Latest / In the Loop AI / The $7 Billion AI Middle Man: Stripe Buys OpenRouter

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The $7 Billion AI Middle Man: Stripe Buys OpenRouter · In the Loop AI

0:00
Josh: Just three months ago, investors valued OpenRouter at $1.3 billion.
0:04
Josh: And this weekend, Stripe agreed to buy it for more than $7 billion.
0:08
Josh: That's a five times markup in just 90 days for a company doing roughly $140 million in revenue.
0:12
Josh: That's 50 times their revenue, which is outrageous when you look at what other
0:16
Josh: companies in this industry are trading at.
0:17
Josh: It seems like a top signal until you realize that Stripe processed $1.9 trillion
0:22
Josh: of volume last year and only kept 0.36% of it.
0:27
Josh: Open router charges five and a half percent on everything that flows through
0:30
Josh: it. So Stripe just bought this take rate of 15 times higher than what it's used
0:34
Josh: to in the fastest growing industry on earth.
0:36
Josh: And this would seem like a one-off pattern if we didn't also get information
0:40
Josh: from SpaceX, also known as Cursor, who just launched a GitHub competitor yesterday
0:44
Josh: while the GitHub platform was down.
0:46
Josh: In AI, the attention is kind of moving from the model layer to the middlemen.
0:50
Josh: And we have some proof that we're going to walk through today going through
0:52
Josh: this open router acquisition and the SpaceX alternative to GitHub.
0:56
Josh: These are pretty big deals.
0:57
Ejaaz: So the number one question, I think, if you're listening to this episode is
1:00
Ejaaz: why on earth should I care? And why do I care about some TradFi Stripe finance
1:05
Ejaaz: company buying this other random company that I don't really care about, right?
1:08
Ejaaz: I only want to hear about Anthropic. I only want to hear about OpenAI.
1:10
Ejaaz: Well, firstly, what is OpenRouter?
1:12
Ejaaz: OpenRouter is basically a platform that you can go to and you pay one subscription,
1:17
Ejaaz: you pay once and you get access to 400 plus AI models.
1:22
Ejaaz: This could be open models, this could be closed models, like from Anthropic,
1:26
Ejaaz: from OpenAI, but they could also be the Chinese LLM open source models.
1:28
Ejaaz: And the idea behind Open Router is as follows.
1:31
Ejaaz: If you are someone that has a task or a project or a business that you want to build, or
1:36
Ejaaz: largely anything. You want to figure out the cheapest way to do it,
1:41
Ejaaz: the most cost-efficient way to do it, but also using the smartest models when
1:45
Ejaaz: and where it makes sense.
1:46
Ejaaz: But that's sort of confusing. You would need to get manually many different
1:50
Ejaaz: subscriptions. You would need to kind of know which model to use at which different time.
1:54
Ejaaz: And then the models get upgraded and then you don't know which one to choose.
1:57
Ejaaz: Like, are you using Grok? Am I using Cursor's model? Am I using ChatGPT?
2:00
Ejaaz: Am I using Claude? I don't know.
2:02
Ejaaz: OpenRatter basically solves all of that problem for you.
2:05
Ejaaz: So a simple chat box in the same way that you would in chat GPT.
2:09
Ejaaz: And it has a smart route on the back end that determines which model to use at which specific time.
2:14
Ejaaz: And it saved people so much money. And it's given much better answers on average.
2:20
Ejaaz: Now, you mentioned they're using or they're processing around 30 trillion tokens
2:24
Ejaaz: a week at this point, 100 trillion tokens per month.
2:27
Ejaaz: This is up, I think, 15x from last year, and it's up 5x or 6x in the last six
2:34
Ejaaz: months alone. These guys are like absolutely churning out money,
2:37
Ejaaz: $50 million ARR every single year.
2:40
Ejaaz: And so the idea here is why would Stripe buy a company like this?
2:44
Ejaaz: Well, the answer is pretty simple. When you look at what Stripe does,
2:47
Ejaaz: they basically looked at the financial system.
2:49
Ejaaz: They looked at banks. They looked at how people transact money.
2:51
Ejaaz: And they thought, hmm, this is really clunky. This is really siloed.
