All he sees you is, is a check. You know, just somebody I come to when I need money. And I'm sorry, but, you know, even though it's venture capital, these are companies like a family, they need to be nurtured. And you can't just leave your family for three months and come back and expect everything's fine. Right. You got to be there and you got to nurture it. So I can't do it every single day, but sometimes every single day for a couple of weeks, I have to with certain portfolio company founders because they need me and they need my partner and the team. And then maybe they don't need me for another month, but at least I know that if something comes up, they're not nervous to call me, even if it's the worst news ever. You know, let's try to figure it out. And I think, I think having a story and they understand you, but if they just knew me as Greg the venture capitalist and parkway and that's all they knew, you would never build a relationship. They actually have to know who I am outside of just writing the check. [00:30:23] Speaker A: Right. Okay. Jackson Sinclair asks, how do you respond to lobbyists and others who are out there and they are very opposed to these kinds of emerging technologies. For example, AI is very energy intensive and many environmentalists are against it. [00:30:43] Speaker B: Yeah, that's a. It's a complicated one. You know, I think, you know, it seems like this administration's really backing it. I'm not saying the last administration didn't, but it seems like it's really pro. AI. Yes, there's an energy demand. We had to figure that out because you put too much. There's too much. The grid. The grid can't handle the demand, right, for the compute power needed. So now they're looking at more nuclear. And environmentalists don't like that. But think about Bill Gates, right? He's an environmentalist, and he's been pushing nuclear for a decade. He said. So there's all these contradictions out there. When you talk to folks, at the end of the day, you got to solve the problem and protect people. But you can't just say, no nuclear, no this, and we're going to have windmills, you know, pushing AI forward, it just doesn't work right? So you have to find a way to move forward. And the energy demands are there. There's also fusion, and that's, that's almost there. And you can drop in, you know, small fusion reactors that are, you know, that have a better reputation than even nuclear. And they can, you know, they could run many of these data centers, like some of the biggest data centers in the world. But Elon Musk, you know, he just built the largest data center in the world in Memphis, Tennessee, $10 billion. And I think he had to prepay, like, I may be wrong on this, so don't quote me for, you know, 100% on this, but I think it was like 5 or 600 million he had to prepay because it would have cost consumers so much money because of the, the grid was over. You know, it was, it was running like overload. So essentially he prepaid for two or three years so they wouldn't pass those costs on to the consumers. So that's what you're up against. You need, you need data centers to drive humanoids, to drive the chips, and Nvidia, which. Everybody needs chips now. So there's, there's, you could build a data center every single day right now for the next 10 years, and you're, you're still way behind. It's not enough. So it's, it's, it's, it's definitely an issue. But I think nuclear, you know, I think it just got a stigma, a bad stigma back in the day, right, with everything that happened, the leaks and everything. But we're, we're a lot smarter and a lot better at those things now. So nuclear plants today are not what they were many years ago. So there's, there's a safe way to do it. We're not in the 80s anymore. The 80s was dangerous. Everywhere you looked. I mean, we were all, I mean, look at the gyms we played in outside. I'm surprised we all survived playtime in school. I mean it was, everything was dangerous back then. [00:33:43] Speaker A: Yeah. So yeah, I mean we're looking at nuclear, looking at different kinds of ways to power this increased energy demand in order to fully scale it. Guillaume Verdun, he's the founder of Xtropic AI and he's also going to be our keynote at our Gulch conference in Austin coming up in June. He has proposed thermodynamic computing to optimize energy efficiency and processing speed. Are there people out there like him that are working on not just powering the way existing computing is functioning, but also finding ways to make computing itself more efficient? [00:34:32] Speaker B: Absolutely, absolutely. That's in the works, but it's just not ready yet. It's unproven. So in the meantime it may take three, four years. It could be two years or it could be seven years, we don't know yet. So in the meantime the energy demands are not going, they're not going anywhere. Right. But there's a lot of really smart folks that are trying to figure that out and everybody needs it. Like a good example would be like OpenAI. OpenAI spends six or seven billion dollars a year on compute to be able to service. Every time you ask chat something that's energy intensive and imagine millions and millions and they keep growing their business and they need more and more demand so they keep spending more. So they're