75 – Why Meta’s Llama Sets a New Benchmark, Leaving ChatGPT Behind

Marcus: [00:00:00] If you enjoy this content, please take a moment to rate and review it. Your feedback will greatly impact our ability to reach more people. Thank you. Tell me about Alaska.

Vic: It was great. Went on a cruise, saw all kinds of wildlife and the world changed all around me. I had very limited wifi, so I was getting a USA Today printed.

Vic: Report of news each day And trying to keep up with the world changing Um, but alaska was great. It’s a beautiful it’s incredible. There’s nowhere else at least that i’ve seen in the world Um a cruise is okay. I mean it was the best way for the group. We had nine people So it was the best way for the group we had with some, you know for maybe 11 To 82.

Vic: Oh, wow. That’s cool. And so it was a, it was, it was a great family trip and you probably only could do it on a cruise. You can certainly only do Alaska on a cruise with my 82-year-old mother-in-Law. So great. I got kind of tired of the food and the ship is [00:01:00] fun for day one, right day two. But by day seven I was kind of ready to get off.

Vic: Yeah.

Marcus: Yeah.

Vic: And not much happened. It was kind of quiet in the, in the public areas, .

Marcus: I only missed

Vic: everything.

Marcus: Yeah, you only missed everything. Holy cow, dude. I, you know, they show all the pictures of like presidents when they start their their, uh, term and then when they end. And like, I feel like I aged in the last two weeks.

Marcus: I mean, this has just been totally insane.

Vic: Yeah. But it was a great show with Emily. I learned a lot. I listened to it on the way back. And I think it was great. Hey, listen, it’s,

Marcus: it’s, it’s just so valuable having, um, having her as a front of the show. You know, the work that she does is, it is, it is different from any of the work that I encounter out there.

Marcus: And it’s great that she is, um, someone we can call on at any point in time and also she’s so on top of it, like right as everything is happening, she’s like already put everything together. You know, I don’t know when she [00:02:00] finds the time to do it. Yeah. Yeah. Uh, but it’s, it’s a, it’s a real gift to us. So yeah, she, she did a great job.

Marcus: Um, all right. We have a busy show and thank you for finding a way to pull all the stuff together for this show, because there’s no way I was going to, I was, I’m, I’m exhausted, but hopefully

Vic: I didn’t miss anything. I, I sort of over the last 24 hours quickly. Did a news search of the last seven, eight days.

Vic: Yeah, I think, I

Marcus: think you did pretty good. Um, so with that, let’s dig in,

Marcus: uh, starting with the stock market in this economy and, uh, we talked about a little bit last week with Emily, but we skipped talking about a whole lot of news last week, just to focus on the, the Trump administration’s, uh, model for healthcare. But the NASDAQ has really taken a beating two weeks in a row now.

Marcus: Yeah.

Vic: Yeah. I think that the excitement about AI. And all the fun kind of [00:03:00] gimmicky things that can do, it can write me a haiku about my trip to Alaska that has sort of worn off, right? And it seems like the last probably the last two weeks, Magnificent Seven have really gone down. And it’s been a kind of a rotation in capital, I think, to bond markets and to sort of a broader, uh, Russell 2000 kind of market.

Vic: So this morning, the Wall Street Journal. Um had a story about that and actually the over the last few months the Russell has sort of begun to outpace the sp500 because of that turnaround.

Marcus: Yeah Um, well, it’s a concentration of a value in the 500, right?

Vic: But then today, probably the reason it changed since I looked at it this morning, maybe is that, um, we’ll talk about a minute, but the GDP report came out.

Vic: So the stocks have come back a little bit since this story originally, but the main thesis, I think, is still the [00:04:00] same, which is AI has to start producing, let’s just say revenue,

Marcus: right?

Vic: Forget, forget net income and earnings and compared to the amount of capex going in. It’s not. Yet producing them.

Marcus: I mean we we talked about this I don’t I feel like it’s just two or three episodes ago how you know, the the main use cases of AI today are Embedded within the large tech companies meta, I think is still the best and most obvious example how they replaced the apple, um, tracking capability that was cut off with AI that has now made their ad engines perform even better, right?

Marcus: So, you know, if you’re, if you’re an existing company that makes your money off of the highest caliber. Uh, you know, software, you can supercharge that software leveraging AI. And by the way, that’s not an LLM, it’s, it’s data science and machine learning. Right. Um, so, so yeah, I mean, look, the LLM thing for anyone who has played [00:05:00] with it at all, uh, It doesn’t do the work for you.

Marcus: It’s it’s not a hundred percent of the work. And so you then have to figure out how to change your workflow and that switching costs and that change. And also that comes with a risk, right? I mean, I’m looking at all these different marketing tools that are out there right now. And it’s like, do you really want to a hundred percent?

Marcus: You know, put your marketing on AI. Do you really want to do that? You know, and, and lose the human connection because everyone can see it. You can smell AI, whether it’s video, whether it’s text copy, you can, you can tell when it’s been generated by AI. So,

Vic: yeah, I think, I think it’s very similar. And we’ve talked about this before, very similar to the internet.

Vic: We can all see that. It’s AI is going to be really impactful eventually, just like the internet in 1995, Netscape went public, we could all see this is incredible, it’s going to be great, and then in 96, 97, it’s kind of the same thing that we were doing [00:06:00] previously, now just thrown up on a web page. Right.

Vic: And it takes a while to for entrepreneurs really to figure out how do we use these tools in a way that’s scalable and profitable. We haven’t figured that out right now. The

Marcus: road map is

Vic: not clear. Okay. So, I mean, that had been true before two weeks ago, but the market just. So, so the next story is Google fails to wow, they Google beat earnings.

Vic: I think this is on Monday Mm hmm, they beat earnings, but they didn’t Wow with any kind of unveil AI Magic and they they have a lot of cash. They got like 98 99 billion dollars, but they’re spending close to 50 a year On cap ex

Marcus: right

Vic: in a I. And so I think the street is just struggling with how to make the math work.

Vic: I think the answer is it doesn’t work. They’re they’re thinking about it in a longer term than 3 months or 6 months, [00:07:00] right? That that’s.

Marcus: Similar to the story we just had. I mean, really, quite frankly, this is not the tech company’s fault. It’s, um, you know, it’s the analyst’s fault. I mean, you know, these, these stocks never should have been, uh, propped up the way they were in the first place over the course of the last two quarters.

Marcus: Um, you know, Nvidia may be because of their actual revenue generation from their actual chips, but all the rest of this R& D, it is, it’s speculative. And, um, I think. We all have a hunch that it’s going to work out, but look, at Jumpstart, we’ve, we’ve paid for Gemini for enterprise and, and because we feel like we ought to be able to leverage it, we haven’t found a good way to leverage it yet, you know, um, it requires too much of a workflow.

Marcus: I can’t tell

Vic: you how many tools that cost 10, 15, 20 a month that I’ve tested out, and they’re all cool, and I haven’t figured out really how to, Embedded into the workflow so that we [00:08:00] can do more things, better make more money for our LPs. Right, exactly. Uh, tell me about China cutting their interest rate.

Vic: Yeah, so China is hard to get my head around, but they are sort of, I think of them as sort of the manufacturing floor for the world. They make a lot of the stuff that we buy here at low prices and they have invested in a whole bunch of real estate manufacturing productivity. Assets for decades Um, and they are really struggling now.

Vic: So they cut their, their nationwide interest rate. Um, and they’re having a lot of real estate, all the problems we have here, real estate and, uh, sort of, um, dislocation of some workers where they can’t find jobs cause they’re not qualified for it and not enough workers in other areas, but it is, um, you know, it’s a, it’s a command and control sort of centrally managed.