2:55
Ejaaz: We are going to build on top of this and make it a really smooth process to
2:59
Ejaaz: create a transaction, to pay for something, to sell your goods or service.
3:03
Ejaaz: They then looked at AI and they thought, huh, AI is going to eat our entire business up.
3:08
Ejaaz: And these tokens, these AI tokens that people are like prompting and using,
3:12
Ejaaz: look very similar to money.
3:14
Ejaaz: And I see that OpenRouter has pretty much the same business model that we have.
3:19
Ejaaz: How do we get access to this AI world? We should just buy OpenRouter.
3:22
Ejaaz: And that's pretty much what they did.
3:23
Josh: Even in their own words, their stated thesis is to be the economic infrastructure for AI.
3:28
Josh: Traditionally, when you are an AI agent going to make payments,
3:31
Josh: you are subject to the traditional rails of a human being, which is 30 cents
3:35
Josh: and 2.9% fees. So anytime you want to pay online with a credit card,
3:39
Josh: that's what you're paying when you pay through Stripe.
3:41
Josh: It's a serious amount of money when it's done at the scale that they're dealing
3:45
Josh: with, which is $3 trillion of money per year.
3:48
Josh: So how do you get around that? You have to build this infrastructure layer.
3:51
Josh: And when Stripe's building the infrastructure layer, you could view it as small
3:54
Josh: different parts of it. So they have Bridge, it's stablecoin infrastructure,
3:57
Josh: it's crypto, there's much lower fees.
3:59
Josh: Then in June of 2025, they acquire Privy, which is a embedded wallet specific for agents.
4:06
Josh: Then in September, they acquire Agentic Commerce, and they start to build this
4:10
Josh: Agentic layer on top of it. Then they build their own blockchain in March 2026,
4:15
Josh: and now they are making a bid for OpenRouter. And the number is not final.
4:19
Josh: We believe it's $7 billion.
4:21
Josh: No one has confirmed. Stripe hasn't wanted to come out and say this is the amount.
4:25
Josh: It was rumored to be $10 billion.
4:28
Josh: Now the current consensus is seven there's a chance it may have been eight but
4:32
Josh: regardless it is a huge amount of money that they're paying for this
4:35
Josh: and it seems to be like the next layer the next step in building this agentic
4:39
Josh: infrastructure situation that they have because when you believe in the thesis
4:42
Josh: that agents are going to get more capable that implies that the spending that
4:46
Josh: they're going to be doing is much higher and not only is it much higher
4:49
Josh: but it could be much smaller perhaps you're trying to pay for sub agents to use
4:53
Josh: um to do this really complex project and you just need to pay a couple cents
4:56
Josh: for server hours it doesn't make sense to do that with a credit card there's
5:00
Josh: no infrastructure built in place yet to
5:03
Josh: have these microtransactions that agents may want to use and also it's kind
5:07
Josh: of clunky infrastructure for agents to send money in large quantities like when
5:11
Josh: you think about sending a wire transfer an ach transfer sometimes it takes days
5:15
Josh: sometimes you're limited in the amount you could send
5:17
Josh: that doesn't really work for agents and you kind of want something separate
5:20
Josh: for these ai entities so that feels like this is kind of what that is building towards but
5:24
Josh: the difference is that open router is a different piece of the stack open router
5:29
Josh: serves kind of like the meter it's
5:30
Josh: the point where the intelligence gets consumed and gets priced so they've bought
5:34
Josh: this middle layer that on the surface appears pretty lame it's like oh they
5:38
Josh: just paid seven billion dollars for a wrapper but in reality
5:41
Josh: they just got the middleware that
5:44
Josh: Tends to soon i'm sure hundreds of trillions of tokens are going to get routed
5:48
Josh: through and the amount of data that comes through that on top of everything
5:51
Josh: is huge so this feels like they the reason they spent 50 times earnings they've
5:56
Josh: made such a huge multiple on this company
5:58
Josh: is for that reason alone it's for having the right to be the middle layer of
6:02
Josh: this new infrastructure tidal wave that's happening as it relates to ai agents and tokens
6:08
Ejaaz: I've been trying to wrap my head around the $7 billion price tag because it
6:13
Ejaaz: just seems like they're overpaying massively for what is essentially a company
6:16
Ejaaz: that makes $50 million a year. You don't typically pay like 120X earnings for something like that.
