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All right, everybody. Welcome back to the number one podcast in the world. Freeberg's out saving the world,
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creating new potatoes or I don't know, quinoa, maybe some Brussels sprouts. I'm
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not sure what he's working on at this point. In his place, his personal favorite bestie. He always says that
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when I'm not here, I want Brad Gersonner in the seat. Welcome back. We haven't
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seen you on the pod since your shout out at the State of the Union. Take us behind the scenes for a brief moment
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here, Brad, of what it's like to get a shout out from POTUS at the state of Did
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you know it was coming? Did you choreograph to this thing? Did you Did you choreograph that or was that more
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spontaneous? >> I honestly had no idea it was coming. >> And in fact, I I found out after the
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fact that it wasn't in the speech and the president added it to the speech. So, I don't even think it was, you know,
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few days ago few days before going to happen. But we got an invite to the State of the Union and you know, listen,
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it's an institution. And this has happened every year for 250 years in the country. I've never been. I thought I
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did know he was going to talk about Trump accounts. So I figured if I'm ever
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going to go, that's the time to go. And I have to say, you know, I'm just a
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sucker for Democratic institutions and Democratic traditions. It it was an extraordinary night. Set aside, you
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know, the headlines about what Democrats did or Republicans did. Just the whether
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it's a Democrat president or Republican president that this happens every year.
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You have to go report on the State of the Union. So it was a it was a special night. did dinner ahead of time. We're
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in the chamber. The chamber, as you all know, is very small. And so, you know, just to your right was the first family
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and and Jared and Ivanka. And so, you know, we were there as to observe like everybody else. And wow, it
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was it was quite a moment. And >> I want to just say you did a great job because when you sent your heart out to
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all of America, >> I took it. I took it. I took it. I was like it out, >> but you kept it at the right angle.
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>> Right. Right. >> You had just gone up a little bit extra and out.
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>> Would have been no bueno. >> Those would be some super racist Trump
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accounts. >> Keep your protractor and your ruler out when you send your heart out. Okay.
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>> One final thing on it, Jason. You know, we're signing up over a 100,000 kids a day to these Trump
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accounts. Fantastic. We have millions of kids who've already claimed their account. We have nearly 30 million kids
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in America who are eligible for at least $250 if they just go claim their account. These things are going to go
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live on July 4th. And what it really showed, I think, the country, it accelerated after the State of the Union
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because the president, you know, really believes this is a way to get everybody main street America into the game of
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capitalism and get them all directly owning, you know, the great companies in America. So, it meant a lot to me in
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that regard that it highlights the importance of the program. So, I was deeply grateful to the president for not
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only making sure this happens, but the shout out is pretty cool. >> Good for you, bro.
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>> I have um an interesting uh idea for you. I'm sure it's come up already, but
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with this whole discussion of UBI, somebody said to me, "Oh, you know, I really like these Trump accounts your
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friends did the the Invest America because it's like the start of UBI." And
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I was like, "Well, that's not exactly the intention, but I get it." And with
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wealth disparity going on in the country, that has a lot of people concerned. What if there was a giving
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pledge around equities and people could opt into it? They don't have to, but if
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somebody like, I don't know, Larry and Sergey or Zuckerberg said, I want to pledge 5% of my shares to go into kids
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accounts over the next 20 years. What an amazing, beautiful thing that could be.
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And it would be incredibly material to get whatever it is, a tenth of a share, a hundredth of a share, a thousandth of
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a share of whatever company. Has that come up yet as an idea? I'm sure it's
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obvious, right? It's come up. Stay tuned. But yes, we're going to have some banger announcements
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as we head toward July 4th. >> All right, let's talk about the war in Iran. Obviously, there are much more
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important issues than financial ones. Life, death, the freedom of the people of Iran, but we're uniquely qualified, I
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think, to talk about the economic fallout, second order effects, first order effects. And there has been
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massive volatility over the last five trading days. Just talking about Brent crude oil and we'll we'll key the
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discussion off of that type of oil. It spiked to $84 on Friday. That was day seven of the war, 119 on Monday, day 10
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dropped back down to 84. Jump backed up to 100 after three commercial ships were
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hit in the straight on Wednesday. Those ships, by the way, were not oil tankers.
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Uh they were carrying cargo. They were flagged as Thai Japanese and Marshall Islands. Brent crude currently at 99
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when we're taping this. It'll be at something different by the time you listen to the pod, I'm sure. But it's uh
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quite a spike. And here's a second chart. This shows you the spikes over time. I was old enough to remember the
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oil shock of 1978. Uh we had to like get in line at the gas station based on your
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license plate number and uh you had to wait an hour or two to get gas. Gulf War obviously it hit $100 in 20 $26.
