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All right, everybody. Welcome back to the world's greatest podcast. The number one podcast, your favorite podcast, the
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All-In podcast. I'm Jason Calakanis, the world's greatest moderator. With me, of
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course, Chimath Polyhapitive, >> the great great great great great grandchild, Jason was of a hooker and
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>> you saw that from France >> and a purse snatcher. >> This this comes from like a history of
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uh France. some history >> uh said they let you out of this was this was the deal in 1719 Sachs if
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you're a prisoner in a in Paris you were offered your freedom on the condition that you marry a prostitute and move to
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the great state of Louisiana what are you saying taking the deal >> it explains a a certain of your
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proclivities Jake I I >> I thought you were asking me to see if they would extend the rule for you
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>> no I'm saying that your great great great great great Grandma, I'm not a hooker. I'm Greek.
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>> That's what I'm saying very explicitly. She was >> We never We never spent time in a
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prison. Also, of course, David Freeberg is here. How you doing, brother? >> Living the dream.
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>> Good to be back. Missed you guys last week. How was Brad? How did he fill in?
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>> It was great. Yeah. Yeah, he was. >> Trump account victory lap. >> He had a little victory lap. We played
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Chariots of Fire. And uh how was your special time at blank and your time next week at blank?
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>> Thanks for h Thanks for having me on your show, Jel. >> All right, we got a full docket today.
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Uh lots of stories. Let's start with uh Deep Mind's Deis Habis just dropped an AI regulation proposal and it's um it's
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pretty popular with the boys. In an ex article, Demis called for a US-led international AI standards body proposal
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is modeled after FINRA, the Financial Industry Regulatory Authority. That's a self-regulatory body. And this
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would be federally overseen, but industry funded and run by independent technological experts. Frontier Labs
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would submit their models 30 days before release. Uh, and it would be voluntary initially, then mandatory. At some
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point, the models would be assessed on risk to cyber security, national security, biological threats,
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and other high-risisk domains. Benchmarks would be updated quarterly, and the body can coordinate a slowdown
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in development if the situation demands it. I guess that would be if uh there was a cyber risk, etc. Looks like uh on
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the positive side we have Elon who said it was thoughtful, Sam at OpenAI, Jack Clark at Anthropic, Sundar,
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Satia, Jack Dorsey from Block, the Carlson brothers. So Freeberg um uh Freeberg, your thoughts on
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>> Oh, wow. Way to really way to really uh put in the effort today. Go ahead, Jason. Good.
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>> Just pass it to me. I'll take care of it. Let me let me >> What do you want me to do? Oh my god,
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what an incredible topic. >> All right, here. Let me do it. You want me to do it, right? Three, two,
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>> some of us actually care about this topic. Let's go. >> Okay. Yeah, you care about it. Okay,
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here we go. Three, two. Here's a clip of me calling it on the All-In podcast first. The whole industry is going to
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need to be regulated and I think the industry needs to regulate themselves. That's the key to this. We need to have
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a set of tests that Google, Microsoft, Amazon all agree to. Elon, hey, these are the things we should test and they
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should self-certify each model before asking the government which doesn't understand the models to certify them.
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The industry should have an industry certification like they do for countless other things. I've talked about the MPAA
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and the video game industry. We should just self-certify. It's the simplest thing in the world to do. And then we
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could release the models ourselves without the government getting involved. >> Brie, would you like to congratulate me
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on nailing it again? Well, first of all, first of all, I thought that Demis' proposal was really smart and
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thoughtful. Now that I know that you may have shared the same thought, I think we
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should just do something different. >> I can't win, Zach. Even when I nail it, I hit a halfcourt shot. Truman's like,
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"Move the net. Move the net." >> I think it's worth putting a little definition around this proposal, which
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is to form an SRO, self-regulatory organization, because they're not purely independent. SRO's like FINRA and the
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National Futures Association, they exist in the financial markets and they were created to allow the financial
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institutions to set their regulatory rules, how they check each other, how they make sure that everyone is being
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safe because they're obviously all trading risk with one another. So the industry doesn't want to have exposure
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and they certainly don't want to have things get slowed down because that would make the markets inefficient. So
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the analogy with AI is pretty appropriate here which is that there are many players in the industry. They are
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all trying to progress AI technology and no one wants to have a single regulatory
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body that comes in from the government or outside that says here are the tests you guys have to pass with your models
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in order for them to be appropriate. As we saw in California when California tried to pass AI legislation, I think it
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was about a year a year and a half ago, none of what they wrote even made sense at the time. But fast forward a year,
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none of those kind of rules and requirements actually map to the technology of the day. So the purpose of
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an SRO like FINR run NFA is they can adjust how tests are being run, who is actually running the test and make sure
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the right experts are involved in doing this, independent experts that is to do the testing with federal government
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oversight but not control. So in the case of FINRA NFA, they report up ultimately to Senate committee and House
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committee that gives those committees oversight of those governing bodies that are supposed to be doing the work to
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make sure that they're doing their frigin jobs. So the SRO concept would be that experts could be brought in from
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industry that know how to assess models for things like cyber risk, for things like biorisk, for things like weapons
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risk, social manipulation, etc., etc. that independent body can get voted on, can get changed over time, and because
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they actually have expertise in running software valves and running tests like this, they can operate at a faster pace
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than setting up a new government agency. So, it's it's kind of a very elegant solution. And I think it's why everyone,
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to your point, Jal, and I I'll say this is right, the industry recognizes that there needs to be some degree of
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oversight and checkpoints here. And I think that this could actually solve that problem. So that's why I think
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everyone's kind of climbing on board with it because it doesn't actually hand stuff over to the government. It says,
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"Hey, we're going to get the right people to to take a look at these things and the government is going to have
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oversight ultimately." >> Did Anthropic and OpenAI have a point of view? >> They both signed up to it. I don't think
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Daario directly, but Dario's president gave his thumbs up and then I think Sam gave his thumbs up
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>> which means they're on board. Saxs, is this the best of the uh possibilities in
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your mind? uh is the industry regulating itself after they have now provoked governments around the world to be so
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concerned about this issue. >> Yeah. And I, you know, I talked to Dennis about this and this may surprise
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people, but I told him that I could potentially get on board with this, speaking just for myself, not on behalf
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of anyone in the government because I thought that an SRO, again, a self-regulatory approach would be
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infinitely better than creating a new government agency that I think would rapidly become a DMV for AI. Dario calls
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it an FAA for AI. The government does not have the expertise to evaluate AI models. The criteria are changing too
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rapidly. you're going to very rapidly end up with a queue where all the models would be waiting to get tested and it
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would start with a month-long delay. It would end up being many months and we would just lose the AI race. So, I think
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an SRO approach would be infinitely better than that if it was done right. And I outlined for Demis
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criteria or conditions that I thought were really important to in order to make this work. And if I could, I'll
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just run through them >> please. >> All right. So number one, I think the SRO has to have broad representation
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from within the industry, the AI industry. It has to include startups and open source. It can't just be the three
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biggest labs, you know, can't just be >> the fix, right? >> Yeah. Exactly. And that's precisely to
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avoid the problem of regulatory capture, right? If you have a diverse enough group of interests being represented,
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it's much harder for this to turn into red capture. So for example, I think if you had Jensen, Elon, Zuck, and maybe
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Mera because she just launched a very interesting >> open >> platform that's based on open mach
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capture problem to a large degree. So that's number one. Number two is I think that this body should only be reviewing
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frontier models, meaning the true frontier. The models that really represent an advance in the
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state-of-the-art of artificial intelligence and models below this level should not be held up from getting to
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market. And I do think that is a big risk under regulations is that the leaders of the market use this as a way
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to tie up lesser models. And there's no reason if a model is not at the frontier, why hold it up? Okay, so
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that's >> so they have to be in maybe the top 10 performers, top 20 performers on the
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benchmark test. >> No, I think I think when they benchmark on key dimensions of intelligence, they
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have to represent an increase above where the current state-of-the-art is if it's not a step change, then how are you
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dealing with some new incremental risk, right? I mean, this is all about dealing
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with some sort of incremental catastrophic risk that could be introduced by some new step change in
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intelligence. And that brings me to number three, which is I think this body should be dealing with catastrophic risk
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only. And to my knowledge, those right now are cyber and CBRN, meaning it's, you know, chemical, biological,
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radiological, nuclear. So it should not be things, for example, like disinformation or microaggressions. This
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should not become a speech regulator, you know, or just, you know, things that seem kind of trivial. The only reason to
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have this is for truly catastrophic risk. So that's number three. Number four, and Deus mentioned this in his
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post, is that I think it should be voluntary first. This new organization should prove it works before it gets
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legally enshrined and becomes mandatory. And then number five is this should be a
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substitute for a new regulatory agency. If it's just additive, then it defeats the purpose and there's no real reason
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to support it. So again, I think this has to be a substitute, not an addition to a bunch of new regulatory structures.
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So I think if you did those five things, I think this becomes much more palatable. And Demis said, I mean, he
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didn't put all these points in his blog post, but he did say to me that he was bas.
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So I think if those notes were adopted, this is something that we could potentially get on board with. That
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doesn't mean I don't still have concerns. I'm quite concerned for example that you know I think Daario has
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expressed support for this however I think this is just an opening bid for anthropic meaning they'll take this
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thank you very much this is more regulation than we have today but that won't be the end of it right this will
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just be the stepping stone to get what Dario has now called for many times which is the FAA for AI and if I could
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let me just as as a final point I just want to explain what the FAA does because people need to understand you
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know FAA for AI sounds really nice, but actually it's a really extreme proposal.
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What the FAA does, among other things, is approve new airplane designs. Okay? And specifically, it requires what's
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called a type certification for any new aircraft design or major changes. And for an entirely new aircraft design, it
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takes 5 to 9 years >> to get the certification. And if you merely want to amend a certificate, I
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guess for you know major changes or I'm not even sure how major the changes need
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to be, it takes three to five years. So the Boeing 737 Max, for example, took about 5 years. So this is
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permissionbased regulation. There's no approval, no flying commercially. It's safety first. Look, that might make
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sense in the case of preventing plane crashes, but when you're talking about AI models, you're talking about
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replacing a system that is releasing new versions every couple of months with one
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that is potentially fully under the control of government, fully government approved. Everything has to be
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certified, and you could expect the timeline to go from months to years. Again, I think we'll just simply lose AI
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race if that happens because China is not going to abide by those rules. So just to sum up, if my choices are
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between FAA for AI or what I would call the DMV for AI, I would much rather go for Demis' SRO for AI, the
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self-regulatory approach. But we really have to keep it honest and pure because again otherwise it'll just be the
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opening bid in a coming new wave of regulation and it will be the vehicle for massive regulatory capture.