Vic: [00:09:00] economy, so they don’t get too much information out. Um, so them coming out and cutting the rates and sort of saying that they’re hopeful it’s going to spur growth, I don’t have a lot of confidence that the borrowing costs in China are the reason it’s not, they, they have too much capacity.

Marcus: Yeah. I mean, the, the consumer has softened the credit card, uh, you know, Delinquencies are going up.

Marcus: The credit card balances are going up. Um, I think we’ve heard over the last quarter in quarterly earnings, the number of CEOs that have mentioned the softening consumer has doubled. Um, everyone’s talking about it. Uh, I was looking at some data on hotel room rates for Nashville and, you know, They’re flat below, uh, inflation, sort of for the first time in, I don’t know how many years, because Nashville every year.

Marcus: Yeah. Yeah. Year over year has been just crushing it. So the [00:10:00] consumer is soft and, and that’s, that’s going to impact things everywhere. And as you said, trying to be in the manufacturing base of the world, um, is going to feel it as well. So

Vic: I think that’s right. So if they get, um, if they struggle, it’s going to be hard on the rest of the world.

Vic: So I think it all was interrelated, which is why we’re tracking it.

Marcus: Yep. Agree. Uh, okay. And a little bit about sort of the post pandemic job market, you know, we, we, with the pandemic was a very weird time. Uh, the whole quiet quitting the, you know, I’ve got all the optionality in the world. We knew the employers were going to evolve and change things.

Marcus: And it seems like that’s fully set in now.

Vic: Yeah. The unemployment rate went over 4%. Um, and so there’s only a few times, if you go down in this article, there’s only a few times, right there, where it’s gone below 4 percent for, uh, at least 6 months. I think there are 5, maybe, in the history that they’ve been running it since [00:11:00] 51.

Vic: And we are, we have been there for the past 3 years, so it’s 3 years, which is not the longest, but it’s the third longest, it’s a long time, and we’re no longer there. And so it’s not that the the economy is terrible. I don’t think we’re in a recession. We had the GDP out today The job market is not terrible, but it’s not as good as it was two years ago, a year ago, three years ago.

Vic: Yeah. It’s just not.

Marcus: And, and, and how, how do you think the, the, the fed might interpret that data alongside GDP growth?

Vic: Um, let’s talk about healthcare for a minute. Cause I think, um, I think it’s been really helpful in healthcare for the employment environment to be less frothy. We’re like, we. In healthcare, we need a lot of people, we need to be able to hire nurses, med techs, transport, all the, all [00:12:00] the people that actually make a health system run or make a dentist’s office run, make an ambulatory surgery center run, and so I think it’s actually healthy for the healthcare economy or our, our listeners for the most part to have some more Um, some more interest in staying in the job than just jumping for a dollar more an hour.

Vic: So I think overall we want this like four percent, three and a half to four and a half percent unemployment. It’s probably good for healthcare. If it gets too low, healthcare is a hard job, so we lose people. That’s right. Hell, the Fed will interpret it, uh, this morning when I read this and there were a whole bunch of people from this article and, and just the fact that it’s gone over four, Saying that the fed should cut rates more quickly to sort of stay in front of this They’re always behind the curve and with china kind of having troubles in our employment now Unemployment [00:13:00] ticking up to four percent a little over four.

Vic: Maybe it makes sense for them to cut Uh, but then you know mid morning we got the gdp report which we’ll cover in a minute. So I think they are Probably my guess is this is the soft landing that they’re they were hoping to achieve. Yep Sure, unemployment rate comes up over four, but the whole point of this article is that in the last 75 years, they’ve been tracking since 1950, it doesn’t stay below 4 percent very long.

Vic: Yeah. It almost, it almost can’t. With people moving and changing jobs just naturally, you have, you have some unemployment. As the kind of the natural state of things. Yeah.

Marcus: Uh, okay. So let’s let’s talk about GDP 2. 8 Growth in the second quarter and that is much more than expected I mean, I think it’s probably only much more than expected because of how q1 turned out, right?

Marcus: So people kind of readjusted, uh, and then the gdp kind of came roaring back in the second quarter. [00:14:00]

Vic: Yeah yeah, I think that um, maybe go down to the chart the um, The expectation was for 2. 1 and it came in at 2. 8 And yes It was sort of on a slow decline, soft landing, are we going to go into a recession, lots of people were worried about unemployment going up and GDP going into a recession.

Vic: Literally, eight hours ago, I was reading an article by a former Fed, uh, Board of Governors. Guy’s not there anymore who was calling for the fed to cut rates Two weeks from now at the next meeting, but I think with gdp being almost three two point eight It’s hard to argue that the that we’re nearing recession, right?

Vic: There’s lots of people on twitter x That are saying it’s a lot of, um, government spending. It’s all or whatever, but the fact is the summary is 2. 8. It’s not close to negative. So, I mean, I, I’m not opposed to the fed cutting rates, [00:15:00] but I don’t see a real need for that. It’s hard to make a case that with unemployment at 4.

Vic: 1 and GDP Inflation is still kind of high. We haven’t got a report for a couple of weeks, but it’s over well over there too. It’s over three, roughly three. I don’t know. It seems like a, the course is pretty good.

Marcus: Yeah. And, and now we also are, uh, squarely in the presidential election cycle. And so obviously it’s, there’s a bit of political jeopardy for Powell to, to actually execute a rate cut between now and November, right?

Marcus: Yeah. Yes.

Vic: So, I mean, the odds are, well, again, This morning before GDP came out, it was a little over 50 percent that they would cut rates in September

Marcus: and

Vic: like 10 percent in August. So I think it’s still probably likely that we look to the September meeting as a VC. Uh, I’m happy to for rate cuts, but I don’t know that we need them necessarily.

Marcus: Yeah, yeah, but but but we could use a little bit more risk on. I mean, it’s [00:16:00] still it’s still a pretty soft market for us. It’s still a pretty soft private market. Oh, yeah, definitely. Uh, okay. Certainly, I think outside of all things presidential, which has taken most of the oxygen in the room right after that story of the week has been CrowdStrike.

Marcus: Which is a company that nobody knew existed, uh, prior to this, this, uh, really, really bad software push that caused massive outages. I think most felt in the, in the travel industry, people, you know, losing this thousands of flights, a lot of health systems had troubles too. I mean, yeah, for sure, for sure. Um, but, but I mean, but, but not the big story, the

Vic: airlines,

Marcus: particularly Delta, which, which has taken, are they back yet?

Marcus: They’re limping back, but they’re not fully back. Um, I mean, just, just a terrible, terrible blow to what I think is probably the best, you know, [00:17:00] commercial airline brand in America today. Um, right? Yeah. Uh, just terrible. And, and caused by a software vendor, sort of underneath, you know, there’s a little bit of their Southwest moment.

Marcus: Right. You know, Southwest had this moment, what, two years ago during Christmas? Yeah.

Vic: But that was self inflicted, Southwest. A little more than this. Yeah, but, but it was, it was, it

Marcus: was software related. Yeah, I don’t know that the passengers care.

Vic: Yeah,

Marcus: that’s the point. That’s the point. I mean, you know, we see Buttigieg saying, Hey, listen, Delta, you owe all of these consumers, their money or equivalent in flights.

Marcus: So, I mean, this is going to really hurt the Delta brand, but let’s, let’s step back from Delta for a second and just talk about CrowdStrike. So yeah,

Vic: let’s just unpack what happened as much as we know right now. As much as we know. It’s your space. You probably know it better, but. CrowdStrike is a security, cybersecurity tool, and my understanding is that the way it functions, [00:18:00] they are in like the kernel of the operating system.

