0:00I think there is an opportunity to create a hundred billion dollar company with a lot of specialized models in inference. There's going to be a pullback. I'm okay with that because I think the long-term opportunity is so [ __ ] big. It's like so large. Today, I'm thrilled to welcome Eric, co-founder and CEO of Modal. Now, Modal just hit a billion in AR. They just raised $750 million led by Excel and they're priced at $15.75 billion today. But today we dig into the inference market, what to come, [music] what no one sees that
0:28everyone should see, and so much more.
0:30We've lost new grats going to, you know, some of the labs for like 20 plus million. I mean, these are exceptional people. Exceptional. I don't want to sell this company cuz I would just go and start Modal 2.
0:43[music] Eric, listen, dude. It is so great to have you on the show. You know, I was sitting downstairs with you chatting before and I was just like, you can feel when it's going to be a good show because people are themselves. And that was an amazing conversation and we're going to have a lot of fun. So, thank you for joining me.
1:08It's so exciting to be here. I mean, I've listened to so many episodes. It's it's kind of surreal to be inside of it right now.
1:13That's really awesome. As I said to you, you you could have text me when you started the company and maybe I would have been a little bit richer.
1:20Yeah, but you probably didn't know about me then. No, I didn't. But I would have welcomed investing in another suite. Um, I wanted to start with I was talking to Zach Frankle last night and he said about your childhood and like early indicators of success and like exceptional ability. How did you fall in love with technology? And for me as an investor, what would have made me excited in seeing your childhood?
1:42I started coding 1992 or something like that. I was eight. Uh, and just loved it. you know, it's like one of those things like I realized you can control computers. I had a Mac Plus, you know, 1 megabyte of RAM or whatever. [snorts] Um, and yeah, started making games and like I mean they were terrible, but you know, it's just I I think back at like in a way I'm like so grateful. I look back at like my childhood. My my friends, they were like collecting hockey cards or whatever. That was like their hobby. Like my hobby was
2:11programming, you know, and and now I make a lot of money from it. Isn't that kind of crazy? like you you know when you think about it like the fact that I can make a lot of money like doing what what was my hobby since I was eight it's kind of nuts. So I I I'm just so grateful about you know the fact that I fell in love with technology and coding and then you know I started doing programming competitions when I was 16 17 and so much fun.
2:32Modal was your first company or is your first company why did it take so long?
2:37I think the consistent pattern in my life is like I never had quite enough confidence in myself. Um, and a lot of it was that was missing was just the confidence a little bit the money too.
2:49But, uh, so it wasn't until I was like 36, 37, I started modal. And I think I I don't think I've ever wanted to necessarily start a company. It was like one of those things where like I just saw this big opportunity in the market.
3:02I almost thought to myself like why is no one else doing this? Such an obvious idea. And and that led me to think like maybe I should start a company. And then, you know, five years later, here we are. uh has gone pretty well. I think in hindsight maybe I should have started much earlier.
3:16Do you wish you had I look at some of these like Stanford kids and they're like 21 and like I kind of feel like they maybe have too much confidence. You know what I mean? Like they're like you know think they're going to take over the world and they're 21. Uh I think I think the ideal age is maybe like I don't know 32 or something like that. You have a little bit more experience. You know how to navigate people. You know how to hire people. You know how to fire people. Like all these things. Um I I don't I don't know if I would have been a good founder like in my 20s.
3:43Before we get into the market and everything beneath that, we were chatting downstairs. Um we often hear that founding companies is like eating glass. It's hard. It's painful. How do you feel about those?
3:54Dude, I I hate that stuff. It's like I I don't get it. Like you're eating glass like every day. Like why are you doing it then? Like I don't know. You expect some like magic reward like some big cookie in the end. Like I never understood that mindset. I think it's like this mindset that a lot of people have. I'm gonna suffer pain and then there's going to be this big reward in the end. I don't know. I don't think about it that way. I enjoy every day I go to work. Of course, there's like hard times. Like there's, you know, you have to have hard conversations, maybe fire people, maybe like do hard things, but like in the grand scheme of things, like I mean, such is life. And I enjoy life.
4:22I I enjoy building a company. And I don't I don't think of it as like in one one day we're going to flip this company and be I I hope to work on this for 20 30 40 50 years. I'm having so much fun. I don't want to sell this company cuz I would just go and start Model 2.
4:39It's funny. I had the chance to sell 20 VC. Uh the show's always successful. We said earlier I to share everything for like 80 million and I own 100% of it and that for me is a lot and my mother went for a walk with me and she said, "What would you do tomorrow?" I said, "I'd start the 19minute VC." She was like, "Yeah."
4:56She was like, "Don't sell." Yeah. What would you do? I don't think money necessarily makes you happy. I mean, a little bit. Like it's good to have some money but you know beyond a point like what you know I like building stuff.
5:06You're such a sweet I love technology. I love coding. So much fun.
5:08You're such a sweet. [laughter] Is that is that Swedish? Is that Swedish mentality? Maybe it is.
5:12Yeah. Never has an American come on before and said it's not about money.
5:16I mean I do care about money a little bit but maybe you're right cuz I do think in Swedish mentality it's like it's like self-actualization. Like doing what you enjoy is like kind of the highest form of prestige in a certain way. And it could be music, it could be like poetry, whatever. Like it almost doesn't matter.
5:30What do you do that you don't enjoy?
5:33Yeah, I kind of hate fundraising, honestly.
5:36I mean, it's fine. I don't know. Like, I enjoy it when it's like good people, but it's like kind of challenging. You have to say no to a lot of people. I guess that's a good problem to have, but you know, in general, it's it's Oh, you have to say no to a lot of people. Oh, Eric, I know. I know. That's a horrible thing.
5:50Larry, you can only have 10 million, 50 million. Oh, you've never done a deck, have you?
5:56I I've never made a pitch deck. uh every every every round we've done so far, it's I I like to get to know people well in advance of of raising money. So So every round we've done, I mean, most recently we announced a Dun yesterday with Excel. I've been speaking to Rich and Gonzalo at Excel for I think at least a year and at the at some point, you know, we're like actually, you know what, we could take some money like what are the terms like let's discuss terms and then it happened very quickly because we already had that
6:25relationship. How do you think about price optimization? Is it a game of getting the highest price?
6:30No, I don't think so. I I think maybe in later stages it becomes a little bit more of a commodity like the money itself. But but I think in the early days like like I mean for several reasons like one is that there's a misaligned incentive like VCs always want to put in way more money than a company needs. Uh and and and that you know you just take on a lot of dilution.
6:47It's not good as a shareholder. Um, but the other thing is like you actually want to hold back I think and and it's often better to raise a lot less money at a lower valuation and then keep the VCs hungry for the next round.
6:59Can I ask you is this not the generation though where actually capital is the mode and you need so much more money than you think. You said that VCs want to give you more money than the company needs. I thought AI was finally the output exhaust for venture dollars that was needed.
7:14I think there are times in the market where you are capital constrained. We have not been capital constrained for most of the time of the company. We've been extremely capital efficient. We burn only a few million a month. I mean only like you know it's a lot of money. I have respect for the money.
