Modal CEO: Has Open-Source LLM Inference Peaked? | What Happens to the Cost of Compute

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that's your destination 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 gonna have a lot of fun so thank you for joining me it'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 that'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 yeah but you probably didn't know about me then no i didn't but i would have welcomed investing in another suite i wanted to start with i was talking to zach frankel 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 i started coding 1992 or something like that i was eight i 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 one megabyte of ram or whatever um and yeah started making games and

like i mean they were terrible but you know it's just i think back at like in a way i'm like so grateful i look back at like my childhood my friends they were like collecting hockey cards or whatever that was like their hobby my hobby was programming and now i make a lot of money from it isn't that kind of crazy like you know you know what you think about it like the fact that i can make a lot of money like doing what was my hobby since i was eight kind of nuts so So 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.

Modal was your first company or is your first company. Why did it take so long? I think the consistent pattern in my life is like I never had quite enough confidence in myself. And a lot of it was that was missing was just the confidence, a little bit the money too. But so it wasn't until I was like 36, 37, I started Modal. And I don't think I've ever wanted to necessarily start a company. It was like one of those things where I just saw this big opportunity in the market. I almost thought to myself, why is no one else doing this? Such an obvious idea. And that led me to think, maybe I should start a company.

And then five years later, here we are. It's gone pretty well. I think in hindsight, maybe I should have started much earlier. Do you wish you had? I look at some of these Stanford kids, and they're 21. And 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. 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. I don't know if I would have been a good founder at like in my 20s. Before we get into the market and everything beneath that, we were chatting downstairs.

We often hear that founding companies is like eating glass. It's hard. It's painful. How do you feel about those? I hate that stuff. It's like, 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 going to 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. I enjoy building a company. And I don't think of it as Like one day we're going to flip this company.

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 because I would just go and start Modal 2. You really wouldn't. No, I don't. 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, be on a point. Like, you know. I like building stuff. I love technology. I love coding. So much fun. You're such a Swede. Is that Swedish mentality? Maybe it is. Yeah. Dude, never has an American come on before and said it's not about money. I mean, I do care about money a little bit, but maybe you're right.

Because I do think in Swedish mentality, it's like self-actualization. Doing what you enjoy is kind of the highest form of prestige in a certain way. And it could be music, it could be poetry, whatever. It almost doesn't matter. What do you do that you don't enjoy? Yeah.

seven powers or like one of those things it's a good book but i think you know then people read that and they get delusional like and you know they're like yeah we're starting this company it has all these moats you never have moats in the early days like you know like google could do anything they wanted to google 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 there's an old blog post i always come back to it by ben thompson it 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 it 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 i actually think like the three things that matter to say when i invest is like one team are they top one percent team yeah two speed of product decision making 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 yeah and i think those are the three determinants to me of defensibility moat but it's a kind of package yeah i mean again i don't know if i would but i kind of agree your point like i think brand i don't want to call it a moat but it's it's actually i think the value of brand has gone up a lot can i be a dick yeah please do you think modal have done well with brand i 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 an event in San Francisco and I thought a lot about that, sort of how we package it, the event and the visual look and feel. But do you think you have a bigger brand than Bass 10 and Fireworks? I think we have that. I think we have like really, really good vibes. Like I'm terminally online. 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 see everything that gets tweeted and about our competitors and this is important like everyone wants to be a part of the community everyone you know what i think is like people misunderstand is i love type safe with jev yeah because like everyone wants to clone jev no one wants to get up on stage and wear a fucking 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 tell me why because he's authentic and different i think

so 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 this is something cool and people want to use you because you're one of the cool products out there they're like have you tried modal it's pretty cool what what has modal done then the base 10 and fireworks haven't to build that i think we started with the developer experience so that was and we had a very clear sort of plg product market fit product-led growth in the sense that people came bottoms up they just sign up on a product like i think the consumer background of coming from spotify is very important in how i thought about building what's not a B2B company selling tech effectively. You know, it's like a very boring category. But I think, you know, like having personality and having, you know, a little bit of an edge is a big part of how you create that sort of movement 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 a 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.

I think, in fact, we're actually more long than we're short GPUs because we can charge a higher price to our customers. There's effectively a market price, and it's like different dynamics because we lock up longer-term reservations and rent them out on a slightly shorter duration. But if the underlying price goes up, people are also willing to pay more. What happens to the price over time? H-100s were meant to depreciate and go down. I have no idea. Yeah. I mean, actually, it's funny.