Vic: In order to Protect the operating system. They need that kernel level exposure. Um, they pushed an update, I think only to Microsoft operating systems. It’s my understanding. And it didn’t work. And not only did it not work, it crashed the entire system. And the way the pricing for CrowdStrike, it’s pretty expensive and they charge by machine, and so I don’t know about Delta, but I read another report that most.

Vic: System, most companies have chosen to put it only in their most critical systems because that’s where they’re worried about cyber risk, a blue screen of death, a human I. T. Professional has to go touch that machine and try [00:19:00] to get it fixed, and that’s not a fast process across a company like the size of Delta.

Vic: Yep. The other thing that is complicating matters is that the E. U. Required Microsoft. Give kernel of access to all the cyber security vendors as part of their competitive um negotiation settlement agreement and so The reason that they gave access and apple has not been required to and does not give access to the kernel So whether that was important for competitive markets or not, it it caused this uh Vulnerability.

Vic: Now CrowdStrike and Microsoft could have done a better job, obviously. But maybe it makes sense to not have vendors in the kernel. So this is your space. I mean, where, where should that be modified? Do

Marcus: you remember SolarWinds? I do remember SolarWinds. [00:20:00] Yeah. Same thing. Yeah. Bad software push. Um, listen, uh, This is the embedded centralization of, of software.

Marcus: And we, we talk about it a lot, how this, this can happen. And it’s exactly why it’s so, uh, Dangerous to go too far in this direction. Like this, this, if people want to understand the, the most likely threat of AI, this is it it’s, it’s not the AI, it’s the human error in conjunction with the AI, right? We’re talking about software pushes.

Marcus: So for people to understand, you know, You build software into releases. You always have to do new releases because either you’re enhancing features or you’re fixing bugs or you’re covering up security vulnerabilities. Yeah.

Vic: Microsoft changes something or [00:21:00] whatever. A hundred reasons you have to change it.

Marcus: You’re always doing new releases. Forever. Right? And so part of that process is you build and you test and you go through QA and you have to have some kind of environment that replicates the real world where you sort of, you know, You know, running through a harness of tests. The idea that, um, a bad piece of code that could, that could totally blue screen the operating system, makes it out into general availability such that it poisons this many companies, uh, really Like, unacceptable is, is, so many heads have to roll on this, um, and the reality is, it’s some mid level person who screwed it up.

Marcus: Yeah, who

Vic: didn’t test whatever, and they just said, I’m gonna go home and click complete on all these things and not actually test it, because a lot of times when I test it, I don’t find anything and I want to go have dinner with friends or whatever, whatever [00:22:00] they obviously they there was some human error that was made.

Vic: Yes, and there weren’t there weren’t enough checks and balances. What I think is scary is that this is where we are today. When humans pretty much wrote the code, maybe they have tools to help them, but we’re about to enter a world where. AI is writing the code, and then that same mid level person is supposed to read it over and make sure they understand it, but they don’t understand it.

Vic: And they’re not gonna read it. And they’re not gonna read it, and even if they do read it, the reason they’re not doing it and the AI is, is The AI will do it different, faster, more complex, and it’s going to be difficult for humans to, it’s a cheaper and also harder to do QA on.

Marcus: Yeah.

Vic: And then you put systems interacting with each other, like CrowdStrike and Microsoft, but every, [00:23:00] we have 30 systems that interact, and it’s, It’s going to happen more and more often.

Marcus: Yeah, now, let’s just talk about Delta for a second. This shut down the flights, and that is terrible, but this software didn’t get pushed to the planes themselves. There weren’t planes dropping out of the sky, right? I mean, I hate to harp on this. Tesla software gets pushed to the car, to the car, on the road.

Marcus: Yes. So like, like you just got to understand the amazing vulnerability that we have introduced by pushing live software into like our transportation ecosystem. Um, And helping healthcare is going to be to me, healthcare has been, well, okay, let’s just say this healthcare has had so many issues with software over the [00:24:00] course of the last year that like, to me, this is just yet another story in healthcare.

Marcus: Um, it’s not worse than the change healthcare story. It’s not worse than the Ascension story, right? It’s another one. It’s just, it’s just another one. But, but this is a much broader sort of vulnerability. Around the ubiquity of software in everything we do to the point where we don’t, we don’t even know it’s there, you know, the number of people that had their laptops go down and didn’t even know that CrowdStrike was a company, never mind that the software was on their laptop, but they didn’t even know, like the company existed like that.

Marcus: That should kind of tell you the level of abstraction we have from the reality of what’s happening. With, you know, embedded in our technology on a day to day basis. And like I said, laptops are not that big of a deal, but if it starts being pushed into DaVinci robots, starts being [00:25:00] pushed into cars, starts being, you know, the healthcare implications can be far worse than what we’ve seen today.

Vic: Yeah, and we didn’t have, luckily, there was no second order effects. But you could easily have a different problem that CrowdStrike causes a problem and something else. And that it’s, it’s much harder. The blue screen is terrible, but you know, look at that machine’s dead. And what I was thinking about in Alaska is like, it went really quickly, like within 24 hours before I got my next USA Today, terrible summary, the whole world was down, the whole

Marcus: world

Vic: was down.

Vic: And no one really knew why at that point. And I had, I had unfortunately no Wi Fi, but you could, you could get to the point where we’re, we’re dark and no one really fully understands why ever, because there’s, there’s two or three degrees of like knock on effects and [00:26:00] that everyone’s pointing fingers, but it’s not clear.

Vic: And that’s not even with a bad actor. No. Um,

Marcus: so yeah, so SolarWinds was a bad actor, right? Right. CrowdStrike is not a bad actor. Right. But it’s the same thing. The effect is the same. It’s the effect is the same. Yeah. So look again, we, we, we will continue, I think, to ring the alarm on this particular issue, which is the dependence on software and, you know, our failure to recognize that software is now a high reliability, um, um, um, um, um, High potential fatality related industry, you know, we have all this serious regular reason why planes don’t fall out the sky, right?

Marcus: Because of regulation. Um, doors might fall off, but please. Yeah, yeah, yeah. I mean, but even still, even with the doors and all the, oh my God, still no one died. No one died. No one died. Yeah, that is, you know, yeah. That’s a miracle, but it’s not a miracle by accident. It’s a miracle because of the seriousness of the [00:27:00] regulation that’s attached.

Marcus: We don’t have anything remotely close to that in the software industry. And I’m not saying a startup should have to suffer that kind of, you know, regulatory burden. But look, when you get to the level of a CrowdStrike, you probably should. Yeah. You probably should. And after this? You probably will.

Vic: Yeah, I agree.

Vic: And it’s also going to be pretty hard. Software’s moving all the time. So it’s going to be a challenge, but we have to figure it out.

Marcus: Moving into VC company called headway banked a hundred million dollars in a series D round to accelerate expansion into Medicare advantage and Medicaid. And this follows a series C round that they just closed.

Marcus: That was how much was sick? There’s a hundred million. Well, no seed was 125. Yeah. The C was 125. Yeah. So, um, I mean, I didn’t know that much about headway, but they’re a direct to consumer business, uh, partnering with, with health plans to help consumers be able to navigate and find, um, therapists that are inside of their network [00:28:00] and they now are working.

Marcus: To expand into Medicare Advantage into Medicaid, which is, which is great, but also kind of interesting, um, just given those two populations and, and sort of a technology interface to be able to find therapists, you know, I can’t help but think about my parents and how I have to do everything for them. But obviously, you know, that’s not everybody in Medicare Advantage, there are.