7:27You burn a few million a month.
7:28No, I mean up until like last year. Now we have to spend a lot of money on capacity. Um how much do you burn a month now?
7:34A lot. I mean we actually are profitable on a P&L basis but like cash flow is quite negative because we have to spend a lot of money on on on getting GPUs and building out capacity. Uh and so that is a different period in you know in the company and how we think about capital.
7:47capital is I don't want to call it a moat because you know like I I feel like people you know throw around that world word like [snorts] to mean like things that you know mo to me has like a very strict definition uh but but you know certainly helps capital helps at this point what's the moat definition for you I mean moat to me is like you go read like seven powers or like one of those things it's a good book but but I I think you know then people read that and they get delusional like you know they're like yeah we're starting this company has all these moes you never
8:16have emotes in the early days like you know like Google could do anything they wanted to.
8:22Google could do. Yeah. But it's also like you know like what are the seven I don't even remember. It's like cornering resources like market power like whatever. It's like none of those things happen until you're like 10 years in. You know I there's an old blog post I always come back to it by Ben Thompson.
8:37It talks about Snap and the like the gingerbread man strategy. Do you know this thing? And it's like the whole point is like Snap doesn't have a moat. They just run faster. Like they're the gingerbread man. And I actually always come back to that. I think that's so true like for almost every startup these days. It's like you just have to like move faster than everyone else.
8:52I actually think like the three things that matter today when I invest is like one team. Are they top 1% team?
8:59Two speed of product decision-m very specifically. You look at like instinct today. The speed of feature shipping is really very impressive and they're very and then three is brand.
9:09Yeah. And I think those are the three determinants to me of defensibility moat but it's a kind of package.
9:15Yeah. Yeah. I mean again I don't know if I would but but I kind of agree your point like I think brand I don't want to call it a moat but it it's it's actually I think the value of brand has gone up a lot. Can I be a dick?
9:27Do you think modal have done well with brand?
9:29I think pretty well. I think we have it's coupled with the developer experience and the product and the website and the visual identity and all these things. We just did a lot of how we package it, the event and the visual look and feel.
9:43Do you think you have a bigger brand than base 10 and fireworks?
9:46I think we have that. I think we have like really really good vibes. Like I'm I'm terminally online. Like people tweet like way more about modal. I think there's like a little bit more of a community. I think there's like much better vibes around us. Like but like I am paranoid about those companies. Like I am paranoid about competition. Of course I track it. Like I of course like I I I see everything that gets tweeted and about our competitors and you know it's but but this is important like get everyone wants to be a part of the community. Everyone you know what I think is like that the like people
10:15misunderstand is I I love type safe with Jeb.
10:18Yeah cuz like everyone wants to clone Jeff.
10:20No one wants to get up on stage and wear a [ __ ] pink fur coat and just like talk about the Jevolution in an unhinged way. That is what brand to me is like it's like that guy is like he's playing the game on a whole different level and I think it's just like so like true about like companies today like you have to think about that what so can you jump out why cuz he's authentic and different I think so I I think you just have to create a personality you kind of have to like figure out like what is the personality of your company and just be consistent and create like almost like a sense of movement a sense of like community like
10:50this is something cool and and people want to use you because you're one of the cool products out there like have you tried modal It's pretty cool. What what has modal done then that base 10 and fireworks haven't to build that?
11:01I think we started with the developer experience. So that was and we had a very like serious or like very clear sort of PLG product market fit product growth in the sense that people came bottoms up. They just sign up on a product. I think the consumer background of coming from Spotify is very important in how I thought about building what's now B2B company selling tech effectively. In a way, it's like a very boring category, but I think, you know, like having personality and and having, you know, a little bit of an edge is a big part of how you create that sort of
11:31movement and that sort of like sense of excitement and the feeling that you're different. And I wanted to start the moment you go to our website and the moment you try the product and you just feel that it's different, the magic moment. Can I ask you, we've spoken about the three different providers there. Inference as a market has many different speculators commenting on it.
11:52When you look at the next 5 years, how does the inference market play out?
11:57First of all, I I think inference is going to be an enormously large market.
12:00It's like the new cloud basically. And but I don't think inference in itself is maybe like the only thing you need. One of the things that I feel very strongly about is like it has to come with a whole set of different like a lot of other products. it has to come with post training, sandboxes, agentic stuff, all kinds of you know other types of inference like low latency inference, batch inference. Uh so so so building that platform and we by the way we've been working on this for the last 5 years. I think that to me is you know not a mo but it's a very strong tech
12:30it's a very hard product to build infrastructure.
12:33Why do you need to have the breadth of that product set otherwise you're just in a compression layer? Yeah. Yeah. Cuz otherwise you're just selling commodity product, I think. And like if you're just selling like tokens for dollars, there's no switching cost, you know?
12:46People can just switch a different provider, right? It's then it's you just it's just a race to the bottom. But if you couple it with all these other things around it, sandboxes and post training and and and and reinforcement learning and all these things like you can actually create a a whole set of tools like no one wants to build, you know, buy a single trick pony. people want to buy a portfolio of different things like they want to buy, you know, whole suite of tools that basically lets them build amazing AI applications on top of it, right? And and that to me and the and the infrastructure underneath is
13:15a lot of uh uh differentiation, a lot of you know staying power in the market. It's very hard to copy like the infrastructure required to build all of these products.
13:25What does no one see about the inference market or you don't see commented on much that is very obvious to you? One thing that people don't see about the inference market is I actually think in the long term there is so much gross margin opportunity in the space because you can build all these things around it. All the sandboxes, all the agentic stuff, workflows, uh post- training, reinforcement learning. If you do all those things, there's actually so much opportunity to make money. Is it a market that has software margins? Cuz we're looking at
13:54margins now in the 25 to 40% range.
13:59That's kind of traditional players. I don't know if that's yours, but that's kind of what inference providers are generally. Um, do do they go to 70 as you own more and more of the stuff? I think basically almost no company today has software margins anymore like what you used to see in like Silicon Valley in the you know 10 years ago with this like 90% margins plus I think that's basically gone and the reason is actually almost like topological it's like you have this like stack of vendors right like today you have applications
14:26you have models you have infrastructure you have cloud you have Nvidia and so when a customer pays a dollar at the top of the stack it has to flow through a lot of different layers and at every layer there's going maybe, you know, 20% 30% gross margins. So, I think there's a lot of margin opportunity and there's a lot of opportunity to to to make a lot of money. I mean, the space is so big, but you're also splitting it across a lot of layers in the stack. So, I mean, you know, like the the 90% software margin businesses are gone. I I think Modal has an opportunity long-term to
14:56get to 40 50 60% margins, but we're never going to get to softer margins.
