We’re in an Age of Build

Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
I feel like I've been resistant to some of the more recent waves, you know, labeling themas fads or something like that.
With this one, I'm like, nope, I'm not missing this one.
I would like to capitalize on it in some manner.
But the capitalization on it would be a bonus to the fact that I'm just going to plug intoit because I think if I don't, then I'm straight up left behind.

(01:11):
Merry post-apocalyptic Christmas or something, Sean.
Yes, Merry pre-New Year.
We're here in...
What?
Yeah, Happy Hanukkah, Happy Hanukkah.
Yes, Happy Hanukkah.
It is still going, I think we're on night five or six tonight, if I'm not mistaken.

(01:31):
If we're, wherever you are in the temporal space listening to this.
Yeah, that's where we're at in our head space, just to give everybody a little referencepoint in time.
Well, Dan, how was your Christmas holiday?
Did you have?
was good, it was quiet.
For us, we did not travel, nor did we host, which is remarkably unusual.

(01:54):
I think that's happened like one time in the past decade, and we were in Malaysia that onetime, so it was different.
But this time we had kids, we did our little Christmas open under the tree stuff, and itwas fun.
And then we went up to see some other family that live in the area and had dinner withthem.

(02:15):
It was nice.
That's very fun.
That sounds like a very nice little Christmas.
My wife and I went up and visited my parents up in Indiana.
So we spent the holiday in the Northern Climes where it was a nice balmy 50 most of thetime.
Definitely not as cold as it could have been or used to be, I feel.
Just a really good time with the family though.

(02:37):
which is kind of like a foggy Christmas really.
You couldn't really see more than about 500 yards Christmas day.
was pretty cool.
Instead of a white Christmas, it was kind of like a London Christmas, I guess.
Yeah, yeah, yeah.
So it was cool.
Yeah, we also, we spent some time just digging around the Midwest there.

(02:59):
One thing I kind of want to dig into, we can hop right into it, is so.
we did like a little gift exchange, right?
For, like a kind of a white elephant style type gift exchange where we're just buying, youknow, just one or two gifts, rather than buying gifts for everybody.
so I went to the mall here in Houston, looking for, you know, just some random ideas of,of where to like, you know, you used to be able to go like the Brookstone or sharper image

(03:24):
and find some kind of cool like.
Maybe a little maybe a little hokey little tacky, but still kind of, you know, fun littlegifts that you might play with for a couple of months or, you know, might be on your desk
for a couple of months before they.
make you think or isn't this cool?
More novelty than purpose, but yes.
hey, here's a weird application of this new technology we were working on or, know, andit's, I was thinking about it.

(03:46):
They're, they're like, stores of, solutions looking for problems.
Really?
That's kind of what they're selling.
Yeah.
Yeah.
This thing only massages your calves, but you want it.
Yeah.
get in the right size.
Yes, exactly.
So, no, but I really didn't, I couldn't do we didn't have any of those stories left herein, in Houston.

(04:12):
And we were, you know, talking pre recorded, you were saying it's harder to find thosekind of gifts.
Like, I don't know, those stories don't exist.
But then also, do you know, the things exist online at all?
do the exact.
The stuff definitely does.
It's just changed.
It's.
It's.
Well, well, right, yeah, and I think my comment to you was like I got to see what someteen and preteen boys were up to with playing with their gifts that they had received.

(04:43):
And you know, of course there's some like.
Serious more serious gifts, but some of the playful ones.
were things that made me think like, this is clearly on Amazon.
It's not on sharper image anymore.
Sharp image isn't where people go.
It's going to be bought on Amazon and it's going to be sold by a seller whose name isIFFUKKKKLMQP and that's going to be the, you know, that's it.

(05:16):
Mm-hmm.
But I don't see these things.
I don't know that they're popular.
I don't even know that they're options, I think, because I'm not out searching for them.
Therefore, my algorithm isn't giving them to me.
don't see them on Instagram ads.
I don't see them on my Amazon homepage, because I'm not looking for this stuff.
Therefore, the algorithm isn't serving it up to me, right?

(05:38):
And that was my comment to which you said, hold up.
yeah, hold up.
We got to get into this because this is, this is like, I was thinking about this in termsof, one, right.
Like, so if I don't have an algorithm that I'm, you know, that's feeding me thisinformation, one thing I was thinking about during doing my Christmas shopping, and then

(06:01):
actually in a little post Christmas shopping experiences was,
There used to be a little bit of a joy and wonder and going and wandering around a spaceand not really knowing what you were looking for and not being like, let me think and come
up with a list and like, oh, here's the plate stores I need to go visit to see that.
It's just like, I'm going to wander and, hey, that looks interesting.

(06:21):
What catches my interest?
That doesn't exist in the same way it does today with the digitization of retail or thee-commerce.
have an infinite shelf, but you can only really like legitimately see four things on sixthings on your screen at a time.
And you can only scroll for so long.

(06:42):
It's not like walking aisles.
Mm hmm.
And it's so and I wonder like, you know, the future of the American mall, what does itlook like?
Because I was last time you've been to a mall.
in Asia, malls are still like the place over there.

(07:05):
Yeah.
And that's last time you've been to them all was in Asia.
Yeah, well, I was in Philippines.
Yeah, I was for the week I spent right next to the mall and the mall is where you eat.
The mall is where you hang out.
The mall is where you yeah, the mall.
mall.
That's like it's a big deal.
Yeah, still highly popular.

(07:25):
I was just telling someone the other like you can go get like really legit Filipino foodin this particular mall.
or you can get McDonald's.
you can get Rolex.
You can also get H
It was all right there in that mall.
So when's the last time you've been to an American mall here in the States?

(07:45):
question.
Pre-kids?
We're talking years.
With kids, we live really close to this outlet mall in Castle Rock, and there's like aCarter's store, H and Columbia Outerwear.
It's an outdoor mall.
Yeah, yeah.
And it's really nice to walk around, and also like we can get, you know, a new kids pufferjacket for like $18, right?

(08:11):
Like so, we do go.
But it's mostly like discount clothes that we're looking for.
Yeah, that makes that makes total sense, Makes perfect sense.
So I visited one here in Houston, indoor old indoor style mall called Memorial city.
on the West side and then.
And it's about 20 % empty and just like a lot of the shops are what's.