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>> To your point, it can't restrict. >> Yeah. >> Can't restrict open source. I think
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that's so important because all of these other efforts require money that you have to spend which is always where
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regulatory capture happens and you have to enable startups and open source to compete effectively.
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>> Shimoth, any thoughts on this new self-governing body? >> I think it's really important and I hope
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it happens quickly. The thing we have to keep in mind is there's going to be a torrent of money that's going to try to
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influence both sides of the political aisle to regulate this in a way that creates some
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form of regulatory capture. We just don't know what. And so the faster we avoid that off-ramp by actually
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establishing a set of rules and superseding the need for federal oversight is a really important thing.
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Now, at the end of the day, you still have federal oversight in some ways because you still have commerce that
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plays a huge role in these standards. You still have the DOJ. So, it's not as if it's going to be a wild west. But
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what it prevents is a handful of actors using their balance sheets and their capital to essentially pull the ladder
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up. And I think if that happens, we're in a really bad place. So I think Demis' proposal makes a ton of sense and we
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should just get on with it. >> All right. >> Well, yes. But provided I mean again
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just provided that I think we we make sure that I mean look in my view there there are five conditions but I think we
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do have to make sure it's pure. Even in the FINRA example, that's the analogy that Demis used was that we should set
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this up in the same way that that FINRA is set up. FINRA does report in ultimately to the government. It reports
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into the SEC. And so, you know, if we are going to set this new SRO, where is it going to report to in the government?
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There's going to be a huge food fight over that and it will then be subject to political pressure. The software
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industry has never been regulated in that way. We do not have a dedicated regulator for software. We're right, but
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those issues are important. But my point is, h I'm just saying these things are never ideal. But if the choices are we
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kill open source and we lad pull the entire market, so there's a duopoly or there's this, I'd say this
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>> for sure. And and that's and that's that's the crux of my argument is it's definitely the lesser of two evils. I'm
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not sure those are the only two choices, but increasingly there's no question that the pressure is coming to regulate
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AI more and more. And frankly, this all goes back to anthropics government. >> They poke the tiger. They poked the
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tiger. >> Yeah. Well, it's it's more than that. >> They're funding the meat the tiger.
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>> Yeah. I want to give an update on that actually cuz >> I would say poking the tiger of like the
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American public getting really freaked out and then the government stepping in. Yeah,
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>> totally. And there's a couple of data points on that actually. I just want to
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give a quick update. So in October of last year, I tweeted that Anthropic is running a sophisticated regulatory
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capture strategy based on fear-mongering and everyone kind of went crazy over this. This was again like a very hot
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take or spicy take at the time. Back then people thought that I was beating up on a little startup. Now I think
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everyone can kind of see the truth which is look this is not a little startup. They already have a trillion dollar
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market cap valuation. Gavin Baker thinks it'll be at three trillion after they IPO.
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This is actually one of the biggest of the big tech companies and they are I think by pretty much every criteria
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including revenue the leading AI company. So I think people can see now that they have enormous resources and
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they're putting those resources behind an effort to like Jimoth you said pull up the ladder and it's classic regatory
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capture and there was an article in Politico just the other day. is called inside Anthropic state-by-state plan to
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ratchet up AI rules. And what it says is quote AI giant Anthropic is pursuing a strategy of oneupmanship that encourages
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states to impose increasingly tougher AI guard rails rather than a line around a
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single set of regulations. So the basic idea is that they get a set of regulations passed in one state like
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California's SB53 and that was then supposed to be the model at least for all the blue states.
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But then with each new state, they actually make the regulations more and more strict, more and more
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all-encompassing. So there's not actually a stable equilibrium. What they're trying to do is drive each
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incremental state to more and more regulations. And so this is actually an article explaining that they're doing
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the opposite of trying to create what we wanted, which was a single national framework. they actually want the
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patchwork because they're using again the pressure they're creating at the state level to impose more and more
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regulations. And again, what I said last year was that Anthropic was principally
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responsible for the state regulatory frenzy that is damaging the startup ecosystem. Again, everyone went crazy at
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the time. I think now there's plenty of evidence showing this is their agenda. And um
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>> and by the way, they're going to win that because states have great sovereignty rights and like we're seeing
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with self-driving the states are going to decide. It's not going to be a federal mandate. The states get to
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decide just the nature of the US. >> The reason why >> they're going to they're going to win on
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that in a couple of states, right, Zach? Just realistically, >> they've won in a bunch of states. They
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already won in California and Illinois and New York and I mean they're winning in all the blue states and maybe even
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some red states. But look ultimately the reason why anthropics arguments are finding purchase is because when you go
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to the government and say please regulate me you know you should have more power there there's hardly anyone
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in government who will ever say oh no no no we're not qualified like we don't want government
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>> yeah there are very few people who are principled that way and most people in
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the government will say thank you very much what else can we take and this is the mistake that I think a lot of people
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in the tech industry are making is they think that they can just buy off politicians or the political system by
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making concessions. No, that will just lead to a ratcheting up of the pressure. The government will be happy to take
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this and then come back for more and more and more until it's fully under government control. So, at some point, I
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think these companies are going to have to grow a spine and fight and decide where they're willing to draw a line.
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And if Demis' SRO is the line, if they're saying, "Okay, we think this is the right solution and we're going to
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fight here and this has to be it and in exchange for this we need preeemption and we need, you know, other things
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written into law that make sure this is where the line is, then I think it can work. But I think if you're just kind of
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offering it up for free and all these companies are just going to say, "Oh yeah, regulates, give us the SRO." That
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will not be the end of it. That will just be the opening bid and the government will come back to take more
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and more and more. Yeah. All right, let's keep moving through the docket here. Stripe, which is still a private
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company, much to the chagrin of many of the shareholders, I think. Uh, now as they go into the second day on this,
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yes, I mean, I'm in I'm in a couple of funds that have large positions like go public, boys. They are bidding bidding
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53 billion for your alma mada, David Sachs, PayPal, which is a public company. Stripe and the private equity
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fund Advent are jointly offering to acquire PayPal for about 60 bucks a share, which is a
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small premium. Most people think it'll go for more like $70 a share. PayPal stock jumped on the news obviously. And
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>> were you able to get to the bottom of this that was it just Stripe and Advent?
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Because then somebody else reported that it was also Block. >> Yes, Block is coming in as well.
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>> It's so confusing. every other media source is like they're all over the place on this.
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>> Yeah. No, it's I think it's because it was a breaking story and maybe they were
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trying to keep it quiet. >> It's a huge deal though if if Block is a part of it versus if they're not. I
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think >> Yes. And Block, formerly known as Square, is Jack Dorsey's uh payment company, one of the few entrepreneurs to
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ever create uh two decacorns in our industry. And uh they're contributing 17 billion in equity in the combined offer.
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how they um chop up what's inside of PayPal would be the big question. Obviously, they own,
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you know, a number of different brands including Venmo in addition to PayPal. That might go really well with the I'm
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just taking a guess here with the block assets. Stripe owns Bridge. That's their
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stable coin infrastructure company they acquired for a billion dollars in 2025. PayPal has SIUSD which is already in
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circulation. That's their stable coin. So, stable coins are part of this. But the biggest thing is PayPal is still a
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juggernaut. Sachs 439 million consumer accounts. You did something right there 25 years ago. It
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still the test of time. >> It's kind of amazing. It really is. >> Isn't it amazing that it's still that
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strong? Yeah. It's weird when brands keep going for that long. >> But the problem is that the product is
00:22:10
getting very long in the tooth. I think it's only growing 7% a year which is a lot on the base that you know it's it's
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grown to it's a big base but the product has become somewhat obsolete and in a way it's a legacy product. I'd be
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curious to hear from the Stripe guys how they would fix that cuz I think that's a
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very hard problem to fix. Maybe they wouldn't maybe they would just run it more efficiently and kind of milk it
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>> kind of do a private equity play. The different question >> the interesting question to ask is
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what is the only kind of baby that advent and stripe and block could have together and I think there's one which
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is you are creating a competitor to Visa and Mastercard >> because you now have upwards of 6 or 700
00:23:02
million accounts. You have massive stable coin infrastructure. You have all of the riskmanagement
00:23:09
infrastructure that Stripe has built over the last 15 or 20 years. The big critique of Stripe's business model
00:23:16
early on was they had to build so many value added services because everybody always thought the take that they could
00:23:23
make as a middleman sitting on top of the traditional rails would effectively get competed away. Now to their credit,
00:23:29
they've done such a good job that that hasn't happened. But I think what it means now is you can vertically
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integrate and go soup to nuts. That is probably the most obvious thing to make out of it. So that now
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Stripe gets access to an ultra- lowcost set of payment rails literally like to zero brings it everywhere all over the
00:23:49
world. So does block advent can pour money into it. So it's quite powerful if it comes together. Rbert, what does this
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say about private market companies at scale and Stripe potentially never going public? I mean, how does a private
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equity firm get their return on this investment in 2, three, four years? Do they wind up selling more of it to
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Stripe? What are your thoughts here on the structure and capital market implications here?