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2008 we hit kind of a peak moment. $216 in today's dollars. That was the peak
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oil discussion. Demand from China went off the charts. When Russia invaded Ukraine, we hit 115, which would be 133
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in today's dollars. So, this is uh not new, but it is significant. And breaking
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news today, Iran's new Supreme Leader Mosh Taba says he's keeping the straight
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closed as a tool to pressure the enemy. Wall Street Journal on Thursday quoted a
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senior fellow at the Middle East Institute saying that reopening the strait will require ground troops. Poly
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market 27% chance that US forces enter Iran by the end of March and 57% by the end of the year. So the sharps over at
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poly market believe we will have boots on the ground. Let me stop there. Brad, your thoughts on what happens when oil
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hits this kind of number and we have this uncertainty of, hey, this could last, you know, two more weeks or it
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could last 6 months, it could last a year. Nobody seems to know and how it resolves. We just had a really
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interesting talk with Graham Allison. Um, how it resolves is also a major unknown. Your thoughts?
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>> Right. So first is obviously there are huge direct costs as oil prices go up
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right oil is a component of a lot of consumer you know and enterprise products and it also hurts consumer
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confidence enterprise confidence Goldman Sachs is out today with some analysis where they updated kind of the economic
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knock-on effects right so they raised their PCE inflation forecast from 2.1 to 2.9 right for the year so that's a huge
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jump right in terms of their expected you know PC inflation core PCE which excludes oil, okay, is they forecasted
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up uh from 2.2 to 2.4. So they're saying even if you excluded the direct price of
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oil, the knock-on effects is going to cause a little more inflation. They lowered their GDP forecast by 30 basis
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points for the year. And they also expect higher unemployment as a result of this for the year. All of that is
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weighing on the sentiment of the market. Remember, just a few months ago, the S&P
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peaked at 24 times. Now we're at 21 times. But I think the market may be getting it a little bit wrong. Right?
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The Trump doctrine, you know, I tweeted about this last week. I think the Trump doctrine is far more pragmatic than the
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neocon doctrine. Right? I think we I think Trump has a very limited set of goals. He wants to destroy and degrade
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threats to America's national security interests. He doesn't want to spread
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democracy. So my suspicion is that these impacts are shorter duration, but right
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now the market's having a little bit of post-traumatic stress flashbacks to Afghanistan and Iraq and wondering if we
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might be wandering into a quagmire. >> All right. And just he may not um in
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terms of the doctrine, he has said he wants to see uh the people rise up there. So might be splitting hairs, but
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I think uh he might actually be for regime change. He says he wants the regime to change
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>> being equal. I don't think he minds if the people bring it to themselves. The
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question is whether the US is going to, you know, put boots on the ground and try to spread misonian democracy like
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like the Cheney doctrine was. And I think this is very different. >> Chimat, uh, your take on the economic
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impact and, you know, and any other uh, things you'd like to add about the war
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in Iran? I think the most important thing that I saw this week was I think President
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Trump was asked about the war and he said the war would be over very soon. What did the market do? The market
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literally took oil from 120 a barrel to 90 a barrel almost in you know a nancond.