(08:38):
curious to me is I like the particularly the the larger department stores are very muchobviously struggling hard.
Some of the smaller shops that seem to be doing well are like specific name brands likethey're atomizing a bit right where like it's here's the Levi's shop.
Here's the Ray Band shop.
Here's the or yeah like very specific it's it's not like a collection of stuff it's nowhere is our one specific store product we need much smaller spaces for that.

(09:08):
so like these larger, the scale, larger scale stores are, seem to be really taking it moreon the chin.
And then have a lot of, a lot of really weird little things of like.
in the kiosks.
and even like people, it's like they're buying clothes on Alibaba and reselling them typeof thing.
Like low, like really low rent, which is fine.

(09:30):
It's just, it's like, you know, it's, And so it's like, it's so, it's like the entireexperiences like of the indoor mall has completely changed like half the food court.
it though?
So like what you're doing right now is comparing it to some sort of construct that youhave in your mind.
Yes.
what I'm doing is I'm just right.
What I'm trying to do is I'm trying to say, right.

(09:51):
So I'm imagining like the booming 1980s, 1990s mall space, what you see in Asia, that mallspace, what that kind of was for a community and now what those spaces have become and
like aren't anymore.
And what I'm thinking like those spaces need to become and like what the communities, howthe communities can like reabsorb those spaces in interesting ways.

(10:15):
Because
When we were in Indianapolis, do you remember ever visiting?
for those of you who've ever been to anywhere, it's, just like any other giant mall inyour probably city, but circle center in Indianapolis, giant indoor mall in downtown.
I kind of think like the Houston Galleria or, I mean, not like the mall of America thatplaces, I don't wonder what the mall of America is like today.

(10:37):
I bet that's a weird, that's a weird place.
I wonder how that, that retail mega structure is holding up.
it has like entertainment and stuff in it, right?
Experiences too.
I feel like those are the malls that are doing fine.
I would think they would have to.
But no, so anyway, we're in this downtown mall.
At least two thirds empty.

(10:58):
Just empty.
And it just, like, there were two stores closing, there were two stores that were closingwhile we were there.
At least.
At least.
I've talked to you about my theory around capital flight, right?

(11:20):
Well, let's get into that.
Let's re-circle on that today.
Cause I think that's, I think that's kind of also where my head space is at around this.
and, it, just, it felt it's, you know, a fine space, like there's all this like usablesquare footage and, you know, volume of covered space that could be something, but really

(11:42):
what can you do with the dang thing?
Right.
It's like, it's set up in such a way that
How do you repurpose this?
How do you make this at all useful to the community rather than just being this monolithicgraveyard essentially?
It's similar to the discussion of like, can't we make these office towers intoresidential?
And it's like, yes, but it's going to take one time to government permitting that doesn'ttake four years and a whole boatload of money.

(12:07):
Yeah, and a whole boatload of money.
Which means someone has to risk that money in search of reward.
Or it has to be done by someone who doesn't need reward, which is usually government.
So I was curious on the flight while I was sitting in the airport for eight hoursyesterday, or actually, yeah, there was a, think five tornadoes in Houston ended up

(12:33):
hearing.
So, Houston travel was wrecked.
when we got in, it was one 30 and the airport was packed, just jam packed because peoplewere just stuck there.
And like it was, I just felt so bad for everybody.
was so glad that we were fortunate enough to be getting home as late as it was.
Thank God for all the airport workers that had to suffer through that.

(12:55):
Like I know they were just in hell, but they were miracle workers yesterday to those,those in Houston.
kudos to you all anyway.
That's what saying.
I was looking, I had this time in the airport, uh, dealing with it, like waiting for thestorms to clear and, and before us to get cleared to take off, uh, I was looking up, you
know, kind of the history of the mall downtown Indianapolis and, and found out that, know,it just recently last year got, uh, acquired and they're basically forcing all the

(13:23):
businesses that are there out.
So, okay, they're trying to empty it out and they're going to.
They're going, they went to the term they, they frayed, they put it reintegrated into thecity.
Um, which basically to me means.
Which to meanings and like they, kind of, then there's a couple of sketches up andbasically they're, they're atomizing it, right?
They're, want to turn it into an outdoor style mall, less big, big, the, not the biganchor department stores more, you know, boutique stores.

(13:49):
And I think this is going to be the trend that we see if you're going to be trying torevitalize a downtown area is that you're going to have to make it much more smaller.
Spaces that can be consumed in different ways for different purposes.
But to be able to do that, I don't know how you do it.
Cause I think what you were saying, this is where your capital flight theory comes in atall.

(14:12):
And like, how do we actually fund this kind of transformation or revitalization where it'sneeded?
Or is it.
Well, this ties into another thing that's in our notes around like investing in realestate around demographic changes.
so no, my capital flight thing is very much related to, I don't know what, what would havebeen called white flight back in like the late eighties and early nineties.

(14:36):
I think that's when it was occurring.
Right.
And it's all like the narrative I think was all around crime and crack and drugs and allthe stuff.
And that's why all the
white people left downtown.
the all the 80s dystopian, you know, action movies that
Exactly.

(14:56):
And everyone but then everyone moved to say, to the suburbia.
And what I wonder is like, is that narrative just wrong?
It's the convene.
It's the narrative that makes everybody feel like they were powerless to change it andthey had to leave versus just like revealed versus, you know, stated versus revealed

(15:19):
preferences of, well, you have a couple of kids, and you kind of want more bedrooms and a
Yeah.
bit more square footage for your own sanity and maybe a yard because that way when yourkids go crazy you say outside please go play.
what we're saying is the result that we see then, it's like, all this like, like thisdecision just happens like, oh, we were just escaping this thing that it became, but no,

(15:39):
it became that because you escaped it.
Correct.
So that's why I call it capital flight.
And I think what we might be beginning to see is it kind of happening again becausemillennials are having kids later and the hollowing out of downtown is going to be not the
same, but similar.
Yes, yes, I'm thinking the exact same thing of to sustain these, these, you know, citycenters.

