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has anybody else seen duu and IMAX no don't say anything oh don't say anything about Dune all I want to say about Dune
00:00:07
no don't say it is fantastic and I want to see it again in IMX that's it that's all I'm saying is that it's worth seeing
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twice I don't even want to know that you think it's good it's overrated it makes
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me oh stop both of you see he didn't see it he didn't sax didn't see it no I saw
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Dune Dune two yeah I saw it it's overated okay stop stop okay stop everybody you both of the not over
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there's like five great scenes sxs the scene stop stop you guys are so let your winners
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[Music] ride and instead we open source it to the fans and they've just gone crazy
00:00:50
with queen of all right everybody Welcome to the all-in podcast with me again the
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chairman dictator moth poly hoaa David saaks the Rainman yeah and sulan of science David freeberg it's your boy
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jcal here and we have so much to go through the doj dropped a Sherman X suit on Apple today
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right as we were about to tape the program seems like Thursdays is the big news drop day now so this doj suit
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outlines five alleged abuses and they claim obviously that those abuses reduce competition
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while limiting consumer choice and raising the prices that consumers pay for their iPhone we talked about this
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actually just a couple of weeks ago when we talked about Peak Apple the five categories are very quickly super apps
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cloud gaming apps messaging apps SmartWatches and digital wallets if you don't know about super apps that's the
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one that's maybe you haven't heard of if you're listening to this in Asia they mention how alipay we chat and PTM are
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super apps what does that mean you get like five or six different functions in one app social media images purchasing
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getting rides you know all that stuff and when you have that you can move from one platform to another super
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easily and when it comes to messaging apps we've all experienced the green bubble friend so the main argument of
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the lawsuit pretty interesting they explain and it's a really well-written document I read it this morning that
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when Apple faces new competition instead of lowering prices for consumers or offering a better deal to developers
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they would quote meet competitive threats by imposing a series of shape-shifting rules and restrictions in
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its App Store guidelines and developer agreements I've faced this every time I've invested in an app startup they
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complain about the goalpost moving by Apple and Apple shares down about 3% on the news today I'm sure everybody's got
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some interesting thoughts on it shamat you were talking about Peak Apple just last week or the week before I think
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what are your thoughts on the lawsuit that dropped today to be honest I haven't read it and I don't really
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know like the odds of these things just because it seems like some of this stuff
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is so clearly political and I think that these things have seasons to it in the sense that
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there are moments where these things are more likely to go in the favor of the company and more likely to go in favor
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of the government the one thing I'll say is that these guys have been losing a fair number of these things so they're
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kind of 5050 in their fight with epic they've basically lost against their fight with
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Spotify they definitely are in a moment where people are looking at the profitability of these devices
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as the source of their long-term cash flow and I think they realize that there's not a lot of growth because they
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haven't entered a bunch of new markets so the real question is knowing of that did they do something beyond what
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they've already always done to try to lock people in and can they prove it I think that that's really where the
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government's case will come down to because then it's clear that Apple probably understood that their
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Market was kind of solidifying and they introdu these blocks essentially into processes
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that that force people to stay that's probably bad news for them but I I don't really know because I haven't read the
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lawsuit yeah sax did you get a chance to read it or do you have any thought generally speaking I haven't read the
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filings but I read some of the press coverage about it I would say based on the Press coverage that I read that
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there's not really a Smoking Gun here at least the Press hasn't reported one and
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what I mean by that is let me give you a couple of examples that were in the press one is that apparently the filing
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made a point about when Tim Cook was confronted some time ago by a user saying when I try to send a video by
00:04:59
text to someone with an Android phone it just doesn't work very well it never works it was a guy trying to send a
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video to his mom and Tim Cook responded well your mom should buy an iPhone it's kind of like a throwaway comment by Tim
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Cook probably not a great idea for him to say that but that's an example of what the lawsuit brings up another
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example is that the Apple watch doesn't work with Android phones you know it only works with
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iPhones obviously again is that really a smoking gun issue I don't think so I mean it's
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this is Apple's whole strategy is that all of its products work seamlessly together and apple Hardware doesn't
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really work with other operating systems it never has so at least based on the Press coverage I've yet to see a single
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Smoking Gun example coming out of this lawsuit now I think what those examples highlight is what this lawsuit is really
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about is your view of interoperability what the government is saying is that Apple needs to make its
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apps and its devices more interoperable with other ecosystems so the watch needs to be interoperable with
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Android Apple messaging needs to be interoperable with Android messaging and so on what the government is saying is
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that apple is refusing to play ball with other applications other operating systems and that creates a monopolistic
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Network effect what I think Apple would say is no the fact is that Apple from the outset has always tried to do
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everything super nuts we've always done the hardware and the software together and that's what creates the magical
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experience and so Apple's entire product strategy is based on creating a vertically integrated stack that goes
00:06:43
from Hardware to operating system to key applications and I think apple has a point saying if you try to make us
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unwind all of that the product is not going to work as well it's not going to be the same product experience that
00:06:55
everyone's used to so again I think that how you view interoperability at the core of this lawsuit I think that both
00:07:03
the government and apple make good points about that and I'm a little bit skeptical right now that the government
00:07:09
has a Smoking Gun at least one hasn't been reported in the press and so I'm a little bit doubtful right now that the
00:07:16
government's gonna be able to win this case freeberg any thoughts yeah I mean I think it's a function of consumer choice
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if consumers want to have this closed system where they can iMessage with other iMessage app app holders and not
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be able to have a seamless integrated messaging experience with Android users they'll be happy if they're annoyed
00:07:37
they'll switch over to an Android so you know this has always been Apple's orientation I I think I
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mentioned this to you guys I've been on a Mac since 1984 when the Mac original came out I still have my first Mac
00:07:51
original by the way I keep it in my office on my shelf and Apple's you know always had
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like a really hard focus on the software that they make available to their users
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to create an incredible product experience so I don't know if this is necessarily about Market abuse as much
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as it is a consumer choice if the consumers didn't like the product they didn't like the fact that things were
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not available that things were very expensive they would go elsewhere and you do see that in segments of the