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>> I think there's going to be more of these kinds of deals. If you look at Ryan Cohen's bid for eBay, I think it's
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probably a second dot on a line that I think is emerging, which is folks that are call it AI native are looking
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at call it first generation digital native businesses that have become mature and old and stale and aren't run
00:24:43
by the founders anymore and have not yet realized the opportunities with AI, have
00:24:48
not yet realized their potential. or overspending in a lot of ways. And when you take a look at those businesses as a
00:24:55
modernday AI operator, you're like, "What the hell? This thing is so under uh utilized. They're not using their
00:25:03
network well. They're not operating well. They're overspending. They're not using AI well." And there's a set of
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opportunities that become quite obvious. And I think the capital markets as we've
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seen with like Josh Kushner's roll up of accounting firms and General Catalyst has a project like this where you can
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kind of use capital to go buy you know in those cases traditional services businesses and AIify them. I think this
00:25:28
is part of a line of maybe looking at traditional digital businesses and AIifying them. And there's a long list
00:25:35
of these. There's a couple dozen of them. So I think if you looked at the public markets and you said, "Hey, where
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are all these kind of software companies, network businesses that emerged in the early part of the
00:25:47
internet or even in the more recent part of the internet, aren't run by their founders anymore, have stalled out,
00:25:52
there's a massive opportunity. Now the question as a capital provider is who do you partner with to go and execute that
00:25:58
operational revival of that business?" You're not going to go hire some Mckenzie consultant to do that work for
00:26:03
you. It's got to be the best of the best. It's got to be the right players in the business. So, I think Ryan Cohen
00:26:09
has proved his metal obviously with some of the things that he's done with Chewy
00:26:13
and GameStop and that's obviously debatable. I spent some time interviewing him to understand his
00:26:18
>> This was on the Allin interview program. You can go to our channel and find it
00:26:22
there. It's last month. >> Thanks for the plug. And obviously, when it comes to payments, who better than
00:26:28
Stripe and maybe Jack Dorsey plays a role here. And and by the way, I think because capital I mean, if you think
00:26:33
about that $17 billion equity contribution, what that technically means is Stripe is selling and Block is
00:26:40
selling $17 billion of equity to the cash investors. That cash is then going to buy a PayPal. Therefore, Stripe and
00:26:50
Block end up owning a piece of PayPal. The private equity investors own a piece of Block and Stripe. And what is not
00:27:00
clear in the deal docs that were published cuz I don't think it's relevant to the public markets is who's
00:27:05
actually going to operate PayPal post close. And my bet would be that they're going to hand it over to the Stripe guys
00:27:11
and say you guys >> I think that's clear. Yeah. Because they're the most qualified and they will
00:27:15
have the biggest stake in it. Uh you're >> so I think I so I I will make a prediction. I think that eBay and PayPal
00:27:20
are probably the beginning of a wave of mega deals of call it flaccid, you know,
00:27:28
digital businesses that can be revived, okay, >> with the blue chew of capital and the
00:27:34
right operator and I think that there's probably a big >> a big wave of this to come.
00:27:39
>> The other thing is this is probably not the final clearing price. I think the
00:27:45
price is probably another 10 to 15% higher from here. And and I will say that there is a certain individual that
00:27:54
must look very closely at putting in a competitive bid. Oh, a certain individual who may may have his
00:28:03
fingerprints on the original PayPal who might also have $4 or5 trillion in market cap to play with who also made a
00:28:12
$60 billion acquisition recently. We don't have inside information here. >> To your point, Freeberg,
00:28:18
>> correct? >> This is becoming a playbook. There's a company called Bending Spoons that just
00:28:23
went public. They bought a bunch of non-founderled assets. AOL for 1.4 billion, Vimeo for 1.4 billion, We
00:28:30
Transfer, Eventbrite, Bright Code with him. >> I was just DMing with him. >> He's He's awesome. I've hung out with
00:28:37
this guy. This guy is an absolute freaking operational killer. He he bought Evernote.
00:28:44
>> Yeah. In Milan. >> And yeah, he runs the whole thing from Milan. >> He bought Evernote and he just goes in
00:28:48
and he diagnoses these businesses. He's like, "How are they being over where are
00:28:51
you overspending? Where are you underpending? what are you doing wrong with the product and what are you doing
00:28:54
wrong with marketing and he just faking fixes it and he's just a killer and he's
00:28:59
taken all of these what were called web 2.0 I know businesses and he's revitalized them, rolled them up and
00:29:04
printing cash out of them and leverage the cost to run them lower. >> He's using young AI first executives
00:29:12
from what I'm talking >> totally. It's a great call out JL like bending spoons is the roll up of this
00:29:16
sort of strategy but for these mega deals I think there's more of them to come. I will say uh you know the the
00:29:21
high order bit here uh which we talked about for a couple years was venture capital was on the ropes for a couple of
00:29:28
years under the wrath of Lena Khan and then once Trump got elected all the executives working in corporate
00:29:35
development said hey looks like M&A's back on the menu and now we're seeing deal after deal after deal get
00:29:42
consummated people are no longer scared of doing deals Uber just bought delivery
00:29:47
hero today uh That's going to like jump their revenue by 20. Yeah. And that's going to jump their revenue by like
00:29:53
they're getting diluted 10%. It's going to jump their revenue 24% or something crazy like that.
00:29:59
>> And this is going to be I think the big story the next couple of years and all
00:30:03
this liquidity. Talking to LPs and family offices, which I do on a regular basis, they're all like, "Hey, when's
00:30:09
your next fund? Hey, when's the next deal?" Because now people are believing in venture because of the SpaceX
00:30:14
distributions and all this M&A. And we have four or five companies that got bought since Donald Trump was elected
00:30:20
president. Thank you my President Donald J. Trump for putting M&A back on the menu. Sachs M&A back on the menu. Why
00:30:28
didn't you make a bid saxs for PayPal? >> Been there, done that. >> Been there, done it. Okay.
00:30:32
>> No, but look, you have to have synergies. >> There was a moment, this was like 15
00:30:36
years ago where they asked Sachs to go back and be the CEO. >> That was right. I remember that at the
00:30:41
poker game. Yeah. He and I immediately flew to Vegas and spent the weekend there to think about it.
00:30:47
>> Like, you know what? >> I wasn't No, they didn't ask me to uh but I was >> Well, no, I I never got the offer, but
00:30:56
it was down to like final two or something and it was between me and someone else. And actually, they ended
00:31:02
up going with some, you know, like traditional like credit card executive. And to be honest, that's why PayPal has
00:31:10
stagnated is that as soon as it was acquired back in 2002, they basically blew out like all the founders, all the
00:31:16
founding DNA and it was just kind of run by, you know, consulting types. You got
00:31:21
to remember at that time it was acquired by eBay and Meg Whitman had worked at Proctor and Gamble and Disney and she
00:31:29
spent like eight years at Bane and it was like a very corporate mindset. I mean among all the internet companies of
00:31:34
that era it was definitely the most corporatist and they saw the founders the founding generation at PayPal is
00:31:42
just a problem just a bunch of like cowboys they couldn't control they made no effort to retain them and I think
00:31:47
they were kind of relieved when they all left and then that's what created the PayPal mafia was that you know normally
00:31:53
in an acquisition you'd lock up all the talent but in this case >> they locked them out they're like these
00:31:58
guys hard to manage change the keys >> I've said for a long time it's a misnomer to call it the PayPal mafia.
00:32:04
It's really the PayPal diaspora. >> Totally. >> Our homeland was taken over and they
00:32:08
burned our temple and then kicked everybody out. >> Yeah. >> And that's why the whole PayPal mafia
00:32:13
got started with all those companies. >> But as a result of that, >> for for decades, I don't say anyone's a
00:32:18
victim. That's >> Look, when you when you acquire a company, you get to decide what to do
00:32:23
with that asset. >> Totally. >> So, I mean, that was just the reality. But it's not like, you know, I don't
00:32:28
think anyone was bitter about it. They're all like, "Okay, this give us the capital to go. I'll do the next
00:32:33
thing we want to do." >> Well, the new CEO, by the way, Enrique, is really aces. Uh, I've met him before
00:32:38
and they're doing a great job. Um, apparently, which is why they probably got these offers because they've been
00:32:43
tightening that business up for the last couple years. >> Well, no, the reason they got these
00:32:46
offers is the market cap is down to, you know, was down in the what, like 30 something billion. I mean, this is a
00:32:52
company that was worth 200 billion, wasn't it? Roughly >> 322, I think, was the peak.
00:32:58
>> Mhm. And before this offer, it was down to what 30 to 40 billion. Yeah. >> So the reason why it's attracting offers
00:33:05
is it's so beaten up. And so now the question is, can anyone else do something with it?
00:33:10
>> To your comment about you've got to have synergies. Doesn't it seem to be the
00:33:14
case that in this era the the core synergy that any great operator can bring to the table in this sort of a
00:33:20
scenario is AI? Like you can leverage whether it be in this business or others you can leverage tools that drive
00:33:26
automation that drive product development that drive improvements and efficiencies across the organization
00:33:31
that make the product actually better for the user etc etc that simply >> potentially obviously being well
00:33:37
implemented. Well, look, I think you have to have a product vision of how you would use AI to make the whole user
00:33:43
experience better. And yes, you're right that you could just use AI to drive efficiencies and that'll improve your
00:33:49
profitability and earnings. And so on a financial level, you could make the acquisition work. But it seems to me
00:33:57
that the existential issue for PayPal is that you're dealing with a product that's 25 years old. I mean, it's the
00:34:04
same thing that we created back, you know, like 27 years ago. I mean, it's changed a little bit, but not that much.
00:34:10
And the problem is that that that interaction model is legacy. And so, unless you've got a a vision of how to
00:34:19
resuscitate it and rejuvenate that that product, I think, yeah, it could be a good financial play. Maybe
00:34:24
>> I think they're buying the accounts. >> Yeah. I mean, what you're saying, Jamoth, is Yeah. what you're saying is
00:34:29
interesting because with Stripe, I mean, this is the advantage that Stripe has is
00:34:34
that they have a ton of merchants, right? So, they've they've become the preferred mechanism for merchants to
00:34:42
basically accept payments via APIs. And I think they're doing about two trillion
00:34:47
a year of annual transaction volume. I think PayPal is doing 1.7. So, actually, Stripe is a little bigger than PayPal
00:34:54
now. But the thing that PayPal has that Stripe doesn't really have is the consumer relationship. So, you know,
00:35:00
over 400 million active consumer accounts. So, you're right, Jimoth, that if if somehow you could combine the
00:35:06
merchant relationships with all those consumer accounts and then bypass the credit card networks cuz there'd be a
00:35:12
lot in theory there could be a lot more on us transactions. >> Exactly. And >> that's where the value is.