6:22
Ejaaz: But as I start to unpack it in my head, I think there's a few things going on here.
6:26
Ejaaz: Now, one of them you mentioned is agentic payments. I think Stripe is basically
6:30
Ejaaz: making a big bet that the future of payments isn't gonna be human at all.
6:35
Ejaaz: In fact, it'll probably be 10 to one agents to humans.
6:39
Ejaaz: So what a world looks like in that sense is you're never selling to a human in the future.
6:44
Ejaaz: You're selling mostly to AI agents. AI agents aren't going to have big wallets
6:48
Ejaaz: or big budgets. They're going to be making microtransactions.
6:50
Ejaaz: Now, right now, the financial system sucks for microtransactions.
6:55
Ejaaz: If you go on to like Bloomberg, for example, right? And let's say I want to read an article.
6:58
Ejaaz: I don't have a Bloomberg subscription right now, but I would love to read one
7:01
Ejaaz: specific article. I would love to just pay five bucks to read that specific article.
7:05
Ejaaz: I can't do that right now. And Bloomberg probably just wants to charge massive
7:09
Ejaaz: subscription fees annual, right?
7:11
Ejaaz: But they're not able to do that. With this new purchase, Stripe is one step
7:15
Ejaaz: closer to be able to enable this. You mentioned they have their own blockchain.
7:18
Ejaaz: This is kind of like a stablecoin thing. This is like digital money.
7:21
Ejaaz: If you combine both of these things together, you suddenly unlock agentic payments.
7:25
Ejaaz: And that is basically Stripe's main vision.
7:28
Ejaaz: The second thing, and I think the real reason why they're paying $7 billion for Open Router.
7:33
Ejaaz: Inference specifically. Now, inference is basically the cost or the ability
7:37
Ejaaz: to serve customers requests or prompts for their AI model. So you route it to
7:42
Ejaaz: an AI model, you get the answer back, and you serve it to them.
7:45
Ejaaz: Now, inference over the last, I think, year and a half has basically 10 to 20x.
7:50
Ejaaz: It's become a more valuable moat than training your own AI model.
7:55
Ejaaz: And this has been the case for like all Frontier Labs as well.
7:57
Ejaaz: They've realized that post-training is way more valuable.
7:59
Ejaaz: So in a world where anyone and everyone is using AI for pretty much anything,
8:05
Ejaaz: any conceivable kind of like task, you can expect to be able to have high volume
8:10
Ejaaz: transactions. Like money basically just flows through this entire thing.
8:13
Ejaaz: Everyone's doing every single bit of work through inference.
8:16
Ejaaz: And Stripe wants to be the Rails that owns all of that. I was reading this really
8:20
Ejaaz: interesting case study.
8:21
Ejaaz: Josh, do you know where Visa came from or like how Visa came to be? Not a clue.
8:25
Josh: It was in 1958.
8:27
Ejaaz: They came out of Bank of America
8:29
Ejaaz: They were a pet project inside Bank of America. They were incubated inside another bank.
8:33
Ejaaz: And they built basically this network to make Bank of America more compatible
8:38
Ejaaz: with other different banks, except no other bank wanted to use this thing because
8:42
Ejaaz: it came from a competitor. So what did they do?
8:44
Ejaaz: They spun out this thing called the Visa network, and it became super popular
8:48
Ejaaz: because it was like a neutral platform.
8:50
Ejaaz: And then everyone started using it, and Visa itself became a bank.
8:54
Ejaaz: Now, we see the opposite thing happening here, where Stripe has basically acquired
8:58
Ejaaz: open rights and so the question is allegedly if it's true will they keep it
9:02
Ejaaz: separate to their current business or will they kind of keep it as like a neutral good.
9:06
Josh: Yeah i don't know well you could you could tell bill ackman about that visa
9:08
Josh: story i'm sure he'd be stoked that's a nod to yesterday's episode if you haven't
9:11
Josh: watched go check it out i do have to ask you a question which is have you ever
9:14
Josh: heard of openc like remember openc oh yeah
9:17
Ejaaz: That one called back to you.
9:18
Josh: For those that aren't familiar openc and we'll get to the reason why i'm mentioning
9:22
Josh: this but openc was the largest nft marketplace in the world.