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market and as we talked about a few weeks ago you do see that xus most of the smartphone market is actually
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Android driven yeah so this is a premium product that people are willing to pay a
00:08:29
premium price for even if that means limited access I think developers are frustrated that they can't access this
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premium Market but I'm not sure that Apple necessarily should be coerced to service developers when at
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the end of the day the consumers are paying for the product and to your point like is it is it really the case that a
00:08:48
green bubble versus a blue bubble is really that limiting you know it's not the world an it's annoying but the world
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yeah I would say apple has completely abused their power every chance they get in order to capture this 30% from the
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app store they blocked the ability for you to use Audible or you know other marketplaces to buy books and media they
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blocked the ability to use other media players like VLC they blocked the ability to use browsers and if you leave
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Apple unchecked they just keep abusing it and so I think this is kind of one of those lawsuits that's like if we don't
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stop them they'll just keep making it worse and when people file complaints then Apple will back down which they did
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on media players and and they'll stand down if you think about this from the PC era to now then you can see how pricious
00:09:39
their behavior is when you buy a laptop the idea that you would have to go through an app store and pay a $30 tax
00:09:46
to put a piece of software on your computer would seem insane 30% 30 yeah 30% tax on your which would seem insane
00:09:53
like if you buy a laptop you should be able to put whatever software you want on it but they did this magic trick
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where they said no if you want to put software on your phone it has to go through the App Store it has to be 30%
00:10:04
and that's really the anti-competitive thing here I think this will be settled and if you look at the different issues
00:10:10
here I think this is going to be actually a huge win for Apple because if iMessage were to exist on Android they
00:10:17
would get all of those users to download iMessage and they would have all those users if they made the watch compatible
00:10:22
they would open up many more people to buy the watch and you would get more watches I think that Apple's thinking
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way too short term about the the lock in here and they should you know allow more
00:10:32
of these apps allow more watches and they should allow the gaming thing I think that they're being petty I don't
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think anything's going to happen here because it's taken them five years to file there's a at least a 50% chance
00:10:46
that the administration is going to turn over which means that this lawsuit changes or goes away entirely and then
00:10:52
even if it does kind of proceed it's going to take 10 years of very detailed Arguments for something to happen and
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frankly probably in 10 years from now we've already moved to a different compute platform and this is not going
00:11:02
to matter I mean there there is the coin toss of what the Trump Administration would do here for sure that's valid but
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I think these things will get settled I think the settlement will be iMessage releases they allow the see the thing
00:11:15
about the Apple watch it's not just sacks that they're allowing it on Android it's would you allow Android
00:11:20
watches to connect with the SDK directly into the IOS operating system which they
00:11:26
block you from doing I think they should just have a little switch in your freedberg settings that allows you to
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flip it and say I take responsibility for allowing third party stores and I want to be able to load any software
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it's your computer I don't think the government should should regulate I don't think the government should be
00:11:44
able to mandate I think they yeah I mean I I like the fact everyone keep looking
00:11:49
to the government to do things that they want as a consumer make your choice with
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your dollars make your vote with the product and service you want to buy instead of running to the government and
00:11:58
asking the government to come and do stuff you feel that way about price fixing what do you mean price fixing in
00:12:03
what context if like a group of people price fix the cost of a phone or like let's say the 30% from the app store
00:12:09
which just happens to be the same between two app stores do you think price fixing is
00:12:13
something valid for the government to think it's not the same do you think price fixing is something the government
00:12:18
should come in on it's the question if there's limited access to products in a market and all the participants get
00:12:24
together to set the price in the market I do think that's anti-competitive and that's there a good role for the
00:12:29
government to play there but Google and apple don't price fix because Android is
00:12:35
an Open Access system you can put any application you want any way you want there are several app stores to put
00:12:41
Android apps on your Android device Google operates an app store called Google play but there are other app
00:12:47
stores you can go to as well and they all have different prices and Google's App Store costs by the way are not apple
00:12:53
and they're not 30% and we talked about this last time I'll pull it up for you again it's like 15 to 12 going down it's
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a sliding scale so there is competition in that market generally I think the point about if there's limited access to
00:13:05
a market for product for consumers and everyone in that market gets together and sets a price that is
00:13:10
anti-competitive and there's a good role for government to play there but I don't
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think that having the government come in and say I want this feature to have this
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button and this flip in my app is is what I want my government doing I want my government protecting me from
00:13:23
crime and you know defending the country and I don't want all the other stuff that the government does to drive costs
00:13:28
up which is generally what the government does so what do you think the role of the government is here in terms
00:13:33
of anti-competitive especially in the case I'm curious your thoughts on a duopoly like if you look at Google
00:13:39
search Monopoly pretty easy to understand like hey they've got 90% but here you got two players who have you
00:13:45
know roughly 50% of the market each or 60 40 depending on where you are so what what is the the the proper role of
00:13:51
government here and is this an overreach no I mean I actually think just to give the government lawsuit some
00:13:58
credit I actually think it's good to hold Apple's feet to the fire and make sure they're not engaging in
00:14:03
anti-competitive tactics one of the things I've said previously on the show is that I think the government's been
00:14:09
making the mistake of going after bigness for its own sake and I don't think that bigness in and of itself is
00:14:16
bad it might be a reflection that the company's done an incredibly good job and that's why it has a lot of customers
00:14:21
and a lot of market share what I've said is I think the government should prevent
00:14:25
anti-competitive tactics so I think that this lawsuit is good in the sense that it's targeted at the right types of
00:14:32
things it's not just going after Apple because it's market cap is so big it's going after specific things that it's
00:14:37
doing to kind of lock in its Network effect now the problem that I see is just that the examples that we've been
00:14:44
given so far from the lawsuit just don't seem that compelling again I'm kind of waiting to find out where's the Smoking
00:14:50
Gun here but to freeberg point I mean look I don't think you can just say that if you don't like what Apple's doing go
00:14:57
to a different platform because because the point is that there's only two choices and they can both engage in
00:15:05
anti-competitive tactics and they can both create lock in but sax there are not just two choices Android is an open
00:15:11
operating system Google has a fork of Android that they put on certain smartphones there are other smartphone
00:15:17
makers that use other Forks of Android so Android has enabled and the reason Google bought Android was to provide a
00:15:24
counterbalance to exactly the dynamic of one handset manufacturer having an operating system that could control
00:15:32
access to the internet and to apps and so Google open sourced Android many handset manufacturers use their own
00:15:38
versions of Android to put their own experience on the phone and then Android users can put apps from anywhere they
00:15:44
want and other companies offer app stores so there are many app stores to go to and there are many different
00:15:49
handset manufacturers and a lot of people I think in correctly look at the operating system landscape in Mobile and
00:15:56
say oh there's Android and there's iOS but Android is an open platform and there are many different Forks of it run
00:16:02
by many different companies so I think that it is actually a very competitive market like we talked about last week I
00:16:07
think close to 80% of global handsets are run on Android Forks so you know it's not necessarily the case that there
00:16:14
are only two choices and Google does not control Android there are many developers that contribute to open
00:16:19
source there Google has their own Fork that they do a lot of work on but anyone can take their own fork and do I mean
00:16:24
you guys can you know when you when you um when you boot up a Samsung or Sony TV
00:16:29
that's running Android and that's running their own version of Android are you arguing that Apple doesn't have
00:16:33
Market power in the US they do xus they're you know yeah I mean I think sure we're talking about the US market I
00:16:40
mean I think the US market they're about are they about 5050 we pulled this chart
00:16:43
up last week but I more in the US now it might be 55 45 right now yeah something
00:16:48