00:35:18
>> PayPal already owns Brainree. So, now you have Stripe and Brainree that effectively were competitors that won't
00:35:23
be. And then what block gives you is an entire point of sale infrastructure and you get the cash app. So you put it all
00:35:30
together and I think it's a it's a shot across the bow for Visa and Mastercard. >> Brainree is the other one that I think
00:35:37
you just mentioned there Chimath that's important because that is a very strong business that you don't even know that
00:35:43
PayPal owns. Venmo is also that speaks to a lot of young people. So you're kind of getting two generations. You're
00:35:49
getting Gen X and millennials. Uh a lot of bang for your buck there. Yeah, >> what Zach said is true. They have enough
00:35:55
of the things to go end to end on their own rails. >> That is a very >> Yeah, the question is whether you can
00:36:02
package it all together in a way that the consumer will actually choose because it's one thing to say, well, we
00:36:08
take the merchant relationships of Stripe and the consumer relationships of PayPal, we don't do that. But what if
00:36:14
the consumer doesn't want that? >> No, you don't do that. I think what you do is you go to places like all of the
00:36:18
merchants that use Stripe and say, "We'll give you a 3 or four or 5% discount and they'll be like, "Okay."
00:36:26
And so you'll see these prices that just, you know, fall everywhere. Like imagine if Shopify was like to all their
00:36:32
merchants, okay, you have two choices, the old way or the new way. The new way, you put another two or three or 4% in
00:36:38
your pocket. Of course, they're going to pick the new way. >> Well, and this is the paradox of like
00:36:42
modern M&A. You know, if you look at protecting the consumer, this will ultimately be great for the consumers.
00:36:48
This is going to lower the prices on it. They're not buying this to >> Okay, you're saying something really
00:36:52
interesting. It is so good for consumers if this were to happen. This is the exact reason why if this had happened
00:36:58
two years ago, >> yeah, >> this would have been the antitrust equivalent of a coloctyl exam. I mean,
00:37:08
>> oh god, >> you would not even get one step close to doing this deal two years ago.
00:37:14
>> Well, that's that's really interesting actually. I mean, the key question with
00:37:17
antitrust is how do you define the market? And so, if you define the market as, you know, APIs for merchants, then
00:37:24
JCAL, it would be Stripe versus Brainree. And then the government would say, well, that's you can't consolidate
00:37:29
share. >> However, if the real market is Visa and Mastercard, that's the ultimate duopoly.
00:37:35
And if PayPal can add competition to that market, which is infinitely larger than APIs. Exactly. Then
00:37:42
>> it's actually pro competitive. So how you define the market determines whether
00:37:45
it's anti-competitive or prompetitive. >> And those guys are smart enough and they've read enough books where they
00:37:50
won't [ __ ] this one up. >> All right, let's get to the next topic. >> Somebody else is suing Open AI. This
00:37:56
time it's Apple. On July 10th, Apple filed a 41page lawsuit against OpenAI over alleged alleged stolen trade
00:38:06
secrets. Apple says Open AI stole their IP to develop their consumer hardware device. Remember, we had um
00:38:15
Sarah Frier at Liquidity and I uh probed her on this new device and she said it was very human and lovable. She gave us
00:38:24
a little bit of the goods. Well, it turns out Apple is alleging that maybe this is partially their IP. Tang Tan,
00:38:33
Apple's former VP of iPhone design, is OpenAI's chief hardware officer. He allegedly directed Apple job candidates
00:38:41
interviewing at OpenAI to bring quote actual parts to interviews to quote show and tell in the interviews. Changu,
00:38:50
former Apple senior technical engineer, sent this text message to a still employed Apple colleague. Quote, "lol, I
00:38:59
found out I can access the network storage. So funny." During all of this, OpenAI has poached over 400 Apple
00:39:07
employees over the last year or two. Big numbers of poaching. Apple and Tim Cook
00:39:13
have seen enough chimoth. Tim Cook green lit this. As insane as this is, Sam Waltman has found a way found a way to
00:39:22
screw yet another party. Screwed Elon, his first benefactor. Chimati, if you remember correctly, the
00:39:29
default for iPhone AI was supposed to be chat GPT. So they took this relationship, Sam took this relationship
00:39:39
where he got to be the default on the most important platform for AI, the iPhone, and now it's wound up in a
00:39:46
massive lawsuit. What are your thoughts on this? I haven't really seen Apple very latigiously in 25 years in Silicon
00:39:55
Valley. So that's obviously a concerning data point for OpenAI. They're very reactive
00:40:03
more than they are proactive on these things. So, there must have been something that really
00:40:09
really upset them. >> Egregious. Yeah. >> So, I don't know. It's going to take a
00:40:14
court to sort this out. I don't really want to gossip because like who knows what's actually going on and who said
00:40:20
what and blah blah blah, but nobody should be stealing things from their former employer.
00:40:27
Nobody. >> Obvious. >> You're just not allowed. It's just obvious. These people are very, very
00:40:30
smart and they're very successful. And you know that's why OpenAI probably wanted them and that's why they wanted
00:40:36
them you know and you come to them with the collective wisdom of what you've accumulated and I think that's
00:40:42
sufficient. You don't need to especially as a senior person do this. So I just hope that this stuff isn't true because
00:40:49
I think I don't think that Sam or Sarah or anybody else there are trying to induce this to happen. I don't think so.
00:40:56
>> Yeah, I doubt they induced it but I do believe that it's true or Apple wouldn't
00:40:59
have brought it. Sachs when we look at this maybe you could open the um aperture here if you want or you can
00:41:06
just go very detailed but the nature of we have a free market we don't have non-competes in California generally
00:41:14
speaking you can just employment at will go where you want but we have had instances you know whimo famously uh you
00:41:21
know brought some IP to Uber when they did Travis and the team said leave the building your job is
00:41:29
rescended you don't get to bring that information here. In this case, it seems maybe they didn't induce it, but it
00:41:37
occurred for some period of time. So, take us through big picture what you think is going on here and what
00:41:44
it means for the industry. >> Well, like Jamas said, I have no idea what's going on here. I mean, these this
00:41:49
is a lawsuit. The facts are all alleged. We don't know. It's going to be adjudicated. So, I really don't want to
00:41:54
opine on what happened here. But if people want to know a very simple rule of thumb for how to avoid these types of
00:42:01
disputes is just when an employee leaves their previous company and joins the new
00:42:06
company, just don't take anything with you. >> The only thing you can bring to your new
00:42:10
job is what's in your head. >> Your memories. >> Your memories. That's fine. Whatever is
00:42:14
in your head, you're allowed to take. But never leave with anything else. >> No thumb drives, no CD, no documents, no
00:42:23
nothing. >> Justip what's in your is okay. Fraberg, any thoughts here on just the
00:42:32
number of lawsuits that seem to be piling up over at Open AI? Bad luck. >> Couple dots make a line, I guess.
00:42:44
>> Okay, there you go. Very well said. Couple of dots make a line. Okay, SpaceX had a data leak this week. They launched
00:42:52
Grock Build in public beta at the end of May. The newest coding model, Grock 4.5,
00:42:58
powers Grock build. I've been playing with it. It's extraordinary. It's a coding tool that works inside of Kurser.
00:43:04
Uh, SpaceX previously told users, Shimoth, nothing from your codebase is transmitted to XAI servers during a
00:43:10
session. But what actually was happening is every time a developer or according to reports used Grock build the tool was
00:43:18
sending their entire codebase to SpaceX cloud servers out without alerting the users not just the files that were
00:43:25
needed to do that specific coding task just everything passwords API keys could have got pulled up there all the uh
00:43:31
change logs etc. Uh the privacy setting was supposed to stop this but it didn't work. SpaceX quietly disabled the upload
00:43:39
on July 13th by flipping a switch on their servers. Elon Musk, friend of the pod, promised on X that all previously
00:43:45
uploaded data has been deleted, I guess. Uh, and in response, SpaceX open- source
00:43:50
rock build. That's their harness. So, that's another opensource win or win for the open-source community and AI
00:43:58
sovereignty. You got any kind of thoughts on this? Obviously, this was not intentional, but
00:44:04
trust is important uh with these models as we've been talking about for the last
00:44:08
couple of months here on the All-In podcast. >> I would actually connect this to my
00:44:13
comments on CNBC earlier this week, which built on top of Alex Karp's comments the week before.
00:44:21
Privacy in AI is very fragile and it's very brittle. And this is despite the best efforts of great businesses. Like,
00:44:32
you know, you may not like Elon for personality quirks, but he is incredibly trustworthy. He's overly
00:44:40
transparent. And so, to their credit, they shut it off immediately. But my takeaway is that there are all kinds of
00:44:48
non-obvious data leak vectors lurking in AI. And so if you think that you're going to flip a ZDR switch, zero data
00:44:57
retention, which is the magic term that the industry uses to tell you that everything's going to be okay.
00:45:04
I think the answer and the message should be it's not going to be okay because you can't guarantee any of it.
00:45:10
So the model companies when they give you these zero data retention policies are probably trying their best. But I
00:45:16
think the reality is you are leaking information where you don't know it. and they despite their best efforts may
00:45:23
still have trap doors that they don't even know about until it's figured out by somebody else like in this example.
00:45:28
So all of this speaks to you have to have a stratified ecosystem. You have to have third parties. Now look that's very
00:45:34
biased for me because it's in part what we do for large enterprises at 8090 when
00:45:39
we implement our software factory. But the reason why it's working so well is this exact reason. You need an
00:45:45
independent third party layer to interface to these models to manage this exposure because there are trap doors
00:45:52
everywhere. >> And that's what Sachi just said in a really interesting blog post. Did you
00:45:57
guys see that? >> Yeah, >> I thought that was excellent. >> The reverse information paradox.