Marcus: Obviously, a lot of technically savvy people who are Medicare Advantage, um, members and, you know, may need, may need, may need therapy. So

Vic: behavioral health, it’s, uh, whether you’re in Medicare, Medicaid, or in commercial insurance, it’s hard to find it in network provider. That’s right. And so I would, I think this is a sort of a specialty network carve out for a plan.

Vic: And then it’s like a network. Uh, business model. They’re, they’re getting providers to opt in on the other side. They’re getting plans and they’ve raised a [00:29:00] ton of money. Um, they have one competitor that’s public, uh, called life stance, but it’s, it’s a huge opportunity because people don’t want to pay out of pocket and insurance should cover mental health.

Marcus: Uh, spark capital led the round thrive capital, a cell, a 16 Z and four runner venture. So kind of the, the a list, um, circled around this deal. And I

Vic: think there have been. Primarily in commercial and they’re they’re like using this money to move into Medicare Medicaid. Yep.

Marcus: Exactly. Just smart. Yeah, it is smart biteable secure a 16 million to provide primary care to small employers, um, led by cherry rock capital, but also city impact fund actually just spoke to them today.

Marcus: Uh, first round capital commerce ventures and Y Combinator. Um, the company has raised more than 25 million and they basically are focused on direct primary care for blue collar workers. So I think that that’s, that’s the interesting differentiation here. Um, you normally hear about direct primary care for like white collar workers.

Marcus: So targeting blue collar workers is a, is it certainly a [00:30:00] differentiated model focused on, uh, in home virtual primary care and then, uh, prescriptions and lab tests.

Vic: Yeah. And it, it’s, uh, it’s needed. And I, I hope they figure it out. It’s also a really hard place to make money. And so I’m a cheerleader for them, but so far I haven’t seen a model where they actually can repeatedly make money.

Vic: So bringing this service to it’s small to medium size blue collar workforces. So you have 200. people manufacturing windows or something. That’s a hard market, but, but it’s, it’s great that they’re working on it.

Marcus: Yeah. I, I think if you tech enable it though, and you make a lot of it sort of, um, an overlay to existing providers, um, there’s probably a path here to, to make, you know, I, I think if you, if you compare it to what these workers [00:31:00] currently have in terms of, you know, access to health care and what is currently packaged there’s probably so much upside just by creating a great technology interface for the phone, right?

Marcus: So I would imagine a lot of what they’re doing is really focused on their app and how strong their app is and then just tying together other services and making those connections and, um, you know, getting the, getting the plans to be better used. So, you know, look, I’m, I’m, I’m excited about the, you know, The, the prospects of it.

Marcus: It’s a, it’s got a good set of VCs around the table. So, you know,

Vic: and I hope mean go down a little bit. I think it’s like 30 a month per employee. Yeah, that’s awesome. Yeah. Which is great. If they can make it work, that’s awesome.

Marcus: All right. So moving on Google’s aborted deal show antitrust long shadow over tech.

Marcus: So this was a big story, but it very much got overshadowed by all the crowd strikes stuff and the presidential stuff, but Google tried to, um, acquire whiz. Um, They, they first were talking about HubSpot, the HubSpot deal didn’t, didn’t go through. [00:32:00] Then they were talking about acquiring Wiz, which, which is a, um, uh, cybersecurity company.

Marcus: And they made a Twitter. A competitor to

Vic: CrowdStrike, I think. Yeah. Or at least,

Marcus: uh,

Vic: adjacent. Well, smaller than CrowdStrike. Yeah, yeah, yeah. Much smaller.

Marcus: Um, offered 23 billion and Wiz walked away. Yeah. Uh, which is, has like all sorts of VCs just like, what? Right. You know, freaking out about the idea that you walked away from a 23 billion offer.

Vic: They raised money at 12 billion. Post money value less than a year ago.

Marcus: So, um, what are the key reasons, uh, for why this deal went down? Um, or, or, you know, didn’t happen, didn’t happen. Uh, the, the first is apparently Wiz feels that they are maybe now because of the CrowdStrike situation worth more. Um, then, then even the 23 billion offer and Google’s not prepared to make that kind of offer, uh, based on, you know, this new cycle.

Marcus: Uh, and then the second thing being just the overall cloud that, that hangs over these, these large tech companies making [00:33:00] acquisitions at this scale.

Vic: Yeah. It’s, I think, uh, I mean, the whiz founders, this is their second company. So they already had a two or 300 million exit. Uh, so they personally have made some money and now I think they’re really trying to make more of an impact and at the same time, there’s a lot of news around opinions, rumors that they were concerned that they’d be tied up in regulatory approval, not able to really invest and grow and yet not closing the acquisition for a long period of time and they walked away from it.

Vic: So I don’t know how much of that is rumor and true, but those are the two things that the CrowdStrike thing made them much more valuable because they didn’t have a problem and they want to build a, build a legacy. Bad week for Google. Yes. Uh, [00:34:00]

Marcus: okay. Let’s talk about the, uh, the help committee.

Vic: Yeah. So the Senate committee on health education, labor, and pensions met today at 10 AM.

Vic: We’ll link to the part of the video where Bernie Sanders rails for 10 minutes. Cause it’s entertaining. Yeah. Yeah. Um, but they are subpoenaing the CEO of. Uh, steward, steward health for all of the, um, activities that he’s been involved in over the past eight to 10 years,

Marcus: everything that led up to, to the bankruptcy bankruptcy,

Vic: and they showed his two boat, his two personal boats, Bernie did so, you know, Bernie’s entertaining to watch, um, he has pictures of his two personal boats.

Vic: Um, I forget what it was. Well, not small boats. I know one cost 40 million. One cost 15 million. Oh man. Big boats. Oh man. And the company had two planes. Oh man. And they were acquiring, he was personally [00:35:00] acquiring these and the company’s acquiring planes as they were laying off people and shutting down hospitals.

Vic: Oh man. And so Bernie Sanders does not like that. And I don’t like that. He has requested, he chairs the committee. And he’s requested that, um, the CEO come testify three or four times and he’s refused. And so they met today to vote on issuing a subpoena which they have power to do and they passed it. Wow Um senator sanders pulls in private equity as a group As another bad actor, but they don’t subpoena Anyone from Cerberus or private equity folks.

Vic: Okay. And then the, the ranking Republican is a doctor. I forget his name. He was very supportive of attacking Stewart, right. But made it clear that his position was that private equity does a lot of good and we shouldn’t paint them with this [00:36:00] brush when management had the responsibility to run this business and where they got financing from.

Vic: It was the Republican view is, is immaterial. How that plays out in the regulatory markets probably will depend on the election, really. Um, non profit hospitals going to switch to for profit are going to be watched really carefully. And there’s really a no win situation, I don’t think. I mean, if you, if you continue to do well, no one, no one gives you a thank you.

Vic: Right, right. But then if you go bankrupt, which really is, is what makes America great. Like the fact that our companies and any company can try for something important, and if they fail, it doesn’t follow them around their whole life. Right. That’s what makes our economy work, but it, but it’s, it’s not good.

Vic: It’s not a good video for Stuart. And then he’s going to have to [00:37:00] go and testify.

Marcus: And then Stuart health also failed to secure bids on Ohio and Pennsylvania facilities. So, I mean, are they basically, I mean, Optum already backed away for them. Are they basically just like persona non grata? No one wants to touch them with a 10 foot pole because like, why would you like, I mean, you might want to help those communities, but Stuart is just.

Marcus: A pariah at this point, right?