15:00What's a wild prediction you have on the future of the inference market that you think many people would disagree with? I think one prediction about the inference market is going to split into a lot of different things because the market got so big in the last I I don't think anyone expected me included I don't think anyone expected it to be you know so big it's like 10x or 100x bigger than I ever thought and that to me means there's going to be so much room for specialization low latency high latency like various types of fine-tuning and post training I think there's going to be some wacky new technologies that let
15:29you do it with way less resources new hardware like all kinds of different things I'm really sorry does that not go against what you just said about the need to own it all and have that breadth of product if it's so much larger that you need real specialization specialization by product I think it's going to fragment into a lot of different products now we can build a lot of those products and host it all under modal and that to me is very exciting cuz a lot of different you know there's going to be a lot of different products that companies are going to need for one product they're going to need low latency inference for one product it's going to they're going to
15:58need batch inference for one product they're going to need sandboxes which we have for one product they're going to do pre-training their own models you know maybe it's a you certain specialized, you know, audio models or whatever. Like we do a lot of stuff besides LM inference. Uh and and so that to me that creates a lot of opportunity to basically kind of rethink what a cloud looks like in the era of AI and and kind of deconstruct the cloud and rebuild it for this new era of software.
16:23Can I ask you earlier you said about building capacity with GPUs?
16:28What's it like doing that today? Is it as crazy as reports suggest?
16:33So it it is pretty crazy. I spent some time in March uh at GTC Nvidia's big conference in San Jose. I I would describe that as like an open air drug market, but GPUs instead of uh drugs. Uh you're running around, you know, working talking to 500 different cloud vendors.
16:48You're like, do you have GPUs? Like, please get and and like, you know, in the end you come out like you do a lot of deals and and and that's something we've had to develop the muscle. I think part of the value prop of modal is like our customers don't have to think about that. We do the dirty work of doing all the GPU deals under the hood. We work with 25 different Neo clouds over you know right now we control like you know 0.1% or whatever I don't even know the number of like the world's compute but like my like you know crazy like you know how I think about the the long-term goal is like as we control more and more
17:18of the world's compute you can aggregate that capacity and aggregate demand on the other side and and manage that capacity and demand extremely efficiently. So that to me is like something we actually think we can do we can fill a big gap.
17:30What does that allow you to do being that aggregation layer? Well, so we built a lot of our infrastructure ourselves like we we we don't use Kubernetes and Docker and things like that. We built our own container files. We built our own file system. We built our own container runtime. We built our own scheduler. We built our own uh uh basically how we managed the capacity.
17:47And that that enables us to to basically treat like all of the world's compute as one big pool of capacity. And so if you if you think about the fact that there's you know we already have many thousand paying customers and and over time it just grows and grows. Each of those customers have like very sort of variable requirements or like their their uh their workloads kind of vary over the day and they have maybe bursts and and and in each individually they're like very sort of unpredictable but if you pull all of those customers together you end up with a very sort of smooth uh
18:16overall demand and that is something we can manage extremely efficiently. Uh and and so one of the valid props of modal besides like we we can scale up with you is also you don't even have to do capacity planning just come to us you we give you 100 GPUs I I think it's so amazing going back to types safe for instance like they we we we didn't even we had talked to them I think a long time ago before they launched but you know they launched overnight on modal and we we weren't even aware of it just like scale up and we gave them a ton of GPUs uh and it just happened
18:45automatically so so that magic I think is is something that is people really value with modal is like we can give them a lot of GPUs on very short notice and we can handle that sort of variable like if you go to us you don't have to lock up you know like a rectangular block of GPUs over 3 years and you have to know the exact number like it's it's pay as you go you scale up and down you pay per GPU second how do you do GPU buying in terms of forecasting then because you don't want to have an insane excess of supply just sitting on your books
19:15totally yeah the the GPU uh lead times right now is three to four months. So, so we basically do a straight line or exponential line extrapolation and we look at an aggregate across all our customers. We have a very diversified set of customers. You can actually look at the demand in aggregate pretty well and predict based on monthly growth rates uh which have been about 30 40% month-to-month uh for the last 12 months and you just project that you know 3 to 4 months into the future you end up with like 2 to 3x you go out and you know buy that capacity and make sure to ramp up and and sometimes
19:44and can you just buy that capacity?
19:46You can. Yeah. I mean, I I think I think there's a little bit of like a misconception that like we're out of capacity. I mean, Nvidia is like shipping like an insane amount of GPUs like every month. I don't know how many 100,000 black holes are getting installed. Prices are up for sure. You have to pay more to get the same amount of GPUs. And I don't want to say it's like an efficient market, but if you're willing to pay more than other people, you can get a lot of GPUs.
20:07Is there a price at which it doesn't make sense for you? Of course there is.
20:11But like at what point?
20:12I don't think so. I think in fact like we're actually more long than we're short GPUs. Uh cuz we um you know we we can charge a higher price to our customers like there's effectively a market price and you know we it's like different dynamics cuz we lock up longerterm reservations and and rent them out on slightly shorter duration. Um but you know if if the underlying price goes up people are also willing to pay more.
20:31Totally get you. What happens to the price over time? You H100s were meant to depreciate and go down.
20:37I have no idea. Yeah. I mean and like I mean actually like it's funny.
20:40Well dude if you have no idea what am I meant to have. [laughter] Did you see Jensen? Yesterday he was in London actually someone asked him this question and he's like well obviously like demand is going to catch up with supply or sorry supply is going to catch up with demand eventually and then we'll see what happens with pricing. It might happen in a year it might happen with in 5 years. He said exactly the same thing I always tell people like hardware prices like it's like gravity. Hardware prices always go down in the very long run. Right now we're in a very you know there there's a supply shortage and you know that means that prices have gone up. They may continue to go up for
21:10another year, two years, 5 years I don't know but eventually they will come down. How early are we? Because I, you know, I run Instinct for for everything. I have over 100 automations on Instinct doing things that are just absolutely wild from buying concert tickets to planning shows to helping with like medication for my mother. Um, the amount of compute I am using is Jevans paradox times 100.
21:35If that is equivalent for actually many people in society.
21:39Yeah. because it's accessible within WhatsApp and what how early are we though?
21:44I think we're very early. I think you're saying the same thing. I mean, yeah, Jeans probably whatever like I think there's just so much latent demand for these things and you know I I think you know eventually we're going to start to run up against new capital constraints right like there's interest rates are going up like we just can't build data centers fast enough. Maybe that's good.
22:01I don't know. Like I think in in a way like you know it's a guarantee against like overbuild which but I also don't know if we can overbuild these things because there's just so much demand for it.
22:11I don't think you can overbuild in the next 5 years.
22:14Probably not. No. No.
22:16I I think I think what could happen is like people realize you know Instinct is a good example. Like allegedly they don't you know charge or they don't make revenue yet. So I think it's a good example, but like clearly Instinct can make a ton of money in the future, but so you know that's a dynamic in the market. There's a lot of companies that are not yet making money yet and they're using a lot of GPUs. They just have to eventually start to make money, but like that that lag could take a while, right?
22:41And and that we might run up against that.
22:43You mentioned the specialization that comes within the inference market and we we spoke about Nvidia there. We're seeing more and more specialization within the chip market.
22:51Is Nvidia's business today stronger than ever? or actually weaker than ever as you see the fragmentation of the market into very specialized players from cerebrous to etch to Olix to fractile that weren't there before.
23:06I I I think you're uh try to phrase it as like one versus the other. My my view is like I think Eric Vish was actually it's funny like the same thing like all of these things are going to grow like I think Nvidia is going to keep growing.