like that the issue is the cat and mouse that apple is really good at playing they will push their advantage and so we
00:16:54
see the five things that the justice department wants to go after here but the App Store is obviously one of them
00:16:59
and before that I mentioned some of the other categories where they do this abusive power they basically keep it up
00:17:04
as much as they can until they get checked and I I think interoperability is actually in the long term going to be
00:17:10
in their best interest they use interoperability when they need it so Apple music and iTunes they allow you to
00:17:16
use Windows and Android it's only when they see an advantage and that's really the hypocrisy of apple and I think it's
00:17:23
really important that the industry stand for more interoperability and the ability for to load any software that
00:17:30
you want on your device this is a compute platform the ability for them to block you from installing your own apps
00:17:35
on it I think it's a really terrible by the way Jason what you're saying is a very fair statement from a consumer
00:17:41
point of view and from an industry point of view and that's where that voice should come from to force in the
00:17:46
marketplace changes from Apple but having the government do this and having the government involved I think that'ss
00:17:52
all these bad they're representing the people somebody did it they asked Tim Cook to do it and Tim Cook said pound
00:17:56
salt buy a phone for your mom no but aren aren't they representing the people like how do you expect the people to
00:18:01
organize like file a class action no I think if enough companies boycott the Apple platform and tell consumers to
00:18:07
boycott they'll I mean consumers can make decisions developers can make decisions whether or not they want to
00:18:12
develop for Apple no that's not realistic you know that not real that's naive come on I don't think I want the
00:18:17
government stepping in to tell private companies what to do because customers don't like what they're doing wait wait
00:18:23
do you think that the government should stepped in to prevent Microsoft from taking over the browser the whole
00:18:27
Netscape case bundling I don't know the case well enough I mean I remember it but I don't
00:18:34
want to speak I don't want to speak definitively there was a substantial chance that if the government didn't
00:18:39
step in then Microsoft would have extended their Windows operating system Monopoly they did have an AB to the
00:18:44
Monopoly they did have a monopoly on personal compute OS at the time well it wasn't an absolute Monopoly I
00:18:51
mean you were using Macintosh at the time that's what I'm saying at the time Macintosh was like 5% of the market it
00:18:57
was under 10% at the time yeah it was about four or five% at that time Microsoft was
00:19:02
95% of the personal Computing market so they did have an absolute Monopoly on that market you had a consumer Choice it
00:19:07
wasn't a very good consumer choice but you still a consumer choice you could go use MacIntosh and you did you were using
00:19:14
lot of people could afford it yeah okay but the point is that Microsoft had substantial Market power and what they
00:19:20
were in the process of doing was the smart thing from a business standpoint which is you take your operating system
00:19:26
Monopoly you use that to extend into the browser you kill Netscape you take over
00:19:30
with Explorer you bake Explorer into your Windows operating system so the two things are basically the same then from
00:19:37
there hold on from there you leverage your control of the of the browser in the home screen to control search okay
00:19:44
and so you think about like all the dominoes that would have fallen if Microsoft had continued maybe if like
00:19:49
Bill Gates had continued being CEO and there would have been no Google there would have been no Yahoo they would have
00:19:54
controlled the internet they would have controlled the internet and they were actively you left out a big piece of
00:19:59
sax which you'll remember the second I say it they were trying to break HTML in Open Standards by creating ActiveX and
00:20:06
using all funky Cod right and so you have to understand these companies will if you give them an inch they'll take
00:20:12
the mile and that's exactly what Apple does consistently they consistently try to squeeze I think it's great saaks is
00:20:20
Right tactics is the way to go after this companies these are five recent tactics I think the the government's
00:20:26
going to win changing three of these and that's win that's a win for me yeah the
00:20:30
mobile operators tried to do the same at that same time if you guys remember Verizon yes singular they they you could
00:20:37
only put their apps if you bought it through their store yeah on their operating system on the mobile phones
00:20:42
that they contracted to have made so they all had their own custom version of the handset manufacturers OS which all
00:20:50
and then they did rev share back with the manufacturers and that's why Android was acquired it wasn't actually at the
00:20:55
time to compete with Apple Android was required to compete with all the mobile phone companies that were trying to
00:21:01
block access to the internet and apps well Google wanted to maintain its search Monopoly let's be honest they
00:21:06
that's why they bought it they knew users would be there and they wanted to have the default they want to have the
00:21:11
access to the internet block Yeah by this by the handset manuf they want it to be the default search browser in the
00:21:16
app which is what you have to agree to by the way so if you want to talk about perniciousness and heavy-handedness if
00:21:21
you have an Android you and you want to use the Android updates from Google corre you have to give the bundle of
00:21:27
apps if you want the and support from Google you can for it but then you don't get their support which then breaks your
00:21:33
phone if you want their version that's right yes yeah so you know there's a little cleverness here I think so you
00:21:39
have two basic ecosystems in Mobile it is a duopoly and both them Advantage themselves in ways that grow over time
00:21:48
and I think that if Apple were completely left unchecked it would figure out ways to boil the Frog and
00:21:55
keep extracting more and more value out of Downstream applications tot they boil
00:21:59
we paying 1,600 or phone now how are we paying 1600 or phone so look I think it's I think it's good for the
00:22:04
government to hold their feet to the fire but here here's the thing that the government's lacking is again that
00:22:10
example they can point to that's really compelling I mean with the Microsoft Netscape thing it was really obvious
00:22:15
what they were doing right the browser was the gateway to the whole new platform which was the internet and if
00:22:20
Microsoft could make that a feature of the operating system their dominance would extend into the new Computing
00:22:26
platform but you remember how they did it Apple watch is just not the same thing the Apple watch is kind of a an
00:22:32
appendage of your phone that most people don't even want so it's hard to point to
00:22:37
something do you remember saxs how they were getting the browser built in they were going to the oems the Dells of the
00:22:44
world the HPS and saying if you want this price for Windows you have to include the browser on the desktop it
00:22:50
has to load it has to ask for your credentials all this stuff or you can pay $150 for Windows um if you want it
00:22:58
with without the browser bundled so they use this pricing to get the oems to to bundle it and that that was where well
00:23:05
isn't that what Google's doing with Android effectively exactly is like it's exactly right you can have your own
00:23:11
version without Google search if you're willing to put up with all these headaches and maintain an operating
00:23:18
system update the operating system yeah it's exactly what they're doing so anyway I think three out of five of
00:23:23
these get settled and it'll be good for consumers ultimately I I I would not Financial advice but I think that
00:23:29
Apple's going to be able to manage this I'd buy the stock I may buy more of the stock I think that this will be good for
00:23:34
them long term all right listen going even deeper into apple and this Google relationship big questions emerged this
00:23:42
week as Bloomberg reported that Apple was speaking to both Google and open AI about powering certain AI features on
00:23:50
iOS specifically according to the article this deal between Apple and Google seems much more likely than the
00:23:56
open a one and could happen this year as you know we've talked about it on this show before Google has been the default
00:24:01
search engine on iPhone for I think over a decade now and uh Google pays Apple 20
00:24:07
billion a year that's pure profit for Apple U it's unclear what features they would power with Google Gemini maybe
00:24:15
it's like the search deal and Google Gemini's on there maybe it's built in and Apple has been building its own llm
00:24:22
it's called Ajax they've been doing some other open source stuff called Maggie what do you think chath you were talking
00:24:27
about this on Twitter you think you had a pretty good tweet and a pretty strong position if apple is going to use Gemini
00:24:35
what does that say to you about Apple and their view of the future I think it's them giving up this is the most
00:24:42
consequential new development in technology and compute in probably 20 years 30 years and so to be spending
00:24:51
tens of billions of dollars of R&D and to not have enough allocated to this so that you have a legitimate path forward
00:24:58
to do it yourself I think is a little inexcusable [Music] actually it's akin to IBM in the 70s
00:25:06
going to Microsoft and and basically asking them to build the operating system for them when you're such a
00:25:13
dominant company in such a dominant position but you abdicate your responsibility to innovate I think that
00:25:20
that's a really bad situation for a company to be in was like Yahoo adding Google Search right and then by the way
00:25:28
on the heals of like turning off cars and and losing these antitrust issues in Europe and then being sued by the doj
00:25:38
here to then be in a licensing discussion with a third party for such a critical technology I think is just says
00:25:46
not very good things about the state of the company freeberg your thoughts on this potential deal we don't know what
00:25:52
features this would power I don't know if it's Siri or it's just image editing or search an extension of search maybe
00:25:59
giving an answer I have no idea it seems to me like there's if if Apple's doing the right thing which I'm sure they are
00:26:05
they're probably building their own alternative platform here they realize it's going to take them some time in the
00:26:11
interim they want to have a stop Gap and my guess is by going to Google they're probably going to get paid instead of
00:26:17