Vic: Yeah, I mean, they’re in bankruptcy. The problem, I think, is that they have, um, over the last several years, they’ve sold their real estate assets and done leases with MPW. And they’re, they just, it’s not a lot of assets that are actually there that another health system would really want.

Vic: And so, I don’t know, it’s a challenge because they have these hospitals in Ohio, Pennsylvania that no one bid on. I

Marcus: mean, not, not even, not even General Catalyst?

Vic: No, they,

Marcus: they

Vic: already have their one, they, um, so I don’t know, [00:38:00] it’s, uh, the Senators are going to rant about how bad it is, but that’s not going to help people in Ohio and Pennsylvania.

Marcus: No,

Vic: no, it’s not.

Marcus: All right. CDC report on resistant hospital infections outlines the need for federal investment, epidemiology society says. So this is kind of a scary, I mean, we already know hospitals generally speaking can, can be dangerous environments, uh, you know, sepsis, things of that nature. Um, but this report, uh, I think maybe paints an even bleaker picture than, than maybe what we typically think of.

Vic: Yeah, the, I know of C. Diff and Mercer, there were a whole bunch here they tracked, they’re all getting, worse. Um, more, more

Marcus: antibiotic resistant

Vic: and more common occurrences. Okay. Um, good end of the chart. And I think the issue is that new, uh, antibiotics are [00:39:00] not profitable to try to uncover and get through the FDA process.

Vic: We’ve talked about this before. Yeah. It’s not, It’s not a profitable endeavor to try to address this. And so kind of not surprisingly, we don’t have any in the pipeline. So it means the government is going to have to take it on. The government is going to have to take it on the reason that this came out now is the CDC’s budget was cut by 20 percent for next year out of this program.

Vic: And so that is making people at CDC. They’re upset and also they’re they’re now promoting this that we they think it’s needed and Whether whether I don’t think the cdc and the rest of the government uses their money that wisely But but someone has to work on these urgent and serious Um bugs that we have no way to treat.

Vic: [00:40:00] Wow. Um, so I mean, I I don’t have a good answer It’s a pretty sobering Um story, all of the bad thing. It’s it’s based on the number of infections. So those are real people that that either died over in the hospital for a long, long time.

Marcus: And I mean, the change in rate, uh, it’s, uh, it’s, it’s keying from 2022 versus 2019.

Marcus: There’s seven different microbes that they’re, they’re tracking here. Six of the seven have an increase.

Vic: I think this is right. We either don’t have a treatment at all, or the treatment is very expensive and very poorly. Not very effective

Marcus: stay out of the hospital folks. Yeah, sorry. I mean listen we’re gonna talk later about how the demand for hospitals are clearly going up, but uh, Not not necessarily safe spaces to to be in for long periods of time united health had a very robust Uh earnings [00:41:00] report and obviously we everyone had already priced in the change healthcare thing They were pretty transparent about how much it was going to cost Um, I don’t think this is the first time we heard the 2 billion.

Marcus: I think they increased it You Oh, they increased it. Yeah,

Vic: they beat earnings, but M. O. R. was up and part of what they sort of put into this earnings release is that the they underestimated how much the change attack was going to cost them. So I think that. UHC will be fine, but they need to navigate that process.

Marcus: I wonder, I wonder where that, that, um, that cost was, um, was, was miscalculated. You know, one of the things that, that I heard from, uh, from a company today was that they were able to sort of continue their, their business. And it wasn’t just like claims. It was other things, you know, because change as a platform does so many different things.

Marcus: Um, [00:42:00] And there was one specific thing that, that, that change hadn’t gotten back online yet. And so they, they basically just moved their business over to Waystar, um, in order to advance that particular thing. So I’m wondering if some of the losses, like are all the losses related to the amount of work or payouts they had to do, or is any of it lost customer base to Waystar or other, you know, competitors.

Marcus: I, I, I haven’t looked into the, the, the report well enough to really understand that, but.

Vic: I mean, the, the CEO. Blame the MLR being 85. 1 versus 83. 2, which is what it was last quarter.

Marcus: Well, some of that was because they had to just take down all the utilization. Yeah. Difference in coding intensity. Yeah.

Marcus: Right. Yeah. So they

Vic: weren’t able to run their business on their business. Yeah. Okay. So that’s, that’s going to turn around

Marcus: in the back half of the year.

Vic: And then. He said later, this is the early expectations of what it would cost to recover, which I think is the time, effort, management time, [00:43:00] all, all the effort around putting that back together and, you know, redoing the platform.

Vic: So it’s maybe not subject to at least the same process again. They were overly optimistic about how much it would cost.

Marcus: Uh, still, good report for them. Yeah, they’re a machine. Molina shares rise 11%. Molina, I think, is the company to watch.

Vic: Medicaid is, I mean, they’re mostly Medicaid. They have lots of, they probably have Medicare as well.

Vic: Yeah, but they’re mostly Medicaid. Medicaid is, is A lot of money going into Medicaid. A lot of money going into Medicaid. That’s right. That’s actually, you and Emily were talking about that

Marcus: last week. Yeah. Yeah. A lot of money is going into Medicaid. So, so yeah. Melina, um, I mean, yes. Uh, so shares rising 11 percent after the, the Q2 results, um, now trading at 319.

Marcus: That’s pretty strong.

Vic: That’s pretty strong. Yeah. Centene’s the other one. They’re not out yet. But they’ll, they’ll come out probably next week. Yep. I expect they’ll be similarly strong.

Marcus: [00:44:00] Yep. And, uh, Humana is picking up where Walmart left off. So I think we all know that Walmart has completely shut down their clinic business.

Marcus: Like they’re done. They’re out of that business entirely. And, uh, they’re partnering with Humana. So they’re going to reopen the clinics, but they’ll now be Humana’s, uh, central well brand of clinics and they’re opening it in the 23 of their stores.

Vic: Yeah. I think they’re literally going into the same like building.

Marcus: Sure. They’re already outfitted. It just, just swap the logo in the staff. Right. Yeah. I

Vic: think it makes a lot of sense that the, um, like the user base or the subscriber base and the customer base been on well, one and a man overlaps a lot. And the companies already have a lot of connections. They’re, they’re partnering on other things together.

Vic: So I think it’s a, it’s a good thing for both.

Marcus: Yeah. Sentinel, well, obviously because the Humana is senior focused, so it’s not, I mean, I think they can provide primary care for anybody, but it is senior focus is optimized for that. So I’m sure that that decision was tracked. You know, closely [00:45:00] based on walking traffic and who Walmart was already kind of getting, walking through their doors.

Marcus: Uh, okay. What is next? A lot of stuff, man. Oh, Arden. Uh, yeah. So moving in health systems. Okay. So I just got to say, it was pretty cool looking at the video of Marty ringing the bell. Congratulations, Marty. Congratulations to the Arden Health team. It’s cool to see people that, you know, actually take a company public.

Marcus: My buddy Edmondo Robinson from the Aspen program, he’s on the board. So he was like back at, you know, he was back there, he was there on stage. So it was, it was super cool to like see all the people we know take company public. So congratulations to all of them. Yeah. I’m happy for them. Good. Uh, but, but like, uh, how did the IPO go?

Marcus: It went fine. It was flat. Pretty much flat. So it priced perfectly then.

Vic: Yes. Yes. It was priced well to raise money. It didn’t get that one first day pop. Yeah. No pop. I don’t think that the Ardent guys care that much. I don’t

Marcus: think they care either. They got, they got it out. They’re good to go. It didn’t go down.

Vic: Yes. It didn’t go down. It was successful. They sold [00:46:00] it all. Um, there weren’t a lot of insider sales. So, um, EGI and all the management team, they, they all held. It’s a good sign.

