01:16:34 路 John Coogan
[01:16:34] S1: We I I've never seen that exact technical failure before where it cuts out entirely. We've heard scratchy audio. We've heard degraded video. It was the video was coming through crystal clear, but the audio was cutting in and out a little bit. But I think we got a lot of good stuff. Coco, they should have called the AI agent Frosty. Snowflake? Frosty. Probably intellectual Frosty the agent. The jolly happy coder. Coder. Yeah. Something. Anyway, Citadel. Citadel Securities, former former employer of mine when I was an intern, wrote a post on tokenomics. They're one of the most significant hedge funds and they just dropped tokenomics. I have it here. I have a second printout. Tyler, you want to bring that over to me? It's not what you expected is what they say. So we've argued for some time that agentic and complex workflows delivered by frontier models would be expensive to run constrained by physical bottlenecks and vulnerable to unrealistic expectations of frictionless deployment cost. That judgment now looks less contrarian than it did when we set it out in February. They're taking a victory lap over at Citadel Securities. Amazon has now removed its token leaderboard. Microsoft has canceled clawed code subscriptions, and there have been multiple reports of unexpectedly large token bills. The salient point is that even the most powerful technologies must pass through the prosaic discipline of cost curves, capacity restraint constraints and marginal returns. Adoption is therefore becoming less about what frontier models can do in principle and more about the price and scarcity of the inputs required to make AI operational at scale. Compute power cooling, memory bandwidth and inference budgets are real and binding constraints. They go into economic theory talking about the the the three functions that prices provide. So they signal scarcity, create incentives for substitution, and ration scarce resources toward their highest value uses. This is the stuff that goes viral on TikTok. We're we're deep in it. You heard of the keeping the viewer watching. This is the most important thing. You read the Citadel Securities macro strategy report. But they do say they ration scarce capacity toward the areas where marginal productivity and AI justifies the marginal cost of using it. They're talking about ROI maxing.
01:19:01 路 John Coogan, Jordi Hays
For the economy at large, simpler models may be more cost effective. Productivity augmenting pathway until physical constraints are eased. We hence see growing signs of a bifurcation in frontier versus everyday AI usage. They actually shared some data here around token expenditure index dropping, the log growth rate declining. And so folks are pulling back a little bit and shifting towards cheaper models as they figure out a new workflow. Something gets unlocked, and then they say, hey, we got to actually make this ROI positive. So that's the latest from Citadel. Let's see what Amazon Web Services is saying. They're black belting on the timeline. They said more AI generated code doesn't make your team faster. It might actually slow you down. [01:19:49] S0: Crazy This is such from AWS. [01:19:52] S1: Would have expected it from like some AI thought leader, podcaster, Twitter person. [01:19:57] S0: AI bear. [01:19:58] S1: But, yeah. It's funny coming from the AWS cloud gold check. [01:20:03] S0: It's funny because it's also like, if you were to write this, I think a lot of people would write this as more AI generated code doesn't necessarily make your team faster. No. Per No. More AI generated code doesn't make your team faster, which is just like factually incorrect for like a lot of teams. Yeah. Yeah. Right? That's true. We're actually moving faster than ever. Also, okay. Read the next post in this thread. [01:20:29] S1: It's like
01:20:29 路 John Coogan, Jordi Hays
[01:20:29] S1: It's like [01:20:30] S0: very clearly AI generated. Okay. The real bottleneck was never writing code. It's releasing it, debugging it, and keeping it running well. So when Honeycomb c Honeycomb IO [01:20:42] S1: CTO. [01:20:43] S0: CTO charity majors set a productivity target, she didn't chase 10 x. She chose two x and built from there. [01:20:50] S1: You think this is AI? Because the choose two x comma and ampersand built from there [01:20:55] S0: I think it was human edited but like that that [01:20:58] S1: Syntax Syntax. I agree. I agree. Her team also skipped the mandates and built a set of AI values instead. Every AI output has to have human owner. If you don't want [01:21:07] S0: your name on it, it's probably not good work. [01:21:09] S1: Yeah. That's reasonable. Quality first, quantity second. So they had a podcast about it. Coming from AWS, that's a wild statement. This is this is very funny. But, yes. Also funny with the backdrop of of a $500,000,000 budget. [01:21:27] S0: Well, yeah. And it's funny because Amazon is of course one of the largest investors in both OpenAI and Anthropic to Yeah. Leading coding model provider.