Well, dude, if you have no idea, what am I meant to do? Did you see Jensen yesterday? He was in London, actually. Someone asked him this question. He's like, well, obviously, 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 within five years. He said exactly the same thing I always tell people. Like hardware prices, it's like gravity. Hardware prices always go down in the very long run. Right now we're in a very, you know, there's a supply shortage. And, you know, that means that the prices have gone up.

They may continue to go up for another year, two years, five years. I don't know. But eventually it will come down. How early are we? Because, you know, I run Instinct 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 the amount of compute i am using is jevin's paradox times 100 yeah if that is equivalent for actually many people in society yeah because it's accessible within whatsapp and what how early are we there i think we're very early i think you're saying the same thing i mean yeah jevin's power whatever like i think there's just so much latent demand for these things and you know i think you know eventually we're going to start to run up against these capital constraints, right? There's interest rates that are going up. We just can't build data centers fast enough. Maybe that's good. I don't know. I think in a way, it's a guarantee against overbuild. But I also don't know if we can overbuild these things. There's just so much demand for it. I don't think you can overbuild in the next five years. Probably not, no. I think what could happen is people realize Instinct is a good example.

Allegedly, they don't 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 lack could take a while, right? And we might run up against that. You mentioned the specialization that comes within the inference market, and we spoke about NVIDIA there. We're seeing more and more specialization within the chip market.

Is NVIDIA's business today stronger than ever, or actually weaker than ever, is you see the fragmentation of the market into very specialized players from Cerebrus to Etch to Olex to Fractile that weren't there before. I think you're trying to phrase it as like one versus the other. My view... It was like, I think Eric Vischer was actually talking, 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. They're going to keep shipping amazing chips. I think there's also going to be like Cerebrus 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. So why is Cerebrus down 30%? I don't know. I don't follow really the stock market. You don't follow the stock market? No. 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. To what extent is CUDA the moat that everyone says it is for NVIDIA? I actually, I think it's a little overstated. I don't think CUDA itself is the moat. CUDA is actually kind of annoying to work with. It's like a pretty low programming model. But I do think all the NVIDIA, the ecosystem is.

Like I think, you know, all the kernel optimizations and all the stuff that, you know, like Torch always supports NVIDIA much better than anything else. And the open source engines like VLM and SGLAN, because of that, they always support it much better. So like everything is NVIDIA first today. And that'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, you know, it's the year of non-NVIDIA accelerators. It never keeps happening. I'm always wrong. NVIDIA has just, you know, shown 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. To what extent are the neoclouds a friend, because they're partnered with you in a lot of cases, I'm sure, as you mentioned, I think 25, you said, or a foe? You know, I had the founder of Nebius 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 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 think some of the top neoclouds, Nabuus included, they are trying to move up the stack. I'm personally somewhat skeptical. I think it's very hard to be good at your core business and also trying to move into a different market at the same time. Why would it be hard for them? What's the bare case on them being able to move into the inference layer efficiently? I mean, I'm biased, but we spent the last five years building an incredibly complex infrastructure stack. I think it's very, very hard to replicate what we built. What's the hardest thing?

All the code and everything around the file system, the container runtime, the scheduler, building the system that can place millions of sandboxes every minute, scale up and down many, many thousands of GPUs, power hundreds of thousands of tasks running concurrently. These are very hard engineering problems. I mean, I'm an infra geek. I love that shit. It's so much fun to work on it. But these are hard problems. Is Nebius a better business than CoolWeave? I actually don't know. I don't know. I think they're both. They've executed extremely well, both of them. I have a tremendous respect for what we've done.

I think at the end of the day, the thing that I have the most respect for is actually more on the financial engineering side. They're very good at that kind of stuff. Why do you say that? Because 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 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 over the next few years. Doing that sort of dance with the financial It's kind of an interesting game, and CoreViva has done it exceptionally well.

It's a capital game. It's a financial game. When you move a layer beneath them, we spoke about Jev, who obviously worked with Modal. We've seen incredible movement from the open source community, which has been exciting. Yeah. But then you also see Haiku and Anthropics' 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? 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 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 i mean they're obviously i have tremendous respect for all the chinese labs are 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 but anyway going back to the question i do think that open source 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 sources kind of play a big role in that it's like windows versus linux with the i am sorry with the greatest of respects, do you think Europe will produce a competitive open source model?