having to pay someone else for the technology because Google will realize some benefit from getting users over to
00:26:25
search results and seeing ads so Google will probably benefit and pay them instead
00:26:30
of them having to go pay someone for access to some technology that consumers might want access to sax any thoughts
00:26:37
here I'm sure apple is goingon to make an investment in building their own models here yeah I mean who would look
00:26:42
at the launch of Google Gemini and say I want that that launch was at total Fiasco another world company I think it
00:26:52
fit the Apple philosophy pretty good I how woke would Tim Cook have to be to look at the launch of Gemini and say oh
00:26:58
yeah I don't see anything wrong there you got that exactly right absolutely I want that yeah Siri show me
00:27:04
the president of the United States I mean apparently Tim Cook is the only person on Earth who is impressed with
00:27:09
the launch of Google Gemini I mean I can't believe the story is true it's just it can't be true I'm so excited
00:27:15
today to launch Gemini on stage here iOS 27 Oh my God can you imagine him on stage doing searches live the story
00:27:25
can't be true because it' be so strategically dumb like said even if Google Gemini were great you'd still
00:27:31
want to invest in having your own thing because it's such a strategic technology
00:27:36
why would you ever Outsource it to your main competitor but in this case you know that Gemini was terrible it was a
00:27:42
fiasco and so the story makes no sense I just can't believe it's true it's probably people knocking on each other's
00:27:48
doors they spent $30 billion last year on R&D 30 billion Apple to be clear they spent $30
00:27:57
billion on R&D what did they spend it on catering I mean you got to think Apple vision is a big piece of that right
00:28:06
chips I guarantee you like half of that is like the M3 M4 30 billion like not a couple crumbs fall out of somebody's
00:28:14
pocket and so there's 50 million allocated to just like you know mucking around with llama or mucking around with
00:28:20
mistol what if they took project Titan the car car deal that was 10 billion supposedly they had spent on that and if
00:28:28
they put that towards AI Microsoft again again it goes back to the to the people I don't think I don't
00:28:33
think the the person in charge of the windshield wipers for project Titan is going to be the person that figures out
00:28:38
how to land a really killer llm yeah that's a different skill set but it's not even that expensive I mean's a
00:28:45
mechanical engineer and one's a computer scientist so these are not the same people they're not fungible that way I
00:28:50
mean I guess the question here is Apple capable of building on a culture basis freedberg this type of software they're
00:28:57
a hardware company it's not you're standing on the shoulders of the whole open source movement all you have to do
00:29:02
like jam said all you got to do is take the latest mistal model or jump on hugging face and start working I mean
00:29:09
you're not starting from zero because of Open Source not not only you're not starting from zero not only do you have
00:29:14
the foundational models that are excellent and available in open source you have probably the most prolific set
00:29:19
of training data that has ever been ex created in the entire world to make these models kickass yeah you have all
00:29:25
the Apple photos archive I wonder if in their ch see that's the thing is their terms of service is so privacy based I
00:29:30
wonder if they could even use that information and I just think look at the end of the day the Apple brand is still
00:29:36
exceptional and so if you're given a $10 million a year job at Google versus a $10 million a year job at meta versus a
00:29:44
10 million $10 million a year job at Apple if you're like one of these killer AI people that get these kinds of offers
00:29:51
I got to presume that Apple gets their fair share of these people yeah you would think and even in the worst case
00:29:58
you see Microsoft doing like pretty heavy handed deals with companies like open Ai and just this week with
00:30:05
inflection so it's not as as as if these deals can't be done right and so it just
00:30:11
kind of like leaves I don't know it's just it's quizzical to spend that much money to not necessarily be willing to
00:30:18
compete on the human capital to not necessarily be in the market acquiring these
00:30:24
businesses I don't know it's just it's just a question mark like what's going on over there Jam ask what's going on
00:30:28
over there we have some inside footage Nick you want to play tape what's going on
00:30:41
here what are we watching I hope we didn't keep you waiting mother nature mother nature well
00:30:57
welcome to Apple how how was the weather getting in oh she's controlling the weather was
00:31:07
however I wanted it to be yeah they did this couple of but but this reflects their self-image I mean they released
00:31:13
this they care about the plan no it's it reflects that they think somehow this is
00:31:18
an accurate reflection of the way they do meetings no I think it was the um point
00:31:23
they were making is they were trying to do a skit about like how they're doing less packaging and including that that
00:31:29
skit was to tell you that you're not getting a charger in your next iPhone because they they don't they want to say
00:31:33
didn't it was cringe I thought the intent was maybe it's a little cringe but yeah I it a
00:31:39
little cring but I do appreciate that they are doing sustainable products and not putting as much stuff in landfills
00:31:46
so I think they should get a lot of credit for that what I do think about this deal that's really interesting is
00:31:50
it's sort of cementing the Google and the Apple alliance against Microsoft and Microsoft has big you know AI ambition
00:31:59
so this is kind of interesting if you lock in the duopoly of Google and apple and then you lock in Google search
00:32:06
Monopoly and you start fighting Microsoft I think that's what we're I think that's what's probably going on
00:32:11
here is they're trying to figure out how do we keep Microsoft away from running away with this all right we covered that
00:32:18
huge Nar lawsuit back in December and there has been a settlement big news for the National Association of Realtors
00:32:25
they've agreed to pay $418 million settlement last week and federal jury found that the n and several large real
00:32:33
estate brokerages conspired to artificially inflate agent commissions the settlement is pretty pretty big deal
00:32:40
people are freaking out about it as you know the seller of a home pays the buyer's agents commission so you have a
00:32:48
buyer and a seller 6% fee typically sometimes it's five but they split that 3% to the buyer and the seller but the
00:32:56
seller is paying that 3% to the buyer now that can't be listed in the MLS anymore and that deal cannot be done
00:33:03
ahead of time buyers are responsible for paying their agents commissions going forward so if
00:33:09
you bought a million dollar house and you were the buyer you would pay 30,000 to your buyer's agent or you would
00:33:15
choose to not have an agent or you would choose to negotiate it and you have to have a signed contract this is a crazy
00:33:24
just shocking shock to the system according to most people who are in it I've seen a lot of real estate folks who
00:33:30
are saying this is going to be healthy because you have this you have to have this conversation between the buyers
00:33:35
agent and the buyer but Commissions in the United States are hundred billion doll a year
00:33:42
and one analyst projected the lawsuit could lead to a 30% reduction in commission payments and that would
00:33:49
eliminate about half of the 1.6 million active NRA members from the industry you
00:33:53
had a lot of feelings on this fredberg when we talked about it a couple of months ago what are your thoughts on
00:33:58
this settlement is anything going to change is this as groundbreaking and shocking as people seem to think it is
00:34:05
well I would take this settlement along with a lot of the developments and advances in
00:34:15
AI as being the moment of catalyzing real change in the residential real estate agency
00:34:21
industry it's an industry that's been known to have fixed pricing and be very expensive to
00:34:29
Consumers a real tax on the system and it's largely been wrapped around this idea of mitigating your liability
00:34:38
reducing risk servicing the customer many of those aspects over the last couple of years have been largely
00:34:46
standardized through forms digitized because so much of this information is no longer going to get paperwork from
00:34:51
the courthouse but a lot of the information sits digitally and can be accessed in a democratized way and the
00:34:57
fact that so much of the service and Discovery reading through documents understanding what they mean and what
00:35:02
they say can be automated through Ai and llms much of this is kind of coalescing
00:35:07
around what I hope and expect will be a more seamless automated direct Marketplace for consumers the challenge
00:35:15
is that most consumers put most of their personal net worth into their home and so it is where most people's net worth
00:35:23
is tied up and so because it is such a sensitive investment and it is their entire
00:35:28
savings they want to have a trusted advisor by them so it's going to take some time before that trusted advisor
00:35:34
becomes some piece of software but I do think that software is going to play more and more of a role in providing
00:35:41
advisory tools and services to consumers in this transaction Marketplace and that's only going to catalyze
00:35:47
and accelerate the fee reduction I do project and I do expect that much of what is charged on a commission basis on
00:35:54
a percent of home value today will change to being a fixed Fe andk 10K for your buyer AG different services so you
00:36:02
can have someone do ackart do the disclosure diligence for me for 5K you know negotiate the purchase for me for
00:36:09
10K and you as a consumer will start to pick from a a menu of the services that you want to have rendered for you and
00:36:15
things that you're comfortable doing yourself I don't need someone to negotiate price I don't need someone to
00:36:20
find me a home I've got red fin I can go do that I can arrange open houses on my
00:36:23
own the lock box is there I'll go walk around the property I don't need someone to point out the the color is nice in a
00:36:28
room and so I think that there's elements of what this h of what will happen here which is a fragmentation and
00:36:34
then an automation of these services and as a result significant fee reduction and I'm in the middle of doing
00:36:40
this myself right now with a piece of real estate where I'm not using an agent and I've been
00:36:46
using a direct listing service I've used all of these standard forms there's a lot of AI tools you can use to kind of
00:36:53
read all the disclosures for you make sure everything's C pathetic and these escro they'll handle a lot of what a