23:18They're going to keep shipping amazing chips. I think there's also going to be like Cerebras and all these etched and all these other ones like shipping specialized chips and they're also going to grow. So I think there's going to be markets for all of it.
23:28So why is Cerebras down 30%.
23:30I don't know. I don't follow really the stock market.
23:32You don't follow the stock market?
23:33No, I I'm in like a very passive, you know, buy the index mostly because of my own time. Like I don't feel like I have the energy to follow the stock market.
23:41To what extent is CUDA the moat that everyone says it is from?
23:44I actually I think it's a little overstate. I don't think CUDA itself is the moat. CUDA is actually kind of annoying to work with. It's like a pretty annoying programming model. Uh but I do think all the NVIDIA um the ecosystem is like I I think you know all the kernel optimizations and and all the stuff that you know every every like torch always supports Nvidia you know much better than than anything else and and and the open source engines like VLM and SLAN because of that they always support it much better. So like everything is Nvidia first today. Uh and
24:14that's probably going to continue. It's like funny. For the last like 15 years, I've been saying, you know, like next year is the, you know, is the year of non- Nvidia accelerators. Uh it never keeps happening. I'm always wrong. Uh Nvidia has just, you know, shown to to be incredibly good at having that staying power and just dominating the market. We'll see. I mean, there's like Tranium, there's TPUs, there's AMD, there's a lot of other stuff that does look quite good and they're catching up, but you know, I still think they're quite behind.
24:39To what extent are the Neo Clouds a friend? Cuz they're partnered with you in a lot of cases. I'm sure as you mentioned I think 25 you said or or a foe you know I had the founder of Nabius on and he was like we're coming for the inference market like we need to own full stack and I don't mean that against him I totally understand it but are they friends or are they they foes I feel like everyone in startup land is like a friend and a foe at the same time they have this like weird sort of you know relationship with everyone I I
25:07think some of the top neoclouds Nebulus included uh they are trying to move up the stack I'm personally somewhat skeptical I think it's like very hard to be good at like your core business and also trying to move into different market at the same time.
25:19Um, why would it be hard for them? Like what's the bare case on them being able to move into the inference layer efficiently?
25:25I mean, I'm biased, but like we spent the last 5 years building, you know, an incredibly complex infrastructure stack. I think it's very very hard to replicate what we built.
25:32What's the hardest thing? just all the code and you know everything around the file system the container runtime the scheduler like building the system that can you know place like millions of sandboxes every minute you know scale up and down many many thousands of GPUs you know power hundreds of thousands of tasks running concurrently these are these are very hard engineering problems like I mean I'm I'm an infra geek like I love that [ __ ] uh it's so much fun to work on it but like these are hard problems is Nebius a better business than
26:02coolweave I actually don't No, like I I don't know. I I think they're both like they've executed extremely well, both of them. I have a tremendous respect for what we've done. I think at the at the end of the day, like what the the the thing that I have the most respect for is actually more in the financial engineering side. They're very good at that kind of stuff.
26:17Why do you say that?
26:19Cuz I think a lot of the constraint for building a NeoCloud very quickly is on the financial side. You need to be very good at you go lock in like a long-term customer contract, then you go raise a bunch of money against it, then you go buy the chips, then you deliver the chips, and then you pay off the debt like you know, over the next few years.
26:38Doing that sort of dance with the financials like it's kind of an interesting game. Uh, and Corv has done it exceptionally well. Uh, it's a capital game. It's a financial game.
26:47When you move a layer beneath them, we spoke about Jeb who obviously work with modal. You know, we've [clears throat] seen incredible movement from the open source community, which has been exciting. Yeah.
26:58But then you also see Haiku and and Anthropic's newest models being incredibly performant and incredibly cheap. What's the benefit of open models if Frontier models are almost as cheap and as efficient?
27:13I I think open source is always going to be there's always going to be great models coming out. Let's also remember like the open source the the open source models they're all moving into licensing models. So like they're getting better at capturing the value of those models and I think that means they're going to have more funding to train better models and I really hope there's going to be European and US models because I don't think it's a good situation that we have so many Chinese models. Uh I mean there obviously I have tremendous respect for all the Chinese labs. They're extremely good at what they're doing but I think it's good for the world if there's you know more power spread out. Um but but
27:42anyway going back to the question I do think that open source uh there was there's always going to be people who want to fine-tune want to have more control over their models and and sort of tweak the parameters like go low latency high throughput like whatever it is and and open source is going to play a big role in that Windows versus Linux with the I I'm sorry with the greatest of respects do you think Europe will produce a competitive open source model?
28:08Yeah, I mean I I'm I I love Europe. I I grew up in Europe. I grew up in Sweden, but you know, I I do think that like Europe does struggle with, you know, accumulating large amounts of capital. I think both of those things are things that Europe struggles with and and that is something that, you know, China has done really well. They've accumulated massive amounts of human capitals uh human capital and and US obviously has very, you know, very good at like raising enormous amounts of money and like training very large models. Uh, I I
28:37don't know if Europe has passed to either of those.
28:40Does it matter if Nvidia owns the open-source model layer in the US with first pool side and now reflection?
28:49I I think Nvidia is very smart to focus on the ecosystem, building up an ecosystem. Uh, and I think that includes like propping up a lot of open source models and I think they probably saw an opportunity to pick up open source models like like these these companies are very resource intensive like very capex intensive and and and I I think it's smart of Nvidia to like buy some of those and sponsor them effectively in order to create like Americanbuilt models. By the way, I want to take back
29:18like one thing I said I Europe does have an insane amount of human capital. I do think what Europe is very bad at is like aggregating them and putting all of them at the same company. That is something I think US is very good at and I think inspiring a mindset of ambition and huge huge scale. I think to the point that you said earlier which is like oh I didn't have the belief in myself. I respectfully think if you're in the US you might have been surrounded by influences that told you to start a company earlier.
29:43Yeah. Yeah. I mean it's almost like too much on the other side to that point but oh when you're four you're encouraged to start leave school drop out. Kindergarten wasn't worth it. Exactly.
29:52I I totally agree with you. I do want to talk about you we said about models and Jav in particular. Are we seeing like the unbundling of models on a like per function basis where Jav is obviously very good for its certain tasks. I think so and I think that's a function of what I talked about earlier where like the market for in France is so large and and that you know when a market is like you know billion dollars like you're not going to have too many subm markets but when a market is starting to get 10 billion 100 billion whatever right like you're going to have a lot of different subm markets and and Jev does classification and and things like that
30:20regression type things very very well and and there's a large enough market for that okay welcome it's your first day as a partner at 20VC fund and we're in the investment committee and very kindly we have the opportunity to invest all Je, we're all in on Je's new round.
30:37What's What's the bull case for Jav being worth 100 billion?
30:40I I told you before, but like I I think the brand and the community and the movement around, you know, this just the sort of everything they're doing is is so incredible. And that to me is like a massive massive asset in this new age.
30:51That's a hundred billion dollar company.
30:53I think there is an opportunity to create a hundred billion dollar company with a lot of specialized models in inference.