Yeah. I mean, I love Europe. I grew up in Europe. I grew up in Sweden. But I do think that Europe does struggle with accumulating large amounts of capital. I think both of those things are things that Europe struggles with. And that is something that China has done really well. They've accumulated massive amounts of human capital. And the US obviously is very good at raising enormous amounts of money and training very large models. I don't know if Europe has the either of those. Does it matter if NVIDIA owns the open source model layer in the US with first poolside and now reflection? I think NVIDIA is very smart to focus on the ecosystem, building up an ecosystem. 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. These companies are very resource intensive, right? Very CapEx intensive. And I think it's smart of NVIDIA to like buy some of those and sponsor them effectively in order to create like American built models by the way I want to take back like one thing I said 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 U.S. is very good at and I think inspiring a mindset of ambition yes 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 U.S. you might have been surrounded by influencers that told you to start a company earlier yeah 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 yeah exactly i totally agree with you i do want to talk about you and we said about models and jev in particular are we seeing like the unbundling of models on a like per function basis where jev 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 inference is so large and and that you know, when a market is like, you know, a billion dollars, like you're not going to have too many sub markets. But when a market is starting to get 10 billion, 100 billion, whatever, like you're going to have a lot of different sub markets. And, and Jev does classification and things like that regression type things very, very well. 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. Jev, we're all in on Jev's new round. What's, what's the bull case for Jev being worth 100 billion? I told you before, but I think the brand and the community and the movement around just the sort of everything they're doing is so incredible. And that to me is like a massive, massive asset in this new age. That's a $100 billion company. I think there is an opportunity to create a $100 billion company with a lot of specialized models in France.

You would have done it though at $8.5 billion. I would have done it at $8.5 billion. I think there's a pretty big outcome here. Could be an exit, could be a public company, who knows. But I do think there's a lot of upside here. Dude, I'd love to see him ringing the bell on the New York Stock Exchange. Do you know what I mean? Yeah, fantastic guy. Love that guy. Is he great? I 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. I hear you, but I think then you should be more loud, if I'm just honest, Eric.

Moodle? No, well, yeah, but you. Yeah, I mean, that's possible, right? Like, I don't think there's like a personality-led cult from Moodle from your perspective. I think that's a fair point of criticism. i think i could be out there even more i try to tweet i try to blogging i've been kind of bad at that recently no one gives a about blogging yeah 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 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 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 now supporters of modal and and you know you have to lean into what you're good at and in the early days i did a lot of posting do you know for every follower that followed me before 50,000, I would send them a personal thank you message.

That's amazing. You typed it out yourself? Every night from 1 till 2.30 a.m. I used to send them a 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. That's dedication. That's amazing. No, but it was the customer acquisition flywheel. Yeah. 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 a show. Yeah, it's smart. I love what you've been doing in terms of building up this media brand. It's fantastic. Neil Mater has a great thing, which is like, how can I 10x the customer experience?

And actually, like, let's do it. Fuck it. Let's play a game. How do I 10x the current modal customer experience? I think the biggest thing we need is we need way more products in modal. Like, we want to create a busy, 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 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're working in the bio space.

How can we help you? Here's some bio examples, you know, protein folding, whatever. Like we work with a bunch of other similar companies. You seem skeptical. But 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. We're in a B2B space. So I think it's like, you know. But do you worry about being stretched too thin? Yeah.

and how do you reflect on that? I think we should have allocated more resources towards LLM inference like earlier. I think we're a little bit on the sidelines for a while.

