US Military Adapting Iranian Drone Technology

How was your weekend, Jordy? Good. I saw Project Filmery. Oh you did? Yeah I did. I finally saw it. Did you see it? I did not see it. You haven't seen it? Ben, you saw it, right? Yeah. What was your review? It was great. I was telling you. I think it was uh it was fresh. It was fun. People put it on a few didn't like it. He didn't stellar for Juds, right? Isn't that what he said? He said something. You liked it, right? I thought it was great. It was very enjoyable watch. I don't know. Should I see it? Yes, I think you should see it. In theater. In theater, for sure. Okay. It's definitely a good movie. It's not too long, it's like two and a half hours. But it's uh it's an Andy Weir. It's uh have you seen The Martian? Brutal. It's basically just like endless stream of problems and then like quick solutions. So there's some sort of problem they need to figure it out, problem they need to figure it out. All of it's I don't know, like loosely like hard sci-fi, like somewhat believable. It does have aliens in it and stuff, but it's a fun time. Anyway, well speaking of real space, what's going on? Yes, with Artemis 2. Artemis 2 is uh is live streaming right now to almost a million people on YouTube on the NASA YouTube channel. I believe it's also on Netflix. The stream title is just We Are About to Fly Around the Moon with Authority from NASA. We can actually pull this up and see. I would love to hear what is going on right now. Uh, because I think it's happening like as we speak. One minute ago, NASA posted that the crew uh are now the farthest any human has ever traveled. 250,000 miles from the Earth. Anyway, um Matthew Gallagher, he's the founder of Med vi. And uh we were supposed to have him on the show today. He unfortunately cannot make it. We do have uh uh John Slotkin coming on, the chief medical officer from Gelsinger to or Geissinger to uh talk about claims around oral GLP1 drugs. Uh we read the New York Times story on Thursday, and then over the weekend there was a whole much a whole bunch more analysis about the company. And uh there were layers of the company because you would think that some one else would write the one person one billion dollar company. Totally. And then the New York Times would take it down. Yep. But in this case, it happened in reverse. So uh last week the New York Times broke down the story of MedVee, a telehealth provider of GLP1 weight loss drugs. And the framing was basically that this was the first time in history a single person had built, quote, a billion-dollar company. And that's what went viral. Digging in, there were some small caveats and some big caveats. The the small caveats were that uh you know the founder, Matthew McGallagher, had hired his younger brother, so technically it was a two-person startup. Most people were like, yeah, okay, we'll count that. Doesn't matter. It's a b it's a family number. Uh right. And then also uh the other one. It's only twice as many people as the original challenge. But but they had almost twice the revenue, 1.8 billion. So, but the question was the the valuation. So the headline stat in the article was that they are on track to do 1.8 billion in sales this year. And that the on track is doing a lot of work, of course, because that's clearly an ARR number that's that's extrapolated out. And the GLP one market's moving very quickly. It's not like Roe and HIMS and all the other providers are going to be, you know, just sitting down and letting this company run away with whatever secret sauce they've discovered around customer acquisition, although they might not go into this, which we'll go into. And it was insane scale. But uh companies don't unilaterally trade at one X revenue. Like that's that that's sort of a given in this article. It's sort of presupposed that if you're doing one point eight billion in revenue, uh you would trade above a billion dollars and so this counts as a billion dollar company. I always thought that the billion dollar company would be on market cap, not evaluation. Not on revenue. Because uh you could do, you know, if you're if you're gonna say, you know, okay, any any any just try and say the biggest number, you would wanna set up some sort of like payment network where basically you could report GMV really, really high , and you actually have a very, very small business because you're taking like 1% as your true net revenue. So there was always a question about the margins. And then also revenue durability matters. Like the the the ongoing question around building these one-person high-growth companies is is their durability? Because if you can do it, and then I can do it, and then Tyler can do it, and then anyone with access to a coding model can build it, very quickly we're going to erode each other's markets and trade market cap very quickly. And I think any VC that would look at this, uh, they might get to a point where they're like, yeah, this is a unicorn company, look at the growth. I think there's something here. But at the same time, you could see someone like a private equity guy valuing this and saying, uh well, I I need to see risk. I need to see durability. There's some lawsuits. Exactly. And we'll get into that. So MedBee