00:46:00
>> Yeah, >> that's exactly the the takeaway that he left with. He was building on Alex
00:46:05
Karp's supposed crash out. You know the point that Kart made about how enterprises who have technical ability
00:46:14
want control over their compute models, weights, data and alpha. But he he went further with that idea. I mean he
00:46:21
started with Karp's idea but then he kind of provided a recipe a road map for how enterprises should operationalize
00:46:28
that. And what he says is that enterprises they have to establish a real trust boundary with private eval
00:46:36
proprietary learning loops inside the tenant decoupled orchestration and the explicit right to fine-tune
00:46:43
their own outputs. So he kind of goes through a litany of fairly technical things that enterprises should do in
00:46:50
order to achieve the operational control that Karp was saying that enterprises really want over their AI compute models
00:46:58
and data their alpha. So it's really interesting. I think now there's you know a virtual almost like college dorm
00:47:06
session going on between the leaders of these companies who are brainstorming some of these concepts and now extending
00:47:13
them. Right. >> And what's happening is you're starting to see the formation of not really an
00:47:18
alliance but like an ecosystem that is trying to create alternatives to you know a monolithic closed model stack
00:47:27
which is where anthropic and to some extent open AAI want to go is they want you to be locked in to their to their
00:47:34
stack right their models their harness they control the data all you know all of that and now you're starting to see
00:47:40
all these different companies >> and you pay a huge premium for the privilege for them to do it, which is
00:47:45
even more insane. So, I I saw this data and Nick, maybe you can find this companion clip. The companion clip I'd
00:47:52
like you to find is Eric Glyman, who's the CEO of RAMP, was on Squawkbox, I think today, talking about a new feature
00:48:00
where you can manage the token maxing of your employees through your ramp card. But the data that I saw was that a
00:48:08
million tokens on Fable is about sachs 56 bucks. A million from soul is about 26 bucks which is the same as quad 48. A
00:48:19
million input tokens from on Gro is about $1.50. >> Okay. >> Z is about a $150. Elon's about a dollar
00:48:28
and the Chinese models are 50. >> Wow. So on top of the whole data sovereignty bleeding your alpha away, can you
00:48:37
imagine that you're paying 56 bucks as well per million input tokens for that risk? That is insanity.
00:48:43
>> I'm using perplexity computer and they started supporting Grock and they already support GLM52. So when you're
00:48:49
like you're using Claude or OpenAI, you can only use their model. So I started effing with the different models and I
00:48:54
gave it all the same basically PRD and I said I want to make a podcast player that deep link. So, like if we were
00:49:00
talking about, I don't know, Mythos, it would play me all the miso methos clips across all the different tech and
00:49:07
business podcasts, but make it into one stream. And I was like, this would be like really helpful for me for prepping
00:49:12
for the show and just be interesting. I did it. It took a couple of hours. It cost $11 on the new Grock. It was
00:49:21
hilarious how cheap it was. And then adding to this, I don't know if you saw >> Sorry. Did you try to do it on Fable to
00:49:29
see how much more expensive it was? >> I didn't. I didn't because I was out of Fable credits on my $200 account. So,
00:49:35
you know, >> look at this clip here. Nick, play the clip from Eric Glenn. That's kind of
00:49:39
interesting. >> We're thrilled to be launching token spend management today. It's available
00:49:42
to RAMP and non-RAMP customers. >> And he's exactly right. Over the last year, I looked at the stats this
00:49:49
morning, token spend among RAMP customers has grown by 21 times. >> 21 times. >> 21 times.
00:49:56
>> Not 21%, we're talking about 21 times. >> That's exactly right. So being off by a
00:50:00
few pennies as a CFO uh actually might be quite nice. At the rate it's going, it might be several dollars. And and
00:50:05
look, like I I think that for uh many CFOs, they're often very surprised by the bill because what the AI companies
00:50:12
have functionally set up is you have a tab. you can spend as much as you want. It's very hard for CFOs to see
00:50:18
proactively what people are spending on and every time they're introducing new models, the rates often go up and so
00:50:25
there's very misaligned incentives. So part of what we're trying to do is make it easy for CFOs to see the spend,
00:50:30
understand the spend, and control it. >> Thanks, Nick. He's saying something so important there because if your
00:50:36
engineers are going off randomly in an unguided system and then just ripping through million tokens at 56 bucks, what
00:50:46
he's talking about is the eventual downstream impact to earnings. And that eventually a bunch of these public
00:50:52
market CFOs are going to show up to Wall Street and they will have missed earnings because they're upex at some
00:50:57
point. If things are 21xing every few months, somebody's going to miss a quarter. I don't know who, but somebody.
00:51:05
And it's not just going to be, you know, I was speculating it'll be a few pennies
00:51:09
here or there, which they'll have to say is because of token spend. He's saying it could be as much as dollars at this
00:51:14
rate, which also could be the case. I think the point that we're all trying to make is unless you get a control of this
00:51:21
and you can directly say how much money you're making, this is a bridge to nowhere. It is a money burning furnace.
00:51:28
>> The good news is this is all creating a massive market opportunity. Sachs, Bit
00:51:35
Tensor, Subnets, GLM52 hosting Grock 4.5. Now >> in Inkling, Inklink mirror Marott's new
00:51:42
model in everybody's now saying, "Hey, wait a second. I can give you a better deal. You're paying two bucks. I can get
00:51:48
you one buck. This is >> No. No. People are paying between 26 and 56 bucks. They should be paying 50
00:51:54
cents." Exactly. >> Well, you know, and >> the Inkling announcement was kind of interesting because I think the value
00:52:00
prop there is she's explicitly saying that look, we're not frontier intelligence. We're just under that, but
00:52:07
we're a platform for fine-tuning these open models which are much much cheaper and then you can achieve the result you
00:52:14
want based on fine-tuning. And so that's really interesting. >> Yeah. And uh but you know these open
00:52:22
models won't be around for very long if Anthropic has its way. >> There's a reason they want to stop it.
00:52:28
It's just they have such a monopoly. >> Of course you're you're selling most of the product for 50 cents per million
00:52:35
>> tokens when they're selling theirs for 56 bucks. Of course you don't want that
00:52:39
to happen. Of course you want them you want to try to stop it. >> But that being said, they're still
00:52:43
growing like crazy. Just to be clear, I mean, yes, you know, you are seeing this
00:52:47
explosion of interesting things happening with open models like you said, you know, the latest rock build is
00:52:53
open, thinking machines open and so forth and so on, but still >> I mean, they're growing. They're still
00:52:59
the industry leader in terms of revenue growth. So, these things are happening side by side. And
00:53:04
>> yeah, I would I think that the interesting thing is Eric would not have released this ramp product unless CFOs
00:53:10
were like, I can't control the spend. >> Yes. And then he's like, "Well, here, let me build it for you." And then if
00:53:16
enough CFOs essentially turn that feature on and start to rate limit how it's spent because maybe they're not
00:53:23
getting the ROI and the engineer doesn't care about ROI. The engineer is like, I
00:53:27
want to use the latest greatest model. >> Yeah. And maybe you don't need it. Maybe
00:53:30
Mirror's right. And for 95% of the tasks, you should be at one level lower, especially when it costs 1/100th of the
00:53:37
cost. But the engineer will never make that trade-off because they'll never want to think about it. You're right.
00:53:42
>> And also they're not tied to the money. The CFO is tied to the money and the engineer wants to go on an exploration
00:53:49
on using the latest greatest thing. >> Yeah. If you're booking your Yeah. If you're booking your travel, you're like,
00:53:55
you don't even see the price. You're like, "Yeah, just put me in business class. Put me in a nice hotel." And like
00:53:58
the travel department handles that. >> You're saying something really interesting. What percentage, if you had
00:54:02
to guess, of fable five prompts are just average Michigan that should be running.
00:54:08
>> 98%. 98%. I I I was using it for stupid stuff that I could be using Quen for. Um I
00:54:16
think this is my like micro prediction here. Mark German, who's like the most in then guy when it comes to Apple, he
00:54:24
says, and you know, we got this new CEO coming in for um uh John Furnus. >> Yeah. And he is a hardware engineer. M7
00:54:33
Ultra uh because M we're on M5 chips now. you can get like, you know, 456, 512 gigs of RAM. He says M7 Ultra is
00:54:42
going to support as much as 1.5 terabytes. That's double what they're already supporting. So, if you think about uh
00:54:51
Frontier models, like the last generation, this is like an Opus level model running on your Mac Studio. You
00:54:57
guys all use Mac Studios, you're rich venture capitalists, whatever. You're like, "Yeah, I'll take a four or $5,000
00:55:02
computer." This is going to change everything. you're gonna have employers go, "Oh, I can just run, you know, 90%
00:55:09
of my workloads, 99% of the workloads on the local uh Mac Studio." I think Apple
00:55:15
is a screaming buy right now. Uh and I this not financial advice, but my lord, that company could just run the table on
00:55:21
AI if they get this right. >> All right. >> Apple. >> Yes. Because I they're going to make
00:55:28
such a fortune. >> You got Let me explain. It's just like the iPhone. Everybody laughed at the
00:55:34
iPhone. People overpaid. They did not. When the first iPhone came out, many people
00:55:42
that was it. >> That's true. Steve was the big one. You can I can still hear him laughing.
00:55:46
>> No, if you think about how they make money off of hardware, off of their devices, they will put so much downward
00:55:54
pressure on Claude and Open AAI by just putting local models and supporting them
00:56:00
with this memory architecture. It's going to be wild when people have unlimited tokens on their desktop. I'm
00:56:05
telling you, >> I don't know if you guys uh saw this, but um there's a very large solar
00:56:11
company called Sunun. They just announced this week that they're making distributed data center blocks that you
00:56:19
can put in your house. Another company that did it is company called SPAN that partnered with Nvidia.
00:56:26
So to your point Jason, you're seeing this fragmentation and distribution of edge compute which I think is a theme.
00:56:32
Definitely a theme. >> Well, it's also chasing energy, right? Like if you've got some solar, if you've
00:56:37
got excess battery power, hey, we power up your batteries at night cheaply. >> I think I told you this last week, we
00:56:43
are so massively short electrons. By 2050, the United States of America will be 2 and 12 California's worth of energy
00:56:50
in deficit. 2.5 Californians, the fourth largest economy in the world. we will be
00:56:54
short 2.5x of all of the energy consumed by California by 2050. This week there was an auction by this
00:57:06
huge utility called PGM which serves Pennsylvania, New Jersey, Maryland, you know, 13 states. And that auction is
00:57:14
where they publish a forward curve and say, "Hey, listen guys, here's my forecasted load and here's how much
00:57:20
energy I need." And people signed up to essentially get paid a a guaranteed rate
00:57:26
every day so that they have to fork over the energy in the future. Kind of like a
00:57:29
forward option. They needed like seven or eight gawatt. They had 156 megawatts or something show
00:57:36
up. Well, we are in such a bad place right now on electrons and electricity prices.