00:36:58
lawyer will handle and they'll get paid a you know a fee which is much less than
00:37:03
the agent fee so I do think that there's a big disruption happening in this industry I think it's it's really
00:37:08
important for consumers agents are going to be you know hands in the air telling
00:37:11
you this is ridiculous you need someone to help you you need an adviser that will continue for a good chunk of the
00:37:15
market for a very long period of time but I do think that it's for the benefit of consumers over time to see these fees
00:37:21
come out of the system and see those savings go back in consumer's pockets and for the value of their real estate
00:37:27
to go to go in their pockets not into an agent's pocket is it going to change the profitability of a realtor pretty
00:37:37
meaningfully right both Realtors won't be able to be in business right I think the sellers will do fine and they might
00:37:43
capture more of it because they'll they'll my understanding is the the the seller will maybe do both sides of the
00:37:50
transaction no that's not what's going to happen and there's also going to be limits on that but but here's what I
00:37:55
will say if you look at the the the number of people there are 1.4 million members of
00:38:02
N today the National Association of Realtors if you look at the distribution of earnings and you guys know this my
00:38:10
guess is probably 10% of those realtors make 40% of the fee income or 50% of the
00:38:15
fee income there's a long tale so there's probably a third of those folks who are
00:38:21
already kind of sub living standards in terms of income maybe half of them won't
00:38:27
be able to make enough money in this new you know fee regime that it'll no longer
00:38:32
be an attractive proposition to be a real estate agent for maybe half a million to a million people over time
00:38:39
that are agents today yeah you know it's interesting this the the sellers are going to be faced with Buyers who just
00:38:46
show up having seen something on redin and don't have a buyer's representation and so they think from the stuff I've
00:38:53
been reading that the sellers agent might be pointing them to hey go to these services and be acting as like one
00:39:01
broker essentially representing both sides that's what people are saying is the potential downside I don't think
00:39:07
that's yeah that's not gonna happen for a couple of reasons but let me ask you guys a question if you guys want to to
00:39:13
go buy a new house currently you just go you know sign up an agent or buyer agent
00:39:18
they go walk with you and eventually they'll get paid by the sellers agent so now you have to negotiate a fee with
00:39:23
them up front would you negotiate a fee and say to a buyer agent hey I'll you 2%
00:39:28
of whatever home I buy would you be comfortable doing that or 3% or 4% how would you have that conversation no what
00:39:35
you say sex I mean forget I know you've got a different situation because you've
00:39:38
got real estate people like working for you but like if you were to go out and and if would you go out and get an agent
00:39:44
and pay and negotiate a fee with him it is not worth it to the buyer to pay two to three% of the purchase price to make
00:39:51
appointments you can see all the houses on MLS through Zillow or redin or whatever and what about handling closing
00:39:57
and disclosures no buyer would ever voluntarily agree to pay this massive commission it's not worth it so it's
00:40:05
game over for the Realtors if buyers are forced to pay their own broker's commission the only reason this system
00:40:14
works is because the seller is forced to pay for it yep and when you sign the listing agreement with the seller's
00:40:21
agent you can negotiate a little bit at the margins sometimes you can get the 6%
00:40:25
down to 4 to 5% for a big listing but 50% of it will always go to the buy side I mean I've said to these guys the buide
00:40:33
agent doesn't do anything why don't you make it 2% for yourself and 1% for the buyer they won't do that they just won't
00:40:39
take your business the seller will not represent you they have like all sorts of rules against it so the whole thing
00:40:44
is like protect it's like a racket that's protected some it's cracked yeah well I I still am like a little bit
00:40:50
skeptical that this is going to work out exactly the way we're saying because it
00:40:54
is just such a a death blow to the industry if buyers are forced to pay their own commissions uh their own like
00:41:01
buy side Brokers commission and in the Articles they're saying there's still like some gray area about what's going
00:41:06
to happen but that is what should happen buyers should be responsible for paying
00:41:11
their own Brokers and if you do that I think you'll knock out half the fees of this industry here's an idea why they
00:41:16
let them charge an hourly fee as a buyer's agent like there will be people doing that J $200 an hour $300 an hour
00:41:22
doesn't this impact home prices as well like if you if the buyer had to pay all of a sudden their affordability
00:41:28
effectively goes down because if they have to pay an extra $100,000 for a home then that's $100,000 they can't pay less
00:41:36
than they can pay for the house itself because they have to pay an agent so it all comes back into home prices no it
00:41:41
Nets out because the sellers agents no longer paying 6% they're paying 3% and so now the sellers agent has 3% more
00:41:52
that yeah but net net I think it's good for buyers and sellers because the transaction cost of TR tring go down
00:41:58
exactly money goes back in consumers Pockets yeah create a more fluid Market yeah and I think it's a great
00:42:03
opportunity for startups I'll say this right now like I think there's going to be a lot of startups that are going to
00:42:07
come out of this ruling that are going to launch allart Services leveraging AI to make these services available direct
00:42:14
to Consumers without needing an agent and they're going to be pretty compelling services and they're going to
00:42:18
show up real fast I mean a lot of people will not list their home or sell it because that
00:42:24
6% might put them underwater so if it's now now down to two or three totally yeah people might be like it's always
00:42:31
been crazy to me that anyone would pay a percent of absolute value it makes no sense I bought a home for a million I'm
00:42:37
selling it for a million one so I've made a $100,000 profit but I got to pay $60,000 of my total growth to an agent
00:42:46
to sell it for me% profit I just gave up 60% of my profit on my home right it makes no sense and the crazy thing is
00:42:54
that a bad sale of your home would be let's call it 900,000 or a million and a great sale would be 1.2 so exactly
00:43:02
there's a very small margin where they actually have an impact based on the quality of their effort but they get
00:43:08
compensated for the whole thing yeah for the whole thing get compensated no matter should be that you get a flat
00:43:15
rate $10,000 at a million and then you get 10% over a million or something you could give just like you with a sales
00:43:23
person the incentive comp should be variable based on performance whereas the guaranteed part of the comp should
00:43:31
be like you said a flat fee it's kind of like the salesperson has an OT right Bas
00:43:35
variable yeah I mean you could say if you said 1% up to a million so that's 10K and then 10% for the next 100K and
00:43:44
then 20% for the next 100K so you you know that 1.2 million is really hard to get yeah I'll give you 20% of that
00:43:50
incremental 100 that would be a much better deal you would be getting paid for the actual performance so anyway
00:43:56
really you know Jal I have an idea for the National Association of Realtors oh here we go if they want to stop being
00:44:03
perceived as an evil monopolist all they got to do is put out a cringe ad talking
00:44:06
about the environment everyone's going to love him again absolutely they should do an ad where they have a diverse cast
00:44:12
of people and that diverse cast could talk about like putting sustainable forestry around it all I got to do is
00:44:19
say something something landfills everyone will love them again they can charge ABS absolutely virtual signaling
00:44:24
right they can genu something something landfills yes absolutely all right let's
00:44:28
keep the train moving here the AI landscape shifting yet again Microsoft just just did another one of these
00:44:35
shadow Aqua hires this time of inflection AI bizarre deal Microsoft has hired most of the team at inflection AI
00:44:43
including the CEO Mustafa who everybody knows I just actually had him on this week in startups he was the co-founder
00:44:50
of deep mind he worked at Google for years and now he's going to be the CEO of a new company called Microsoft AI
00:44:58
it's essentially the consumer AI division of Microsoft but they did give him the CEO title for background
00:45:04
inflection have raised 1.5 billion over the last two years it was one of these giant fundings that occurred to build a
00:45:11
foundational model like open AI is doing like anthropic is doing they had a chat
00:45:16
bot called Pi very similar to chat GPT it was supposed to remember your history and build a relationship with you that's
00:45:22
all getting shut down Reed Hoffman who is a major investor in in this company and who's on the board of Microsoft and
00:45:30
who so LinkedIn to Microsoft played an important role in this deal according to reports and the inflection investors
00:45:37
included Bill Gates Eric Schmidt and a bunch of other interesting folks but this was a aqua hire which is the weird
00:45:43
thing chth they hired all the employees they leave the shell of a company the company's going to go do some Enterprise
00:45:50
stuff and investors get to keep their Equity inflection but I guess that might be worthless there's some going on here
00:45:57
that we don't know about this deal structure when you saw this deal and you see Satia taking the entire team like he
00:46:05
threatened to do with open AI if you remember the same exact kind of thing I'll aquire everybody if you don't take
00:46:09
the deal what is your takee of of what's going on here why did this occur like this instead of just buying the company
00:46:17
I mean it occurred like this because Reed and Bill are inexorably tied to Microsoft so
00:46:23
they were able to get a deal for investors that would have never happened otherwise and so good on them I think
00:46:28
they did a very good job protecting the fiduciary interests of the investors of this startup sa no
00:46:36
conflict no interest right yeah I mean we say that a lot this is so weird though why not buy the company sax is it
00:46:43
because of antitrust actually that's a good theory it's just it's hard for Microsoft to get anything through at
00:46:48
this point so probably they're just like why even deal with the antitrust they don't really need the assets so I think
00:46:55
