[Host]: This crap makes mistakes all the time. All the time. It is still just like a... like I think of it once again as like a junior analyst, right? The analyst goes and does all this like really pain in the ass information. You bring it all together to make a good decision at the top.

Doug O'Laughlin: Historically, what happens is that junior analyst who I once was went and gathered all that information and after doing this enough times, there's a meta level thinking that's happening where it's like, okay, here is what I really understand and how this type of analysis I'm an expert in. Actually, I'm very good at. I consistently have a hit rate. Now I'm the expert, right? I don't think that metal level learning is there yet. Um, we'll see if L1's do it, right? Everyone who's spending one quadrillion dollars in the world thinks it will. It better it better happen, right? If you're spending, you know, a trillion dollars and there's not metal level learning. But for me in our firm, that massively amplifies everyone who is an expert because like you have to still do something. You can't just like slop it up. It's very obvious to me what it's sloping.

[Host]: Doug Loft, welcome to the inspace.

Doug O'Laughlin: Yeah, thank you for having me. Yeah. Um, I after all this time, I just Is it okay if I just call you Swiss? I feel the... that's that's where my brain is. So, I've known you for so long. You can call me Mule if you want. I'm um you know.

[Host]: Um, let's let's do a little bit of the Doug story because a lot of people hear about Dylan. Uh, and I wanted to just make this the Doug story. Made the fat knowledge story. You used to be a value investor. That's kind of how you you were value mule and you had a mentor or something that nerd sniped you into semiis. Is that the the story?

Doug O'Laughlin: Um, no. Actually, I solo nerd snipe myself. So, I I wouldn't say value because uh well well for for everyone who's listening to this podcast, might as well be value, right? Maybe quality focus back in the day, but we had this whole thing where we wanted to buy quality compounder companies. And um the one I found that nerd site me all the... like single shot me is I found ASML and I like fell in love with it. And then I like after ASML I just like read about all this stuff how complicated it's to make these who are the people who are able to make them and then I you know semicopters the whole downstreams all from there but it started with ASML in 2018.

[Host]: I was going to pull out the Asianometry.

Doug O'Laughlin: Yeah. That's perfect. That's a perfect one. be amazing. John's a monster, honestly. This one, right? Uh yeah. Yeah. Um I mean, the thing that's crazy is he has um I don't know, he has a whole playlist about it. Every single aspect of what goes into it. And what what's truly great about it, it's all science fiction. Like that's my favorite thing is like science fiction exists other than you know the talking perfectly intelligent robot whatever information LLM. Yeah, ASML is all science fiction. So the semicuncture stuff's always been science fiction. Always loved it. Always thought it was cool. Thought it was the most important thing that we ever made.

Doug O'Laughlin: For me, the thing that was like I guess radicalizing was um I really believe Morris law was dead. Um and I was like, "Oh my god, not only is it this cool new technology is super hard to make and very interesting and technologically very fun to understand and and like I get it intuitively, but um also everything all the old playbook is about about to be thrown out because it's been like this is a super mature industry. you read the these primers about it like that's how you learned about things back before chat GPT knew everything or um you had to go and read these primers of all this information they're like oh it's a very mature industry... everyone kind of had this old playbook from the early 2000s... people just thought it was this old mature business that had nothing new under the sun. Meanwhile, every single day just making a new chip was like science fiction... And when the science fiction ends because you can't make the chips as small as you could, all of a sudden all those free gains you got go away and you have to think about it. And what happened for semiconductor specifically is it created a lot of pricing power or value for everyone who knew how to make a good chip. So Nvidia is probably the best case.

[Host]: Uh, but we wanted to sort of focus this for the cloud code launch, cloud code anniversary, and you've been a big cloud code show.

Doug O'Laughlin: Yeah, I I am. Where's the chart with the four uh 4% of code? ... Oh, you know what's really crazy is we've updated that chart. I think it's like five now... if you want to be good at any game, we're we're tool users at the end of the day, right? ... let's say you're a fund manager or an analyst, right? Your job is to find information edges and like new ways to put information together that no one else has done. Um, and so like I've always thought it's really important to know the most important weaponsgrade uh tool that you can do all the time which is essentially chache anthropic all this kind of stuff and I've been pretty like I'm a I'm an early adopter in tools as much as I can be.

Doug O'Laughlin: ... can you take this company and do some analysis, blah, blah, blah, give us this format back. Um, and I've been running it through like the agentic things like, hey, what what when agents really come around, they should be able to oneshot multi-step hard things to do, things that would take a human 24 hours to do, right? ... and then um you know everyone was freaking out about cloud code 4.5 and I like took it for a spin... and it just like one it started like oneshotting everything, right? Like all these MVPs... generalized easily oneshot MVP of these like projects and able to like really build things on top of it because you can trust what it's doing to a certain extent.

Doug O'Laughlin: ... can you just like kind of like start copy pasting some notes over and putting all together? It's like yeah it does... can we like make an investment framework for my investment style and start to grade all this stuff... and my joke on the the podcast is it's all a skill issue now... I heard about the fact that the cloud code has the commits, right, onto the public... scrape me all the commits, right? ... I have like a crown job updating it every single day... 4% in like two weeks or something.

Doug O'Laughlin: it's a 3:1 to 4:1 ratio... when you convert to HBM because there's a huge amount of HBM, it takes three times uh one HBM sort of unit is like three times uh of the other sort of DDR or whatever, right? ... effectively, you're trading some like... I called it like super oil... in order for this higher grade of jet fuel has been invented and the only way to make it is to like actually uh get rid of all all your other fuel and you have to like massively condense it and refine it. Okay. So um now what happens is if there's any demand here it's an instant shortage.

Doug O'Laughlin: And so we we hilariously enough came out of like the biggest shortage ever in Nan and DM. Like terrible like catastrophic the worst one ever... meanwhile, we have all this new demand, HBM specifically... we completely constrained, took all the DM capacity... these clean rooms take two years to make, man... our conclusion is like we we could see DM prices like go up 100% again... you're not going to get your low-end phone. You're not going to get a GPU this year for gaming. None of that stuff.

Doug O'Laughlin: ...Microsoft has the most to lose... they're the horizontal software company that humans use their software to do information work... The problem is the Azure business with OpenAI, right? You're essentially renting barbarians at the gate. You're you're like, you know, this is ancient rome and you're like, hey, we need some extra guys, so we're going to we're going to pay money for these barbarians to burn... The problem is like each year they become more powerful...

Doug O'Laughlin: ...responsible this like an innovator's dilemma, right? Like do I maintain maximize shareholder value and cash flow today or do I have a a deep belief that AI will kill the hell out of my core business... it seems like Satia is not a believer... reality is Claude for Excel, Claude for PowerPoint is literally exactly what it's supposed to be. Microsoft should have built it.

[Host]: Last thing hike... I've never taken a break. Never... if you take a break in this time, you're like just going to be so behind.

Doug O'Laughlin: I did the Continental Divide Trail, which is the longest and most remote of the three... I did that in 2021 pre-AI... 6 months, 2800 miles... when in modern life do you get to say hey I'm going on an adventure... these crazy lows where you're like, what am I doing? What does all mean? Highest highs and mean like holy crap, it's so good just to be alive... selfmastery is your most important tool use of all.