Qasar Younis was COO of Y Combinator when Sam Altman was its president. Peter Ludwig was an early engineer on Android Automotive at Google. Both are Detroit guys with family roots at General Motors. In 2017, they started Applied Intuition to make a billion machines intelligent. Putting intelligence into a machine is one of the hardest problems in technology. A car, a tractor, and a mining vehicle each have different hardware, different sensors, and lives on the line if the software fails. So instead of building one machine, they built the technology that goes into all of them. Cars, trucks, defense vehicles, mining equipment, combines, robots. Like Nvidia sells chips into everyone else's machines, Applied Intuition sells intelligence. They are the only company in the world that does this across all of these industries. They have raised about a billion dollars. They have never spent any of it. Qasar believes that when we look back 25 years from now, the most important companies in the world will all be physical AI companies. Last week they launched Dana, an agent platform built to get there faster. Enjoy! @qasar @AppliedInt Timestamps: 0:00 Intro 4:08 Why Physical AI Will Be Enormous 5:54 What Applied Intuition Actually Builds 9:25 Timing the Autonomous Revolution 13:59 From Tools to a Full AI Stack 21:40 Why Chatbots Can’t Build Robots 25:18 The Physical AI Data Flywheel 28:19 The Moat Behind Machine Intelligence 30:13 What’s Slowing Physical AI Down? 32:30 Applied Intuition’s Business Model 36:10 Competing in a Massive Market 39:24 The Hardware Renaissance 41:09 Why They Raised $1 Billion 43:49 A World Filled With Intelligent Machines

Gabe Stengel on why every software company will eventually charge based on outcomes: "I look at how hard it was for Anthropic to sell to us. Very easy. And the amount that we pay them has risen exponentially without a human in the loop because it's a token consumption model. Every business needs to go through two different pricing revolutions. You need to move to some sort of usage-based, and then you need to move to some sort of outcome-based. For me, if I can figure out a way to skip the usage-based, and just wait until I can say, 'Hey Patrick, what if I just charge you for every good investment idea I give you? Or what if I charge you for the quarterly report you send to LPs that I can do perfectly?' I would much rather get there than have to figure out some random way of trying to assign dollars per token. You're going to spend $100,000 on tokens and say, well, did I get $100,000 of value? And I don't really know. But you know what the value is to you of a good investment idea because you can actually see how much money did I earn."

Gokul (@gokulr) explains why utility-based software companies like Zendesk are more exposed to AI than systems of record like NetSuite, and why public markets aren't distinguishing between the two: "The software companies that should be the most worried right now is where they are pricing the product based on utility. Zendesk is a good example. Instead of paying for 50 Zendesk seats, you can pay for 20 and I can have 30 AI agents sitting next to Zendesk. For these companies you need to change your pricing model to be based on outcome. It's going to be hard for them to stay public. The companies that are less exposed are ones based on data that has been collected and captured over a period of time. ERP is a great example. There is no compelling reason for someone to put their career at stake by ripping out NetSuite. NetSuite has more time to build AI agents on top of it because they have the data, they can train the AI agent on top of it and bundle it. I think the public markets do not distinguish between these two types of companies." (Jan 2026)

Gabe's answer to the kindest thing anyone has done for him was about both his parents, and how differently their kindness showed up: "My mother's version of kindness was no matter what I did, I was amazing and smart and could do no wrong...you need some of that irrational confidence that comes from undying love. My dad was very different...his version of kindness was figuring out how does he understand who I am and why I am failing at this thing and then help me...while staying true to his standards of excellence."

Maverick hedge fund investor Lee Ainslie: "When rates are over 2.5% on average, hedge funds have outperformed the markets by 6.5%, driven by 12% alpha. Under 2.5%, they've underperformed by 4% on the back of less than 1% of alpha." Today, the Fed funds rate is 3.75-4.00%.

IB chat is one of Bloomberg's strongest moats. People pay $25k+ a year for a terminal in large part because everyone they need to talk to is already on IB. @GabeStengel on building the same thing for agents: "Bloomberg's strategy was, offer a little bit of data to get in the door, build all the analytics and workflows on top that someone would need, and then provide the exchange and the communication platform where you can actually transact in a bunch of asset classes that before was pretty opaque. Bloomberg Messenger. For us, it's use a little bit of AI to get in the door, build out the full workflows, go from co-pilot chatbot to full autopilot tool, and then provide the communication channel between counterparties so that if I have agents that can autopilot do the work, I can actually transact for you. I don't need to build the communication channel for humans to transact, I need to build the communication channel for the agents to transact across these investment firms. Think about what is the system that would allow a large private equity firm to feel comfortable having an agent negotiate a deal on its behalf. You need to replace email, you need to replace the data room providers, you need to replace all the governance and calls that happen on top. There's a huge amount of software to be built out."