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I think that that sort of tells you what everybody thinks. To the extent that the
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market really didn't believe it, oil would not have budged and if anything, it would have faded those comments and
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you probably would have seen oil stay at around 120 or even go slightly higher. So the fact that there was this
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reflexive move, I think is a belief by a lot of the sharps that there is no path
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to a sustained conflict. there's going to be a lot of chest bumping from the
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Iranians obviously because they need to save face and they will want to set up whoever comes next to have the most
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successful chance of governing. So my perspective is that was a trial balloon. I think it validated what everybody
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thought which is that this is going to be a shortrun thing. I agree with that. The downstream impact is, I think,
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correct what Brad said, which is it could show up in some short-term price spikes. But then on March 11th, you saw
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what Chris Wright did, which is the president activated a whole bunch of member countries in the IEA, and I think
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Chris released 172 million barrels. I think there's a coordinated release of
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about 400 million barrels of petroleum. That's going to dampen the effect of any
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price spike. On top of that, I think the estimate is there's probably another
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billion or so more barrels that one could release out of strategic stock piles. So, I think that both of these two
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things together kind of paint a picture that probably the worst is behind us. And I think now it's about finding the
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off-ramp. Sax, your thoughts? >> Well, I agree that we should try to find the off-ramp. I mean, I agree with what
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Brad and Jamas said about that. Look, we've degraded Iranian capabilities massively. Their army, navy, air force,
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all been destroyed. This is a good time to declare victory and get out. And that
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is clearly what the markets would like to see. You are seeing, however, a faction of of people, I'd say largely,
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but not exclusively in the Republican party, who want to escalate the war and who are calling for things like ground
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troops or regime change or they simply want the pounding of Iran to just keep going on and on. I saw an oped in the
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Wall Street Journal to that effect that we shouldn't try and find an offramp, we
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should just keep going with this. And I just want to lay out, I think, some of the risks of what an escalatory approach
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could entail. So, first of all, we're all seeing that the the straits for moves are closed right now. We don't
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want that to persist longer than it has to, but there are actually worse outcomes than that. So if the Iranians
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get hit, if their oil and gas infrastructure gets hit, they've already said they're going to engage in tit
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fortat retaliation against the Gulf States. And we saw there was recently um the Iranians blew up this giant oil
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depot in Oman. You saw some of those images. They could continue to target the oil and gas infrastructure across
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the Gulf States. And if that happens, it won't really matter if the straits get
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reopened because you won't be able to restart oil and gas production in the Middle East. So that would be, I think,
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a much worse outcome that could result from escalation. Furthermore, there's an even worse, I
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think, scenario from there, which is the region is very dependent on desalination
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plants. I think something like 70% of Riad gets their water from desalination. I think it's something like 100 million
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people on the Arabian Peninsula that get their water from Delaw. I mean, it's
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basically a desert, right? >> And those DEL plants are soft targets. You already saw there was I think there
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was one diesel plant in Iran that got hit and then it caused Iran again tit for tat to hit a delaw plant. I think it
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was in Kuwait. I could be off about that. >> But any event, if you see that type of
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destruction continue, you could literally render the Gulf almost uninhabitable. I you're not going to
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have enough water for 100 million people and human beings just cannot survive very long without water. So that would
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be a truly catastrophic scenario and we're talking about destroying the Gulf
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States economically and then also from a humanitarian perspective. So I think we
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have to take things like this into account when you hear people preaching for or advocating for escalation. You
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also have to I think consider the impacts on on Israel. I mean, it's hard to know exactly how much damage Israel
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is taking right now. There's a social media blackout, but what you're starting
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to hear trickle out is that Israel is getting hit harder than they've ever been hit before in their history. And
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we're only two weeks into this. If this war continues for weeks or months, then Israel could just be destroyed.
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There are very large parts of it. Now, I think Israel is a harder target than the
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Gulf States. Their infrastructure is more hardened. Also, they're further away. The Gulf States are vulnerable to
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drones and short-range missiles, whereas Israel is mainly vulnerable to long-range missiles. Nonetheless, at
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some point, their air defenses could become exhausted if it hasn't happened already. And Israel could get seriously
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destroyed. And then you have to worry about Israel escalating the war by contemplating using a nuclear weapon,
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which would truly be catastrophic. So there's a lot of scenarios here, a lot
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of really frightening scenarios about where escalation could lead. And even though
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the United States is a much more powerful country than Iran, they essentially have a dead man's switch
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over the economic fate of the Gulf States and even potentially beyond that, you know, the habitability of some of
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these these countries. So I do tend to think that this is a good time to declare victory. I think Brad, you're
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right that the president has never said that democracy promotion is one of his objectives. Yes, Jal, obviously everyone
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would welcome if the people rose up and chose a new regime, but that's not something that we've said we have to
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accomplish. And this would be a really good time to take stock of where we are and try, I think, to seek an off-ramp.
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And look, if escalation doesn't lead anywhere good, then you have to think about, well, how do you deescalate? And
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deescalation, I think, involves reaching some sort of ceasefire agreement or some
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sort of negotiated settlement with Iran. And we can get into more of what that looks like. But I think that's the big
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picture is that if escalation could lead in all these horrifying directions, then
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I think that's not the right approach. You have to look at deescalation. >> Jake, where are you on this?