00:57:42
>> Did you see what our boy did this week? >> We need we need So this is behind the
00:57:48
meter, which is different. And he he Elon needed to do this by the way just so you know because there's an issue in
00:57:53
Memphis where he was very clever about how he was able to get Colossus off the ground that regulatory it's not
00:58:00
>> explain this >> when you try to power a data center typically you have what's called grid
00:58:08
power. So you go to the utility in the area and you say, "Hey, please run me a line off of that main transmission
00:58:13
line." And that's how you power your data center. When that runs out or is so backlogged, you have to do what's called
00:58:23
behind the meter, which means on your own property that you own, you build something for yourself. Now, there's a
00:58:30
problem with that. You would think, well, that's smart. Yes, but like in everything in America, there's
00:58:35
regulation on top of regulation on top of regulation. And one of the most complicated regulatory schemes that you
00:58:41
have to overcome is clean air permitting. So even if you say you're going to do behind the meter, then you're like,
00:58:48
well, what can I do? Solar you can do, but it takes too much space for most places. Batteries you can do, but you
00:58:56
need to generate the electricity in the first place. So people use that gas. So Elon cleverly bought a ton of 18-wheeler
00:59:05
like engines basically. >> He bought the company that makes all this and provides mobile and then just
00:59:12
and then just you know pin them to the ground and then ran it and you know those are personal use essentially and
00:59:18
so they came under the clean air permitting requirements but then when you act as a block you could make the
00:59:23
claim that it doesn't. Now, there are new solutions like Bloom Energy, which allows you to have huge installations
00:59:30
and still fall under the the the personal use clean air permit. Um, and so for all of Elon's future capacity, he
00:59:38
needed to have this in place so that he gets the the clean air permits and he's able to have a clean run of sight to
00:59:44
continue to build domestic data centers. Anyway, >> speaking there's your little TED talk on
00:59:49
energy, but uh we are in a bad place, guys, and it's only getting worse. Speaking of um data center sachs,
00:59:58
everybody's favorite socialist governor Kathy Hochel in uh the great state of New York, my hometown,
01:00:05
>> powered by fossil fuels, they drive up our carbon footprint. They occupy massive amounts of land, potentially
01:00:12
displacing agricultural space and open spaces. The bottom line is progress shouldn't arise with a higher utility
01:00:19
bill, deleted water supply, or noise pollution. So we have no choice but to address these challenges created by
01:00:27
these massive facilities. That is why today I'll be signing the nation's first ever statewide moratorum
01:00:34
on hyperscale data centers. >> Everything she's saying there is a false accusation uh on the data center. So
01:00:41
let's just go one by one. So she's saying >> that they eat up all of the power. Well,
01:00:47
yeah. I mean, look, if you connect to the grid without producing more power and you force data centers to compete
01:00:53
with, you know, residential rateayers, then yeah, you could drive up utility prices. However, if you do what Chamas
01:01:00
said and let them build behind the meter, then they bring their own power. And that's what the president has
01:01:04
advocated for since the beginning of his administration is let the AI companies become power companies. So, that is the
01:01:10
way to solve the energy problem or the utility problem. Then she's talking about, you know, eating up land. The
01:01:16
reality is these data centers are a model of land use efficiency. We have a ton of land in this country. Obviously,
01:01:23
you can find places where there is enough open land to build a data center. The economic impact and value of a data
01:01:30
center relative to the land use again is one of the best ROIs there is. The supposed noise pollution that's largely
01:01:37
made up that can be dealt with. You obviously don't want to put these things right next to a residential area, but
01:01:42
create a little bit of distance and it's fine. The whole water consumption thing
01:01:46
is largely a hoax. >> The the modern data centers uh recirculate the water, >> closed loop systems.
01:01:54
>> Yeah. And I think there there was a study that showed that a typical data center uses the same amount of water as
01:01:59
two and a half in-n-out burgers. So, in-n-out burger chains. >> I mean, just go after the almonds if
01:02:04
you're concerned about water, people, please. >> There's there Yeah. Or golf courses. I
01:02:08
mean there's many, you know, there's many uses of water that are way more wasteful. So when you compare economic
01:02:14
impact to all these different things, data centers are like honestly one of the best things we could be building as
01:02:21
a nation. But >> and s there's all these taxes and incremental revenues. Did you see the
01:02:26
article where I think it was in North Dakota or something where like teachers were getting like 30 and $40,000 bonuses
01:02:33
from all the tax revenue that was coming in? There's all these upsides. >> That's right. They generate um a lot of
01:02:40
tax revenue. They've created a bluecollar construction boom. It's not true that there's no jobs once they're
01:02:45
built. That you do have ongoing jobs there. And then oh, one final thing just on the the point that Hokll was making.
01:02:51
She said it created a lot of pollution. Natural gas, which is how most of these data centers are are powered, is one of
01:02:57
the most clean burning sources of power that we have. >> 100%. >> These data centers have become the
01:03:03
scapegoat for all the angst that people have about AI and it's kind of become this very clumsy way of trying to throw
01:03:11
a wrench in the gears of innovation and just kind of slow the whole thing down. >> All I have to say is welcome to Texas.
01:03:17
We got plenty of land here. And what's so stupid about her proposal and her talk, aside from the thing she got
01:03:26
completely factually incorrect, is New York State is like 80% underdeveloped. Drive upstate, folks. You're thinking of
01:03:35
New York City. Yes, New York City is packed. You go upstate, it's literally 70 to 80% of the land in New York State
01:03:42
is undeveloped. There's so much land. It's ridiculous. New York is giant. It's giant.
01:03:50
>> On this topic this week, I just want to give a shout out to Senator Dave McCormack.
01:03:57
He had a defense and innovation summit in uh Carile, Pennsylvania at the Army War
01:04:03
College which a bunch of us went to pus came gave a speech had a CEO round table a
01:04:10
lot of defense company CEOs etc. But Chris Wright was there at Sachs and >> my guy
01:04:16
>> he's great and Chris mentioned this in insane story. He said you know there is
01:04:21
a lot of common funding because Dina Powell asked this question on stage and he said there's a lot of common funding
01:04:27
patterns of these people that are protesting um the data centers and he said you could actually trace it back to
01:04:34
the same people that in a different era were protesting fracking. And so he was saying like it's these are all just
01:04:41
hobby horses that they use to raise money, have a job. They're like professionally paid protesters. They
01:04:46
kind of just show up out of nowhere. I didn't realize that there was such a commonality, but they're the same
01:04:51
people. >> The thing that I just can't understand for the life of me is why Anthropic is
01:04:56
still funding these groups that want to put the kibos on new data center construction. There's one called public
01:05:03
first where Daario just gave his first seven figure contribution and then a bunch of other employees at anthropic
01:05:10
gave it and you know all these groups are trying to slow down AI development with new regulations and making it
01:05:15
harder to build new data centers and at a certain point you just have to wonder I mean is this regulatory capture or
01:05:21
they just kind of lost the plot because the number one thing slowing down the growth of anthropics revenue it's not
01:05:27
demand I think it's the availability of compute in data centers. And so you're just kind of wondering like what is the
01:05:35
point of all of this? >> It's so true. >> I was talking to someone in politics about this and the theory that they had
01:05:42
is well the Democrats aren't going to pause the data centers forever. They're going to pause them until they feel like
01:05:49
they're in enough control that they can dictate all the rules. And so in other words, they're calling this a moratorum.
01:05:56
And I think it does mean that the data centers are going to stop but eventually they're going to be in a position to say
01:06:02
okay here are our terms if you want to turn these things back on right you want to lift the moratorum and then that's
01:06:09
when we get this you know big government democrat defined AI regime and you know
01:06:14
that it's going to consist of a new regulatory agency and new speech controls the whole trust and safety
01:06:20
agenda from social media will be ported over that's this was this One person I was talking to, this is what he was
01:06:27
speculating is the real agenda is that eventually once Trump is no longer president or in some future Democratic
01:06:35
administration, they will eventually lift the moratorum but on their terms. Now I think that's a really dangerous
01:06:42
thing to do because you know Trump is president for another two years and then no one knows what's going to happen
01:06:47
after that. And even if you lift the moratorum in say 2 and 1/2 or 3 years, it's going to take a couple of years for
01:06:54
those projects to even ramp back up. So when you start talking about a moratorium on data centers, it's not
01:07:00
like a a few month pause. It's probably a good 5 years at least before you know you can get another data center switched
01:07:08
on in the state of New York. Just so you know how bad it's gotten, there's a curve that you can use to
01:07:15
price data center assets. And I think you guys know this, but I have this portfolio of these assets that myself
01:07:22
and my partner Nita have accumulated. And what's so interesting is when we talk to all of the hyperscalers about
01:07:28
giving us a price because we're trying to figure out whether we should keep it or build it or just sell it, the most
01:07:34
incredible thing is how extreme the price is at the front end of the curve. When you have
01:07:39
verifiable energizable power today. And the reason is exactly everything that you're saying, Saxs, which is that
01:07:46
when you look out into the future, you know, we've said this before, but it's about 40% of all these projects are
01:07:52
getting mothballled and stopped. And so it's creating this massive deficit of available energy to actually drive
01:08:01
the use of AI. So to the extent that you actually want, you know, drug discovery
01:08:05
or you want cancer diagnosis or you want better healthcare or better legal advice, we may actually not be able to
01:08:12
service it based on all of the demand that exists because the power isn't there. The energy isn't there. And the
01:08:16
reason why that's not there is because folks are just kind of reflexively protesting something that they don't
01:08:23
completely understand clearly. So I think it's a really it's a really big problem.