(16:08):
Like we in this happens, right?
It just seems to happen every couple of generations where the city centers just getgutted.
Like, I remember when we were kids, it let's rebuild the city centers, let's rebuild thecity centers and bring everybody back to downtown and
very much in our ethos and my ethos growing up was like, I want to live somewhere and livedowntown.
Like that was what I wanted to do.

(16:29):
and now I'm sitting here downtown and everybody like is moving away.
and, and so I, like, is it, it's, just, I think it's just fricking generational cycle.
So like these downtowns are going to have to go through this, you know, downturn andrevitalization.
What do they look like coming out that next revitalization?
And are we getting there?

(16:49):
Cause I honestly,
Downtowns are.
would be when my kids start to move in.
Yeah, you're probably right.
Cause Gen X isn't, didn't, uh, wasn't a big enough generation nor did it create a bigenough generation to heavily demographically affect the trajectory that's happening.
That's, think it's, if you had, uh, atomized generations, then you wouldn't see this ebband flow, I think.

(17:13):
But because you have the boomers and then the millennials to the two biggest generationsin American history come in and out of life phases, almost all at the same time.
Um, you get these big boom and busts.
with let's call it lifestyle preference changes, and then what manifests out of thosechanges.
Yeah, absolutely.

(17:34):
So anyway, going back to the mall.
This ethos of trying to change the trajectory of the downtown area is where I kind ofwant.
In B-School, we had this one project.
was, it was all about malls.
It was about the future of malls, right?
Like Ballsburg declaring bankruptcies, Simon property was doing like a thing.

(17:57):
There's just a lot.
It was, so it was an easy thing to, to talk about and sort of pontificate on what may bethe future of malls.
And one of.
I forget if it's my group or a different group, it didn't matter.
one of the thought processes was you're have to have more like experiential andentertainment options within the mall.
You're gonna have to make it into a destination and then shopping as sort of likesecondary.

(18:21):
like default included, not, you know, some people are going to go there because they needto shop.
Other people are going to go there because like there's a legit really nice restaurantthere and there's like a play space and something.
And then, yeah, let's go take a look at Crate & Barrel real quick.
Something like that, right?
Yeah, and that's kind of what happened in a lot of the open-air mall spaces that came upin the last 10 years 15 years Even I'd say there were a lot of lot more spaces built like

(18:50):
that
And if you look at like Simon properties, the renovations and stuff like that's, that'sdefinitely where things had gone.
So I.
the path we continue to see too, like, cause I don't think, I don't know why you would,that's the path at this point that makes the most sense to get any traction with, know,
generations just having more and more kids now.

(19:12):
they need that mixed use space.
if your only need is to shop, you can do it on your phone from home.
exactly.
Unless it's a specialty item, at which point, you know, that's kind of different.
Well, even a specialty item, you're gonna be able to find a better on your phone at thisday and age.
That's true, but I would also wonder like, are you going to the mall for that?

(19:35):
I mean, I know you can buy a Tesla in the mall here, but like, you know, some of theseother special, I don't know what you want to call some of these special, I'm trying to
think of a decent example where it's like, no, actually, you're like, you're going to goto.
Yeah, scratch that.
I'm not coming up with an example.
like, I mean, that's kind of like, you know, again, the why I miss sharper image isthere's all these like kind of junky things, but like sometimes there's something that's

(19:58):
really cool.
And I want to go play with all of them a little bit and give them all a hand, like atactile hands-on try and be like, Ooh, yeah, this one, this one, you know, resonates with
my, with my cortex or whatever.
And it gives me the vibes.
So I want to, I want to take this one home or gift this one to so-and-so.
Like you don't get that, to that experience with this picture of it online.
Okay.

(20:18):
Yeah.
All right.
guess.
true.
mean, I remember giving a gift and then like once I know it was received, calling them upand be like, how is it?
Do I need to buy another one?
I forget what we just talking about.

(20:39):
Well, let's go back, like, circle back to city centers, city revitalization, and sort oflike what you're thinking about mid-tier or mid-size cities.
I'm imagining like, there's all these cities of like, across, you know, the United Statesthat are for lack of a better description to midsize city, like anything from even
Lafayette, smaller, smaller midsize city, but to Indianapolis, Cleveland, Long Beach, allkind of seeing like, Denver.

(21:08):
When I was in Denver last year, in, the downtown Denver, I just feel like all the citycenters kind of suck now, like going down and like being downtown is not a pleasant
experience at this point in time.
and that sucks.
Cause like, when I liked, when I travel, I had to travel to cities and, it's like, okay,I'm going to these cities and, they're, they're like, it's just not a pleasant.

(21:36):
They're not pleasant places to visit at the moment.
And I don't know.
Like, like, I think a lot of it is also, have real estate that's you, you're not even ableto afford to actually live anywhere near there.
So you have, you have too much, you have all this, yeah, all these, you know, this vacuumof, that creates this sprawl because you know, this, this cost vacuum of like, okay,

(22:01):
here's where it's cheaper to build and, and yeah, and zoning and.
residential over there, even though like half the city would like to live there.
Yeah, exactly.
Yeah.
So, so I don't know how, without like majorly like we have to overhaul.
We absolutely have to overhaul our zoning and our construction codes, make them a littlemore.

(22:23):
I understand the need for like all these codes in different places.
Like you, the way you build a home in Houston is way different than the way you build ahome in Denver, obviously.
but there's no reason we can't have a more standardized coding system and a morestandardized.
you know, zoning and permitting process to help, you know, expedite and, make, you know,make this the, just to actually reduce the cost of, of, getting these projects done.

(22:51):
It seems like there's so much money that would love.
with the aim of getting the same result.
Yeah.
Yes.
Like that's one step that needs to happen.
then like outside of that, like, also think I don't know how you, because I don't know howyou make anything sustainable without a certain level of density.
Like when you go to Chicago, it's a little different.

(23:12):
Like it has, there's a certain level of density that's keeping this, like these areas alittle, a little more robust and reach self rejuvenating, self sustaining.
yes.
if we don't ever get to those levels of density in certain areas, we're just going tocontinue to have this, this generational by generational by generational, up and down

(23:33):
cycle of, of, of build and blight build and blight.
and I think like, from what I hear when you travel to these, you know, countries in Asiawhere they have, you know, a small city for them is New York and in some places, right.
I was in the second city, Cebu, and that's like three plus million.