uses uh two companies, care val idate and open loop health open loop health, to handle the doctors, pharmacies, shipping, and compliance. And we'll get into the compliance thing, but uh that's a lot of outsourcing, and of course that outsourcing uh takes a toll on margin because you have to pay the doctors, you have to pay the pharmacies, you have to pay the shipping, you have to pay the compliance. And they're paying care validate and open loop health to flow that value through to those individual stakeholders. So it's still it's still. Yeah, I started asking what does this company actually do itself? Just marketing. And maybe they're too aggressive about it. We'll get into it. So uh these GLP1 drugs are so also aren't cheap. And when you sell them, even when you sell them legally, uh even as a telehealth wrapper, a lot of the value is gonna accrue to the pharmaceutical companies that own the intellectual property. At least that's how it should flow uh when things are functioning properly So you can you can effectively build a telehealth company on top of a pharmaceutical company like Novo uh that uh you where you are taking a thin margin on top, you can get to big numbers, but the pharmaceutical companies are going to want to be paid because they did all of the expensive FDA trials, all the expensive RD, and they need to recoup that. So then the other question is you add in you add in the CAC from digital ads, uh they were apparently spending a lot on Facebook uh to acquire customers and you quickly get uh you quickly wind up an estimate of pretty thin margins. I think the estimate uh Shield shared Shield Monad shared was like 15% All of the kind of key areas of the business to these other players, open loop, yeah, et cetera, it's possible that of that th those very thin margins, right, the fifteen ish percent, the margins on that are very, very extreme, right? Sure. Yeah. So you could still get to a number that was in the hundreds of millions of dollars of of uh of EBITDA. Yeah uh yeah I mean the 15% margin looks like 150 million maybe two hundred million in like basically profit, that is crazy. But we'll see what the FDA has to say long term about that, whether there will be lawsuits or settlements. There was already a warning letter and this turned into a big drama about the company. The drama And was it was there any mention of this in the original story? I feel like the uh the founder does need to, you know, respond and have their opportunity to kind of correct the record because these things can kind of run away in either direction. Even with all the drama, uh there were a ton of you know super legitimate questions about how val uable the company really is and how long they'll be able to continue their current business model without pretty serious changes. And that's around the marketing stuff. So MedV received an FDA warning letter uh just two months ago for misbranding violations. So warning letter, if you're not familiar with the FDA's language, it can be pretty wide-ranging. Like sometimes it requires just a small take a small change to marketing materials to remain compliant. And sometimes it's basically a like a shutdown the company moment. This happened a lot with the nicotine category with uh illegal uh vape vapor products. Right. Um and sometimes like the warning letter would be you are warned in that if you continue to sell these, like we will put you out of business. And some of them are, okay, we're warning you about this particular claim on your website, you need to change this language. And it's pretty, pretty m minimal. I went through this uh ten years ago, we started Lucy 2016 and uh while I was there, we were extremely nervous about warning letters because if we got a warning letter, we thought it would mess up the FDA applications that we had in progress, it would mess up distributors, like anyone who you're partnering with, would say, well, I don't want to work with somebody that has a warning letter, have you dealt with this? Um we were able to avoid all this, but uh one one kind of concrete example is that we like Lucy cannot make quit claims about the nicotine gum product. So uh even though most people think, oh, this is like Nicarette, it's actually regulated in a different category. It's regulated as a tobacco product, not as a uh pharmaceutical product. And so uh you can't run a digital ad that says like, hey, you're a smoker, quit smoking with Lucy. That's a violation because it's not regulated as a pharmaceutical, as a smoking cessation aid is the term. And so in the nicotine category, you would have companies create a product. Yep. Usually there would be no founder associated with said product because people didn't want to put their face on it. And they would do a lot of things. They would that would uh make sales grow incredibly quickly. Yep. Like you know making marketing claims, just w where and how they decided to sell, et cetera, et cetera, that the ad channels that they used. And so they would they would go from zero to hundreds of millions or billions of revenue very, very quickly. But the enterprise value of the company would be near zero. Right. Because no nobody would want to buy a company that had all that kind of baggage. And so if you