they licensed the core from the inflection C Corp and then they hire away all the talent and then the
00:47:01
investors get made whole so I think it's like an aqua hire with a little bit of tech along with it that they get through
00:47:09
the licensing deal maybe that's just to protect them from an IP standpoint my take on this is that this was a bailout
00:47:16
this was a bailout of the investors I don't think the investors got ripped off here I think the investors were like
00:47:21
thrilled to get their money back for whatever reason this company wasn't going anywhere it had raised hundreds of
00:47:25
millions of dollars Reed and Bill obviously are are wired in they're on the Microsoft board and this company did
00:47:32
have some talent that Microsoft wanted so they basically did a giant Aqua hire and it bailed out the investors freeberg
00:47:39
is that your take this is a bailout or do you think this is a new interesting end run around antitrust where hey if
00:47:46
Adobe wants to buy the next figma just buy the team do a license of figma some faka lunacy or do you think this is a b
00:47:56
what what's your the the here freeberg and what does it say about Microsoft's approach to the AI space I don't think
00:48:02
this is some runaround antitrust I think obviously like a lot of companies there's been a realization on
00:48:10
how quickly foundational model development is commoditizing and how quickly costs are escalating and how
00:48:17
many folks are chasing it so having some unique advantage in the particular plane
00:48:23
of the market where they were participating as a startup maybe became difficult and untenable and
00:48:31
negotiations and conversations between all these parties who all know each other very very well and are all very
00:48:36
friendly you know this ended up being kind of the best way to move forward so all right there you have it folks in
00:48:43
other related news the Saudis are planning a $40 billion AI fund according to the New York Times reps from the
00:48:49
public investment fund uh in Saudi have spoken to a number of firms about partnering on it the would be the
00:48:57
second largest Venture fund of all time behind soft Banks hundred billion Vision
00:49:01
fund one which you remember was also backed by the Saudis and some other folks in the Middle East region this new
00:49:07
fund would reportedly invest in AI startups chip companies and data centers so we thought we'd do a little
00:49:14
quiz here if you were given the 40 billion David Sachs how would you allocate the 40 billion in AI in today's
00:49:22
market 2024 going on if they put you in charge of this $40 billion AA fund II fund where would you deploy it same
00:49:29
question would come around the horn to you freeberg and then you Chima well the first thing is I wouldn't
00:49:35
be in a rush to deploy all 40 billion at once because that's a recipe for spraying a lot of money into
00:49:40
unproductive or overhyped things so I would take my time first of all but second in terms of coming up with the
00:49:46
framework I would think about the different levels of the stack of AI and try to figure out where the value
00:49:52
capture is going to be and I think there's maybe four different layers of the stack first you've got the Silicon
00:49:57
you've got the chips where Nvidia is dominant then you've got the foundation models where it's open Ai and then
00:50:03
there's some open source models and then you've got kind of infrastructure Dev tools Vector databases things like that
00:50:09
and then finally you have the applications sitting on top of that which are just getting started I think
00:50:13
it's really hard to know from where we're seeing today exactly who's going to capture the most value in the stack I
00:50:18
mean you could make an argument for against pretty much any layer of the stack I guess if I had 40 billion to
00:50:25
deploy what I would do is try to identify who are the leading companies at each level of the stack and then who
00:50:31
are the most promising Challengers and I would make a bed at every layer so I'm covered that's not what I personally do
00:50:38
because I'm not you know I'm just not a hardware investor I'm not really an infrastructure investor I'm more of an
00:50:44
application investor so I'm going to focus on that fourth layer of the stack and just trust that there's G to be
00:50:49
enough value there but again if I was managing a $40 billion Sovereign wealth fund then I would play at every single
00:50:56
level and I would hire the best people who know each layer of that stack sax think you did a good job of sort of
00:51:03
showing the the four layers of the stack I think open source the application layer and specifically Robotics are huge
00:51:10
opportunities that are underinvested in right now so I would take the top open source projects I'd find those top
00:51:15
contributors take the top 20 or so open source projects and back them to the tune of you know significant money 50
00:51:21
million 100 million whatever it takes and try to own the top 20 or have insights into those top 20 open source
00:51:28
models and own those teams look for the top contributors really easy to do on GitHub and hugging face and repet and
00:51:35
other places where they're active and Empower those then obviously there's verticals
00:51:41
we're working on people who are doing screenplays and tax just like you are sacks and that's a fantastic place to
00:51:47
deploy money but then I think robotics is going to be super super compelling here and that takes a lot of money and
00:51:54
so you do have the capital as a weapon and you know the 20-year view of this and making a general P purpose robot
00:52:02
like elon's doing with Optimus or figure AI is doing with their robot I think robotics is a major place you could
00:52:09
probably buy I don't know who owns Boston Dynamics now I know Google sold it so you could probably buy some
00:52:14
robotic companies and then put the AI on them and really take a 20-year view of Robotics freeberg your thoughts how
00:52:22
would you deploy the 40 million the bottom Three Stacks are are very difficult right now to
00:52:29
find a footing obviously you know I think saxs the you know it's it's the I think the generally accepted framework
00:52:36
for how to think about how the market is broken apart but on the application side I
00:52:42
think is where you could think about finding more traditional business model advantages so you know I think your
00:52:51
point about robotics is a really interesting one you know is there a Enterprise likee sale of robotics tools
00:52:57
that have positive Roi for Enterprises and is there a business that's working there and that is scalable vertical
00:53:04
Solutions in labor and Automation and productivity gains are probably the best sharp ratio good Alpha lower beta and a
00:53:13
good place to kind of deploy competing in chips competing in infrastructure competing in models it's such a you know
00:53:20
as we just talked about with respect to what happened with inflection and Microsoft this week it's such a rapidly
00:53:26
changing environment it's hard to have high confidence in where things are headed there so I do think that we do
00:53:32
know that there are Enterprise markets we know that there are segments of things like food
00:53:37
medicine you know manufacturing these are markets that aren't going anywhere and they could all certainly benefit
00:53:43
from unlocks in software or in robotics and Automation and Hardware so that's probably where I would think about
00:53:51
concentrating Capital but you know 40 billion is a lot of money so you'd probably think about deploying it over
00:53:56
what period of time is it 10 billion a year over four years and then is it broken apart in what way over those
00:54:02
sectors and over what geographies and you know then find good managers to help you get it
00:54:08
employed trth you're batting clean up here you got to hear everybody's answers before giving your own what are your
00:54:14
thoughts on your other besties answers and what's your plan to deploy 40 billion for the Kingdom of Saudi
00:54:21
Arabia's public investment fund the most important thing that fund managers get wrong is not having appropriate reserves
00:54:28
for your winners and if I look back the real profit dollars that I leaked was not not investing enough up front but
00:54:37
when I didn't have enough Reserve to do the full prata or even super prata and the ones that worked so the first thing
00:54:43
you have to do and when I do the regression on all of my funds you really need to reserve between 40 and 50% of a
00:54:50
total fund size for reserves so take 20 billion off the table and now you have a
00:54:54
smaller problem which is how do you deploy 20 billion because the other 20 billion is purely meant for the winners
00:55:00
where you cram the money into the few that are winning so that you can make the most money of that 20 billion I
00:55:07
would probably take 2third of it and I would go to all the hyperscalers and anybody that's providing Cloud compute
00:55:15
and essentially buy out all of the compute credits on gpus so that I could tell any startup in
00:55:22
the world you will do a safe with me the Kingdom of Saudi Arabia I will give you
00:55:29
free compute on pick your cloud provider pick your model I don't care so if you want to run llama on grock great if you
00:55:37
want to run mistol on gcp great if you want to run open AI on open AI fantastic but we will pay for all the compute in
00:55:46
return we get 7% up front and you have to tell us some Benchmark of how this model is
00:55:52
improving and then you are hiring a team of people whose job it is and you can probably train a model to do this as
00:55:59
well to ingest the reporting in a systematic way to understand if it is as you guys said a robotics company there
00:56:07
are measures of the quality of a robo A robot's dexterity or Vision or manipulation or tax completion rate if
00:56:15
it's a search engine it's a different thing if it's a consumer facing app it could be users if it's a drug Discovery
00:56:21
app it's the number of legitimate protein synthesis passes that that pass whatever it is so now you've scoped the
00:56:30
problem to 20 billion is in reserves 15 billion of it is tied up in credits and then the five billion I do think it's
00:56:36
what David said what saak said which is a billion and a half to the hardware a billion and a half to infrastructure a
00:56:43
billion and a half to some of these discrete ideas you probably need a 30 or 40 person team total no
00:56:50
more but that business can could make a trillion dollars if it was set up that way but the key is to get the credits
00:56:56
out to people so that the reality is what the commonality across every single AI startup is that they will have to run
00:57:04
on a model and that model will be hosted somewhere in a cloud and all of that compute will need to be paid for so
00:57:11
Saudi Arabia should pay for that compute get six or s% UPF front and retitle the
00:57:17
safe not as the what is a safe called Jason simple agreement for future Equity there should be the Saudi