spending, I think they may spend 9 or 10 billion this year. I mean that's ridiculous, right? For energy to drive, to drive AI and there's got to be a better way. But in the meantime he's got to have data room support and he's got to pay for it. That's an issue for Oracle, that's an issue for Elon. We all have the same issue right now and we just. Eventually there'll be a technology that'll take the, take the burden off some. But it's not ready now. [00:35:53] Speaker A: Right. Well, assignment number one for the human eyed genius robots. [00:35:59] Speaker B: Help us figure it out. Yeah, go figure that out, you know. [00:36:04] Speaker A: So figure has partnered with ChatGPT for some AI. Thoughts on wondering if you saw the news? Well, who. You'd have to be living under a rug if you didn't in the tech world. And you didn't hear the news about Deep Seek that was released and it's a Chinese competitor. It was at first kind of hailed as this Sputnik moment. People were freaking out, wasn't really such a big deal. I mean, they purportedly claimed to be able to create it for a fraction of what some of these other companies have spent to create other search engines. Yeah, so take on Deep Seek. [00:36:53] Speaker B: Yeah, that's a tough one. You know, it's not entirely accurate that they did that they only spent that much money. [00:37:01] Speaker A: Right. Like, so how are we going to trust a Deep Seq search type interface when you can't even ask them, you know, gee, what happened in Tiananmen Square back in the day? I mean, the Chinese communist government does control what these companies say to a large state and whether or not that was accurately what they spent, or if this is indeed a little bit on the side, up side to try and shake things up and project more capability than they actually have. [00:37:41] Speaker B: I think the biggest takeaway I got from deepseek is it showed that in that space, the lom space, what one person can do, another can. So regardless of what they spent, you know what OpenAI has just not unique enough to have a moat that can protect you from a founder like Deep Seq that just shows up and it's just as good or just as close as good as OpenAI. And I don't like spaces like that. I mean, you can always figure it out. You can go into other spaces. But what they're doing is just scraping the Internet for information. I mean, they're regurgitating the award, you know, they're just trying to find data everywhere, you know, like everything that's ever happened. And that's great, but the proprietary, the proprietary data is the uniqueness. Right. So I think the company that has the edge in that, in this space, by far, in my opinion, is Xai Elon's company because he has, he has years and years and years of data that no one else has. SpaceX data, that, which is like a lot of physics data. Tesla, you know, so he has all this data and then of course Twitter, you know, you know, he, when he bought X or he turned it to X, you know, he, he essentially owns all that. Every tweet that's ever happened, it's his, he can do whatever he wants to with it. You sign a terms of use and that's, there's some really good data in there that OpenAI would not have. And so I think it differentiates himself and that's something Deep Seek won't have. So I think regardless of what Deep Seq did in the market, the winner in this, I think out of everyone is it's going to make, it's going to, it's probably going to almost guarantee XAI is going to be the leader. [00:39:42] Speaker A: Yeah, I was playing around with Grok 3 last night. [00:39:47] Speaker B: Yeah, not bad. Yeah, it's impressive. It is. And a captive audience. [00:39:52] Speaker A: Exactly. All right, so another one of your investments is in Google. Spin off Sandbox, AQ in quantum computing. So again, for the layman in the audience, what is quantum tech? [00:40:08] Speaker B: Well, this is actually a quantum simulation company. So it's a spin out from Google. It was incubated in Google for like five years and they spun it out. Jack Hidary is the founder and Eric Schmidt, the former CEO and chairman of Google Alphabet, is the chairman of Sandboxaq and Quantum Simulation. You're using the power of quantum and AI. That's why they call it aq. Sandboxaq is AI and quantum, and they are able to, they're able to basically simulate or imitate a quantum computer today with software. So they built these proprietary algorithms at Google and they still keep developing in. And they did a deal with Nvidia and very powerful deal where they're able to change the code on the Cuda, the chips, the best, the latest and greatest Nvidia chips. And they can run millions of simulations that way. And when you can run millions of simulations, you can, using quantum and AI off their algorithms, you can simulate a quantum computer. You can solve, you can solve like physics, physics problems, like instantly, you know, and an LLM, like a large language model, can't do that again, it's just scraping the Internet and it's great and it can help your business, but it can't go deep with a bit. With B2B, it's not going to fundamentally change your business. And what large quantitative models can do, which is what this is, it's a little technical, but this is a very, this is a very technical company. They're able to go deep and