were gonna value it, it'd be like what is the like very, very, very near term sort of like revenue opportunity. Yeah. Yeah. I mean the famous the famous comparison is Joule versus Puffbar. So Joule uh went, you know, raised a bunch of money, got very big, uh put in FDA applications, got those applications denied, marketing denial orders, then got them stayed in the courts. They set up a I think their whole headquarters was in DC. They were working very closely with the FDA, truly engaging to sort of clean up all of the problems around marketing and sales and formulation, just really try and get to a clean bill of health with regard to the government relations. They were successful and they got approved as uh not as a smoking cessation aid, so they still can't make the claim that Joule will help you quit smoking. They but they did get approved as a tobacco product. Uh you know, which I think the FDA says it has to be suitable for the protection of public health, which is a very vague way of saying like it's a net benefit, net good, that that that that it's on the market. Which is good, you know, people can debate that back in the. But back in the Joule days, they also could not say quit smoking with Joule. They wanted to put say, they wanted like a lot of people that were you know were smoking cigarettes did switch to Joule and they were pushing for that. Uh but they couldn't actually make quick claims, so they used the word switch. They said switch to Joule uh instead of quit with Joule. And that seemed fine for a long time. I think they they they eventually trademarked it and then I think they had to pull away from it at a d at a various points in time. But there's clearly like this gray area in your marketing. Can you say you want smokers to up grade to nicotine gum? And what has MedV been up to? We wound up playing it very safe. And that probably kept us from mooning in revenue to 1.ight8 billion overn, but I still think it was the right decision for Lucy. Now, MedV appears to have taken a much more aggressive approach. They are apparently running 800 fake Doctor accounts on Facebook to sell compounded GLP ones. She'll monot verified that the accounts are not actually doctors. Some even have cartoonishly fake names like Tucker Tucker. Dr. Tucker Carl Zin MD. If you like I feel this is one of those things where I I feel bad for someone who clicked on an ad that was deceptive. From Dr. Tucker Carlson MD. But if you're getting your GLP1s from Dr. Carl Tucker 's in . Like d you probably are in on the joke to some extent. I don't know. Uh it's clearly not above board and they have to clean this up and deal with this. Uh they were also sued in a class action lawsuit That stuff can be crazy expensive because a lot of the fines are on like a per instance basis. So it'll be like, okay, yeah, $10 fine for every text message you send. And it could be like you sent like, you know, fifty million text messages or something. So you could have some massive, massive liability. Of course, uh, that will be litigated in the court of law and there might be a settlement and they can figure out what what the right damages, uh if they are even guilty, they're still early in the process. Uh and so the end result is more of a story of pushing over aggressive marketing tactics. Yeah, I mean so so pull up pull up the actual picture of of Shield's post because I think that you can just see how confusing this would be to somebody maybe a little bit a little bit older. Yeah, zoom in. You can just see. You see somebody that looks like a doctor. Oh, yeah, they got the stuff. If you're 70 years old on Facebook, you're not necessarily putting it together. It's duck Dr. Tucker Carlson MB. So my co-founder at Lucy is uh he he has a PhD from Caltech, but it's in biophysics. And so he's not a medical doctor. But he is a doctor of science from Caltech. Like he has a really good , you know, background, but he's not a medical doctor. And I would always joke with him, like, we gotta put you in a stethoscope, we gotta take some photos of you in a stethoscope, like the aura is so high. And he was like, no, that's like such bad practice. Like we can't do that. Like you d doctor is associated with medical doctor, even if you have a doctorate in something it's like the famous like I'm dying does anyone have a doctorate? It's like yeah I have a doctor in uh a jurisdoctor or whatever. The other interesting thing MedV uses the dot or g what? Domain. Isn't that for nonprofits typically? I would think so. I don't I don't know that if it's technically illegal to use it as a for profit, but uh certainly when you add that to all the other things. Oh, a doctor advertised this to me. And now I'm on a nonprofit medical website. Yeah, in general, I think the story is uh pushing over aggressive marketing tactics to the limit, more than AI allowing low headcount scaling. But and and this has happened for a long time. Back in the old days, I want to say like 2014 Facebook era, uh, but the early days of online marketing, uh, there were countless stories of questionable supplement sales or telehealth operations scaling uh on the back of insane ads. The classic formula for for like mega scale was if you could get an ad approved, if you could get