30:58You would have done it though at 8.5 billion.
31:01I would have done it at 8.5 billion. I I think there's a pretty big outcome here. Could be an exit, could be, you know, like a public company. Who knows? But but I do think there's a lot of upside here.
31:12Dude, I'd love to see him ringing the bell on the New York Stock Exchange. You know what I mean?
31:16Yeah. Fantastic guy.
31:21I mean, you know, his charisma, his like you have to create like a personality like around your brand. You have to create this like visual identity. It's obviously not the visual identity I would have picked, but I think I [clears throat] think then I hear you, but I think then you should be more loud if I'm just honest, Eric.
31:36No. Well, yeah, but you Yeah, I mean that's possible, right?
31:39Like I I don't think there's like a personality lad cult from modal from your perspective.
31:43I think that's a fair point of criticism. I think I could be out there even more. I am tweet I try to tweet. I try blogging. I've been kind of bad at that recently.
31:51No one gives a [ __ ] about blogging.
31:52Yeah, maybe. Right. Maybe I just need to like go more unhinged on Twitter. It's like fun related marketing basically like in the early days of of modal like that was a big part of our growth right like me just like tweeting all the time about what we're building and I think that's really important if I mean every company has to find its own sort of you know go to market strategy but in the early days like we spent a lot of time just talking to people on Twitter just like hitting people up try the product what do you think half of them ended up angel investing you know they're not supporters of modal uh and and you know you have to lean into what you're good at and in the early days I I did a lot
32:22of [ __ ] posting [laughter] Do you know for every follower that followed me before 50,000, I would send them a personal like thank you message.
32:30That's amazing. You typed it out yourself.
32:31Every night from 1 till 2:30 a.m. I person and I'd say like, I see that you're from Sweden. I love the Grand Hotel. Let me know when you're in London. And I would send like 50 to 100 a night.
32:41That's dedication. That's amazing.
32:43No, but it was the customer acquisition flywheel.
32:45Like they would go into the office next day and be like, "Wow, you know this guy, he'd send me a message and like you should listen to his show. Pretty good." It's smart. I I love what you've been doing in create in terms of building up this like media brand. It's it's fantastic.
32:57Neil Ma has a great thing which is like how can I 10x the customer experience and actually like let's let's do [ __ ] it, let's play a game. How do I 10x the current modal customer experience?
33:08I think the biggest thing we need is we need way more products in in modal. Like we want to create a b basically comprehensive experience of anything you need to do in order to build an AI application should be a product inside modal. The other thing we can do is hire way more FDs and way more sales reps. I I will say we've been behind on that, but we should hire like way more people that reach out to you personally and say, "Hey, I saw you get started in modal. I saw you working in the bio space. How can we help you? Here's some bio examples, you know, protein folding, whatever, right? Like we work with a
33:38bunch of other similar companies. You seem skeptical."
33:42Well, no, I don't at all. I'm actually just thinking about like I like the product ambition but I go as a European who goes wow you're in a B2B space so I think it's like you know I but you worry about being stretched too thin.
33:55To your point on like you know why can't nebas do what you do so efficiently because you're so good and you spent so much time as you expand into all the specialtities there are players in each of them who've been doing that for years where I'm like I think that's true. I I don't think they're very good a lot of them. But but I mean I I sort of agree with your higher level premise like if there's anything that's like super critical and never goes away it's it's prioritization and resource allocation right like you can't boil the water and try to do everything at the same time you need to be extremely ruthless and and having a
34:25multi-product strategy I think is a very hard balance like when do you branch out into second product or third product right like it took us four years to see success with a second product which was sandboxes four years to see success with your second product we launched five years to a billion in revenue Yeah. So we we launched sandboxes in 2023. Uh didn't see a lot of success in the early days. I mean there was like some success. You know it wasn't horrible but it you know it was a relatively insignificant part of our
34:51revenue uh up until summer of 2025 when u models I think like saw the 4.5 one of those like they just got really good at generating code and building whole apps and then it's it just exploded. I mean sandboxes today is a 300 million run rate business. uh it's about a third of our revenue and and so that's been a kind of a crazy journey and now we're thinking about you know what's the third and the fourth we just launched a training product I'm super excited about that working on batch products working on reinforcement learning we're working
35:19on all kinds of other stuff and so that evolution into be becoming a platform it it's actually there like if you go back to the very early decks of modal uh you know I put together some just for my own uh you know thinking it was all there it's like we we had this like market map and all these you know it ended up being very different products than we thought But it's so important for me to create like, you know, to focus on a category and focus on a set of solutions, not just like be a single single widget vendor.
35:46What do you know about the sandboxes market today that you wish you had known when you started and released the first product?
35:53It it it actually is like one of those products. I think one of the benefits of being in infrastructure, but also one of the drawbacks in a weird way is like you kind of just have to trust your gut on like what are like important primitives and just build like amazing building blocks. I I think we're in the space of like providing building blocks. We try to look at like what what do engineers need and and not like listen too carefully because like they'll ask for like all kinds of random stuff but kind of distill it down into like what are some of the building blocks and we put out a serverless function product in in
36:23uh it saw success in 2023 with with Gen AI inference. We put out a sandbox product in 2023 because we saw a lot of people were using alams to generate code and then it saw success in in 2025 like I said. So a lot of like how we think about building products has always been kind of like let's just put out like good building blocks and then it exploded and and but like to to answer your question it was reinforcement learning it was vibe coding uh background agents and maybe some other stuff too in the future. Uh, and those
36:52were things we actually didn't anticipate. So, so I think I think I think infrastructure is often like that. Like we didn't anticipate stable diffusion when we started building our serverless function product. It just happened to be the killer app.
37:03What's your takeaway from that? The only thing is that matters is you've got to stay in the game long enough for your timing to be right.
37:11Sometimes I think that's right. I mean, we we definitely been extremely lucky in certain ways with timing. like we put out products like right before we started the company 2021 and then you know stable diffusion and chat GPD came out 2022 we had really good timing with that right it just created so much demand and we're very well positioned but some of it is also like with infrastructure like again like I think it's about like building products that you know you anticipate will be useful in the future and and from your own experience are things that you always wanted to see um I I think you have to kind of trust your gut in that
37:41dude you said there about you resource allocation and that being very very important important as you think about this breadth of products where did you allocate resources where with the benefit of hindsight you wish you hadn't and how do you reflect on that I think we should have allocated more resources towards LM inference like earlier I think we're a little bit on on the the sidelines for a while we didn't realize how big open source inference would be um and we thought it would be kind of a race to the bottom just a commodity space and then deep sea came out we're like [ __ ] like we got to move very fast and so we staffed up a team
38:10immediately you know went from like you know one or two people working on this to like 30 people 12 months later uh and and now we're one of the top three providers.
38:19Jason Lanin, dear friend of mine who I do a show with every Thursday, he always says that now we've reached peak actually opensource LLM inference usage. We're going to see frontier providers bluntly provide incredibly cheap products that they are now. US enterprises don't want to use Chinese models. That will continue. And so actually with those two core prevailing wins, Frontier will actually research and we will see a reduction plateauing of the OS LLM inference model.