they can go, you know, they can help with the drug discovery phase where, you know, for a pharmaceutical company or biotech company, where it takes like 10 years to get through that, that process, they can get through it in like months, if not sooner, savings. And they can, they can help bring like a Parkinson's drug, you know, to market a lot faster. And that's impossible for Xai or OpenAI to do. And that's why this, this company is so powerful, because they're solving problems that the world never thought possible. It really is the Oppenheimer team, you know, it's like, it's like Quantum is so powerful, it's scary. It's the reason why this company started was some bad actors were using early quantum computers and, and they were, they were basically, you know, hacking or, you know, they were bypassing RSA standards for encryption so easily. And it became a national security issue and it still is right now. So that's, that's a real problem. And that's kind of how the company form is to start defending against that. And it's called, that's called post quantum cryptography PQC and that's really the new standard for encryption. If you don't have that or you don't adopt that at some point, you're not. You're not protected enough. I mean, a quantum computer, quantum technology, just even a very inferior one, can bypass any cybersecurity system in the world. So you can imagine, like you hear about cyber warfare, right? It's like biowarfare cyber warfare. There's all these warfares. And you know, quantum technology in the wrong hands can really hurt. It can take down airlines. I mean, they're spoofing them every day where they're, you know, GPS is going out. People. Airlines are flying blind. There was 30,000 flights affected last year from this cancellations. They never tell you why your flight is canceled. It's because, you know, they had. They had GPS issues because GPS is a really old technology. It needs to go away. You and I can jam. [00:44:16] Speaker A: You're not on this. [00:44:17] Speaker B: Yeah, yeah, we can jam our whole neighborhood. It's pretty easy to jam. [00:44:22] Speaker A: Yeah, well, I'm thinking of one particular neighbor that. No, just kidding. [00:44:27] Speaker B: Yeah, me too. [00:44:30] Speaker A: We all have one, right? So Gil Verdun, who I was talking about before, together with Mark Andreessen, who's a neighbor of mine here in Malibu, helped to launch the Techno Optimist movement. They had that Techno Optimist manifesto as well as E ACC or effective acceleration as a counterweight to more pessimistic perspectives on AI and techno doomers who see the future AI at best as a driver of mass unemployment or at worst, potentially future overlords of humanity. Do you have a perspective on all this? [00:45:16] Speaker B: Yeah, it's more the little bit more leaning on the Terminator movies of what could happen. Right. So I'm less pessimistic, I think. I think sometimes we need to look back and think about what we've. What. What the Internet even did to humanity in a harmful way. It really hurt the world. Millions of people died because of the Internet with terrorism, sex trade. You know, I could go on and on 9, 11, when it would never have happened without the Internet. I could go on Forever about what the Internet's done. It took down Main street in the usa, killed retail, killed businesses. There's industries that went away. And it, it was just, it just, it, it hurt a lot. But then there's my other side of me, that new businesses were created because of the Internet. You know, it did a lot for humanity. It helped in a lot of ways. So what I'm saying is you can look at the Internet the same as AI and say, there's going to be this side of it and there's going to be some of this side of it, and it's going to have to play out. But in terms of just like business models, business models are falling apart. Restaurants are going out of business. They can't hire anybody. They're on, they're on. Like McDonald's right now are running on, like three people at, @ the, at the peak time of the day because they can't even make money at McDonald's by hiring one more person because, well. [00:46:48] Speaker A: At least, you know, President Trump, prior to the election, he was willing to pitch in. So. So that helps. [00:46:53] Speaker B: Yeah, yeah. It's just expensive. Human capital is a huge expense. And in manufacturing, it's just really hard because, you know, you have to pay a lot of money to do repeatable tasks. And about 10% of the workforce doesn't even show up every day. So that, you know, at Amazon facilities, and this is just jobs, a lot of jobs that people don't want to do anyway. So hopefully with AI, there'll be a boom with better jobs, too. That's really important. It's not just the amount of jobs. It's the type of jobs for people that they can get a little more excited about instead of just 1920 style and having to be in a warehouse all day. And what you do is pick up 2,000 boxes a day, or 200, whatever the number is. That's really hard. And yeah, I think about culture, you know, the per. You know, the younger generation, you know, purpose, hood is important. I get it. They want to be, they want to have a job that they're proud of and all that. And the older generation, maybe that, you know, they're willing to do it, but