9:25
Josh: And for those who were participating in the crypto space, if you ever bought
9:29
Josh: an NFT, chances are it went through OpenSea. Now it had a meteoric rise and
9:34
Josh: then unfortunate fall because, you know, the attention just kind of faded away from the space.
9:38
Josh: But the reason why I mentioned that is because the founder of OpenSea is named
9:42
Josh: Alex Atala, and he just so happens to also be the founder of OpenRouter,
9:47
Josh: the company that just got acquired by Stripe.
9:49
Josh: And we have his LinkedIn here open on screen and like, wow, what a run.
9:55
Ejaaz: Dude, he was a forward deployed engineer before it was cool. Back in 2012.
9:58
Josh: Between 2012 to 2014, which means he probably got equity and that equity is
10:03
Josh: probably up a tremendous amount.
10:05
Josh: Then he was lead front-end engineer, chief technology officer,
10:07
Josh: and then co-founder of OpenSea
10:09
Josh: for four years and seven months. And now co-founder and CEO of Open Router.
10:13
Josh: So two multi-billion dollar businesses.
10:16
Josh: And it's about time he got his exit because man, what a generational run he's been on.
10:20
Josh: And if you are not familiar with Alex Atala, we actually had him on the show.
10:25
Josh: We interviewed him on Limitless a while ago. This was back from, when did we do this?
10:29
Josh: August 4th, 2025. So just over a year ago, we had Alex on.
10:33
Josh: At that time, what was Open Router valued at? It must've been like what,
10:37
Josh: one 10th or less of what it's valued that today?
10:39
Ejaaz: I think it was a, I think it was max, like a hundred mil. I think he had just
10:42
Ejaaz: raised, which is why we got him on.
10:44
Josh: Oh my God. And, and even just in the last three months, why didn't we raise?
10:49
Ejaaz: We should have invested.
10:50
Josh: We need the limitless fund. Someone give us a limitless fund.
10:52
Josh: That would have been our biggest exit to date with this guy,
10:55
Josh: but that's the story of Alex Talos.
10:57
Josh: So clearly this guy is a pretty focused founder. He's pretty cracked.
11:00
Josh: He, this dude understands where the puck is going. I'm really curious to see
11:03
Josh: what he builds next, but I found that to be a really interesting story.
11:06
Josh: And not only is he following trends, but he has like some pretty interesting
11:08
Josh: theses that are behind these companies.
11:10
Josh: The one with OpenRound in particular is it's kind of, there's another plane
11:14
Josh: analogy. I've been liking these plane analogies where nobody really holds loyalty
11:18
Josh: accounts with 10 different airlines.
11:19
Josh: You normally either have one or you search by the cheapest flight.
11:24
Josh: So for me, I like flying Delta a lot. I have a Delta membership.
11:28
Josh: If I'm not flying with Delta to increase my membership status or to really use their product suite,
11:33
Josh: I will go to Google flights and I will buy the cheapest possible flight
11:36
Josh: and that's all i want i just want to get from point a to point b open router
11:39
Josh: serves as that layer open router is the company that will sift through 400 different ai models and
11:46
Josh: ingest your query and tell you exactly where you can go to get the best outcome
11:49
Josh: for the cheapest price and that was the thesis that
11:52
Josh: really resonated and that's what
11:53
Josh: worked so i mean congratulations to alex this is a pretty amazing exit
11:57
Josh: uh by any means and to exit to stripe again who still is not public for some
12:01
Josh: reason stripe seems to be like the last large company that needs to file their
12:05
Josh: s1 hopefully we'll get that soon but pretty amazing run by by open router and
12:08
Josh: the company and i'm like really stoked to see where stripe takes this next
12:11
Ejaaz: I think it's also worth pointing out that open router isn't operating in like
12:16
Ejaaz: a silo there are many other companies that are rumored to be building their
12:19
Ejaaz: own routing platform look no further than open ai so open ai has a bunch of different models their
12:24
Ejaaz: most recent model release has about like three different versions.
12:28
Ejaaz: They have a routing feature that enables your prompt to go to the right model
12:32
Ejaaz: at the right time for the cheapest possible way.