Marcus: It’s a good sign for the buyers. Select Medical is spinning out Concentra, which is a primary care unit, into its own 529 million U.

Marcus: S. IPO.

Vic: Yeah, which is, again, another positive sign that the market is Accepting, uh, a new IPO in health care, which is, I mean,

Marcus: a lot of services stuff going IPO, which, which I think is, is really good. That’s, that’s really good. Ascension sells nine Illinois hospitals to prime health care. Prime is the fifth largest for profit health system in America, founded and based in Canada, though.

Marcus: Yes. Um, and this, this kind of ties into what you were just saying about nonprofits selling to for profits, doesn’t it? Yeah.

Vic: Yes. Um, I didn’t know much about Prime. I’m still trying to learn about them. They have a dual thing where I think their [00:47:00] Canadian operations are still in a In a nonprofit

Marcus: foundation and the

Vic: U S ones are in a for profit.

Vic: Yep. Um, but yeah, it’s, it’s, it is a dangerous acquisition, but I think a good acquisition, they’re, they’re already in Illinois and so they’re adding to their footprint and hopefully they’ll run it really well and it’ll be successful. They do have that. I mean, that would be a fear for me that if they do something like shut a hospital down, people will complain they might have to shut one hospital down or one clinic down or something.

Vic: So I don’t know. I’m happy to see it get done. Hopefully it won’t have any regulatory problems and we’ll get

Marcus: cleared. And it also seems like this is, you know, yet another chapter in the road of Ascension getting back to, um, A healthy PNL, you know, they’ve been making progress, um, but they’re also doing partnerships and they’re selling certain [00:48:00] assets and it seems like they’re still working out of, you know, where they were sort of three years ago, those, those multi billion dollar losses that they suffered.

Marcus: So, yeah,

Vic: I mean, you and Emily were talking about last week, I think. The way that, um, healthcare is going to go if Trump wins, which, you know, is certainly not set in stone, but, um, Ascension is going to have to behave more like a sort of fully integrated for profit health system that has the diagnostic centers, has a bunch of docs out in the community, has Ambulatory surgery centers.

Vic: Um, You’re going to have to be tight with it. They have to get there.

Marcus: And you got to be tighter with your footprint then, right? I mean, you know,

Vic: Have more control over your footprint. So you, you sort of keep them in your network more. Yep. Uh, HCA crushed it. Yes. Yes. I mean, HCA is the model. And they’re, they’re phenomenal.

Vic: They’re really, really good. And, I mean, I can remember when the stock was 100. During COVID, it was [00:49:00] 100. That wasn’t that long ago. That was not that long ago. And it’s like 300 something now. So you don’t normally see a company this size have a three X like that. And I think they’re still chugging along and they have a lot of patients coming in, a lot of healthcare demand and the way their model works is a lot of operating leverage, a lot of fixed costs.

Vic: So as you put more people through it, they’re going to be really

Marcus: good. Yep. And, uh, UHS also had a really strong,

Vic: did well there. Behavioral side didn’t perform like I was expecting it to perform, but, but they have, um, a whole bunch of hospitals that are not behavioral health too, which, which sort of helped them.

Vic: Uh, and then finally, Tenet. Tenet was really the star. Yeah. Uh, with their USPI acquisition that they have, they acquired it. HCA has built it kind of organically. Their ambulatory surgery centers. Tenet. Acquired at all. Um, and then they’ve built on top of that. So they probably [00:50:00] have a bigger percentage of the revenue that’s already outside the hospital.

Vic: And so that. Really helped them. I think they beat by more but all three did very well.

Marcus: Yeah, so so basically demand for health care services Surprisingly increasing post pandemic in a way that I think people haven’t really figured out what the narrative around that is

Vic: I mean the people running these platforms that have done it for decades Decades.

Vic: Don’t have great. Don’t know how to answer the analyst, like, where’s it coming from? But it’s, it’s an interesting time. I mean, we just went through maybe five or six earnings, payers and providers are all doing well. And I think it’s related to the, the demand is significant and there’s lots of theories about why.

Vic: I don’t know that I understand it, but there’s a lot of people needing healthcare services. Yep. And yet the, the payment structures around. [00:51:00] Medicare Advantage with, with the stars getting reversed and Medicaid, it’s, it’s profitable around. So it’s a good time to be in healthcare anywhere. It used to be that before COVID, you sort of had a correlation where if the providers, if HCA did well, United probably wasn’t doing that well.

Vic: And I think that’s flipped now. So they’re all doing well.

Marcus: Well, I think that both the for profit hospitals And the payers have evolved and sharpened their business models in a way where both can be successful. Right. Um, and I think to the point in the conversation we had last week with Emily, the nonprofits generally have not, right.

Marcus: They, they are less sharp, let’s say in, in their, in their business models. And so, Um, they’ve got, they’ve got work to do to figure out how they are going to consistently perform at the PNL and also sort of serve their mandates and their missions. [00:52:00]

Vic: Yeah, that’s right. And there’s sort of two types of nonprofits, academic medical centers.

Vic: You were talking about that last week, 340 B and also they got a lot of grant funding. They get a lot of grant research that’s getting cut. That’s right. Um, and then you have the non academic metal, more, um, Common Spirit, Ascension, uh, those are two good names, but there’s a whole bunch of, uh, nonprofits that are not, they’re subscale.

Vic: They have six facilities. You gotta have scale. And they’re just not big enough, and they’re not well run enough, really, to do it.

Marcus: Yep. Yeah. I mean, the, the, the only way you can make it work is you gotta have significant scale. Right. Yeah. Um, all right. So shifting to stories about us. Um, Simone Biles. Uh, I was happy to see you pull this, uh, this opinion essay from the New York times, because I was watching a Netflix rom com with my wife last night.

Marcus: And after we watched it, the Simone Biles, uh, documentary,

Vic: I want to watch that, but I haven’t seen it yet.

Marcus: We, we put it in Q and it was very much about what this [00:53:00] essay is about, which is, um, how she, you know, How she has overcome, um, you know, her, her, her mental health challenges and just, you know, not just the fact that she’s returned, but actually how much courage it took for her to, to not put herself through, um, something that she was not prepared to do and how much courage it took to step down from that.

Marcus: You know, one of the things they talked about is just You know, we, we chair these, these exceptional athletes, um, but the minute they do something we don’t like, uh, you know, we, we put them through the ringer and, um, there, there was quite a bit in the trailer of the documentary about, you know, sort of what she went through with the public backlash, which I remember it was not nice.

Marcus: Yeah. It was not pretty at all. So for her to get through all of that and come back now and, you know, be significantly favored after her, um, American trials, uh, to, To win multiple gold medals again [00:54:00] is a fantastic story.

Vic: Yeah. I mean, I think it’s really important for, I was going to say kids, but even adults, everyone to talk about behavioral health, talk about the stress related to competing at that level, talk about the anxiety, the need for perfection.

Vic: And the people that are at that level, it’s a lot of risk. It’s a lot of risk for her and for her to go through it. And then I haven’t. Watch the documentary, but my son didn’t he said that she’s changed the way that she’s designed her Programs so that she doesn’t get kind of bored and not not into it herself yeah, she’s doing harder things that she will make a mistake on and She gives up those like knocks for a second step or whatever Because she wants to like push herself and then it’s okay if she doesn’t And that new style of not having to be [00:55:00] perfect and yet still scoring well enough to be in the Olympics.

Vic: So you know, top 10 gymnasts in the world is, is incredible.