(23:53):
And I think that was city proper.
Like if you do Metro Air, it's a lot.
a lot of places where I think that it's, I don't know, I don't know.
I don't know.
There's different, need to go travel and check this out.
And also you have to see it over, over a span of years to probably actually appreciate it.
but I think we were until we get to the point where we actually can get sustainabledensity in these cities.

(24:16):
Like we're going to just have this, this cycle of boom and blight.
It continues.
And I don't know that you like, I don't want to be the pessimist, but I don't know thatyou're going to see the density required.
No, I don't know what it takes to get there.
Yeah, yeah, you're right.

(24:36):
changes.
Yeah, American preference changes is the hard one too.
It was the hard one, it's not the, that's hard one.
But there are like hints of, know, there being plenty of preference that isn't allowed toblossom to your point of like, you know, trying to live downtown.
And it's like, well, the schools are a one out of 10 and 2000 square feet costs 1.5million.

(25:00):
And I was like, well, I mean, you got to be doing really well to be able to afford thatand to stuff yourself into that square footage with needing to also pay for private
schools because
That's what you're going to end up doing.
I'm not saying, you know, I'm voting one way or another, but that's what's going tohappen.

(25:21):
Exactly.
settle for the one out of 10 school.
Unless you just don't have kids.
Like, you know.
then that doesn't.
What does that do to the fabric of?
That area.
and like, and make it ever.
Yeah.
You, you, you're never going to build something sustainable.
that school remaining a one.
Right?
Like by not changing the economics of the width with which cost of living could the band,the width of the band of cost of living that could exist there.

(25:57):
Right.
you know, I guess I kind of look at it as our neighborhood.
Like it seems to be an American preference that everything kind of be the same.
So either you're going to have the, you know, you go downtown and you get the propertiesthat like, the people can't afford, but like, they're definitely not up to code.
No inspector has been in them for 25 years.

(26:17):
you know, there's probably mold and it's really tiny.
wouldn't fit anyone's modern day preferences, but, that family can live there because ofall of those things that are broken.
But then as soon as it gets renovated and retouched and updated to market preferences and
the financial reward was enough that some developer took a chance on it, then you end upwith the 1.5 plus million dollar property.

(26:42):
There's so much to untangle here.
Like you could spend time really pulling it apart.
it like I was just having these complicated feels like going back to these, you know,cities that I'm seeing and like, and I see I not that I don't see signs of it in, in,
know, the larger city of Houston to there's some still so there's signs of it here too.
I think it's at a more accelerated pace.

(27:04):
There are more dress or maybe just like I've had distance like you can come back and youknow, like
That is true.
I would say there's more economic.
than a slow, slow change of time.
dynamism in Houston, more change.
No, I think so.
Yeah, I think there's a...
is faster.

(27:25):
So you get a graph that looks like this, whereas Indianapolis is a little bit more likethis or something.
So it's more tan, like to your point, more tangible.
Yeah, I think that's very possible.
I will say like Lafayette like seem to have a lot of new construction.
Like, so like as far as, you know, the smaller mid-size city, I think it's doing a littlestronger.

(27:45):
Like they have a big.
like the top 20 highest appreciating property values of last year.
Okay.
So, the saddest thing about it though, is I saw at least a dozen brand new restaurants,like brands, new buildings, brand new bill that's every single one fast food.
Like it was just like, here's a brand new Popeyes, a brand new, a brand new Chick-fil-A, abrand new Kane's a brand new, KFC, like name your fried chicken, you know, and

(28:18):
Like out on towards the, towards the highway.
was brand new hotels, brand new fast food.
then, uh, the campus has changed wildly though.
They, uh, Chauncey's gone.
Uh, it's, it's demolished it yet in the last, yeah, it's, it's just a, it's a flat spaceand most of the levy and not most of the third of the levees, a flat space.

(28:41):
Um, nine Irish is still standing and then everything around it is leveled and blocked off.
Neon cactus?
It's still there, unfortunately.
they're trying to add, like, I don't know, it sounds like they're doing something prettybig.
I don't know, it'll be interesting to see what it looks like another year.
Just, yeah.
how many years has it been since I've been?

(29:03):
But yeah, so like if the smaller size city, like they seem to be doing pretty well.
Cause I think people are flocking in that direction.
Like, and then you have the, know, the, like the Noblesville and Zion's and Zion's andCarmel's of, of the Indianapolis area or the Katie's and Woodlands of this area.
And I'm sure what Aurora and what's in Denver.

(29:23):
Yeah, Parker Castle Rock Highlands Ranch.
where you're getting like massive growth and like this and everything's new justreplicated.
reach of like choice employers to like here in Denver, there's a Denver tech center orsomething.
And you can imagine the kind of employers that are there.
Plus like Lockheed has, you know, tons of facilities around Denver.

(29:48):
Yeah, there's a lot of choice employers around here and there are in Indianapolis too.
And,
just, you know, like if you, you could be, uh, like in the St.
Louis area, there's a suburb of O'Fallon and St.
Charles, St.
Charles in particular is like a beautiful little city.
Um, and you know, if you're a software developer, can work at MasterCard, make 150 plusand, and a nice house costs 354.

(30:16):
You're, you're banking on early retirement on that kind of trajectory.
If you.
keep things within check or build out a big army of rental homes or something, you know,like, that was a good life right there.
Mm-hmm.
Yeah, that's not bad at all.
And, and that it's the employers keep moving to those areas because there's people that,you know, then they have a population pool.

(30:42):
it's self-replicating there.
And then if they wanted to build or move to a, you know, a city center at this point intime, think actually they could probably get a pretty good deal on, on office space.
If they wanted it in a lot of.
you wouldn't get anybody wanting to do an hour and a half commute each way in really roughtraffic in most of these cities.
Absolutely.

(31:03):
or if you're, if you're a non-office based business, like you need some sort ofproduction, like you're sure what you're putting that anywhere in a, in a dense, in a
dense area likely, because you want to, you're going to build something out new in a, in awarehouse space outside of town where the land's cheap, you know, or, and it's, don't have
to come in and renovate something.