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>> Complicated. I have my personal feelings on regime change. And since we don't
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have the information uh the MSAD and the CIA and Trump has, I do think Trump would only do this if he had a very high
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probability of success and an off-ramp. However, it's not looking good with the
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offramp right now and it could be quite chaotic. I think if the neocons get their way and the people on poly market
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are correct, the sharps who say 57% chance we'll have boots on the ground, I
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think this is kind of the end of Trump's second term. And if you were to put
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together the series of mistakes that he's made um and the administration's
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made, they're really at the heart of why people voted for him. You take starting
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a war like this specifically with Iran. That's what we were told was the reason
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to vote for President Trump. He was not going to take us down this path. He was not going to
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risk World War II. He was not going to risk a nuclear possibility as as Sax correctly points out. And now you have
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all the MAGA supporters from, you know, Tucker to MTG to Rogan, Matt Walsh, Megan Kelly, they are all up in arms
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about this is the end of MAGA and this is, you know, a massive betrayal. There's the 1B betrayal where Trump
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wouldn't release the Epstein files. We'll put that aside because I don't
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think that's as important as starting World War II. Um, and then obviously the
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insane unnecessary cruelty we talked about many times on this podcast of ICE agents which he has corrected by getting
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rid of Christy Gnome. So you start putting these things together. If this continues for another 6 months, it's
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basically going to result in the Democrats doing a clean sweep in the midterms. Here's the chart that I think,
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you know, the Republicans really need to look at at how misguided, you know, uh, this all is. This is the
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chart that should be absolutely terrifying. Nobody wanted this war or very few people wanted it besides the
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neocons and the people of Iran probably and the Israelis. But the chances of the
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Democrats sweeping now is up to 45%. This just happened. The Democrats are going to sweep, then they're going to
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win in 2028. and the entire agenda of uh MAGA and Trump's 2.0 will be gone. And
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then you look at just absolutely ignoring the working man. Inflation going up above 3% as you pointed out is
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a likelihood, Brad. Unemployment ticking up. Still very low, but it's ticked up
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10%. Worth keeping an eye on. These foreign affairs things are the least important to the American people. It's
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very, very low on the list of priorities. And people are looking at Trump and what they believe is the
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enriching of his family and all these business deals. >> You're in the kitchen sinking it.
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>> It's literally what I was thinking. >> You're bringing everything at 1, two,
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three, four. Number one, doing the war that everybody said he should not do, include and that that was why we should
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vote for him. Number two, the Epstein files. Number three, the ICE cruelty. And number four, not working for the
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American working man who doesn't own equities. Those are four. 1 2 3 four. It's not a kitchen sink. This is not my
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personal feelings on this. This is my assessment of the situation. If he doesn't find an offer ramp quickly,
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they're going to lose both houses in the midterms. That's I think the thing Trump
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needs to really consider and I think he will consider I think he's going to find
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an offer. >> Right. That is the topic. The topic was are we going to find an offramp or not
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find an offramp in Iran? And I think Sax made the argument that there's danger
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that neocons and others are arguing that we expand, put boots on the ground. You're saying if he doesn't it'll be a
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disaster. Chimath and I both say he will. Right. And so the >> wait will what?
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>> He will find an off-ramp over you know in the nearer term because the Trump
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doctrine is not the neocon doctrine. As much as people want to talk about Iran Iran Iran. I think as I explained last
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week I think this is about China China. And you have to remember at the end of this month he has a pivotal 3 days with
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Xi Jinping in China. This is going to be an absolutely historic convening of the two superpowers
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that run the world. One which is us, we are the established and one which is China who wants to be reasscended.
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And I would bet dollars to donuts that there is going to be an enormous incentive for Xi to negotiate a grand
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bargain in those three days and do something historic for himself. And I think that the president will use
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that if he thinks that it creates leverage. I >> I think it's is a great insight. How
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does the straight of Hormuz open? If this war is dragging on and Israel, which seems to be the driving force in
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this, if Israel keeps it up with uh Iran, how do we ever get the straight open again?