Marcus: Yeah, it’s, it’s, uh, it’s, it’s obviously Olympic season. And so it’s a great story to kind of cover and remember, um, you know, how much Opening

Vic: ceremonies are tomorrow. Actually, when this goes live, it’ll be right when we yeah, yeah,

Marcus: exactly. Um, You know, I, I gotta say that I’m, I’m in the tail end of my, my camp for worlds right now.

Marcus: It’s, it’s, uh, it’s the best camp I’ve, I’ve ever run. And, um, you know, I’m, I, I, like, I feel like I’m a little. Uh, I don’t want to say that I’m peaking early, but, uh, when I look at there being another 30 days, I’m like, crap, I got another 30 days of camp because right, like I’ve prepared so well up until this point, and there are some physiological things that, um, that come with [00:56:00] training at the level that, that, that, that competitive athletes train at, you know, uh, and they’re, they’re not things you can easily explain to people, um, when you don’t have all the

Vic: press, but you have a full time job, So, I think all the cameras and press and people asking, you know, what she ate for breakfast because you slipped and maybe you didn’t eat Wheaties, you ate Cheerios, all of that stuff in the public light is hard.

Vic: Very hard. But then you have a full time job and fighting against people in Vegas that don’t.

Marcus: Yeah, and, and, and, I don’t know, I mean, I, I think I’m, I’m just, uh, You know, there, there’s, because of the issues we have in this country with obesity and some of these other things, you know, that there’s so much, you know, the, the Huberman’s and the Peter Atiyah’s and the, Hey, you know, eat this way, even all the way to the don’t die.

Marcus: Brian Johnson, right. You know, there, there’s so much around your cold plunges and your sleep and your, [00:57:00] you know, your, your diet and your hydration and your electrolytes and your zone to work and all this other kind of stuff. And I, I can tell you like. Okay, if you do all that stuff, um, consistently, you, you, you will get burnt out, like, like literally like, like, like your hormones, your adrenal system and like, and that’s with great nights of sleep, you know, so like, we don’t have a formula for how to do life perfectly as humans, we like, we don’t have one, um, and that’s, that’s why I think the Um, The behavioral health piece has to become much more of a mainstream part of health care, because even as you know, I’m probably body comp was in the best place I’ve been in 10 years, you know, um, it hasn’t been without its mental wear and tear, you know, really?

Marcus: And, and that that And that fact [00:58:00] in and of itself has been a very disorienting fact for me. You know what I mean? They’re like, Oh, like I’m dropping all this body fat. I’m turning it into lean mass. And actually that, that, that recomposition is creating physiological stress.

Vic: Yeah. You

Marcus: know what I mean? Which is leading to mental stress.

Marcus: Um, so. We, we, we have to center behavioral health. We really do. There’s no, there’s no out, you know, there’s no like, oh, all you need to do is just lose weight. That’s not good. That does not fix it all. You know what I mean?

Vic: Yeah. I mean, I, I spend a week in Alaska with no Wi Fi. So I had a lot of time to think about stuff.

Vic: I’m reading this book, why we sleep all about sleep. Yeah. Yeah. I just made an investment in a sleep. And, uh, so I asked the CEO what I should do to, like, get up to speed and he gave me all this stuff to read, which is great. But, you know, um, and I’ve, I’ve been thinking that [00:59:00] I think, uh, nutrition, behavioral health, really like emotional and behavioral health tied together.

Vic: Um, and sleep are sort of comorbid with every disease. And the friendlier way to say it is they are the pillars to, like, allowing you to be healthy and live a complete life. And if you lose pieces of those, and I haven’t slept except for this vacation, I haven’t slept eight hours that many nights in a row for a long time.

Vic: And I don’t think a lot of people sleep enough. We don’t eat very well. We’re grabbing fast food and advertisers convince us that this big gulp of something that’s a basically sugar water is okay to drink. And then we have ignored behavioral health. So the three components sort of contributing to our underlying health.

Vic: forget my cardiac [01:00:00] disease or someone’s, you know, particular situation, sleep, nutrition, and behavioral health are components of all of it, I

Marcus: think. Yeah. Yeah. I mean, I, I think that’s absolutely true. And I think that people still think that behavioral health is somehow behind physical health. And I guess the point I’m trying to is that at the point when Simone Biles realized she was not Mentally in a place where she could compete.

Marcus: Yeah, she can’t compete. Yeah, but do you think physically she was not in the top 1%? Of people physically in the country at that at that at that point was yeah, she’s the top one percent gymnast Yeah, but but if she doesn’t have

Vic: her mental health She’s gonna get hurt because she’s trying to do things that you have to be In the right head space [01:01:00] to do the same with jiu jitsu.

Vic: That’s right. You can’t no you can’t you won’t win You won’t do well, you might get hurt if you’re not like In the right headspace. Yes,

Marcus: yes. And, and that can happen even if you’re doing all the other stuff right. Like, like, um, it can come at any time. You don’t really even know why it’s coming. You know, you’re trying to get to the bottom of it, but like, that doesn’t happen quickly.

Marcus: And, and sometimes it, it doesn’t even really make sense why it’s, why it’s happening, you know?

Vic: Yes. You’re, the way you interpret, the way any human, not you, any human interprets an interaction with another person. Or something on TV or whatever, it could be that you don’t recognize it, but the person looks kind of like your grandmother or, or whatever, like, it’s not conscious, it’s, it’s subconscious, meaning you don’t know why you’re feeling that way, but I think it really [01:02:00] affects, it affects your physiology, it affects your physical state.

Marcus: So, um,

Vic: yeah, good to see that she’s back in the Olympics

Marcus: and that was a good article. I can’t wait to watch her. Uh, all right. Our AI rundown. Uh, I think the AI story of the week, hands down meta. Um, Mark Zuckerberg comes out, says that the new version of Llama Llama 3. 1 is basically a GPT 4 class LLM. It is open source.

Marcus: It is partnered with all sorts of different companies and video being probably the most prominent one, and we can download it. Right now and, and play with aspects of it, you know, sort of at the, even at the training level, training data level. Um, so this is a really big deal. Uh, Meta has a dataset that no other company has, and I’m sure a lot of what they’re training it on is going to be proprietary because it’s, it’s based on, uh, all the data they collect from all the interactions of their billions of members across their, uh, their four big apps that they [01:03:00] have.

Marcus: Um, but at the same time, uh, It’s they’re giving it away. They’re giving it away. They’re giving it away. And, and that, you know, open source, uh, is, is very, very powerful. We just talked about CrowdStrike and we talked about all the things that took down, but we noticed it didn’t take down a bunch of websites.

Marcus: And the reason for that is because websites are not powered by Microsoft, right? Websites are powered by Apache and Linux and Nginx and a whole bunch of open source software and to the degree that many, many companies out there don’t have to pay license fees to open AI and they can leverage and open Meta, you know, LLM platform to build their software and build their businesses on.

Marcus: This is massively disruptive to these other LLM companies. And also, final point, the distribution that Meta has is unparalleled. Um, as much as I dislike that, it is unparalleled, right? Um, and I think when Zuckerberg says more people are going to use meta [01:04:00] AI than open AI, I think that’s, that’s right because more people are opening up Instagram or Facebook or WhatsApp or Messenger on a day to day basis than people are opening up ChatGPT.

Marcus: They just are. You open those apps every day, multiple times a day. So, uh, I think he’s right. And they’re just gonna, you know, their meta is very good at making little nudges in their UX that drive you to at least experiment with new features. There might be no one better than them at doing that in mobile apps.

Marcus: And I think he’s right. They’re going to get Meta AI to the point where it’s the number one used GPT platform out there. It’s incredible.