(31:24):
Renovation is extremely expensive when you're talking about, you know, pipes and yeah.
alleyways.
high voltage industrial wiring.
It's not just, the stuff you put in from the get go, because you're like, want my machinethere, there and there.
And so I'm not gonna go retrench a concrete floor and put it in later, if can avoid it.

(31:46):
do want my apartment to look like that, you know?
I want the exposed brick and the polished concrete and the exposed HVAC system and it allsounds really nice.
Mm-hmm, exactly.
I don't know, it's just, feel like we're in a, I think we're in a moment of, not a moment,an age of flux in those spaces, which I guess we always are, but I just noticed it.

(32:07):
I guess I had.
I think it's moving away from what we have spent the past decade plus as our preference,if you will, right?
And like, that's when our life changed suddenly, and the moving to the suburbs was not achoice.
It was just what occurred to us.

(32:27):
It was a shock to our system.
And now we've clearly fully embraced it.
Along with a whole bunch of other people.
COVID just accelerated it by a lot.
Mm-hmm.
So another few years, it'll be a good time to buy property in the downtown centers andthen let it flip.

(32:48):
No, I don't, who knows?
Anyway, that's what was on my head for my trip to Indiana, Dan.
That was a long answer to your, I think your one initial question.
Yeah.
What's on your mind this week?
Well, I mean, piggybacking, I, we, I had dinner with a mutual, and, you know, she used tolive downtown Denver and, it was just, she was talking about like a couple of weeks back

(33:18):
or something like that.
being back in downtown proper and going on a walk and kind of hitting the old coffee shopsand different things.
And it's like, it's just harder.
it isn't what it used to be.
doesn't have that same vibe.
so like what she misses about living down there, what, what wasn't, she felt like itwasn't present anymore.

(33:39):
Yep.
So piggybacking off of what you were saying.
they moved out?
Pandemic timeframe.
No, I mean, I feel like they bought in 22 or early 23.
It was right around the same time as us.
Like ahead of us, I think.
the pandemic, everything shifted too.
I think it was like basically pre and post like that, that 20 to, you know, like 20 to 22basically was there was just a of things.

(34:09):
that's yeah, exactly.
That's when rates were still low.
Houses were going for like 100 over ask and some markets and then rates went up andeverything.
Anyway, home builders were a great investment and now it's probably time to like let go ofthem for a little bit.
It seems.
Yeah.
No, what's new on my side?

(34:32):
I have been living in a lot.
I've been living in AI land a lot and using it more and more and trying to just now I'mhere to not talk about like any sort of final decisions.
Like this is my tech stack and I'm really loving it.
It's more just here to say like I have been playing with cursor and lovable and bolt.

(34:59):
All three of which are, you know, sort of AI assisted ways to build software.
I still have a lot to figure out, but it is also just completely remarkable how quicklyyou can go from not being a software developer to getting way more than a hello world up

(35:20):
and running.
and yeah, that's, it's the future of code is like using English, which is nuts.
It absolutely is nuts.
But I think it makes perfect sense.

(35:40):
It's...
Well, the layers of abstraction keep getting further and further.
The languages keep getting friendlier and friendlier.
So yes, it makes sense that eventually we reach English.
Yeah, exactly.
I don't understand.
It's not surprising to me on a, on a base level.
It's cool.
It's maybe surprising.
We're starting to see it.

(36:01):
Uh, felt like my, something we'd never see, but, but yeah, I think, I think, I think the,the, know, the no code of code, you know, basically being able to build these things
without having to understand code is going to be where we're at, uh, on, at least onrelatively simple, not no, I shouldn't, you know, like app application based.
level stuff, like as you get into networking interconnectivity, don't know.

(36:24):
there's always going to be a layer of technical, where technical people are needed andthrive.
But I think more and more business people or product managers, even project managers,people who can kind of like organize and communicate their ideas are going to really,
really excel and need far less help by the technical people.

(36:47):
mean, even just like building out a feature where action happens.
Email is sent.
That simple.
And I think today a lot of people will be like, well, duh, that's easy.
Just make it happen.
And I'm like, do you, it was not that many years ago where it's like, well, first, firstwe got to get the like domain and all that kind of stuff.

(37:11):
You kind of still have to do that now.
And then you're to have to set up an email server.
You're going to buy the hardware and then load up an operating system and then load up theemail software.
Configure all of it test it make sure it works now.
You've got to go back and build your other server That's gonna run your software that doesgonna talk to your email server to make an action happen.

(37:33):
It's very in 20 years.
It's come a long way 40 years.
Yeah, it's incredible
do it.
I don't know what you mean.
I'll shut up now.
There's an element when I say these things, I'm like, I'm just like, think old man islike, you know how hard it was my day.

(37:57):
So you said cursor lovable, lovable, lovable and vault bolt bolt.
Okay.
Interesting.
Bolt is probably the friendliest for non-technical people.
You're still gonna get a whole bunch of roadblocks, but I would say have your chat GPTwindow open and then open up Bolt and then start, when you get stuck or things are weird,

(38:24):
start asking chat GPT questions.
And you'd be, I think it's a surprise how far down a rabbit hole you might get.
You may not build software, but you're gonna be much more familiar with the process ofbuilding software.
because you're going to see some of it happen in front of you, which is also justremarkable.

(38:45):
But yeah, I have a SAS idea that I'm chasing.
So I'm going to try to get as far down the process of building it myself as possible.
And then.
Is this the one we had talked about previously?
Okay.
All right.
And then, you know, if I can get, if I can get that idea validated by people spendingmoney on it, then, then I'll, you know, hire someone to really flush out my, I don't know,

(39:15):
the things that I didn't do well or something.
That makes sense.
any any any any insights from your other than you know what you've mentioned here any anyparticular insights you wanted to share?
you still have to know software development in some way.
Well, okay.

(39:35):
like,
The.
architecture of what you're going to build still has to be decided and communicated.
for me, I'm going in thinking like, I want the software to look like this when someoneappears and then they're going to see the pricing tiers and then they're going to see like
a sign up login and then they're going to see this step and that step and this step.

(39:59):
And so I can explain what I want my experience as a client of the software to be.
And so I explained that to these code builders, AI assisted IDs or whatever.
One problem is that I haven't defined for it what kind of architecture that I want it tobe building around.
I haven't told it what kind of authentication that I want it to use.