01:08:28
>> I mean, we're going to have GPUs chasing energy. like where's their energy and
01:08:32
just drive the GPUs there is what's going to happen right >> let me add one layer to it which is
01:08:36
they're not only trying to stop data centers from being built in the US they're trying to stop data centers from
01:08:41
being built internationally in our friends allies and partner countries and the way they're doing that is the same
01:08:48
political forces that are stopping data centers are also behind all these new export controls on chips so they want to
01:08:54
make it harder and harder to export chips to more and more countries including our friends and allies and so
01:08:59
there's not going to data centers here. There's not going to be data centers in our allies. I mean, where are we going
01:09:05
to put these things? >> I mean, those allies have unlimited energy, Middle East. Like, if you want
01:09:10
some data centers, >> well, what's funny, Jason, is, you know, we did a bunch of Middle East data
01:09:15
center stuff and then it's kind of stopped. Meaning, like there wasn't this growth
01:09:20
that I thought would happen because it's a very conveniently placed geography. It's the
01:09:26
Middle East for a reason. And so, you know, you can serve 4 billion people very quickly in under 200 milliseconds
01:09:32
from there. >> Instead, what happened was there was this explosion in Asia and specifically
01:09:36
in Australia, which kind of surprised me because I would have thought that those
01:09:40
folks are a little bit even further out on the DSA, you know, far left. I thought these things would not have
01:09:46
happened, but they they were able to get big deals done. So, in this weird way, you have all of these other countries
01:09:51
kind of running to try to embrace this stuff quickly. They've done a decent job. They're doing stuff to sort of like
01:09:58
displace some of the energy that that is needed in the US. But the problem is we
01:10:03
need to have enough surplus here because this is where most of the commerce is going to get created. That really that I
01:10:09
think should >> these are these are luxury regulations. Like you can afford if you're New York
01:10:14
State or California to be like, you know what, we don't need this. This is a luxury for us to have an extra data
01:10:18
center. If you're Australia, you might really need the money. If you're Texas, you might really want the money. So this
01:10:24
is what's so crazy like virtue signaling only goes so far until your debt to GDP
01:10:29
is high enough and or your productivity is low enough andor your foreign direct investment is low enough where you're
01:10:34
like all right you know what screw all that we're just going to build a data center but the the other thing is if you
01:10:38
saw what happened this week the UAE now is able to import the best-in-class leading chips and so to your point Jason
01:10:46
I think it restarts the cycle where you have to look very carefully at the Middle East because it's a very
01:10:50
attractive place to build these things >> and by the way you saw the you even if you just if you think
01:10:56
about fiber and the milliseconds as you're talking about yes you can get to the four billion people but I don't know
01:11:00
if you saw the the giant Starlink versions now they make like a really big version I think you got like one of the
01:11:08
enterprise versions but there's like an even bigger enterprise version and they can bundle them together and you're
01:11:12
starting to get to like 10 gig 20 gig setups so that means you could start putting these things almost anywhere
01:11:20
>> which gets also like adds another >> can we see your clip. The thing that you
01:11:24
were mentioning before, >> this is not to your point as prevalent in the Middle East where you have
01:11:31
monarchies and governments that aren't ruled by democracy, but in democracies, we see
01:11:37
this anti-data center movement taking hold. This chart is something that for me always kind of played a role in
01:11:46
my understanding of where the incredible anti-GMO sentiment came about in the United States,
01:11:50
>> which is great. Russia Today, this Russian media outlet launched in the US in 2010. They were kicked out of the US
01:11:59
by Biden in 2022. And you can see that prior to Russia today existing in the US, there was no
01:12:06
anti-GMO sentiment. GMOs were around since 1996. That's when they first had their big commercial launch in the US
01:12:11
and were pretty prevalent for, you know, 14 plus years before everyone started to
01:12:17
think GMOs are bad. We got to get rid of GMOs. And you could ask people a hundred
01:12:21
different ways very pointedly and specifically about the facts on the matter and the science of GMOs and all
01:12:26
this sort of stuff, but everyone always had a reason why they didn't want them, similar to what we're hearing now with
01:12:32
AI and data centers. And it turns out that if you track back all of the media that had all this anti-GMO sentiment
01:12:39
that ultimately got picked up by the mom bloggers that ultimately got put into social media feeds that ultimately
01:12:44
everyone just accepted as truth. A lot of it originated in this Russian media push that happened around this era. And
01:12:52
you can actually see this on the Google trend data that shows GMO and it's kind of write up. And then as Russia Today
01:12:57
started to get cut by different media outlets and people stopped retweeting them and stopped reflecting them and
01:13:02
stopped writing articles that followed Russia Today the anti-GMO sentiment declined in the US and I think you can
01:13:09
see this going back decades. You know there's this effort that the KGB kind of designed
01:13:16
during the cold war called directed measures which was really meant to try and create an influence campaign through
01:13:23
affecting media. So putting this kind of propaganda out through foreign media, particularly targeted western
01:13:29
democracies. And you know, you could argue that maybe you could trace back what happened in Germany with nuclear
01:13:35
energy as being kind of similarly originated. But there have been a series of these pushes that seem nonsensical if
01:13:42
you're fairly rational and can have an actually objective debate about the scientific merit, the economic merit,
01:13:47
the benefits of these technologies. But for some reason, what we call the activist community become heightened to
01:13:54
them. Say that we've got to get rid of them. And everyone's got these different unfounded, scientifically unfounded
01:13:59
reasons why they want to get rid of them. And you're like, wait a second, how did we end up in this place that
01:14:04
we're literally handicapping ourselves. And I think we're seeing something similar happening with data centers in
01:14:09
the US today. The funding of the NOS's as they're being called, the media that's supporting this, the retweeting
01:14:15
of the media. And then you asked people, there was a poll that came out today, something north of 50% of Americans
01:14:20
believe that data centers increase the cost of water and electricity. Even if the data center is fully recycling the
01:14:27
water and they're producing their own electricity, there's still this kind of repugnant reaction to the data center.
01:14:34
And so there has been this like deeply sewn psychological shift that's happened in the United
01:14:40
States. and and and you know, people have these, well, I hate the rich, I hate tech, I hate AI, I don't want any
01:14:44
of this stuff, I don't want any of this stuff, >> but where does it all come from? I do
01:14:48
worry that there's some degree of kind of call it foreign, >> you know, influence
01:14:54
>> influence. I I don't love the word influence because everyone kind of everyone captures it up, but there is
01:14:58
some degree of like >> I would say there's there's foreign interest. Let's let's call it that.
01:15:04
>> No, I think it's more than that. So just one month ago, just one month ago, >> OpenAI published a blog post called PRC
01:15:11
linked influence operations are targeting AI debates in the US and Politico covered this and a lot of other
01:15:18
sites covered this. Basically what they are saying and in fact many people are saying is that China is behind a lot of
01:15:25
these influence campaigns to shape US attitudes on AI data centers. >> It makes sense. It makes a lot of sense.
01:15:33
and there's going to be a congressional investigation of this. It does make sense cuz it is in their interest,
01:15:38
right? If they can stop us from building this necessary infrastructure, >> then that's a way for China to win the
01:15:44
AI race. >> If they can the market, if they can incentivize anthropic to, you know, pull
01:15:52
the ladder up, if they can kill open source in the United States and constrain demand or the optionality and
01:15:58
choice of lower, cheaper models, think about that for a second. at $56 per million input tokens. I mean, versus 50
01:16:06
cents for the rest of the world. All of a sudden, it doesn't take a company that's much much worse than you to beat
01:16:13
you when your cost is 50 to 100x more. >> Right? >> That's just the math. The math ain't
01:16:21
mapping. >> You know, it's Sasha made the point that these enterprises are not just paying
01:16:26
for AI with money. They're paying again by feeding those frontier models their proprietary knowledge, right? And all
01:16:34
their their alpha. So, it's like a double whammy. >> It's like it's more expensive and you're
01:16:40
potentially mortgaging your future. >> Look, let's be honest. It is obvious where foreign governments have an
01:16:46
enormous incentive to try to manipulate and influence the comingings and goings in America.
01:16:52
I think we should just acknowledge that. The idea that that doesn't happen is very naive. Now the question is we have
01:16:58
to be able to call it out and put our finger on it because otherwise what is clearly happening is that there's a lot
01:17:04
of Americans that will just fall for this and they will not think from first principles.
01:17:08
>> We have a huge we have a huge moral panic going on with respect to AI. Look when you talk about catastrophes that
01:17:14
could result from AI. What are we talking about? We're talking about things that might happen in the future.
01:17:18
Nothing resembling this has happened yet. you know, even the cyber risk that everyone's been talking about,
01:17:24
>> job loss >> or job loss, it's like none of it's turned out to be true. We haven't seen
01:17:28
any of it so far. But we're on the threshold, I think, of destroying the crown jewel of our economy, which is the
01:17:36
system of free market innovation that we have, this culture of rapid iteration of
01:17:41
anyone with a good idea can go raise risk capital and start their idea, start their company. And we're on the verge,
01:17:48
you know, now we're talking I think about how far the Overton window has moved where we're actually saying that
01:17:53
creating a FINRA for our industry might be better than all the alternatives. FINRA is a bunch of stock brokers
01:18:01
writing rules. And when's the last time there was ever any innovation in that sector? I mean, I guess Robin Hood made
01:18:08
trading free. That was it. >> That was a big one. Yeah. Flow. >> Okay. But that's not real innovation.
01:18:13
Okay. That's like an innovation with respect to a pricing model. And we're actually saying that that might be the
01:18:18
least bad alternative is having the equivalent of a bunch of stock brokers creating new rules that all these AI
01:18:26
companies are not going to have to abide by. It's crazy. We are going to we are going to throw away the lead that we
01:18:31
have in this. And by the way, Kimmy K3 just came out and people are saying it's it's now right up there. It's very very
01:18:38
close to the frontier. We may have months on China if that. and we're going to create all these crazy rules and new
01:18:45
regulatory bodies for risks that have not manifested yet. >> It's worth monitoring the situation, but
01:18:51
it's not worth panicking. Like, you should monitor the situation with self-driving cars and job loss. China is
01:18:56
certainly doing that. They just stopped giving out permits for self-driving cars
01:18:59
as an example because it's going so well and they're losing jobs and and there are people who are getting there's a
01:19:05
little civil unrest. So they just said we're going to make self-driving cars um licensed and so they're not giving out
01:19:11
any more license moratorium on license for now. It's worth watching Mythos and if it could hack your system. Palo Alto
01:19:17
Network's checking it out, other people checking out. It's all worth monitoring but yes it there's no disaster here
01:19:22
today because of AI. nothing's jumping out of your chat GPT window. You know, the worst case scenario is you blow out
01:19:28
some tokens, you know, okay, great. That that's that's the biggest >> There's only a handful of companies that
01:19:34
are even at the frontier and they all have safety testing and red teaming and all the rest of
01:19:39
>> doing a good job. >> Yeah, I'm saying stop that. I'm just questioning whether we need some vast
01:19:44
regulatory apparatus now to start doing all >> certainly premature and we did this
01:19:49
because of science fiction and Daario saying all jobs are going away. I mean that that that was the most ridiculous
01:19:56
thing when he said like he's panicked that it's going to be 80 or 90% jobs in 2026. What was his claim? I Nick get the
01:20:02
exact claim. I think he said 50% of jobs. >> He said he said with it he said 50% of
01:20:07
entry- level knowledge worker jobs are going away within 1 to 5 years. That was one year ago.