12:34
Ejaaz: And then if you look at Meta, Zuck saw the rumors about open routing potentially
12:39
Ejaaz: being acquired and launched a project codenamed, I believe it's Switchboard,
12:43
Ejaaz: which aims to do the exact same things with Meta's own models,
12:46
Ejaaz: as well as a bunch of new open hosted models.
12:49
Ejaaz: And then if you look at the financial system itself, Ramp, which basically does
12:53
Ejaaz: something similar to Stripe, processes a lot of transaction volume.
12:56
Ejaaz: They created an internal routing platform that saved them, I think it was 40%
13:02
Ejaaz: of their annual spend, not AI spend, but annual spend in general.
13:07
Ejaaz: And they're now creating that or externalizing that as a product for anyone
13:10
Ejaaz: to get access to. So we're seeing this growing trend of people realizing that
13:14
Ejaaz: there's not just going to be one or two models that you're going to be using every single day.
13:18
Ejaaz: You're going to be using multiple and you don't need to pick and choose which
13:21
Ejaaz: ones. They're going to be hundreds.
13:22
Ejaaz: So just get a routing or aggregator platform to do it.
13:25
Ejaaz: And again, Alex Zatala has a history in building aggregator platforms.
13:29
Ejaaz: OpenCU is exactly that for NFTs.
13:31
Josh: You have to imagine that companies like Anthropic and OpenAI are seeing this
13:34
Josh: and they're thinking to themselves, well, hey, wait, we just have like a suite
13:37
Josh: of models from high to low, very cheap ones, very high end ones.
13:40
Josh: Why can't we create our router ourselves?
13:43
Josh: So I imagine, like you just mentioned with Zuck, we're going to see a lot of
13:45
Josh: that, mostly just due to the nature of agents and how these agents are working.
13:49
Josh: Not all of them need frontier tokens.
13:51
Josh: But for the once that do, we have a company for you. And it is called Ledger,
13:54
Josh: the sponsor of this episode. Thank you, Ledger, for sponsoring this episode.
13:57
Josh: If you are building with AI agents, chances are you're worried about security.
14:00
Josh: There are break-ins all the time and increasingly happening.
14:03
Josh: Ledger has a three-step process where the agent proposes, the humans approve,
14:06
Josh: and then the Ledger signer enforces.
14:08
Josh: It comes equipped with Ledger stack, which is an open source framework filled
14:12
Josh: with tools that you could use to help you navigate the way that you use your
14:15
Josh: agents. It works with Cloud Code, Codex, and Cursor. It is open source and available
14:19
Josh: today, linked down in the description. Thank you to Ledger for sponsoring this part of the episode.
14:22
Josh: Now, we did mention in the intro, I uttered the name of this company named SpaceX or Cursor.
14:27
Josh: SpaceX just bought Cursor for $60 billion. And Cursor has been on this generational
14:31
Josh: run so far where they released GrokBot, which was a Cursor product now under the SpaceX category.
14:36
Josh: And just yesterday, something funny happened because GitHub was down.
14:39
Josh: And for those of you who don't know, GitHub is basically where the world's code base is hosted.
14:43
Josh: And there were a few hours during
14:45
Josh: the day in which GitHub was having some outages. And during that time,
14:48
Josh: Cursor the small little company that spacex acquired for 60 billion dollars
14:52
Josh: the fastest growing company in the world um they released their own alternative
14:56
Josh: called origin and origin is basically the github alternative now why are we
15:00
Josh: talking about this now in this episode it's because the thesis is very similar
15:03
Josh: to what we just talked about with the stripe acquisition a lot of the value is moving to
15:07
Josh: being the middle layer the middle man you want to be the infrastructure provider
15:12
Josh: for where all the tokens get generated so these companies aren't necessarily
15:15
Josh: racing to generate the tokens, although in the case of SpaceX, they are.
15:18
Josh: But instead, they're working towards this middle layer. And this cursor origin
15:22
Josh: deployment is another example of how people just really want to be the tollbooths.
15:25
Josh: They're building the place in which you have to pass in order to build with
15:28
Josh: these AI agentic systems.
15:30
Ejaaz: And the best part about this is you can get public exposure to this thing by
15:33
Ejaaz: just buying one single stock, which happens to also own a rocket company as
15:37
Ejaaz: well. SpaceX. Isn't that crazy? Yeah.