(40:21):
I haven't told it what kind of packages, libraries or languages that I want it to use.
And so this first prompt gets pretty far.
It's pretty interesting.
And then the second prompt might like, you know, use some other library or sort of not.
be holistic and consistent with the way it's building.

(40:44):
So instead you kind of have to go in and define your technical, you know, your technicalpieces first.
Like I want to build a React app and I want to use these JavaScript script libraries andthese icon libraries and these font libraries and you build all that out.
your boundary conditions, essentially.
And those kind of have to be repeated ad nauseum.

(41:07):
cursor has like a config file that you can kind of like load in your preferences ahead oftime so that it's sort of, I don't know how it works in terms of whether it's like
resubmitting those every single time.
That seems like a huge token problem, but, yeah.
So it's just, again, early stages of playing.
spent, what the past couple of weeks, just like playing with the tools with no aim.

(41:31):
and then trying to decide which tool I'm stick with.
And then watching a bunch of YouTube videos on people, from people who like are legitsoftware developers who can walk you through like, this is what needs to happen without
the AI help.

(41:52):
since, know, basically get me to the point of give me everything I don't know.
and so that I can sort of wire, not wireframe, but like, you know, put the skeleton up sothat the AI can climb the rest of stuff.
you.
That's, uh, I, I'm fascinated to see what you build.

(42:14):
Um, um, I'm gonna, I really want to go poke around here.
Um, I wish I had some better ideas of like something to actually execute.
Yeah, I know.
What does oil and gas need?
Why aren't we creating a software studio at this point where it's like verticallyintegrated AI solutions to your problem?

(42:36):
we have, that, that division, they, generate about $500 million in revenue year for usright now.
and, and, SLB actually,
You productize AI solutions?
product did we use our digital integration, the vision essentially, and they have like abig AI team that is looking at integrating AI into different use cases.

(43:02):
So you're saying we missed the boat.
No, I'm saying, no, what I'm saying is we're right at the perfect time because the way wedo it is we think, here's a good idea for use case.
And then they go and look and see if who's already figured out how to do it and buy them.
So not at all, to have missed the boat.
honestly, like the, the things where we're looking at getting the most benefit, I think asan industry is,

(43:32):
I don't know.
maybe I'm that's a, that's a narrow vision that I was just about to have.
But, was going to say like, we have these large data pools that need to be.
Correlated essentially like between, geological survey data and then all of the welllogging and drilling data, from the thousands and thousands and thousands and thousands of

(43:56):
wells that we've drilled.
you know, then
correlating that back to your survey data and understanding how to build more efficientwells and using machine learning to say, okay, when you're running under these parameters
and doing these different things, you're able to basically look at the things that couldincrease or improve your recovery time or likelihood of drilling a successful well.

(44:24):
think those are probably where the the big money is going after right now.
if I had to guess.
But you have to have the data for it to work.
Yes, exactly.
They have to have the data for it Torx.
So they're partnering with, you know, the likes of Microsoft and Google directly andsaying, Hey, we want to work with you and our data that we have, because we have these

(44:45):
massive petabytes of, know, we, we used to be collecting petabytes of data a year.
so we have these data sets that I know that exists somewhere within company vaults that wewould love to figure out how to synthesize into.
useful insights for our customers and clients, essentially, if that makes sense.

(45:05):
Oh, 100 % makes sense.
Yeah, I think this yeah.
yeah, like, mean, I used to, as a reliability engineer, go in and into a system we had.
It was just, it had to have been by the time I was leaving almost a million different,logs of different runs of, of like well runs.

(45:28):
And when we'd have a problem, we'd go and say, let's pull up by like the,
I just lost the lot of latitudes.
Let's pull it by the lunch and latitude where we're at.
All right.
Let's find me a hundred other wells in the area that had been run and boom, you'd havelike, you could just like find them and then you have to go manually and say, all right,
let me find them stuff at the right depth and like correlate all this and see, right, howis this tool ran versus everything else that was in the area and how, how did it perform?

(45:55):
And, um, lot of very manual data slicing and analyzing.
And I just know that like, that's now like, so
achievable to be replicated, you know, on a, on on a automated bait on an automated way.
I don't know.
How do we, yeah.
How do we build that out?
if we can figure that out, I know some people.

(46:18):
Yeah
I mean, you know, a very simple strategy that has worked for years and I think is stillworking as you build a highly niched piece of software, prove that it works, get some
paying clients, get your ARR to a particular number and then sell on a really healthymultiple on ARR, which is nuts.

(46:40):
It is, is to many, much, yeah, exactly.
But to know what problems need solved and what prob problems are worth.
money to be solved has always been like a, it's like an insider's game to some extent.
mean, either you're just bloody brilliant or you're out in consumer land, which is muchmore cutthroat and difficult to build something there, right?

(47:09):
But B2B it's like, you have, if you get to a thousand customers on a really, really usefulB2B software,
because you're charging very good money for it and you give good support.
Go get Constellation knocking on your door or something.
Vista, Equity, or strategic, like you guys.

(47:32):
Yeah.
So let's build it.
Yeah, we're saying we need some use cases.
Yeah, or a pile of demo data.
Mm-hmm.
Hmm.
Doesn't even need to be real.
It just needs to look a lot like what
people have that you're selling to.
Mm-hmm.
And so what you're, are you thinking of, you're talking more from the pure automation, theworkflow automation standpoint, when you're thinking this stuff, are you actually thinking

(47:59):
of like building off of taking a foundational model and then trying to build a specializedmodels off of the foundation model.
Yeah, no, the second one.
think being like an automation agency is like printing money right now, but I don't thinkit lasts very long.

(48:19):
Being more strategic, being able to go walk into a company that's got, let's say it'ssmall even, 250 million in revenue, right?
Means they're, you know, of plenty size to be throwing around money.
at potential growth levers and your software comes in and says, you've got some thingsthat you don't know what to do with and you don't know how to value.

(48:47):
We know how to mine that for you and turn it into some small bets of value or thatovertime compound and don't cost you headcount.
That's like a home run for most middle and upper managers, you know?
Yeah.
is.
And I don't know how real that is, like, well, I know it's real.