00:57:27
for future Equity I love it that's what right well there you have it MBS the Allin KSA $40 billion fund give us a
00:57:36
call we'll fire it up and we'll deploy the 40 billion for you I kid maybe actually I'm curious you guys since
00:57:43
everyone kind of seems to agree with the the framework of the four levels of the
00:57:47
stack where do you guys think the value cap is going to be do you think it's going to be by the chip companies the
00:57:53
foundation model companies the INF structure companies or the or the applications I'll actually change my
00:57:59
answer in a little bit I don't think it's necessarily new technology companies per se that are going to
00:58:04
benefit most but I think that it's businesses in traditional industries that are going to be able to leverage
00:58:10
these tools whether they're using open source tools or third party technology capabilities that they're buying as a
00:58:16
service or as a piece of software there's an incredible set of advances are going to be realized in things like
00:58:21
chemical manufacturing drugs General manufacturing that have existing scale and infrastructure that are the fastest
00:58:29
to move to adopt these Technologies are going to benefit the the most and I think that's probably where most of the
00:58:34
value will acre is not necessarily a chip company but in other businesses in traditional industries that can
00:58:40
transform themselves using AI so your answer is at the application level level yeah and then within application Level
00:58:48
you could divide it up between existing companies and startups yeah and existing
00:58:52
companies are able to leverage AI innovations that are lower in the stack another way to answer your question saxs
00:58:59
is which is the most CR which spaces are the most crowded already and so obviously chips are super crowded lots
00:59:04
of incumbents lots of people going after it and the foundation models are very crowded as well and the application
00:59:10
Level is yet to sort of be built out right because we're in year zero or year one of that so I do think application
00:59:17
Level is where there's a lot of value but I also think the hosting and the development of these various Niche
00:59:24
models is going to be a huge opportunity so just once again those open source models being put into cloud computing
00:59:30
environments and optimized that could be a whole new level of aws's and Google cloud and azures so there's an
00:59:39
opportunity for somebody to compete with those incumbents by just being better at
00:59:44
those models that are open source and having the team that's doing those updates and then optimizing that cloud
00:59:50
so I would go with the cloud level for those open source models and providing that as a service like VMware does or
00:59:56
other folks do WordPress would be a tiny example of an open source project like that and then I just something tells me
01:00:03
this robotic space which has been a false start over and over and over again I think this is the time where actually
01:00:09
it's going to work and so I'm I I love that Hardware robotic space for I think you're right SX I think it's kind of
01:00:16
bookended in my mind I think the the folks that are building fundamental Hardware will make a lot of money over
01:00:22
the next 5 to 10 years and then the folks that are building the fundamental application Level
01:00:27
experiences will make a lot of money as well and then who knows the thing that we're not talking
01:00:33
about enough and I don't understand it well enough is the entire way in which apps are built needs to fundamentally be
01:00:41
rethought from first principles because you essentially basically have these client server apps where you have all of
01:00:48
this business logic that's sitting back in some server somewhere and I don't think that that's how apps get built
01:00:55
today in a world of AI and so it doesn't need to work that way so I don't exactly
01:01:00
know what that means but it it just seems like most of the architecture of how the internet works today doesn't
01:01:05
make much sense so that would then support free br's point that all of the kind of the Legacy things that we all
01:01:11
know and trust also get rebuilt and so that could create an entire wave where networking value gets recreated and
01:01:17
everything so so my gosh I mean it could be very very transformational yeah I mean the idea that you would just talk
01:01:25
to a computer or in a chat interface and you wouldn't use an app interface you would just ask it questions it would
01:01:30
give you answers ask a questions it gives you answers give it a task it gives you a result this is why comp this
01:01:35
is why like Saudi needs to basically make a bet that there's just developers that are swarming around ideas let them
01:01:42
show you what's happening because paying 800 million a year of fees is not the best way to generate a return on $40
01:01:49
billion if this is where you want to be investing I don't think yeah 800 million
01:01:53
could pay for a lot of credits which probably gets you once closer to the to the answer or rdit went public today
01:01:59
they have 800 million in Revenue company is worth over 8 billion dollar in trading it's up 50% what do you think
01:02:08
chamath is this the opening of the IPO window again so a oneoff we got stripe coming and what do you take from it
01:02:15
popping 50% on the first day I don't know I really haven't looked at the company I haven't looked at the
01:02:23
the financials but like these last three or four weeks I think people have been so
01:02:29
excited and rearing to go we're in the middle of another meme coin craze oh God don't bring it up we
01:02:37
all getting pulled into that nonsense I think the point is that I think there is
01:02:42
a speculative party going on right now and I'm not saying that Reddit is part of it but whenever these things are so
01:02:51
mispriced just means that people are are ready to gamble a little bit there's definitely a lot of gambling in the
01:02:56
system as we've seen and we're recording this on Thursday so who knows what the stock price will be tomorrow generally
01:03:03
way sorry the the other thing is like Powell did say finally it looks pretty likely we're going to get these three
01:03:09
Cuts so we're going to be down to four and a half to 475 on fed funds by the end of the year
01:03:18
it probably means that we'll get another 50 to 75 basis points through 2025 so people will look out to the end of 2025
01:03:25
and look at a fed funds rate that's sort of like 375 to 4% so they're getting pretty excited and froed up so this is
01:03:33
the beginning of the beginning in terms of that kind of speculation yeah we saw crypto go bonkers the last couple of
01:03:39
weeks yeah what's your take on all this Sachs is does it feel like people are in
01:03:46
h gamble mode again and does that concern you I guess after what we just experienced well I think they're pricing
01:03:54
in these rate Cuts as if they're definitely going to happen like jamas said I think the the Market's
01:03:59
expectation is with let's call it 70% certainty that you're going to get three rate Cuts this year and it still seems
01:04:07
to me that that's a little bit up in the air because inflation has not come down
01:04:12
to the fed's Target of 2% it's still right around 3% 3.1% so it's been sticky around 3% it
01:04:20
was coming down pretty fast last year but it's still there so people I think are Maybe gambling in the sense that
01:04:26
they're counting on R cuts that haven't happened yet but they liked Pal's doish rhetoric yesterday and they seem to
01:04:36
think that that means that the ray cuts are definitely coming I don't know how pal can promise
01:04:41
that without inflation coming down unless he's trying to create a Biden put there it is folks which was my theory
01:04:48
going into this year is that yeah get a Biden put from the FED absolutely and it's looking like Biden has a clear path
01:04:56
to Victory based on the lowest unemployment of our lifetimes and this roaring stock market
01:05:02
records yeah it's just a easy Biden Victory freedberg what do you think about the risk
01:05:10
on I don't know Biden is incredibly unpopular if you look at his actual polling he should not win the election
01:05:17
but that's in spite of you're right the economy is seems to be doing pretty well
01:05:21
and the stock market certainly doing pretty well a president with the these fundamentals would normally get
01:05:27
reelected but Biden currently is not his polling is not the polling of a president who's going to get reelected
01:05:33
it is but pal comes if pal comes through with the ray cuts that will help him it's pretty amazing how horrible a job
01:05:40
he's doing that he's made Trump look like a better candidate to some people that is an extraordinary achievement by
01:05:46
Biden I will have to agree there look I think the the bigger economic issue to be talking about was
01:05:53
that buried article in the The Wall Street Journal about commercial real estate do you see that article that was
01:06:00
crazy so this Wall Street Journal article reported that of the 36 billion of office loans that came due in the
01:06:07
commercial mortgage back Securities market last year only one quarter were paid off in full that's according to
01:06:14
data from Real Estate analytics fir cred 10 is that extend and pretend strategy that you see in there oh yeah I mean
01:06:21
only one quarter of the loans got paid off so 75% get paid off in full so there's tons of buildings that are
01:06:28
underwater right now but nobody wants to foreclose and then sell them at a fire sale price so yeah everyone is it's
01:06:37
pretend an extend yeah kicking the can down the road nobody wants to take the medicine so yeah well they're hoping
01:06:42
they're hoping that rates will come down fast enough and occupancy rates will go
01:06:45
up fast enough that no one has to foreclose but if rates don't come down then you have a real problem I mean
01:06:53
again everyone is just assuming that inflation will continue its path from 3% to 2% and then we'll get these rate cuts
01:07:01
and they're hoping they can cling on landlords are Clinging On And I think the banks that loan them all this money
01:07:06
are clinging on for dear life but if rates stay higher longer then you're going to see some real distress yeah
01:07:15
including in the regional banking system freeberg you had a a science corner here
01:07:19
a couple of different things came up the Hubble telescope 3D printed organs what where do you want to
01:07:25
go with this I mean do you guys want to talk about how the universe is expanding
01:07:30
at an accelerating rate and expanding differentially everywhere we look and we don't understand how or why 100% And sax
01:07:37
needs to use the L so yeah definitely red he dropped he dropped I love science quarter let's do it
01:07:45
freeberg it's your time to sign to to shine of science tell us what's going on with the universe my favorite topic
01:07:53