01:21:27 路 Jordi Hays, John Coogan
[01:21:27] S0: Well, yeah. And it's funny because Amazon is of course one of the largest investors in both OpenAI and Anthropic to Yeah. Leading coding model provider. [01:21:39] S1: Hey, they didn't say more AI generated posts don't make your social media team faster. Entirely possible it sped them up. They certainly got 14,000 likes on this. This is a banger post from a corporate account. Rare to see those numbers put up on the timeline from a corporate account. Congrats to the team over there putting up some fun numbers. Sridharam Krishnan, the don't know how to differentiate them. He's a kerniejackson.com investor adviser to bending spoons, not the former a 16 z a 16 z GP who worked for the government for a little bit. Sridhar Ramaswamy not many Silicon Valley vCs took our Bending Spoons intro in 2022. These vCs thought it was beneath them to be associated with the company. From 2024 onward, many clamored for an introduction to sell their portfolio companies. Bending Spoons is going public. So Bending Spoons will be a public company, and they own a number of of, you know, historical companies. They own AOL and have done a bunch of other stuff. Eric Souffert broke down the [01:22:46] S0: They literally own America Online.
01:22:46 路 Jordi Hays, John Coogan
[01:22:46] S0: They literally own America Online. [01:22:48] S1: They own America Online. It must be electric. I can't get into my mobile email. Just going skip this Brutal. And move on. But you can Eric Souffert over at mobile dev memo wrote a breakdown of the Souffinator, wrote a breakdown of bending spoons filing to go public. The Italian roll up operator that owns among many other properties AOL, they own Eventbrite and Vimeo. Don't they also own Evernote, or am I getting that mixed up? Someone own Evernote, and the Evernote employee growth chart looks like a fast takeoff. Like, post 2020 COVID, they went from like a thousand employees to like almost 6,000 employees or they tripled or doubled the workforce. And Benning Spoons, you know, known as sort of like the the operational excellent, almost like a private equity firm, private like, they're, you know, they're gonna do cuts. They have done a few cuts, but like the the actual headcount has like had held fairly stable and I think the business has gotten to a much better place. So interesting to see there's a time and a place for being aggressive, expanding when there's a big moment and the market's up, and then there's also a time to consolidate and focus on operational efficiency. [01:24:04] S0: Why be your partner. Why is this guy so obsessed with GTA, John? [01:24:09] S1: Have you ever played GTA? [01:24:10] S0: Any GTA? Maybe like [01:24:13] S1: GTA three, GTA four? [01:24:14] S0: Maybe like for like two minutes. [01:24:16] S1: Two minutes? [01:24:17] S0: And I'd be and I was like, wow, you
01:24:17 路 Jordi Hays, John Coogan, S5
[01:24:17] S0: And I'd be and I was like, wow, you [01:24:19] S1: just Loser. What a loser. Never gamed in his life. [01:24:22] S0: I couldn't get into it. I couldn't get into it. [01:24:26] S1: Yeah. You're a rust guy. You're you're a [01:24:28] S0: Everything like I I just even as a child I was like Wait. Everything that you can do in this game you can just go do real life minus [01:24:36] S1: No. [01:24:37] S5: You can't. [01:24:37] S1: It's all crimes. Wait. [01:24:39] S0: Jordy turned it down. [01:24:40] S1: He turned it down. [01:24:41] S0: There Yeah. Maybe I'm pure of heart. I don't enjoy. Yeah. Like, like crap. [01:24:47] S1: They were gonna let me play for like fifteen hours, ten hours, maybe five hours, but I turned it down. [01:24:51] S0: They were like wanted to pay me to play. [01:24:54] S1: Yeah. Wanted to pay you to play. Strauss said actually. I I would love for you to play. I I was a video game tester. I got paid to play video games. Best job. Play video games all day? [01:25:07] S0: They they got you hooked. Yeah. They they they got you hooked.