15:39
Ejaaz: Unlike Stripe, unlike OpenRata, who are still private companies, SpaceX.
15:44
Ejaaz: I still don't think a lot of people realize that they are very much so a frontier
15:48
Ejaaz: AI lab. And the acquisition of
15:50
Ejaaz: cursor will go down as one of the best acquisitions ever, in my opinion.
15:53
Ejaaz: But yeah, like focusing on this, this particular launch, and why it's actually useful.
15:58
Ejaaz: Code hosting platforms are used by pretty much any and every software engineer.
16:03
Ejaaz: In the world. So basically allows you to upload your code repository and collaborate
16:08
Ejaaz: across various different engineers to kind of update the code base,
16:11
Ejaaz: submit kind of changes that you want to make.
16:13
Ejaaz: And you can do so collaboratively online, securely, privately if you want, or publicly if needed.
16:18
Ejaaz: And so GitHub had the moat on this entire thing. And Microsoft did the smart
16:22
Ejaaz: thing years ago, and they acquired GitHub, except they didn't leverage that
16:26
Ejaaz: at all for any of their AI products.
16:29
Ejaaz: So now what Cursor slash SpaceX have is a fully integrated software stack where
16:35
Ejaaz: they're building the models,
16:36
Ejaaz: They now have the routing platform, which is basically Cursor for coding specifically.
16:41
Ejaaz: And now they have the code hosting platform. So what does this mean?
16:45
Ejaaz: Any future coding model that Elon Musk creates, so Grok Code,
16:49
Ejaaz: Grok Build, will essentially have a really tightly integrated product loop.
16:54
Ejaaz: And they'll be able to see what developers and engineers are building,
16:56
Ejaaz: how they're behaving, and be able to iterate and build much better frontier
17:00
Ejaaz: coding models, which makes me basically, I don't want to turn this into a SpaceX
17:03
Ejaaz: ball episode, but it makes me incredibly bullish about the entire thing.
17:07
Ejaaz: But the second really cool thing about this, which separates it from GitHub,
17:10
Ejaaz: in my opinion, they've specifically engineered Origin, this new code hosting
17:14
Ejaaz: platform, to be extremely high throughput.
17:18
Ejaaz: And that's specifically not for humans, it's for agents.
17:22
Ejaaz: So what I really like about this demo, I can't remember if it's this demo or
17:25
Ejaaz: another demo I watched, they had about a couple, I think it was like 50 GitHub commits per second.
17:32
Ejaaz: So they ended up having multiple agents. I think they had like 100 agents at
17:35
Ejaaz: one point pushing commits to
17:38
Ejaaz: this new cursor origin platform, which basically I think probably like 10x is
17:43
Ejaaz: the speed or minimum 10x is the speed at which humans are able,
17:46
Ejaaz: or the best engineers are able to push code.
17:48
Ejaaz: So the point is they've engineered an entire platform around AI agents doing
17:53
Ejaaz: the bulk of coding in the future.
17:55
Ejaaz: So that means testing the code, reviewing the code, submitting the code,
17:59
Ejaaz: making sure other agents can help review the set code.
18:02
Ejaaz: And so humans at the end of the day will just kind of sit back and manage a
18:05
Ejaaz: fleet of these agents as they code. GitHub currently isn't oriented to do that,
18:10
Ejaaz: but this platform is, and I think that gives them a major advantage going forwards.
18:14
Josh: Yeah, some of the launch claims, 296,000 clones per hour, 22 commits per second per repo.
18:20
Josh: For those who don't know, that's just a tremendous amount of code being pushed. This is superhuman.
18:24
Josh: This is not something that GitHub ever built itself for because it was never
18:27
Josh: expected that humans would ever do something at a rate this fast.
18:30
Josh: So this is basically, if you were to redesign GitHub from first principles in
18:34
Josh: the year 2026, this is what you get. It's just a tremendous amount of throughput.
18:39
Josh: And this is coming at a time in which GitHub is really stressed.
18:41
Josh: We showed a chart on the show a few weeks ago that shows the amount of commits
18:45
Josh: to GitHub going basically in a vertical line. It's a hockey stick.
18:48
Josh: They've never dealt with this much volume before. And as a result,
18:50
Josh: they're starting to deal with some issues.