01:20:12
So >> it's a little ridiculous. Yeah. I mean it's but he's not even know how to use
01:20:17
the tools yet. >> He's been in a state of panic since GPT2. >> Yes. Yes. I mean >> remember they wanted they wanted to have
01:20:25
uh regulatory approval for models that use 10 to the 25th flops. Right. And every single AI model is like well past
01:20:33
that threshold now. >> Yeah. >> And we haven't seen any of the the harm. Look, they thought that 10 to the 25th
01:20:41
flops would be enough compute to create, you know, the Terminator, you know, to create Skynet.
01:20:47
>> No offense, Freeberg, but one guy's panic attacks, one guy's anxiety condition might have shaped the whole
01:20:53
course of history here like Dar does Daario have like I'm not making light of it, but does he have an anxiety issue
01:20:59
where he's like overly concerned about this stuff or is it just delusions of grandeur? Come on the pod, Dario.
01:21:04
Invite's open. Come hang out. I'm sure he'd love to come on the pod after you just accused him of having a panic
01:21:09
attack, but >> I mean, he seems like he's in a perpetual one. >> No, let me tell you, listen, I it could
01:21:16
be psychological, but I actually think that there's a strategy that makes a lot of sense, and it's a very simple,
01:21:21
straightforward strategy. Number one, brand yourself as a safe AI company. Number two, ban unsafe AI. Three,
01:21:29
profit. >> Yeah, there you go. >> That's the strategy. Kind of brilliant. All right, everybody. Go to
01:21:35
allin.com/events and sign up for the Allin Summit in September. Scholarships are open. Let's
01:21:42
do a quick amazing deep robust science corner with our boy David Friedber. Before we get into the science
01:21:50
corner, I'm going to give a shout out to Ronnie Dog for adoption. I love family dog rescue in Sonoma. Check out his
01:21:57
Instagram link. God, here he goes >> in the description. This dog needs a home. He was fostered and he lost the
01:22:02
foster home. Someone come and grab him. He's awesome. All right, let's get into this.
01:22:07
>> This is what we're doing. He's trying to >> he's trying to get more Q points.
01:22:11
>> That dog looks delicious. >> Gross. >> You don't live in Sri Lanka anymore. Chimal.
01:22:20
>> Yeah, seriously. >> Sri Lanka taking a spray. >> How do you marinate that dog in Sri
01:22:26
Lanka? >> Do what you got to do in Sri Lanka. Salt and pepper free or do you like something
01:22:31
else? You know, just a little salt and pepper. >> 12 hour marinade. Do you use bolet?
01:22:36
>> Oh, do do you like do you like a little yogurt and garam masala? Maybe do a little
01:22:40
>> spicy. Do you guys want to talk about reversing aging? >> Yes. So, I want to talk about but I got
01:22:45
to drop. All right, guys. I got to go to the EIFFEL TOWER. PAUL, >> I'LL COVER IT. THE audience will stick
01:22:51
around. >> Science corner. All right. So, Jamal, you can drop two if you want. I'll cover
01:22:58
science corner solo. So in the past we've talked about Yamanaka factors which are these proteins that can go
01:23:03
into cells and reverse the aging of the cell and the cell starts to act young again. Pretty amazing. And uh there's a
01:23:10
lot of advancement happening on that front. But this paper that came out just this week that everyone's kind of going
01:23:15
crazy about was put out uh jointly by Calico which is Google's kind of you know age reversal startup that's super
01:23:21
secretive that they're not allowed to talk about in partnership with a group called Revel Pharma. And what they
01:23:28
focused on was what's called the extracellular matrix. The parts outside of the cell that age. And and what does
01:23:34
aging actually look like outside of the cell? Well, over time, sugars and fats bind to proteins in the area between our
01:23:43
cells and they accumulate. They don't get cleaned off. And as they accumulate and they don't get cleaned off, they
01:23:48
make it harder for your body to clean out that area, to maintain that area. It causes stickiness. It causes binding.
01:23:55
And that reduces mobility. and ultimately leads to things like wrinkles in our skin, makes it harder for our
01:24:00
joints to move. >> Is that what visceral fat is? >> No, it's called glycation. And so it's
01:24:05
the binding of sugar and fat to the proteins that sit in that extra cellular >> in between the cells. Exactly. And so
01:24:14
it's that whole gunky area in between the cells that when you're young works well, everything's smooth. The proteins
01:24:21
get replaced if they break down. And as you get older, sugars and fats kind of stick to these proteins, block them up.
01:24:27
And as they get blocked up, your body can't repair them. It can't clean them. And more importantly, it changes the
01:24:32
structure and the shape of those proteins. So things like collagen that are far apart stick together. And that
01:24:38
causes things like wrinkles and that causes immobility. And it also causes inflammation because then those proteins
01:24:45
kind of look different than they're supposed to. And your body starts to attack them. And that activates
01:24:50
inflammation. And that's why we get one of the reasons why we get more and more inflammation as we get older. And so one
01:24:55
of the key what are called advanced glycation end products that's the term for these things is called CML. CML is
01:25:02
kind of the predominant molecule that that gets formed in this extracellular matrix that's driving aging and nothing
01:25:10
breaks it down. So these scientists set out to try and create an enzyme. An enzyme is a protein that breaks
01:25:15
something down um that can break down CML. And remember, a protein is just a series of amino acids. And those amino
01:25:22
acids are programmed by DNA. So you can put three letters of DNA to make an amino acid. So you can literally just
01:25:27
print DNA and then put it in a bacteria to print proteins and then test those proteins to see what they do. That's the
01:25:33
the modern kind of era of kind of protein synthesis and protein testing. And so these guys kind of went out and
01:25:39
they took the target which is CML and tried to figure out okay how do we actually degrade CML clear that
01:25:46
extracellular matrix and reverse aging. And they started with AlphaFold and they
01:25:51
used Alphafold to find a protein that could bind to CML and activate an enzyatic or process that would break it
01:25:57
down. And then they took that protein from AlphaFold that comes out of a bacteria. They produced it. They started
01:26:03
to test it and then they started to find some of the binders or the parts of that
01:26:08
protein that they could make better and they used you know DNA programming to change it and they made hundreds and
01:26:14
then thousands of variants of it to measure activity which is how good is it at breaking down the CML and they did
01:26:20
this recursively five different cycles and then eventually they tested it once they' kind of gotten it breaking down
01:26:26
the CML really well in a test tube they started to test it on the proteins that we would find in our body, cassine,
01:26:34
collagen, retinal proteins which are in your eye, hemoglobin, and they were able to get rid of 52 to
01:26:42
97% of the CML, just degraded away. >> And then they um they found several sites where they were able to degrade
01:26:49
over 90%. And then they took actual human skin from elderly patients that had donated their skin and they put this
01:26:58
enzyme onto that skin and they were able to eliminate 55% of the CML on the skin
01:27:05
which basically reversed the skin's age down to the age of a 31y old. This is from greater than 70 year old patients
01:27:12
just by putting this enzyme on the skin. And so it's kind of a groundbreaking demonstration of combination of
01:27:19
alphafold what's called directed evolution where you change the order of the DNA that changes the structure of
01:27:25
the protein to test different proteins do high throughput screening and ultimately make a novel protein that
01:27:31
doesn't exist in nature today that can do something pretty profound for human health. And now the next set of
01:27:36
questions is okay well great this enzyme is awesome. How are we going to get it into our bodies? How are we going to get
01:27:40
it into that extracellular matrix? Is it going to be a cream? Is it going to be a
01:27:44
shot, a supplement? Could we eventually take an RNA shot that makes the protein inside of our body and starts to do the
01:27:50
degradation from within? A lot of questions kind of still to be answered, but it really, I think, lights a great
01:27:56
path forward. >> Amazing >> for these novel therapies that we're developing. It's [ __ ] awesome. I
01:28:01
mean, dude, likeing, >> you know, all my I got all these joint pains in my hip and my shoulder now.
01:28:05
Like everything you can feel yourself getting older. >> Well, that's I I will tell you this
01:28:09
right now. That will not be the first market. The first market will be cosmetic and
01:28:12
>> cosmetic skin. Yeah. >> It will be a trillion dollar market. If if you can create a cream,
01:28:18
>> dude, if you could put this enzyme literally on your skin and have it absorb >> a cream.
01:28:22
>> Yeah. >> Game over. It's it's a that that alone is $2 trillion. >> But I mean, dude, AI, let's just talk
01:28:29
about applications of AI, why it's actually awesome that everyone should be able to agree on and you can't be
01:28:34
convinced by some foreign scop. This is [ __ ] awesome. I mean, this was alpha full used to discover this thing and
01:28:40
evolve it and drive this outcome. Everyone can benefit from it. It's just so profound that we have this tool at
01:28:46
our disposal in this day and age. >> I think it's pretty awesome. Anyway, thanks for sticking around for Science
01:28:50
Corner. >> Guys, I love you. >> All right, bro. Love you, too. >> We'll let your winners ride.
01:29:03
We open sourced it to the fans and they've just gone crazy with it. >> Queen of besties are
01:29:19
my dog taking your driveways. >> Oh man, my habitasher will meet. >> We should all just get a room and just
01:29:28
have one big huge orgy cuz they're all just useless. It's like this like sexual tension that they just need to release.
01:29:37
>> Your feet. >> We need to get merch. >> I'm going all in. I'm going all in.