38:50I think that's a little bit of a fixed pie size mentality. Like I I I think you know with with all due respect I do think both spaces will grow 5x 10x 20x over the next 12 months and and beyond like and so like it's hard to argue like you know which one's going to be bigger than the other but I think both will grow like in you know orders of magnitude over the next few years. 5x 10x 20x over the next 12 months.
39:11You just hit a billion in revenue. Yeah.
39:14Does that feel pretty cool?
39:16It feels pretty cool. Yeah. I mean, I I it's, you know, like I I don't know. Like I'm this like, you know, Swedish guy that, you know, grew up in a random I I for me it's like these numbers are absurd, but like Yeah. Like it feels great.
39:29It's so [laughter] much money.
39:30Eric, you're so I wasn't expecting you to be so like likable and cool. [laughter] I don't know. Like it's like a lot of zeros. Like how many zeros are in a billion? It it's it's a lot. Um your wealth manager will tell you when you look at that.
39:45Where will you be in 12 months?
39:47I don't know. What I can say is we've been growing. We grew 50x in the last 12 months. So you can extrapolate that. I mean I don't know like at some point we start you know like markets just get very big and they start to slow down a little bit. But um I I with with the growth rate right now like the growth rates are not slowing down like we're growing 30 40% every month. 4 billion.
40:06I mean, I definitely think we should I I hope to be way beyond that.
40:11With the greatest of respects, 15 billion then feels like quite a cheap price. Like if I'm an ambassador, so this is now my ballpark. Like if you if you think you were going to be at 4 billion, say dropping, I don't know, uh a billion two to the bottom line. Yeah. Then they actually only paid what 14x end of year next year bottom line. 3x top line.
40:34Yeah. Yeah, it's kind of cheap.
40:35That feels pretty cheap.
40:36I think it's cheap. I mean, like, I wouldn't do this if I didn't think we could grow and become like a generational company. I think there's so much upside. I think this is one of the largest markets opportunities that's ever existed. I I think that the demand for compute, the demand for AI applications, it's just it's going to be enormous and they're all going to need a place to run and I hope a lot of them are going to run a modal. What revenue line do you not have today or is tiny that you think will be very significant in three years time, five years time?
41:04That is a good question. I think training is is something we just launched. I think that could be very large. I I hope that could get to 100 million run rate in the next 6 to 12 months. Um post training similarly working on batch jobs. Um I'm very excited also about a lot of like sort of traditional like data warehousing stuff, databases, um workflow orchestration, uh feature stores like vector database.
41:27I there's just so many parts of this and they all kind of fit together very nicely and that that to me is like what I'm so excited about. It's like once you start building in this space there's so many natural adjacencies like this is like a problem with me is like I get excited about so I have like no lack of ideas like at modal like we have so many ideas of things we want to go CI would love to get into continuous integration that's like a very interesting space agent harnesses maybe we should train models maybe you know there's just 5,000 directions you know and that's like my add brain like wants to run in all of
41:56those directions you have to be obviously ruthless with prioritization and only take on like one or two things at at the right time but But but but there's so many different directions we can go.
42:04It's amazing that your wife calls you for decisions. [laughter] She must get a very incoherent answer.
42:11Is this I just wanted some curtains.
42:14Yeah. You know, with the curtains, I just like you pick one of them. We've [laughter] seen Simpsons and like Rain Wolf Castle becomes the president and they're like, [clears throat] "Which one do you want to pick?" You know, one to seven. He's like, "I was born to lead, not to read." And number four.
42:27[laughter] Yeah. I I I totally uh get that. Can I ask we've seen this real shift, I think, in in emphasis, but also in resource allocation from pre-training to post-training. Um, how do you feel about that? And do you think that is the new normal?
42:45I I I don't know. I I think post-training works because there's a lot of tasks that people do in real life that have fairly finite sort of uh feedback mechanisms. So, coding is like a great example, right? like you can do coding with reinforcement learning pretty well uh because you know you can have you can run code in sandboxes and a lot of labs are running uh modal sandboxes for that exact purpose. you start to look at cyber security is another area math obviously with lean I mean we've seen some fantastic product I think it's kind of incredible all these
43:14like open eye uh proofs the other day so law maybe to some extent you can you know do like eval so I I think I think post training right now like there's like such an incredible focus on it because you you you have all these tasks that traditionally only humans can do but actually well within reach for for agents and and for LMS um but but but like I I don't know if it extends beyond that like I don't know like there's a lot of tasks out there that like have way longer feedback loops that I don't know if like post training quite yet are
43:43is within reach. A lot of people ask me like what's going to happen with software engineers in the long term. And I think you know we're probably going to automate everything that that an agent can do within 24 hours or or a week or something like that. But I kind of feel like you know engineers like they they work on a longer time scale and they have feedback loops that are longer. So I I I have a feeling like reinforcement learning we're going to start to run into some limitations around that. But I've been wrong for so long. So maybe I'll be wrong and just keeps going and eventually we can re do reinforcement learning on things that take 6 months for a human. I don't know
44:13what does the day look like in 3 years for an engineer.
44:16I mean I I'm extremely bullish on software engineering. I've been coding for 30 years and I've seen so many different changes with like programming languages and the cloud and you know so many different frameworks and it's you know every single time we make pro programmers more efficient it just increases demand for software. there's so many parts of the world that desperately need software and so I'm I'm very very bullish on software uh and and the need for soft software engineering and I think one of the biggest misconceptions from the outside is that developer it's about like translating
44:46from English to code like that has never been in you know the job of software engineers it's like to understand the requirements in the first place and be kind of an interface between the humans you're building for humans at the end of the day and like trying to figure out like what does that even mean in terms of processes and workflows and and and that continuously moves up in the stack you know back In the 60s, we used to write assembly and punch cards and then we moved to cobalt and then to C++ and then to Python and and now we're using agents. And that's just like one and and like it's definitely like the biggest thing that I've seen in the last 30
45:15years. But I do think we have many many analoges and many parallels throughout the the history of of software and computers. Uh to me that makes me feel like you know software engineers are going to be fine for the next 10 20 years.
45:26How much money do you spend on coding agents a month at Modal?
45:29I think a half a million or something like that.
45:31How many engineers you have? 150.
45:33Dude, that's so that's so worryingly though.
45:35You want to should be token maxing more.
45:38It should be 10x that.
45:39Yeah, maybe. I don't know.
45:41Brandon said McCor um that they spend 3x their human salaries on inference.
45:47Yeah. Yeah. Yeah. We're not quite there yet. Uh but I will say like our software engineers are extremely agent pills, including myself. I mean I I write code with agents like all the time. But I think like the big question if you're looking at like an anthropic IPO and don't worry I'm not doing a Bloomberg and like pulling you in to be like what do you think of the anthropic [laughter] IPO? I hate those.
46:05Yeah, it's great. It's no one in AI is like not a fan. [laughter] Yeah.
46:10Everyone is go. Um but I do think a big uh the motherload so to speak is claw code. It's $60 billion of revenue. it largely kind of um dictates the $2 trillion price. Um and you look at Mark Ben off who says that they spend 5% of engineers salaries 300 million on claw code today. Now if that comes way down
46:37as efficiencies improve you name it.