18:53
Josh: One of which was the outage that happened yesterday was a global outage for
18:56
Josh: six hours and 42 minutes.
18:59
Josh: That is a tremendous amount of time for a company that hosts the Globes code,
19:02
Josh: which meant that a lot of people couldn't push or deploy.
19:05
Josh: During that time, ironically, is when this launch video came out.
19:08
Josh: And it's funny, you know, the timing was a little bit rushed because there's
19:12
Josh: not even audio in the launch video.
19:15
Josh: I saw this great post online that said like, if your video, if your launch video
19:18
Josh: has audio behind it, you've shipped too late.
19:20
Josh: They didn't even get to processing audio. They didn't even put a song behind
19:23
Josh: it. They just shipped it. they said here we're live go try it out i have to
19:27
Josh: i can't help but think about microsoft in this situation
19:30
Josh: because Microsoft, we know they've been struggling. They've been having a tough
19:33
Josh: time. They haven't been able to produce really anything of value in the world of AI.
19:37
Josh: They have all this open AI IP. They haven't really done much with it.
19:40
Josh: Their flagship product, I guess, is still co-pilot, which no one uses unless
19:44
Josh: you are forced to through your employer.
19:46
Josh: Now their crown jewel GitHub has a pretty serious contender in cursor,
19:50
Josh: or I should say SpaceX AI, the one of the soon to be the largest AI company
19:55
Josh: or one of the largest AI companies in the world. So when I think about Microsoft,
19:58
Josh: I'm like, man, what do they have going for them?
20:00
Ejaaz: Dude, don't worry. They've only been flat year to date. Yeah.
20:04
Ejaaz: Wow. I mean, let's see it like, let's see on the day. On the day we're looking
20:07
Ejaaz: at, yeah, okay. Seems to be unbothered.
20:10
Ejaaz: I mean, they did have a breakthrough earnings, quarterly earnings recently,
20:13
Ejaaz: which their cloud revenue basically went vertical.
20:16
Ejaaz: But again, if you just end up becoming a cloud provider in a world where you
20:19
Ejaaz: could have owned the AI or Frontier AI Model Lab, you've fumbled the bag drastically.
20:24
Josh: What does the five-year look like on that oh
20:26
Ejaaz: Don't even how they've been doing for that's a whole 65.
20:30
Josh: Not great for five years being one of the leading ai companies like that's that's
20:34
Josh: tough and like you mentioned it's
20:35
Josh: it's like okay the company will continue to do great right they have the infrastructure
20:39
Josh: they have uh microsoft azure they're huge cloud service provider it has incredible
20:43
Josh: margins it's growing very fast everyone needs cloud everyone needs these access to compute
20:48
Josh: but other than that like what what do they have are they going to become a cloud-infra provider?
20:53
Josh: Is that the end state of Microsoft after all these years?
20:56
Ejaaz: Well, there is a counterpoint to this, which is,
21:00
Ejaaz: pretty much any company that isn't a tech company in literally any industry
21:05
Ejaaz: uses Microsoft's suite of services.
21:08
Ejaaz: I cannot tell you the number of business meetings I've been on over the last
21:12
Ejaaz: six months that have been on Microsoft Teams, and it makes me cringe, but listen, it works.
21:16
Ejaaz: And that just shows the deep embedding that their software infrastructure has
21:21
Ejaaz: for the majority of companies in the world.
21:23
Ejaaz: Now, that is a very sticky moat. Now, Anthropic, OpenAI are trying to chip away at their moat, right?
21:29
Ejaaz: Saying, hey, use our models, we'll deploy, we'll give you forward deployed engineers
21:33
Ejaaz: and try and figure out how best to integrate AI because they can't really get
21:37
Ejaaz: into the client's computer systems other than that way.
21:40
Ejaaz: Microsoft knows that they have this moat. Satya Nadella wrote this really long
21:44
Ejaaz: essay basically saying, hey guys, I know that you're trying to get into our
21:47
Ejaaz: data moat and we're going to do everything that we can to protect it,
21:50
Ejaaz: but I don't see how they can.
21:51
Ejaaz: They're going to have to eventually hand over the reins if they can't come up
21:55
Ejaaz: with a competitive AI offering. Copilot right now is that premium offering.