it like sort of like whitelisted or or through the approval process, it wouldn't automatically get reviewed that often. So once you were approved, you could say you could spend a thousand dollars or you could spend fifty million dollars. And there was there wasn't early on there wasn't a natural trigger to like re ref act check. It was like if you could get approved for a small ad, you could scale it up. And so people would do all these crazy things to try and get the ads approved. There were all these uh tricky things where they would route to one website and then after the ad was approved, they would changed the website and, then the you know the all the ad platforms had to eventually figure out like, okay, we need to be scroll scraping scraping a layer deeper like consistently or like every day. But the canonical example of the uh the health supplement or telehealth operation that would always go viral and always just print was if you could get an ad approved that had Harvard scientists, Brain Pill, and Johnny Depp all in one call to action. I'm not kidding about this. This is real. So it was like always this picture of Johnny Depp coming out of the ocean. That was the one that was like really scroll stopping. No, no, it was like a paparazzi photo. Which they didn't have the rights to use. They would not partner with Johnny Depp. They should not be running that ad at all. And then something about brain boosting or like making like limitless pill make you a genius, that type of marketing would all like it's very general. Like ever who doesn't want to be smarter? So everyone would click on that. And then like Harvard scientists would like lend its like credibility because oh, if it's from Harvard, like it's good. Uh and so if you could get those three terms approved, there were a whole bunch of like sketchy operations that would get ads approved and then just pump like a hundred million dollars of sales behind them. And it seems like maybe there's a little bit of that going on here where a lot of these uh a lot of these ads should not have been approved. Maybe there needs to be a validation. I know that a lot of companies that partner with doctors, even just to sell like skincare supplements, sunscreens, really anything, the rate to uh to advertise with an influencer who's a who actually has some sort of medical credential is like way higher. Yeah. Because it's way more effective. And that yeah, it's way more effective. But if you can just like fake that, then you're basically arbitraging that, but you shouldn't be. So we have we have two employees, but eight hundred fake doctors on Facebook. Not great. Yeah, maybe I want to be the one b one person, one billion dollar company, but I want to win more. Yeah. So if adding incremental people helps me build a better company, yeah, why would I not add add at least a handful of people? Yeah. Yeah, totally. So yeah, I mean I think I think software is an interesting category, especially if it was open source software somehow, where there was some sort of flywheel where you could verify what was actually built and then you could verify what the sales were because it was done on some you know sort of open platform or some sort of thing where uh the the actual reporting and the analytics. I mean apparently the the New York Times did verify the run rate that they that they used so their the the their money was flowing through the business. But having having a much cleaner representation of what the financial picture is, I think would would help. Uh I was personally excited about the prospect of a video game and just vi more video game develop ers seeing breakout success. So a couple of years ago, uh bef in the in the olden days when I had free time, uh I got woefully addicted to a poker themed roguelike deck building game called Bellatro , which I don't think anyone here has played. But this game is amazing. So much fun. So it's it you're basically playing poker, but there's no financial stakes, there's no money, there's no microtransactions at all. Interestingly, the game actually got banned, I think, in Japan or some other country for being like poker and being banned for being anti-gambling. No, no, for No, no, banned for for being like gambling aesthet ics because you are playing with cards. There's no real money. You pay like ten, fifteen dollars for the game and then you can just play unlimited. But it's done extremely well. So sold over five million units. I saw some reporting that it might be seven million and maybe even more now because they've gone multi-platform. And I think at $15, $20 download, that might be close to $100 million in revenue. And it was made by a solar solo developer who goes by local thunk. Over two and a half year period, he originally wanted the game to be a side project that he could put on his resume, but it wound up being a massive success. And so depending on your valuation methodology, you could probably underwrite Bellatro close to a billion dollars if it's generated a hundred million dollars of basically free cash flow. You know, there was obviously two and a half years of RD, but that was just this developer's time, the future revenue streams, the offshoots, the merch, like you you get to a number that's