Favorite part of the episode was Gabe's pitch to talent: "AI is going to completely transform the world. The place that is gonna be the most interesting is applied AI, because that's where AI intersects with humanity. The companies that dictate how AI intersects with humans are gonna do the most interesting creative engineering and product work in the world. Finance is the catalyst for all human progress and innovation, and capital allocation is upstream of the financing of every company, every idea, every economy. If you can make that more efficient, you can supercharge the world. We're the category leading player who has the best shot on goal to not just be the $100 billion business to do it, but the $500 billion business that completely transforms capital markets. There's such a depth and a complexity and an amount of interesting problems that's so exciting, and we have a killer group of people that is super smart, hungry, curious, and low ego that's gonna do it."

Every IB analyst knows this MD. Sends deck back at 11:28pm because the logo is wong. Sends back again at 1am because the bars aren't blue enough. Can't even read the model. But fights over the 25bps in deal fees bc the Patek doesnt pay for itself. Ask him and he'll tell you he's the only one in the building who's ever closed anything. If this company can fix that stupid deck back and forth then amen.

A big part of an investor's job is making founders more ambitious "Pat Grady (@gradypb) was at our board meeting and we presented an extremely aggressive plan for next year in terms of hiring goals, commercial goals, product goals. He goes, 'Gabe, if everyone in finance is gonna make a buying decision on AI in the next 18 months, and they are definitely gonna buy something no matter what, even if you're not there, then the only thing that matters is that you can blitz the market as quickly as possible to make sure that you are there. Given that, do you think this plan is aggressive enough or no?' The answer was no. And the reason it wasn't aggressive enough is because I was being soft. My goal as a venture-backed business is to increase the tails of the distribution. It's fine if it gets 30% more likelihood that I fail if the odds that I become a $100 billion company also increase by 20%. But you actually have to be okay with raising both of those tails at the same time."

Gabe on why he doesn't think Anthropic or OpenAI will own finance: "The reason people get confused when they look at app layer businesses like mine or Harvey or Legora or Sierra is because there's a spectrum of perpendicularity to what the labs are building. There's a whole bunch of stuff underneath the surface that the labs are never going to build, that we need to build for finance. All of finance is a collection of different niches with different data sets, different regulatory requirements. And we can get to $5 billion in revenue by going deep across those things and creating the systems of record that help manage them. That for Anthropic would be like stopping on the side of the road to pick up a penny, because they're on the pathway of trying to go from $100 billion in revenue to a trillion in revenue. Say you are a big public company buying another big public company and you need to send data back and forth. You actually need some sort of data room, something that is compliant, safe and secure. And I don't think OpenAI or Anthropic will ever want to build a data room business. If you actually want to be the exchange for all of high finance, you don't just need to own the intelligence, you need to own the transaction venue, the communication venue, the workflows, and all the data inputs that go into it. Think about the fundamental difference between Claude Code when it came out versus ChatGPT. The models were actually fairly similar, but the harness and the way that it was presented from Claude was far better. The way that you harness these models is so, so important."

Being a founder is like "chewing glass" "When you spend six months recruiting a candidate and they don't join, that's chewing glass. When you spend a bunch of time working on a product that gets completely washed over by the next model and makes you feel like an idiot for expending all that time and capacity on something that was the wrong call, chewing glass. When you get rejected by 40 investors in a row before you're able to raise capital, chewing glass. My experience of startup building is it's like a rollercoaster where you have to feel the extreme highs and feel the extreme lows, and I'm a super emotional guy. I will feel on top of the world at the high and like everything is cataclysmic at the low. But then if I look back at the journey, the lows get lower, the highs get much higher. And I look back three months ago at the low I was dealing with, I was like, 'What a joke.' I could do that in my sleep now."

Almost every founder has to survive some version of what Gabe describes here Although Rogo has raised over $300M, 40 investors passed on their Series A (except @rabois) Gabe on why every pass at that stage is a pass on the founder: "I met with Sequoia, Kleiner, Benchmark, everybody, and 40 people passed. And it wasn't just, you got the email with the deck and it's not exciting. It was, 'Oh, this is interesting. Let me meet Gabe. Oh, I kinda like Gabe. Let me spend an hour with him. Oh, Gabe, come to IC. Oh, Gabe, let's go to dinner. Oh, Gabe, come in for the weekend.' You know what? We're gonna pass. And it's so personal, because at that stage it has nothing to do with anything but you. Keith Rabois came a month after everyone else had rejected us, and Keith was like, 'Gabe, this isn't a contrarian bet. It's basically just Harvey for finance. Why would I do it?' And I said, 'Keith, if it's not contrarian, why did every single one of your friends just say it was a bad idea and not believe in me?'"