We didn't realize how big open source inference would be. And we thought it would be kind of a race to the bottom, just a commodity space. And then Deep Sea came out and we're like, fuck, we got to move very fast. And so we stepped up a team immediately, went from one or two people working on this to like 30 people 12 months later. And now we're one of the top three providers. Jason Lampkin, a dear friend of mine who I do a show with every Thursday, he always says that now we've reached peak open source 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 resurge and we will see a reduction slash plateauing of the OS LLM inference model. I think that's a little bit of a fixed pie size mentality like 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 yeah for sure you just hit a

billion in revenue yeah well done yeah does that feel pretty cool it feels pretty cool it's you know like i i don't know like i'm just like you know swedish guy that you know grew up in a random know for me it's like these numbers are absurd but like yeah like it feels great it's so much money you're so do you know i wasn't expecting you to be so like likable and cool i don't know like it's like a lot of zeros like how many zeros are in a billion it's it's a lot your wealth manager will tell you when you look at that where will you be in 12 months i don't know what i can say is we've been growing we grew 15x in the last 12 months so you can extrapolate that i mean i 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 with the growth rate right now like the growth rates are not slowing down like we're growing 30 40 every month four billion i hope to be way beyond that with the greatest of respects 15 billion then feels like quite a cheap price like if i'm an investor so this is now my ballpark if you think you're going to be at four billion say dropping i don't know a billion two to the bottom line then they actually only paid what 14x end of year next year bottom

line 3x top line yeah it's kind of cheap that feels pretty cheap i 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 think that the demand for compute The demand for AI applications, it's just 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?

That is a good question. I think training is something we just launched. I think that could be very large. I hope that could get to 100 million run rate in the next six to 12 months. Post-training, similarly, working on batch jobs. I'm very excited also about a lot of like sort of traditional like data warehousing stuff, databases, workflow orchestration, feature stores, like vector database. And there's just so many parts of this. And they all kind of fit together very nicely. And 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. It's 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. I would love to get into continuous integration. That's like a very interesting space. Agent harnesses. Maybe we should train models. There's just 5,000 directions. And that's like my ADD brain wants to run in all of those directions. You have to be, obviously, ruthless with prioritization and only take on one or two things at the right time. But there's so many different directions we can go on. It's amazing that your wife calls you for decisions.

She must get a very incoherent answer. I know, I know. What is this? Is this? Is this? I just wanted some curtains. Yeah, with the curtains, I just could pick one of them. I've seen Simpsons and Rainer Wolfcastle becomes the president. And they're like, which one do you want to pick? You know, one to seven. He's like, I was born to lead, not to read.

How much money do you spend on coding agents a month at Modal? I think a half a million or something like that. How many engineers do you have? 150. Dude, that's so worrying, you know. You want to, should be token maxing more? There should be 10x that. Yeah, maybe. I don't know. Brandon McCaw, that they spend 3x their human salaries on inference. Yeah, we're not quite there yet. But I will say, like, our software engineers are extremely agent-pulls, including myself. I mean, 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 mind, I'm not doing a Bloomberg and, like, pulling you in to be like, what do you think of the Anthropic IPO?

I hate those ones. Yeah, you know where it's like, yeah. I think it's great. Yeah, it's great. No one in AI is like, oh, not a fan. Yeah, yeah, yeah. Everyone is against it. Go, go. But I do think a big, the motherlode, so to speak, is Claude Code. It's $60 billion of revenue. It largely kind of dictates the $2 trillion price. And you look at Mark Benioff, who says that they spend 5% of engineers' salaries, $300 million, on Claude Code today. Now, if that comes way down as efficiencies improve, you name it, that's a challenge. Or will that go up as it just eats more and more of engineers' workflows?

Yeah, 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, it makes 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 I'm just like the biggest like optimist that there is in the world about software and computers. And like, I just love this shit. I think it's just going to keep growing. The data market is an interesting one.

We have so many players that have scaled so fast. Yeah, it's incredible. If 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 the Frontier Labs. There is so much money to be made in that space. It's kind of incredible. Let's go a layer deeper. What would you do next? You specialize on a specific market? I mean, the coding space is where you see the most demand right now. If you can sell code environments to the labs, you can make a lot of money. There's a big space in that. Still? Still, yeah. Yeah. I meet startups all the time. I angel invested in a bunch of that. I mean, they're incredible businesses. 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? Do you want to get on the venture treadmill? I'm not sure. Like, I think these are companies that are 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's a fantastic business today and that's all that matters. I think there's data marketplaces and then there's data and services. And when you look at the leading providers, they started as the data

or acquirers, and then just sell you the data. And that's kind of it. And I think they've really gone full lifecycle now to deployment, implementation, evaluation, monitoring, with a real enterprise hand-holding ability, similar to the FDs, where they will really be that partner to ensure full implementation. That's how you expand margin and have some form of business in the long term. For sure. Yeah, and I think it's going to be a tough business