close and uh you have to imagine that that his two and a half year development like life cycle would have been pulled forward by the help of AI. So he basically developed the the game in in entirely in the pre-AI Does it still have momentum? I think it's probably trailed off a little bit because people sort of you get to the end of the game after I don't know 10, 20, 50 hours or something. And then there are some people on YouTube that will do like tons and tons of like try and break the game because you can get really, really crazy with like combinations of different things. But at a certain point, like you do kind of finish the game and then you're like, okay, I'm I'm moving on. Yeah, I mean some of the stuff that I've seen internally at TPN it's like gonna blow the world. Already vagpost. Are you the vagpost king? Uh have you stared into the abyss the abyss yet? Because everyone talks about at the AI labs, they they all have abysses. And I feel like I feel like abyss 101 is like don't do not stare into it. Yeah. Like maybe glance. Yeah, I think there's the abyss. I think a glance is okay. And or maybe like like saddling up to the abyss and just kinda peeking your head in is fine. But I would not stare into it. I I I think that's something you're gonna app store. Yeah. The app store saw an eighty five percent increase in new apps this past quarter. Let's uh core one out pour one out for the app store review team. Most recent quarters new app count has grown less than ten percent. So uh it was just ticking up uh quarter over quarter and then jumped massively They have an app, but at the same time I have yet to find an app that's on my home screen that was solo developer vibe coded, something like that. So I'm waiting for the flappy bird moment or the Bellatro moment, this like solo thing . Even if it's uh like a productivity tool, um there's clearly more apps, but actually going viral, like what is the Harry Potter Balenciaga moment, what is the you know the viral moment breaks through and actually makes it to the top of the app charts because right now it just feels like the long tail of the app store is getting potentially fatter because there's more single use apps, there's more small apps, but will we see one of those break out and become you know fantastically successful? That's sort of like the next you know critical moment that I'm I'm you know eagerly awaiting, but we'll see. What's going on in China, John? Uh the pork industry is a victim of its own success. This story is incredible. They got swine scrapers over there. Skyscrapers filled with swine. I'm not kidding about this. So this is from the The Economist and I read this yesterday and really enjoyed it. Pork holds a unique place in the Chinese diet. It was once a symbol of good the good life. The Chinese character for home is a pictogram of a pig under a roof. It is so important that the government has a strategic frozen pork reserve and the news media are always full of the ups and downs of the pork industry. It's like you they gotta cover it like it's a horse race. Like what's going on? It's pork race. No, it's serious. Uh uh TBPN for the pork industry in China. That's the real, that's the real opportunity. There have been plenty of peaks and troughs in the past decade. The trough is active over there, literally. Uh in 2018 to 2019, when African swine fever ravaged pig herds, many smaller backyard farms were wiped out. Prices went through the roof before long. The industry came trotting back. Methods producing ever more pork are colliding with slow consumption of the meat. Now all the news is about overcapacity. Uh uh she, who r uh sells cuts of pork at a market in Beijing, says she only got to eat the meat on special occasions with a child. These days, she says it's so cheap, people can have it whenever they fancy. The oversupply pushed live pig prices to a 15-year low in March. Some farmers are losing over $40 per animal. Part of the problem is that some pig farmers have been aggressively expand have aggressively expanded production in an attempt to gain a bigger share of a shrinking market. On top of that, big companies saved their bacon in the downturn by concentrating their pigs into mechanized modern facilities where they could be kept isolated from the swine fever. Modern farms are a marvel of at industrial agriculture, though not of animal welfare. Tens of thousands of pigs are packed into multi-story concrete buildings. One in Hubei province has 26 floors. It's a swine scraper. They it's twenty-six floors of pigs. That's the same thing. Do we know why why consumption is declining? Just oversupply. So they got hit with this uh they got hit with the swine flu and they were worried about all the pigs getting sick and dying. And so they instead of having them cross pollinate in like open fields, they pushed them into these literal skyscrapers that are twenty six floors tall. And but I would assume over over over production you have oversupply, prices come down. Yeah. But they're saying that just overall consumption is dropping too. Well yes. So people are uh moving to chicken and seafood. Increasingly middle class, the middle class Chinese see uh pork is less healthy than chicken and site seafood. But it's really