there's no way even I could go do that job because my body wouldn't allow me to do it. Eventually, you're, you need breaks, you need vacations, and you're probably gonna, you're probably not gonna do that job for very long. It's very difficult. And then there's hazardous conditions. There's, you know, there's all these, you know, issues. And you saw in Amazon, there was the deaths, you know, people were getting really hurt. So there's, there's a good and a bad side, but in terms of the Terminator, it's just pure nonsense, right? Yeah. It's not like they're going to all of a sudden have a mind on their own and, and do that. It's totally controlled. So that's not an issue. But I think it is going to be. It's going to take a moment for everybody to get used to this. But I also think a humanoid, even though it doesn't have a soul, it does reason and try to make you feel like they're listening to you. Right. And I think that as humans, we've lost that anyway in some ways. And it's like, you know, if you could just sit down with them and no one's home and you just watch the game and you ask us some questions, I think people are going to absolutely not be able to live without it. [00:49:10] Speaker A: So, you know, speaking of Andreessen, he describes this very chilling meeting that he and his colleagues had with the Biden administration AI advisors in which the advisors shared their vision of having only a few AI players in coordination with the government, controlling the future of the industry. One in which competing AI startups wouldn't be allowed or would be severely restricted. Andreessen said that he walked out of that meeting and immediately decided that he had to endorse Donald Trump. Do you share Andreessen's or others concerns that a overly intrusive and centralized government approach when it comes to a flourishing AI environment? [00:50:07] Speaker B: Yeah, I don't, I don't like that. That's to Europe and I think that's why Europe's behind. It's like the bigs connected to the government. No one, no small companies get any power or control. And they really are, you know, a little bit behind the US because of that. Over, over regulated, too much control. And you always feel like it's like a group of five deciding what's going on in the entire country. Right. Just in everything. And that's not good. So what you want is somebody like Brett Adcock or myself or whoever it is to come from where we come from and to be able to be able to do what we want to do and be successful and not have to go, you know, and be best friends with an administration and try to fight in their, with and, and have a competitor that can beat you because they're, you know, they're, they're Deciding who's going to win and who's going to lose. That's not capitalism. That's, that's, that's not good. But that's what, like that always happens, though, sometimes on both sides. And it is, and it's in a, it's in different ways. I think, I think it was Thomas Jefferson, I was reading this book a long time ago, is he was all against this stuff, right? And then when he got power as a president, he realized he really liked it and he became a lot of what he didn't want to be before that. But once he became president, he started making decisions that you could look at it as very much different than his beliefs before he became president. So it's still to be determined what's going to happen in this administration. It's still got to play out. Regardless of what was said in the campaign trail. Always say that it's got to play out. But at the end of the day, you know, you don't want like a deal being made in the back room with Elon where he controls everything. That would be looked at the same way as Andreessen said with Biden, that's not good either. Right? So you, you know, you just, you just don't want, you don't want too much power and just a few people's hand controlling AI. I think, I think a lot of. So the Deep seq, I don't see that as a bad thing. I actually think it was actually good. I think it really humbled OpenAI and these groups and it made them realize that there's another deep sea coming and they don't have as much power now as they did before Deep Seat came. And that's really what you want. You want a competitive landscape and that's better for pricing, for customers and everything. Like, imagine if there was one humanoid company in the entire world, just one, and everybody wants one, but it's 100% more expensive than it should be. And that's Europe. Everything's, it's two companies. One in Italy, one tourist company, High endurance company. There's not two. There's one. You know, there's, there's, there's no competitive landscape the same way as us. [00:53:20] Speaker A: So a friend of mine, Jim Pinkerton, likes to say nothing propinks like propinquity, meaning there's an advantage to being in close proximity in many areas of life. You are based in Florida, it seems like most of your partners are based in New York. I understand you go up there once a week or every other week, and yet many of your key investments are in companies based in California. And if you look at some of the top VC firms, the majority of them are also based in California, sometimes specifically in Silicon Valley. Now, I'm saying that at a time when companies are leaving California in