46:41That's a challenge. Or will that go up as it just eats more and more of engineers workflows?
46:46Yeah, it's just going to eat more. I mean like again like we've seen this so many times like you make something more efficient, you make something more powerful, it just unlocks like five new use cases and the demand just goes up in the end. Like that's that's just the history of like the last 50 years of computers and software. But like I wouldn't be here if I wasn't such an optimist. That's why I started a company and like I'm just like the biggest like optimist that there is in the world about software and computers and like I just love this [ __ ] and I think it's just going to keep growing.
47:12The data market is an interesting one.
47:14We have so many players that have scaled so fast.
47:19Yeah, it's incredible.
47:20If I was 20 and I just wanted to make a lot of money, I would go out and start an environment company and just sell data to Frontier Labs. There is so much money to be made in that space. It's kind of incredible.
47:30Let's go a layer deeper. What would you do next? You specialize on a specific market.
47:34I mean, the coding space is where you see the most demand right now. Like if you can sell like code environments to to the labs, like you can make a lot of money. Like there's a big space in that still. still. Yeah. Yeah. I meet startups all the time. I I angel invested in a bunch of them. I mean, they're incredible businesses.
47:50I I don't think what I will say like my one piece of advice is like you make a lot of money today, but like is this a venture fund? Like do you want to get on the venture treadmill? I'm not sure.
47:59Like I think these are companies that going to make a lot of money today. I don't know if they're going to make a lot of money in the very long run, but like who cares? Like you know, take the money. It's like great money. Like it it's a fantastic business today and that's all that matters. I think there's there's there's data marketplaces and then there's data and services. And when you look at the leading providers, they started as the data acquirers and then just sell you the data and that's kind of it. And I think they've really gone full life cycle now to deployment, implementation, evaluation, monitoring
48:27with a real enterprise handholding ability similar to the FDS where they will really be that partner to ensure full implementation. Yeah, that's how you expand margin and and have some form of business in the long term for sure. Yeah. And I think it's going to be a tough business in the very long run, but like today you can have extremely good cash flow selling these data sets.
48:46Can I when we think about that kind of implementation working with partners so closely you said and Lynn has said too from fireworks about the importance of owning your own intelligence.
48:57Can you unpack how this looks because specialized models for companies in this way kind of jury is still out. We have Harvey who says that it's fantastic and it's been amazing and then you have Lora who say ridiculous the underlying models move so fast it's the wrong strategy.
49:16Yeah, for some stuff it's good to own your own intelligence for other stuff is not like I don't think it matters like we have a lot of customers that run proprietary models on on model too like and and their customers you know they use a proprietary model like I don't I don't think it makes sense for everyone to own their own intelligence.
49:30Why does it make sense for you to versus not? I I think for certain use cases, you can take an open source model and you can fine-tune it and you can get really good performance. And the nice thing is you know what the fine-tuned model is based on. It's not going to change like they're not going to take away the model from you. It's nice to have that value like that consistency and and the ability to like continuously like tweak it without without you know the underlying model changing which has happened in some cases with the Frontier Labs. I that's like you know that's nice like you know I support that but like I you know I think there's many other
49:59things that matter to to people. you know owning your intelligence is like just one thing out of many like I think latency matters I think cost matter performance I think you know hackability I think you know being you know having a platform of a lot of adjacent services like these things matter too owning your own intelligence like yeah I'm supportive but you know there's many other things isn't that kind of going against your business no I don't think so I I we the I love the honesty but like dude it would be in your favor to say yes every
50:28company's going to need it and we're the partner to help you. I kind of [ __ ] teed you up there and you Well, I mean, not not really. I mean, if you think about type safe with Jav, right? Like, you know, it's a highly proprietary model. Like, I want people to use Jav. I mean, it runs on modal like like so we have many customers like that themselves are proprietary model like that are hosting on model that are serving their customers and I'm very very in favor of that too. I think the beauty of model is always that there's like a general purpose platform and we support so many different things that that to me is like you know the beauty
50:57is like you know we can if you want to use open source models like that's great like we'll help you and there's many customers that build incredible AI applications on top of open source models fine-tuning them reinforcement learning have a bunch of you know adjacent sandbox use cases or training whatever but there's a lot of companies that have built highly successful businesses you know suno runway types safe and many others like running their own proprietary model on modal like and and their customers don't care and and that that that I think is like you know puts us in a really good spot.
51:25I want to ask two more questions before I do a quick fire.
51:28Model routing as the dear Americans say.
51:32Is [snorts] that a defensible business?
51:33What are you saying in the UK? Rooting.
51:38Well, I mean we are actually the original language America just took ours and bastardized it. But yes. Um uh my question to you is that a defensible segment of this value chain or is that a commoditized product that everyone just builds themselves?
51:53I think it's possible to build a successful business in model rooting. Uh I think you can do that today as a standalone product. I wonder if long-term it has to be part of a more comprehensive platform. At the end of the day, I think what what these companies want, they want eval, they want, you know, ways to fine-tune. they want, you know, more control over uh performance like latency, throughput, like all these things. And I I I think it's like one of those things that kind of makes sense today. Like these are very good businesses. I invested in open
52:22router personally. Uh and they had a great outcome. Uh I actually think they could have done even better on a standalone basis. Um but but I think in the very long term it feels like one of those categories like you know and but that's my view on everything in AI. It should really be a part of you know larger more comprehensive set of tools.
52:39Congratulations, you're on the open router board and the acquisition offer comes in. Please make the case for why they would have done that. Yeah. Yeah. Please make the case.
52:48I think I think Open Router like the growth rate and the revenue like this is and and the brand frankly like they have a really strong brand. I mean there's a lot of like there's 500 other competitors but but but but the space is growing so fast and there's so much revenue. Uh I I would have told them to keep going.
53:04Final one. I think a really telling question is what do you believe that does not go in the favor of your business? And so for example, I think that seed investing today is kind of dead and [ __ ] This idea of like two on 10 and we'll slowly build for 18 months.
53:24Well, it's kind of bad. Like it's kind of bad if you want to make money, right?
53:26But it's great if you want to develop a relationship with engineers or I mean with founders.
53:30Sure. But that goes against what I do. I I'm You're against the relationship with with No, I'm saying like I think the death of seed investing, the two on 10 and build for 18 months is dead.
53:42Yeah. No, I understand what you're saying.
53:44So, what would yours be?
53:45I I don't know. I I mean I I think one one thought I have is like obviously at some point this AI stuff is growing so fast and we're here and we're going to go to here and then there's going to be pullback, you know, 20% 30% in the stock market. Everyone's going to freak out and like people are going to say it's the end of the world. I'm almost certain it's going to happen, but like I'm so bullish because then we're going to keep going and like, you know, like so so that that would be like one thing that I'm like, you know, there's going to be a pullback. I'm okay with that. Uh cuz I
54:14think the long-term opportunity is so [ __ ] big. It's like so large.
54:18Totally agree. Do you take secondaries?