like a supply a supply side stor uh story. That may be more pork than even China can eat. The average Chinese person guzzled 28 kilograms of it in 2024, but that was two kilograms less than in 2023. Uh to boost prices, officials have slashed subsidies, ordered farms to cull droves and told the pork reserve to buy more meat to little effect. Some big firms are looking elsewhere. That is wild. China's biggest pig producer hopes to export its business model. Instead, last year it said it would bring the first high rise, uh it would build the first high rise in Vietnam uh, capable of rearing 1.6 million swine a year. Pig farms are going vertical as profits flatline. And so they are moving the pigs inside, which is what which is you know, winding up with with l like increased yields because uh the the pigs aren't getting sick. America's new best new weapon in Iran is a drone inspired by Iran. You had asked about this on one interview we did with some Yeah, I forget who it was with, but I was I was intri you know, I was surprised to see the US copying the Shahead because it feels like You were surprised to see them copying it or not copying it? No, it it feels like uh entirely the smart move. It's battle tested, they're cheap. Uh we we have a good understanding of their capability because American allies have faced off against them. So there's a lot of reasons that it that it makes sense, but I feel like America had to swallow its pride to some degree uh to to copy you know something that uh you know the the enemy uh made. So they're calling it the Toyota Corolla of drones. Uh the powerful low-cost attack drone the US is using in its war with Iran doesn't come from one of America's more than 400 venture-backed drone startups and it isn't the product of Silicon Valley Ingenuity. Instead, the drone having its moment in the Middle East conflict was designed by the U.S. military itself using reverse-engineered Iranian technology. From the earliest days of the war, the FLM 136, or Lucas, as it is known, has been wiping out Iranian military targets while better funded hardware systems and drones from defense startups have had little involvement. It is a victory for the US military, which went from blueprint to battle-ready drone in less than two years The creation of Lucas is an early proof point of making cheap drones quickly and a sign that the Pentagon can change the way it does business to better prepare for modern conflict. So I I want to know so much more about like so they're not subcontracting this at all? Is this all like it is the entire supply chain the US military During the Biden administration, a small group in the defense department seized on the idea of America building its own version of the Iranian Shahead, a fearsome attack drone that militaries and proxy militias across the globe have sought to duplicate. Russia, which is lobbying about four thousand modified Shaheads at Ukraine every month, according to Ukrainian government data, did more than any other country to demonstrate the drone's capabilities. A small team in the US military's research and engineering office put together plans to build an attack drone. Based on deconstructing a Shahed the military had recovered from Ukraine. Technology for its own use. The last time it was a Soviet-made pontoon bridge. That's interesting. A former senior defense official described Lucas, which stands for Low Cost Unmanned Combat Attack System as the Toyota Corolla of Drones. It may not have all the features or top-end components, but it was built to be affordable and plentiful. The cost of Lucas ranges from 10,000 to 55,000. Uh that's a big range, according to a Pentagon spokesman. There is also still a worrisome lack of cheap U.S. counter-drone technology, which has allowed Iranian-backed militias to continue using small drones to menace U.S. military bases in the Middle East. The small number of unmanned surface vessels in the region are still yearsly Citrini analyst number three got picked up by the CID, the Gulf CIA, because of the tweets about him. So I think everyone needs to be careful uh talking about uh Citrini Analyst number three. Uh based 16Z says Hunter S. Citrini number three. Last post from Francis. He says I think the next LinkedIn post I'd read about the T VPN acquisition might finally reveal the future of media. Just need to find one more. It's true. There was one more post that was good. There were so many good posts. It was a lot of fun. And uh Nate Nate you with uh with an absolute banger and a place that we will end it. He says, Hear me out. T V PN for sports. There very well could be something here. And I liked it and I got screenshotted because it's a it's official. Uh there very well could be something there. Well, get out there, build something. Maybe go treat yourself to the largest buzz ball that has ever been built. It weighs three thousand pounds. It opens up as a lemonade stand capable of holding T V PN. The only place you can get technology coverage and Buzzball coverage. Buzzball is Buzzball in the lore. analysis Anyway, thank you so much for watching. Leave us spot stars on Apple Podcasts and Spotify. Sign up for the newsletter at TvPN.com. Yay! And we'll see you tomorrow at 11 a.m. Tomorrow. Goodbye.