Model routing, as the dear Americans say, is that a defensible business? What do you say in the UK, routing? Routing. I love that. Well, I mean, we are actually, The original language, America, just took us and bastardized it. But yes, my question to you, is that a defensible segment of this value chain, or is that a commoditized product that everyone just builds themselves? I think it's possible to build a successful business in model routing. 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 these companies want, they want evals they want you know ways to fine-tune they want you know more control over performance like latency throughput like all these things and 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 router personally and they had a great outcome i actually think they could have done even better on a standalone basis 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 congratulations you're on the open router board and the acquisition offer comes in please make the case for why they would reject yeah yeah please make the case i 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 the space is growing so fast and there's so much revenue i would have told them to keep going final 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 bullshit. This idea of like two on 10 or slowly build for 18 months. Well, it's kind of bad. Like it's kind of bad if you want to make money, right? But it's great if you want to develop a relationship with engineers or I mean with founders. Sure. But that goes against what I do. You're against the relationship with founders? No, no, no. I'm saying like I think the death of seed investing, the two on 10 and build for 18 months is dead.

Yeah, I understand what you're saying. So what would yours be? I don't know. I mean, I think 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 a pullback, you know, 20%. 30% in the stock market, everyone's going to freak out and people are going to say it's the end of the world. I'm almost certain it's going to happen, but I'm so bullish because then we're going to keep going. So that would be one thing that I'm like, there's going to be a pullback.

lovable before you can put all of your money into only one i love turbo puffer i know simon really well, a Danish guy. So you have the Scandinavian connection. Just a fantastic entrepreneur. I just love the business. How big can that business be? That's a good question. I mean, it is like somewhat specialized. They're doing vector databases. 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 querying system. It could be a large category. What 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. I'm like, what is going on? It just keeps growing and growing. And like, I've been wrong so many times. I was like, you know, in a good way, like, you know, and so it's incredible how large that space has gotten. What do you think is the most overheated category within AI today? Oh boy. I don't know. I don't think anything is overheated. 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 would not invest in them. And there's a lot of them that I would be nervous about anything where like if there's a venture capital pullback, they will struggle to raise more.

money, I think it's important that you race every round as if it's your last round. And there's like a real path towards commercialization and revenue. You got two kids. Two kids. Biggest lesson on being a good dad and being a good CEO? I mean, sometimes I feel like it's kind of similar. Like, you mean like in terms of like how to balance it? Or do you mean in terms of just like being a good dad? What does it take to be a good dad? Setting them up for success in life. And 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 get them exposure. I don't want to create 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'd made me do Y. But I also don't want to create a situation where 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. But I think it's a good way to learn something that I hope 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 parents were very lax, and I discovered math and programming, and they were like, Eric, why are you doing so much math? You should go out and play like the other kids. So in a way, I actually wish they would have pushed me even harder, but I pushed myself so hard anyways, it doesn't matter. So that right amount of pushing.

Why did you push yourself so hard? You're actually from a nation where you are told that it's bad to stand out. I'm forgetting that word, but I had a Swedish girlfriend. Yeah, where it's like, it's bad to stand out. Yeah, don't think you're special. Yeah, why? But 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, like that's the flip side of having a very lax culture is like you kind of pursue people to follow their dreams. And I don't know. My dream was like doing math and programming. I love that shit. So I did that. Unless you're from Norway where a tax structure exists that basically makes it impossible to start a company. Yeah. I mean, Norway has some issues. They also barely work. Yeah, this is very true. But we do have a sovereign wealth fund.

Yeah, they are rich. Thank God for that. Maybe it's like the first post-economic society. I don't know. Literally. In certain, in multiple meanings of the word. Final one for you. What are you most excited for? It can be anything. I look at drug discovery for kind of chronic conditions. My mom's got that. Actually, drug discovery is like one of the applications I think is so incredibly cool. Like 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 want to live long. I want to live a healthy life. You know, and I think- Do you think that is actually a realistic 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 just so much incredible progress today in AI-aided drug design. I think there's so many cool stuff, so many things. Dude, I've so enjoyed this show in a way that I honestly wasn't expecting you to be this fun, open, charismatic. You've been amazing. So thank you so much. Thank you so much for having me. This was a lot of fun.

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