astrophysics my favorite top my Z is back are we headed for Uranus we dead set on it we're
01:08:03
dead he disappeared again he's just gonna drop in and do an Uranus jokes I hear him giggling with his camera he's
01:08:10
with his writers he's he just went to the writer's room to get an update on the Uranus jokes it's long been known
01:08:17
that our universe is expanding we've all heard about the The Big Bang Theory and couple decades ago scientists began
01:08:28
to observe the brightness of supern noi or exploding stars and then by looking at
01:08:37
their brightness we could tell how far away they were and then looking at the shift of the light whether it's getting
01:08:42
red or blue you can tell whether the light the the the Supernova is moving away from us or towards us and how
01:08:49
quickly and so what scientists have used those observations to deduce several decades ago and for which a group won
01:08:58
the Nobel Prize is that our universe is expanding meaning that everything is moving away from itself it's almost as
01:09:07
if we're all in a cake the best analogy I've heard is that there's raisins in the cake and as the cake expands in the
01:09:13
oven all of those raisins look around and they're all moving apart from each other so the distance between everything
01:09:19
is getting wider space is expanding Central moment the Big Bang that's the theory is right this all
01:09:28
started in the Big Bang and it's not like you know we're all in the middle of the universe and the universe is moving
01:09:32
away from us it's that the entire entirety of space is expanding itself and so everything is moving away from
01:09:39
everything else the challenge in the data was that recently we saw that different types of
01:09:44
stars that were observed with the Hubble Space Telescope had actually a different rate of expansion of the
01:09:53
universe than what was previously thought from the Supernova that we saw and everyone thought there was something
01:09:58
wrong with the Hubble Space Telescope data so you know in a final print published last month the James web Space
01:10:06
Telescope which showed much higher resolution of Imaging and as a result much better data and here's an image of
01:10:13
it you can just see the difference between what came out of James web and what was used in Hubble so that shows
01:10:19
one star that was used to calculate the rate of expansion of the universe and what this sh star showed is that the
01:10:26
rate of expansion of the universe as measured across a thousand of these Stars called sehid stars in five
01:10:32
different galaxies had a value that didn't match the value that we see when we look at exploding Stars very far away
01:10:40
and so it once again confirms what the original Hubble data showed which is that the universe is expanding at
01:10:47
different rates in different parts of the universe which totally doesn't make sense and there's no really clear answer
01:10:53
as to the physics of why if there was a big bang and the universe started to expand it should be expanding the same
01:10:59
everywhere there's no reason that different parts of the universe should be expanding at a different rate than
01:11:04
other parts of the universe that there's differential expansion happening Across
01:11:07
the Universe and it really tells us that there's very little we know or understand about this large scale
01:11:13
structure of the universe and why these things are happening there was one group
01:11:17
that put out a theory where they said that the local Universe where we see these seph stars that this data is based
01:11:24
on there's almost a little bubble and on the outside of the bubble there's galaxies and they're pulling stuff out
01:11:29
faster than what's happening where there's not as much density so there's a lot of different reasons and and
01:11:34
explanations for why this might be happening but it's kind of a big story because it basically confirms that we
01:11:40
see a lot of differential expansion happening Across the Universe and we don't know why just another big mystery
01:11:46
of the universe so super kind of interesting confirmatory data from James wed this week Jam do you want to talk
01:11:51
about the the the pig kidney I mean I think it's it's really incredible they took a kidney from a pig and then they
01:12:01
used crisper casine to edit out the certain subset of the pig genes and edit in a certain useful subset of human
01:12:09
genes and then they transplanted that kidney into a 64 year old man I and he apparently seems to be
01:12:16
doing well it's really incredible and this is a guy that was at end stage kidney disease and my father went
01:12:24
through this but when you're at that endstage renal disease you're getting dialed every 3 days for up to four five
01:12:32
six hours trying to basically you have a machine that does the job the kidneys for you to keep your blood clean but
01:12:39
it's just it's kind of a death sentence and it's like a slow moving death sentence at that so the idea that you
01:12:45
could now use this effectively Infinite Source of organs seems really compelling pretty amazing I don't know
01:12:58
what do you think definitely where we're headed I don't even think they're gonna need yeah
01:13:06
speaking of medical breakthroughs did you guys see the the guy who got the neuralink
01:13:11
chip chess with his brain he's using the force yeah that was awesome using the force yeah he described it as he was
01:13:19
playing chess and he said like I love playing chess and I've learned to use my mind to move pieces around and he said
01:13:25
like it's like having the force I mean totally wow amazing I watched the live stream and he said that he was a
01:13:31
quadriplegic from the shoulders down but he loves chess he wasn't able to play chess now he's able to play chess he was
01:13:37
able to play Civilization the game which I guess was really hard in the absence of having this this
01:13:43
chip and now he can do that it's it's incredible I mean it's that they kind of went public with it or I mean obviously
01:13:50
he agreed to go public with it I think Trevor is his name it's pretty amazing and there's more amazing stuff coming
01:13:58
they're making significant progress over there I was talking to somebody who works there and you know it's it's it's
01:14:04
going to be yeah it's it's going to be a process but they're making significant Pro
01:14:11
progress and they're going to have I think even bigger announcements in the coming year they're getting it done it's
01:14:18
for FKS my kids were really Blown Away by it you know it's it's interesting to me what like penetrates their cynicism
01:14:25
and like what they get actually impressed or excited by and they thought this was really cool you know it's so
01:14:31
funny it's like people are breathlessly like looking at the Elon Don Lemon video
01:14:36
and they're trying to opine whether he had a good interview or a bad interview and it's like he actually had one of the
01:14:42
best weeks of his life yeah Starship three made it up yeah Starship had an incredible performance last week and
01:14:50
then this thing this week I mean what an incredible 7-Day run it's more than most
01:14:55
of us will have in our lifetime it's it's also nuts like C that Don Lemon interview like there was actually some
01:15:01
really interesting topics discussed but I I felt like this was like this was the
01:15:05
perfect like baton passing between old media and and New Media where he was constantly trying to do a gotta
01:15:12
journalism thing and Elon was trying to engage in good faith and like an interesting discussion and then every
01:15:18
time the discussion got interesting he kept trying to go back to like Sensational gotcha journalism and it was
01:15:24
a totally wasted opportunity if he had just Don Lemon had just stayed in the moment and like engaged in good faith
01:15:29
instead of trying to get this like clip it was it really bad performance by Don LM and I
01:15:35
thought it was really getting interesting at moments in time he's obviously trying to get a job back at
01:15:39
some mainstream Media Company maybe this is his this is his resume if he can basically get some clip of Elon saying
01:15:48
something that he can twist into something that it doesn't mean and he can say I got Elon Musk then he can get
01:15:53
his job back at CNN or one of those he got paid out in full like 20 30 million bucks and by the way those jobs are not
01:16:00
they don't exist anymore like Tucker and him were like the last of that generation to get those huge payday over
01:16:08
Don Lemon got paid $30 million by whom I think CNN the report was CNN paid out his full contract the same thing
01:16:16
happened I think with Tucker they both got paid their full contracts whoever negotiates those contracts with the
01:16:21
networks over the last couple of decades is awesome because it's pay it's pay for
01:16:26
play like whether you are on air or not you get paid and the and then they don't
01:16:31
let you go to a competitor that's why both of them are doing internet stuff X or whatever carved out stuff just wanted
01:16:37
to give a shout out here at the end of the Pod for the guys at all in talk Chris and Spencer did an amazing job the
01:16:44
team over there from good future media of creating just that amazing fan account now that we're growing up here
01:16:49
over at Allin and we'll have a CEO announcement at some point we have taken over the accounts and we're starting to
01:16:56
make our own Clips so thanks to them for supporting us and helping grow it if you
01:17:02
want to see the four of us go to YouTube and type in Allin podcast and then subscribe uh we're almost at 500,000
01:17:09
subscribers and we decided that if we hit one million subscribers by the end of the year we're going to throw a party
01:17:15
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01:17:29
Sachs and Jason calacanis thanks again to the super fans for helping us build up this amazing audience couldn't have
01:17:36
done it without you and uh yeah we're we're just posting Clips I think every other day on the YouTube channel and so
01:17:43
if you go in there you can subscribe and then right next to it there's a little alarm Bell you hit the Bell you'll get
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01:18:02
will see love you boys world's greatest moderator you forgot your and uh the host of this week in startups so search
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know I have another podcast so please search for this week in startups And subscribe to that as well we'll see you
01:18:17
all next time byebye love you boys let your winners ride Rainman d and instead we open source it to the
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fans and they've just gone crazy with it love [Music] you besties are that's my dog taking your
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huge orgy cuz they're all usess it's like this like sexual tension that they just need to release
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Som we need to get merch [Music] our [Music] going