(49:08):
It's just finding the correct hit, I think, is, you know, would take some time or intimateknowledge of a particular industry and its data.
Yeah.
And I feel like at a certain scale, those companies that once they hit that scale, they'rejust going to Microsoft or those people for a lot of these solutions directly.

(49:30):
You think so co-pilot is going to be able to like look at your mining data and drawcorrelations on what this next mine presents as a set of opportunities.
no, no, no.
But what I'm saying is we have a partnership or they have partnerships with Microsoft todevelop with, you know, Microsoft's help with different foundational models, like specific

(49:51):
use cases, like the, like the, the big boys are, I think in a lot of ways.
That's my impression.
I'm trying to see where there's problems with this because I'm sure somebody at a small,more agile level could do it in a different, maybe more effective way.
But, but I think like when you're talking in an organization in the size of, you know,50,000 plus people that have already these partnerships with Google, Microsoft, Amazon

(50:19):
web, you know, web doing a lot of this.
go down market from that.
Let's go to the let's go to the driller or the oil well owner who, you know, is stillstill just a little bit cowboy.
That's what I'm saying.
Those I'm saying you have I think we like there's there's a threshold of company sizewhere you have to hit.
That's what I was trying to get to Dan.
I'm sorry.
Yeah.

(50:39):
So like, like, like
I 250 million revenue.
I don't know.
I don't know enough about oil and gas to be able to tell you if that's like a huge andlike completely solidified organization with like top notch cybersecurity and data rule
sets, blah, blah, blah, blah.
I, I need
data privacy issues that we have to deal with.
I will say that because a lot of this data is considered very proprietary depending uponwhat it is.

(51:03):
but now for it, like an operator, the stuff they're doing, maybe not.
don't know.
I'm it could be.
on what the goal is.
If the goal is to exit because they were better at picking the right wells and they wereand then they exit to Exxon or whatever, then they're good.

(51:25):
Your software is no longer needed.
They made a bank.
Your software made bank because you probably onboarded enough Cowboys to sell it tosomeone, a strategic or Vista who is then able to like
have a larger organization make the software package more mature or plug into OpenAI andMicrosoft or I don't know.

(51:49):
Hmm.
being unrealistic at this point, I'm not sure.
No, I, I think every industry probably has a use case or two, right?
It's finding what it is and how do you get them the access to the data that you would needto for the specific use case.
And what kind of data would you actually need to solve their problem?

(52:11):
Is also the question I would have.
Yeah.
Yeah, you'd almost, yeah, you almost need to find somebody to partner with pretty early onto have access just to their data.
Cause otherwise like a, like a.
intimately familiar with what the data looks like and you can make up both bogus data justto be able to demonstrate like this is the data set that we have.

(52:31):
This is what's in there.
None of it's real, but we're going to draw a core.
We're going to show you how it draws correlations.
And if you give us access to your data for five hours, I'll be able to give you the samestuff.
Mm-hmm.
Hmm.
Because the engine that sits on top doesn't change, right?
I'm going to think about that and to think on that because there's gotta be, like, I justneed it's like, that's where I want to get my lens at right now for a while is just like

(52:55):
looking at, Where's, where's the application?
Where's the application?
Cause I, I'm sure if it's going to pop up eventually, I'm like, that's a, you know, maybedumb, but good idea.
It's niche, but that's enough.
People would need that.
I just need to be constantly asking that question to myself.
Yeah.
Niche is where you can be a minnow and play.

(53:16):
Yeah, exactly.
That's exactly what you could do.
I don't need to be much bigger than a minute.
you some of the payouts on these things are, you know, for other people are very small,but for us would be enormous and do a couple of those and you're good to go.
have one.
have one.

(53:36):
I have one.
I have one.
have one for a midsize company working with a larger company that has to work with their,that company's AP payment systems.
Like, for example, Arriba with SAP very painful, very difficult to do error free the firsttime.
Cause you always have to validate all these little fields and like something like theshipping costs might not have updated.
And there's constant things that are about bounce back and forth because people justaren't good at checking little details.

(54:03):
Give these suppliers SAP a tool on the front end when they're uploading their invoices tohelp automate the matching and prevent rejection and get things through the first time.
So that way they're not, you know, waiting for the, the, the, the, you know, net 70 daysto actually kick in once the invoice is officially received.

(54:24):
I would suggest looking at crew AI.
You can build little agents.
like, I don't know if you can plug into SAP or whatever, but it seems like you ought to beable to.
Well, for, for like on that situation, like our, for our vendors, it's there to have a webportal.
Right.
So it would just be like, I think as long as you interface with the web browser, you'd befine.

(54:46):
Yeah, but I'm saying if you're just validating some numbers and you're trying to get ridof human error and someone who sits there and just checks these things or whatever,
they're gone in the next couple of years.
I have
You can have like 80 of these agents and each agent only does one thing and it does itreally well.
I have a...
free.

(55:08):
Although I feel like the pricing on some of this stuff is bound to go up.
It's going to go up before it comes back down.
there's like, there are some specific roles I know of that.
Could be automated out given the right?
parameters like I mean We have people that check documentation for example, that'sbasically a Document gets scanned in they go and they look and say does property a B and C

(55:38):
match what it's supposed to on this table.
Yes, it does Okay, it's good to go.
That's all they're essentially or saying now I'm gonna put these this documents from
Part A, part B and part C into this pack, went together, those shipped together.
And that could be very programmatically driven.
I mean, it doesn't even necessarily need to be AI.

(55:59):
I could be programmatically driven, right?
But you could use it.
Having some AI in there would help with certain cases, especially on, guess on thedeciphering of what is what and trying to match certain things.
think there's, we're just pure programmatic.
language doesn't work, but.
yeah.

(56:19):
But you could make the AI transform unstructured data to structured data and then do itprogrammatically after that.
what you would do.
That's exactly what you'd do is just getting it the right structure, right?
That's why it, yeah.
Hey, yeah, crew.ai has SAP logo on there, flying by on their homepage.
Good tip, Dan.

(56:40):
There you go.
Start automating away.
Yeah.
Brilliant.
All right.
you can build all kinds of different automations on there.
It's kind of interesting.
I mean, it's not kind of interesting.
It's really fascinating.
and being able to give me all these tips.
Yeah, I mean, it's really fun.