My conversation with Gabe Stengel (@GabeStengel), founder and CEO of Rogo. For years, Gabe and I have talked about how much of an investor's job AI will eventually do and how he is building Rogo toward that future. Today, Rogo helps some of the world's largest financial institutions research companies, run diligence and execute M&A. But Gabe's ambition is much bigger. He is building toward investing superintelligence, where Rogo does much of the work inside investment banks and firms and becomes the venue where they do their deals. It's a fascinating business and has been so fun watching Gabe build it. We discuss: - 10,000 agents searching for one great investment idea - Which investing skills will still matter - Why Anthropic/OpenAI won't win finance - "Chewing glass" - Why the harness around the models matters so much - Getting rejected by 40+ investors - Building an AI native Bloomberg - Becoming a black hole for talent Enjoy! TIMESTAMPS: 0:00 Intro 2:38 Building Rogo 6:12 10,000 AI Agents 12:02 Skills That Still Matter 17:31 Beating OpenAI and Anthropic 28:35 Bloomberg of the AI Era 37:37 Rogo’s Company Brain 44:19 Chewing Glass 53:34 AI-Native Finance 59:21 What Humans Still Do Better

In 2014, Sequoia-backed companies accounted for 20% of the Nasdaq. Today, it's more than 30%. Michael Moritz on what he looks for when investing in startups:

Michael Moritz on the obsession he looks for in founders: "There's a gentleman called Apoorva Mehta (@apoorva_mehta), who's the founder and CEO of Instacart. Before we invested, I asked him how he had happened on grocery delivery as a business that he wanted to be in. He said he'd played around with and toyed with a variety of other businesses that he wanted to start. But he realized Instacart was the one for him when the idea of the business was the last thing that he thought about when he went to sleep and the first thing that he thought about when he woke up in the morning. To me, that was as good a definition of obsession as any I've heard. But it's that sort of full-on experience that you can never stop thinking about and you don't switch off." Michael Moritz at Stanford GSB, 2019

Michael Moritz on the importance of storytelling in business.

One of Michael Moritz's best stories on obsession is about the ride he got from Bill Gates when Microsoft was still private. "Bill Gates gave me a ride to the airport in his car. The radio was missing in the car, a big, gaping hole in the dashboard. I said, Bill, what happened to you, did you get ripped off? And he said no, I had it taken out. Why'd you have it taken out? Well, I drive from my home to the office, which is 7 minutes and 32 seconds, and then I'll drive from the office to the airport, which is however long. And he said if I've got the radio, I'm afraid that I'll switch it on and I won't be thinking about Microsoft. That's obsession."

On this day in 1985, Steve Jobs was pushed out of Apple. Twelve years later to the day, in 1997, he came back.

Michael Moritz's investment memo for Stripe was under 4 pages. "The shorter the memo, the better. If you can express yourself clearly and have a strong opinion, you don't need a lot of paper." "Being able to distill things to their essence and keep it very short has stood me in good stead over the years."

Michael Moritz on the Time profile that ended his relationship with Steve Jobs, and whether he was ever in awe of him. "Steve was convinced that he was going to be named Man of the Year, even though nobody had told him that. But worst of all, the profile, which he hated for very good reason, and I was appalled by for different reasons, severed my relationship with Steve. Back then at Time, these things went through an editorial combine harvester. So what came out in the bale at the end probably didn't resemble very much of the straw that got fed in. And so the whole tone of the piece was malicious and nasty and underhanded. Sadly, as a result of that, really never repaired the relationship with Steve. Were you in awe of him? No. I respected him. I admired him tremendously. But I knew some of the darker shades of him, which made it difficult to hold him up as an object of unalloyed admiration. But he's a heroic figure, obviously."

In 1982 Steve Jobs gave Michael Moritz unfettered access to Apple, then cut him off completely after the Time profile. Michael on Steve in 2009: "There is no greater distance known to man than the single footfall that separates a CEO from a founder. CEOs are, for the most part, products of educational and institutional breeding. Founders or, at least, the very best of them, are unstoppable, irrepressible forces of nature. Of the many founders I’ve encountered, Steve is the most captivating. It is not too much of a stretch to say that Steve founded Apple not once but twice — and the second time he was alone."