droves, but are there advantages to being in proximity to the tech startup scene, or does technology kind of neutralize that? And do you see the center of gravity sort of geographically shifting? [00:54:23] Speaker B: Yeah, that's a great question. There's a lot there. I'll try to tackle this. We. I think at some point everybody has an office in Silicon Valley if they're in tech, and that's something Parkway is working on right now. But the first things first, you don't. It's not like you just go out there and plant your flag and get deals in Silicon Valley. The best deal is because you're out there, you still have to perform. And, you know, you still, you know, you still have to, you know, fight for these deals. And if you're in San Francisco or New York, those are number one and two anyway. Right? The number one in two cities in the country for venture capital fundraising startups is New York and Palo Alto, San Francisco. So, you know, for me, it was like, okay, we want to get the first Silicon Valley deal, but it doesn't have to be in Silicon Valley. And it happened to be SandboxAQ, that was our first big one a couple years ago. That was a big deal. And now figure, right, you know, definitely the hottest, you know, hottest company in Palo Alto. So we're known out there. We just don't have an office. And now it makes more sense, you know, because we're more known out there to. To plant our flag because you got to hire people, you know, who's going to be a partner out there. But for us being out there full time and not being in New York, I think it's actually not being in New York can really hurt your scaling of your venture capital firm, because still the financial capital of the world. And there are people in New York that just don't go to San Francisco. And there's. You don't really have the same. It's. It's techie and, And Mark. I know Andreessen, and there's a lot of great people out there. I think Andreessen lives a couple doors down from Brad, actually Epcot. [00:56:12] Speaker A: So he lives out here in Malibu now, or at least one of his homes. [00:56:16] Speaker B: Oh, who's that? Andreessen. Andreessen, yeah, yeah, yeah. And he used to be up I think a couple droves down from Brett in Palo Alto, but Mark did. But anyway, I don't think it's like you can just scale your company because you're in Silicon Valley. I think you, it's not easy to raise money out there. You can, you know, if you're a small firm starting out. And I just think we, we were able to raise more money in New York. We have a name in New York because the old company was a New York company. We had a good ecosystem and now we could branch out and be in Silicon Valley. But I will say there are companies that come out of Silicon Valley and always will, that really can't be based anywhere else. So super technical companies like Figure, you think about people that are, there's only a few people in the world that can do, can build this actuator or this thermal system or the unique stuff right about it. They're coming from Google X and different companies, Tesla and they've been working on, and they're on the forefront and they really love Northern California. That's where they, that's where they stay. And they're your key employees when you're building a company like this. And if you're even in Texas, I think you're at a disadvantage in a big way. You're always going to get beat out with talent. There's some just geniuses and in a company like Figure or Sandbox, like every, every person you hire, it's like critical talent and you, you lose them and it hurts, you know, the growth. Yeah, I mean, other companies, not so much. You know, every, every company is different. [00:58:05] Speaker A: One of the things that I am enjoying coming from an Ayn Rand Atlas Shrugged perspective about the current moment, is that you're hearing Trump constantly talk about our geniuses and how important they are and the importance of intellectual capital, you know, in contrast to sort of the envy driven victimhood narratives in which the successful, the most innovative minds are being sort of held up as objects of, you know, hostility and as threats. So I'm enjoying that. And I'm speaking of geniuses. I've had a wonderful time with you, getting to know you, Greg and I just want to thank you for joining us and for the future that you're helping to create. [00:58:59] Speaker B: Thank you. Real pleasure. And we're in good hands. Everybody can sleep, sleep, sleep soundly. [00:59:07] Speaker A: All right. And I want to thank all of you in the audience. I'm sorry I didn't get to all of your questions. I didn't get to nearly half of mine, but this has been a fascinating conversation. Of course, if you enjoy our programming, please consider making a tax deductible donation@atlas assist society.org donate also want to remind the young geniuses out there we still have some scholarships left for our upcoming Galt's gulch in Austin, June 5th through 7th, so do make sure to apply for those. They are going fast and we'd love to see you there next week. I'll be off. We're going to be instead subbing with Atlas Society scholars Stephen Hicks and Richard Salzman. They'll be exploring how capitalist societies tend towards peace while authoritarian ones tend towards war. That'll be interesting. We'll see you then.