54:25I I mean, I personally don't need a lot of money. I you know I I'm pretty happy with life and I have enough. Uh so personally I I actually support it for my employees though. I think um it's it's quite important actually as a founder to uh to that um you make the equity worth as much as possible. And one of the way to do that and to tell future candidates that no this isn't just paper money this is real money is
54:54to have a president of of doing employee secondaries. then you can point to, you know, last round we let employees sell this much or whatever and, you know, up to 10%. Like I I think you have to have guardrails. Like you don't want employees to sell too much. Uh you want them to still be very, you know, have a lot of skin in the game and and be very incentivized to to make the company successful. But I think it's a it's a way to like, you know, like create a very liquid hard currency out of the equity.
55:20I totally agree. And as you think about a talent marketplace more competitive, it's very it's extremely competitive out there.
55:28It's nuts. It's nuts. I mean, you know, it like the offers we see for we've lost new grats going to, you know, some of the labs for like ins like talking, you know, 20 plus million. I mean, these are exceptional people.
55:43What makes an exceptional exceptional new grad? [sighs] You know, like just just [ __ ] sharp people, you know? These are like I I know it when I see it. like they're just, you know, they're just extremely hungry, hardworking, know everything about technology.
56:00I mean, they go to some of the big labs.
56:02Is that it? They go to open air.
56:03Yeah, big labs. Yeah, they pay a lot.
56:05But is that it? Is that where the talent comes?
56:08There's like a few other ones, but but I mean, mainly those people are are known for paying very a lot of money and you won't pay that much.
56:15We pay a lot. We can go very aggressive.
56:18We want to be out there paying 95 fifth percentile for in the market and and there's like a few companies that I know like they're probably going to pay a little bit more. I think we have way more upside in the equity. And going back to what I said about secondaries, I think it's important that for for that reason also like to create like a real tangible value in the currency in the equity that makes us, you know, our offers seem very very strong. Plus the fact that we have a lot of upside. I mean you you you said it right like our stock seems cheap. Like I kind of agree there's a lot of upside in our stock. So that enables us to not necessarily have
56:47to match with the labs, but I think you know create a compelling sales pitch for why our comp package is like basically better than the labs and we're willing to go very far to get the best talent.
56:57[sighs] Okay, we're going to do a quick fire around cuz otherwise I could talk to you all day. You have a great angel portfolio, Open Router. Uh you mentioned lovable before. You can put all of your money into only one.
57:10I love Turuffer. I know Simon really well as a Danish guy. So, you have the Scandinavian connection. Um, just a fantastic entrepreneur. I just love the business.
57:20How big can that business be?
57:21That's a good question. I mean, it is like somewhat specialized. They're doing vector databases. Um, I I think it could be a very large category. If I ran that company, I would have 500 different ideas of how to expand into many adjacent things around databases, data warehouses, other types of query querying system. Like there there's it could be a large category.
57:39What have you changed your mind on most in the last 12 months? probably the magnitude of the sandbox space. I think it's kind of insane. Like I look at the revenue and it just keeps going up and I'm like, well, clearly it has to stop right now. And I think I'm like doing some sort of reverse psychology on the revenue because it just keeps going up.
57:54I'm like, what is going on? It just keeps growing and growing and like I've been wrong so many times. Like, you know, in a good way, like, you know, and and so it's incredible how large that space has gotten.
58:04What do you think is the most overheated category within AI today?
58:10Oh boy. I I don't know. I I don't think anything is overheated. I I will say like one of the things that I'm a little nervous about is companies that are dependent on continual infusion of equity capital. I think I would not invest in them. Uh and and there's a lot of them that I I I would be nervous about anything where like if there's a venture capital pullback they are, you know, they will struggle to raise more money. I think it's important you race
58:39the the every round as if it's your last round and there's like a real path towards commercialization and revenue.
58:46Biggest lesson on being a good dad and being a good CEO.
58:49Uh I mean sometimes I feel like it's kind of similar like [laughter] uh you mean like in terms of like how to balance it or do you mean in terms of just like being a good dad?
58:57What does it take to be a good dad?
58:59Setting them up for success I in life.
59:02And I always like think about like the right amount to push the kids. I'm not a tiger dad, but like I think a little bit you need to push the kids a little bit to like get them exposure. I don't want to create, you know, in the future a situation where my kids come back to me and say, "Hey, dad, I wish you'd made me do X or I wish you made me do Y." But I also don't want to create a situation where my my kids come back to me when they're 20 and they say, "Hey, Dad, why did you make us do X or why did you make us do Y?" So, a little bit of pushing. I make them play piano. I don't know why
59:30but like I think it's like good way to like learn something that I hope you know when they're 20 30 they will actually appreciate they don't like it that much but I think stuff like that you got to push them a little bit but not too much. My my parents are very lax and you know I discovered math and and programming and they were like Eric why are you doing so much math like you should go out and play like the other kids. Uh so in a way I actually wish they would have pushed me even harder but I pushed myself so hard anyway so it doesn't matter. Uh so so let that like right amount of push.
59:57How did you push yourself so hard?
59:59You're sorry. You're actually from a nation where you are told that it's like bad to stand out. I'm forgetting that word, but I had a Swedish girlfriend. Uh y law.
1:00:10Yeah. Where it's like it's bad to to stand out.
1:00:13Yeah. Don't think you're special.
1:00:15But I I don't know if that's true. Like I think there's a lot of misconceptions to Scandinavian culture. I do think there's a lot of like respect for people who follow their dream and like do things and like whether like I said you know it's music or writing books or you know making furniture or art like or being an entrepreneur like I actually think there's a lot of respect for I think this like you know self-actualization and following your dreams is like kind of highly regarded and I think you know it's like like that's the flip side of having a very laxed culture is like you kind of pursue people to follow their dreams and I don't know I my dream was like doing
1:00:44math and programming. I love that [ __ ] so I did that. Unless you're from Norway where a tax structure exists that basically makes it impossible to start a company.
1:00:52Yeah, I mean Norway has some issues.
1:00:54[laughter] Um they also barely work.
1:00:56Yeah, this is very true. But we do have a sovereign wealth fund.
1:00:59Yeah, they are rich.
1:01:00Thank god for that.
1:01:01Maybe it's like the first post economic society. I don't know.
1:01:04Literally almost in certain in in multiple meanings of the word.
1:01:07Um final one for you. What are you most excited for? It can be anything. Like I I look at um drug discovery for kind of chronic conditions. is my mom actually drug discovery is like one of the application I think is so incredibly cool like I I can't wait to take AI generated drugs you know I'm like old and my skin is getting bad and like I don't know like you know every time I drink a beer I feel like horrible the day after like I don't know give me all the AI generated drugs I can take like I I want to live long I want to live a healthy life I you know and I I think do you think that is actually a
1:01:36realistic future I think so but I think with the FDA and other things it's going to take a while but I think there's so much incredible progress today in like drug in in AI AED drug design. I think there's so many cool stuff, so many things.
1:01:49Dude, I've so enjoyed this show in a way that I I honestly wasn't expecting you to be this fun, open, charismatic. You've been amazing. So, thank you so much.
1:01:59Thank you so much for having it. This is a lot of fun.