Vic: I, I think I agree. What I took away is that, I mean, you said earlier, Meta is the best company in monetizing AI today because they have a monetization platform [01:05:00] that monetizes attention and AI is already good on their platforms, engaging with humans to get their attention and then end up.

Vic: Learning what they want to buy. And then it makes me an offer that is something I actually want. And while that makes me a little bit nervous, it, it will benefit meta shareholders because they, they sell more ads. They also have released this open source model, which is going to be great for us, for our portfolio, for the world.

Vic: I agree. Open source is going to be much more resilient. People, all kinds of people will play with it, try to break it. Um, and that will lead to a more robust system overall, Zuckerberg is not, I mean, he gives money to charity, but inside meta, he’s doing it for his own company’s shareholder value. [01:06:00] And I think the reason is he’s trying to drive the LLMs, Gemini, ChatGPT, Grok, Minstrel, Anthropic, to be commodities that are all interchangeable and very cheap.

Vic: Because that’s what Meta wants, and he’s doing that by giving it away free to everyone. Which is terrible if you’re a shareholder of OpenAI. But great, if you’re not, and if you’re funding, like me, funding companies, little companies that want to use AI to build on top of something, it’s great.

Marcus: Look, um, Meta has a history with AI in the developer world.

Marcus: Um, for a very long time, they’ve been building things and then open sourcing them. And then those things have become much more robust. And, uh, and that accrues to Facebook’s benefit.

Vic: Yeah. Not even just an AI in all kinds of systems. Well,

Marcus: I’m talking about way [01:07:00] before. Yeah. Yeah.

Vic: Yeah.

Marcus: Yeah. Okay. They were, they were doing this kind of stuff.

Marcus: Right. Um, you know, react is a JavaScript, uh, framework that. Facebook built and it’s, you know, I didn’t

Vic: even know they had, they had created that and donated it.

Marcus: Yeah. Yeah. So that, that, that, that’s what I’m saying. Like, like Facebook has been doing open source in the developer world for a very, very, very long time.

Marcus: Um, bringing it into the AI world is them. I think continuing that legacy, which is a legitimate legacy. Yeah. Right. Um, but also massively disrupting, uh, The closed source players and I don’t view, I have to say, I don’t view this as being massively disruptive to either Google or Microsoft because I think those platforms are just going to take this and load it up on Azure and AWS and say, you know, and, and, uh, what’s the third one, uh, Google cloud and say, Hey, this is going to empower our developers and whatever, we’re all going to do it.

Marcus: It’s fine. I don’t think they care that much. But the open [01:08:00] AI’s and the anthropics, these, these one trick pony companies, all you are is an LLM. I don’t see how that works. That’s going to be hard. That’s going to be hard because the other players can all, they can all meet parody with meta. Like if, if, if they see open sourcing llama as like a key thing, you know, Google can open source.

Marcus: They also have a legacy with open source technology, right? They can open source the, um, Transformers. Yeah. Yeah. They, they, they can open source. You know what the underlying code for Gemini as well and that that’s

Vic: what all those companies that you named Google, Microsoft, Amazon, Meta, probably forgot one, they all have a different way to monetize.

Vic: It’s not related to selling tokens. That’s right. And sure, Google and Microsoft will sell me tokens. But if that gets commoditized, they’re not going to lose their business. That’s right. And if you don’t have some other way, you’re selling subscriptions to your LOM that [01:09:00] that’s, that’s hard. I think.

Marcus: A health tech company, Commur, also better known as General Catalyst, is going to acquire Augmedix in 139 million deal as the AI scribe competition heats up.

Marcus: So Augmedix was The hot name in the AI scribe space, I think principally because I, if I understand it correctly, that is the brand that HCA was partnering with.

Vic: HCA had several partnerships, I think, but Augmetics was the first one. Right. And then Augmetics

Marcus: had signed a bunch of deals over the, like, we’ve been announcing these deals on the AI roundup for weeks now.

Vic: Yeah. They’re maybe not the leader. They’re a leader in the scribing

Marcus: world.

Vic: Which is the, which is the first adoption place.

Marcus: Yeah. So, so then general catalyst, first of all, they’re publicly traded. Yeah. Second of all, they’re worth 139 million. That’s the head scratcher to me.

Vic: They have been in the story. I didn’t know this before today in the story, they have 45 million in revenue and they’re trading at [01:10:00] less than four X, three X times revenue.

Vic: And I AI. I’m not going to get it right. They have a billion in revenue. And trading at like a hundred billion. Right. And I, as the story we just discussed, I think Augmentix has a more sustainable business model and a much bigger moat. And so.

Marcus: And yet the, and yet they’re exiting at a price that like we would.

Marcus: Yeah, right. One, one, you know, the one thirties, one fifties, I mean.

Vic: So how did they get public? Four weeks ago, we talked about going public. You need to be a billion, 750 million for an underwriter to take you out. Um, I didn’t have, with me being away, I didn’t have time to research it, but it’s a great technology and a pretty good company.

Vic: They’re closing deals. But they’re not bright. They’re burning money. They’re not price. The debt markets are pretty much dead. Yeah. And I think your stock market [01:11:00] is not like companies without a balance sheet. Right. So they, they come here, made an offer for like 169 times, 169 percent of the, um, the last 30 days volume weighted price, which is sort of a pretty common way to look at it.

Vic: Um, and that was smart. I mean, I think. It seems like there’s lots of other AI companies that Spend that in a week or a day, right? And they might have wanted to look into this, but, but they didn’t.

Marcus: So, so Commier is really sort of the lead brand that General Catalyst is, is using to build out. That’s their

Vic: healthcare focused.

Vic: Technology platform. Yeah,

Marcus: it’s, you know, they’ve got health assurance, which is the services business that’s going to buy a hospital. And then they’ve got Commure where they’ve been aggregating like Olive and, and, yeah, they put medics and right.

Vic: I mean, they put a couple [01:12:00] of their, I’m not going to say the some of their ones that weren’t growing as quickly as they wanted.

Vic: Yeah, like, like Olive and something else begins with an A into it really is a way to right size the management teams, get it cleaned up, rebrand it. Yeah. Um, so I don’t know, good to see an acquisition, but a funny, uh, price.

Marcus: All right. And then quickly, we’re going to go through this last couple of stories.

Marcus: So Qventus AI’s discharge planning, a space I’m very passionate about, um, saved Ohio health 1. 7 million in a matter of months. That’s a good story.

Vic: Yeah. I mean, it’s a small test, but really good results very quickly. So good return. And good just to sort of be able to highlight. So we’ll link to the show notes and people can learn more about it.

Marcus: All right. Humana inks, a multi year partnership with Google to invest deeper in cloud gen AI technologies. So Google continuing to grow their space. Kind of quietly.

Vic: Lining up with lots of health systems [01:13:00] and payers now, yeah, in a way that’s pretty interesting.

Marcus: Yeah And then the final one is that Microsoft is collaborating with Mass General Brigham and the University of Wisconsin Madison on AI and medical imaging So a little bit of a throwback to our conversation with Rick Abramson.

Vic: Yeah I mean, I think it’s great to see these partnerships with the tech leaders and healthcare Platforms and not just any healthcare, but really some of the best ones. Yeah Because I think that’s the way that we’re going to get good, good end products. And I think you’re right. Rick, Rick Abramson, we did a guest show with him.

Vic: If you haven’t heard that, you should check it out. But, but he, he trained at Harvard. I think he res, he was a resident at mass general and this is his, his space.

Marcus: All right. Awesome. Rundown. And, uh, can’t believe we got through it all in an hour and 15 minutes. Uh, thanks for coming back. I appreciate your help on putting the show together and see you

next [01:14:00] week.