21:59
Ejaaz: And I don't like to call it a premium offering because it's not that at all.
22:02
Ejaaz: It can't even do the basics of like a GLM 5.2 Chinese open source model.
22:05
Ejaaz: So again, it's hard for me to try and figure out how Microsoft improves from
22:10
Ejaaz: here, but they do have the time. They do have the data mode.
22:13
Ejaaz: And as long as they protect that, they have a shot. They have the cash balance. So we'll see.
22:16
Josh: We'll see. We'll see what happens with all of these as the thesis play out.
22:19
Josh: I mean, we have now it's clear like that there There is a shift upon us where
22:23
Josh: the last two years were very much focused on like who was able to build the
22:26
Josh: smartest model, all of the values occurring to that.
22:28
Josh: Now people are looking further out that risk curve. Like where is next?
22:32
Josh: We know that infrastructure is one of them building data centers,
22:35
Josh: but we also know that the middle men, that middle infralayer is like a pretty good place to be.
22:40
Josh: Stripe purchased the toll booth. We have cursor. I guess you could imagine as
22:43
Josh: if they're like paving these new highways and the labs who are the ones who
22:46
Josh: are actually building intelligence.
22:47
Josh: So it's becoming more clear. Everyone's starting to learn their role in this
22:51
Josh: stack and they're accelerating because not one company is able to do it all just yet.
22:55
Josh: So that's where we stand on Stripe and on Cursor. And I think these are two
22:59
Josh: really cool, really impressive exits on the Stripe front with OpenRouter.
23:04
Josh: Like, congratulations, what an exit. We're going to see how that plays off.
23:07
Josh: Clearly, they're very bullish if they had $7 billion to spend.
23:09
Josh: And like, man, I hope one day Stripe decides to go public. They feel like the
23:13
Josh: final one to publish in S1. So hopefully we'll get that soon.
23:16
Ejaaz: I would love to own part of the number one AI finance lab.
23:21
Ejaaz: And Stripe has all the potential to do that. Maybe some of these funds do.
23:25
Ejaaz: Maybe Leopold launches one in the future. God knows. Yeah, I would love to get
23:28
Ejaaz: access to different sectors that aren't just generalized LLMs.
23:31
Ejaaz: And I think finance is a big one. And Stripe's acquisition is huge. So I'm not.
23:34
Josh: Going to say how that works. And Stripe has just like this unbelievable team
23:36
Josh: of builders who are just so talented and so good at what they do.
23:41
Josh: And if I were to place a bet on anyone actually winning this next frontier of
23:44
Josh: finance and what that looks like, I would certainly pick Stripe.
23:47
Josh: So very bullish on the future of Stripe as it relates to the future of payments.
23:51
Josh: And I think they're a company to look out for.
23:53
Josh: Open routers just fuel on the fire. and that is the update so thank you all
23:57
Josh: so much for watching if you made it to the end you are a real one we appreciate
24:00
Josh: you sticking along for the journey if you enjoy this episode don't forget to share it with a friend
24:04
Josh: that's how we grow which we've been doing so fast and the comments have been
24:08
Josh: so sweet so thank you to everyone who has left
24:09
Josh: a nice comment we read pretty much all of them i i wake up in the morning and
24:13
Josh: like the kind of scroll first thing and just see all of the nice and sometimes
24:16
Josh: not so nice things but i appreciate the feedback both ways it's important to keep us humble
24:20
Josh: um he does any final parting thoughts before we head out of here
24:22
Ejaaz: Uh no i think that's pretty much it. I'm curious what people's thoughts are
24:27
Ejaaz: on an episode like this. Is this something that's interesting?
24:29
Ejaaz: Is this something that's just boring for you? Do you want to just hear about
24:31
Ejaaz: model updates in general?
24:32
Ejaaz: Or is talking about different sectors and applications of AI in different sectors
24:36
Ejaaz: useful to you? Let us know in the comments, DM us, we're available on X,
24:39
Ejaaz: share this with a friend.
24:41
Ejaaz: And yeah, wherever you're listening to us, if you aren't subscribed,
24:43
Ejaaz: if you haven't given us a rating, please do so. It helps us out massively.
24:46
Ejaaz: And we will see you on the next one.