(57:01):
feel like either get on it or get left behind and like within the next two years.
You're probably right.
Yeah, I think you're definitely right.
Within maybe five years.
I maybe two years, maybe a little quick, but yeah, two to five.
I feel like I've been resistant to some of the more recent waves, you know, labeling themas fads or something like that.

(57:25):
With this one, I'm like, nope, I'm not missing this one.
I would like to capitalize on it in some manner.
But the capitalization on it would be a bonus to the fact that I'm just going to plug intoit because I think if I don't, then I'm straight up left behind.
interesting.

(57:46):
I mean, well, yeah, because now's the time if you want to do what you're doing, if youwant to do you say what you would do now is the only time you're going to be able to do
that, right?
Because in a few years, it will be people have developed skills and specializations and
It'll all have been built out.
mean, it was like the last, when we discussed last time, like one of my predictions forthe future or this year or whatever, it's like, just take all the crappy crappy apps that

(58:10):
have some amount of MRR and they're all going to get transformed because now there's anarmy of people who don't necessarily need to really know how to code well.
They can just be technical enough and they can go build a new app and like the whole appstore could be turned over in the next.
Five years.

(58:30):
That's true.
As long as there's some money flowing, there is opportunity and people will eke it out.
They're just gonna eat up the little fish food until it's gone.
Yeah, well that, he had to fish until it's gone, that's good way to put it.
It'll just be...

(58:51):
Give me three or four streams of fish food in my life and I'm, good girl.
Yeah, that's all you need.
That's all you need.
Like, but like, guess I wonder at what point if you're, if you're using these tools that,know, you were talking about, you know, cursor lovable or, or crew and you're starting to

(59:12):
these things out, like, why don't they just go down downstream and then start to eat upthat themselves at some point.
What do you mean go downstream?
Because I think that's the difference between building the software versus being anagency.
Okay.
Right?
Like cursor is in the business of building cursor and charging money for it and continuingto make it a better product.

(59:36):
There will be agencies built off the backs of cursor, but I don't think cursor is going tobuild their own agency necessarily.
They're too busy building cursor.
The moment they decide to do something else means cursor will get eaten up.
Fair.
Fair.
Yeah.
Hmm, I'm sorry, I'm sitting here too much.

(59:57):
Looking at this website that you sent me to, now I gotta get my head space back right.
Yeah, was still looking at, I was still looking at crew.
Yeah, there's some good stuff on there.
I need to go poke around off air.
Are you doing this on, just like you're, I just need you to do this, are you doing this onyour Mac directly, any of this stuff you're doing on a tablet or on other interfaces all

(01:00:21):
through?
yeah, with a full keyboard and all that, Multiple monitors.
It's much easier to work with chat GPT on one side or Claude on one side and then the IDEon the other.
For answering these types of questions, do you find GPT or CLAWD to be more proficient?
okay.
everyone, I, it seems to be, some sort of agreeance that Claude is better.

(01:00:47):
Mm-hmm.
My problem is, is the chat GPT product is better.
And I think it's, that's not a comment on the LLM or the results that spit out.
It's yes, it's like being able to use it.
Chat GPT connects the internet.
I can upload a bunch of stuff to it and it analyzes it.
The Mac OS app is like native and really, really good.

(01:01:11):
So I just, I use it more because I use it more quickly and it
You know, I can give it a link to something on the internet and it looks it up.
And therefore it takes in the whole of the webpage.
If I want Claude to do the same thing, then I'm copying all the text out and downloadingall of the image.
Like the least this is how I figured out how to do it so far, because it doesn't, it keepstelling me it doesn't, can't and won't connect to the internet.

(01:01:37):
So I can't have it consume a webpage the way I would like to have it consume a webpage.
can download a PDF of it.
Critical.
chat GPT is the winner for that use case.
But perhaps the LLM on Claude might be a little better or more accurate.
I don't know like, know, how they're,
if accurate is like a not right word for it.

(01:01:57):
but higher level results in some way, I think would express the difference.
but which is to say I'm testing both because, I'm, I'm, I'm, I'm testing both.
I'm testing my ability to get the LLM, the information they needed to have in order tomake its analysis.

(01:02:20):
testing different ways to do that because both products are very different and how theyallow for it.
And then the actual output of that analysis is another step.
that tracks the quality of the analysis and comparing datasets or comparing information.
You would actually get better results out of a different LLM.

(01:02:43):
think that's where...
is to like, how do I, I know this is possible, I just haven't gotten there yet, is.
Can you make, can you make GPT talk to Claude and then say, put all this into Claude forme.
And then they start planning to take over the world.

(01:03:03):
No, you can't because Claude doesn't talk to the internet or something, I don't know.
what I want to be able to do, I know it's possible, I just haven't figured it out yet, islike, want a very specific, a specifically trained GPT.
Part of the reason I haven't tackled it is because like, if you do that, you need thetraining data, right?

(01:03:25):
And I think it's gonna take me hours to come up with the correct data of like, this iswhat bad looks like, this is what medium looks like, this is what great looks like.
And like having a hundred examples of each of those.
three grade levels, if you will, that's going to take me hours to get.
but then what I want to be able to do is train on GPT on, on that.

(01:03:46):
then, and then via API, plug into that specific GPT so that I can productize that sort ofgrading system, if you will.
So, that, like, can I ask what kind of data that source data you're looking at?
are you talking about like sales data?
you talking about like product review data?
I'm not gonna reveal that right now.
Yeah.

(01:04:10):
I think if I answered it, would give it away.
Yeah.
Off air.
Not that it's some sort of hyper-stealth thing.
It's like, you know, I'm telling everyone who will listen about it, but, and I just, Ican't bring myself to like broadcast it this openly before it's a product.

(01:04:31):
Wait to launch.
concept out there and something to point people to, right?
So you can say, here's what I'm talking about.
Right?
Yeah.
So absolutely.
Totally fair.
All right, well, yeah, as I say, anything else you want to touch on
Yeah, cool man.
Alright, good hanging out.
Good seeing you.
We'll see you again, I guess, in the new year.

(01:04:51):
Until then, stay safe, stay warm, I guess best wishes for New Year's Day and good wishesto everybody out there in Podcastland.
Cool.
See y'all.

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