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>> I think the offramp is that the United States uh you know, declares victory,
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does what Zach says and says, "Listen, we degraded and we destroyed. That's
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what we came here to do. We did not come here for some experiment in in democracy. We wish the best to the
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Iranian people to do the things they need to do. And if Iran does not back down, if after that declaration, Iran
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continues to destroy cargo containers moving through the narrow straits, I think you're going to see Iran's
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neighbors in Israel and others get very involved as it pertains to Iran because it's in their interest. Listen, the
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United States produces 20 million barrels of oil a day and we consume 20 million barrels a day. This is a this is
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a modest problem for the United States. This is a massive problem for China. This is a massive problem for Asia. This
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is a massive problem for all of our friends in the Gulf who are trying to dodge Iranian missiles right now. So,
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there are a lot of people in the world who will take up arms to deal with the Iranians if the United States isn't
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there because we can take care of ourselves. Your position Brad just to confirm it is we are going to leave the
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war in the next 30 days and then if the straits are not open then China, India and all the Gulf uh countries that are
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impacted by it they will protect it. They will fight Iran. >> I think they'll put a lot of pressure on
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Iran not to continue firing missiles at their ships. Right? At the end of the day this is not just an American
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problem. Right? And let's be clear we're always involved in this part of the
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world. The only question is, are we going to have an active armada that's engaged in active military activities
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against Iran? And what I'm suggesting again, and listen, anytime you try to clean up a mess like this, there is
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risk. This is not a riskfree, you know, initiative by the United States, nor was
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Venezuela. But let me steal man the alternative. doing nothing and allowing Iran to procure, you know, the
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ingredients for a nuclear missile when they are set on the destruction of the United States and US interests. Doing
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nothing in Venezuela while the Monroe Doctrine is totally wrecked and we let our adversaries take up, you know,
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positions in in South America. Those also have risks, right? Those carry a lot of risks. And so we're we're
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weighing these two risks. Again, for me, I don't like the fact that we're engaged
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in military activities here. But I will tell you, I am very much on the side that if we're going to go protect
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American national security interest, you go in, you do the the degrading of their
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capability and you get out. And I think, you know, that's what I hear out of the
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president. >> Jim, you had a followup. >> All roads lead to China. I think that
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there you're going to see Xi offer up a grand bargain. And I think it's up to
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the president to decide whether he wants to take it and see what he wants to add
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to it to get something done. But I just don't see them meeting and coming out
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with nothing. I think I see them going in and coming out with something that's
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historic. And I think that all of this Venezuela and Iran together is all about China.
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>> Let me just say one thing as to that, Chimath. I think because I think the
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point is absolutely spoton, right? Probably the single greatest takeaway for us from an investment perspective at
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the start of this war was that the Chinese, right, didn't take up arms on behalf of Iran
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aren't defending Iran and they didn't cancel the summit with the president,
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right? The very fact that because they need him, they need the oil. 20% of their entire domestic consumption is oil
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from Venezuela and Iran. 20%. But it's not 20%. Because it's literally 100% of
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anything that's feed stock, anything that's transport, cars, buses, planes.
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They are in an enormous world of hurt. Now, they have a strategic petroleum reserve as well, and it's quite robust,
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but it's not robust enough to sustain five or 6 months of this. It's not that
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robust. So, at the end of the day, who is going to be hurting the most? It is China. And so if you play this game
00:24:25
theory out, the reason he kept it is because now he needs a summit even more. Could you imagine if the president
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canled, that would be a disaster for the Chinese. So the fact that it's still on the
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books, if I was Xi, I'd be like, how do I negotiate and help find the off-ramp?
00:24:42
How do I end up fixing this faster? All right, remember you have 25% unemployment of young men inside of
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China. 25% today. What do you think it goes to in five months with no oil? >> It's in the
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>> That's the unemployment rate you should be focused on, Jason. >> Oh, the China issue is a separate one
00:25:04
just to >> It's not separate. >> No, no, that was separate from my point
00:25:08
is my point. I I was bringing up a different point. >> Yeah, your kitchen sink didn't include
00:25:11
the Chinese. I get that. I'm just adding to your kitchen sink. >> I didn't have a kitchen sink. I have
00:25:15
four very salient points. All right, Sax, I'll give you the final word here.
00:25:20
Well, look, that was a bit of a a broadside, Jay Cal, where you kind of did kitchen sink it. But look, here
00:25:25
here's the part I'll agree with you about, which is it doesn't take a
00:25:29
political genius to understand that long wars are unpopular. It will hurt the Republicans in the
00:25:36
midterms or 28 if this does turn into a long war. Fortunately, I think the president understands that his political
00:25:42
instincts are impeccable and he's always favored short, decisive, swift actions, military
00:25:49
actions, whether it was Midnight Hammer, whether it was the Maduro raid. I think
00:25:53
that is his inclination and preference. And I think we are pretty much at or close to a point where the president's
00:26:00
going to have to decide on next steps. I think he's indicated that we have completed our objectives and I think
00:26:07
it's just important that we don't let this neocon wing of the party try to
00:26:12
expand the objectives or aims of the war because frankly they've always been
00:26:17
wrong about everything. I mean these are people who never wanted to get out of Iraq and Afghanistan would still be
00:26:23
there after 20 years if they had their choice. So, I think it's just important
00:26:28
to not listen to those people. And look, it's not just one op-ed in the Wall
00:26:32
Street Journal. The Wall Street Journal is kind of the tip of the spear representing that whole neocon
00:26:37
establishment. And I think it's just important that this is the time to frankly ignore those voices and let the
00:26:42
president do what I think his political instincts are telling him to do, which is to wrap this thing up.
00:26:48
>> I'm in strong agreement, and it is my hope, too, that he wraps it up quickly
00:26:52
and that we don't have any more loss of life. All right. We'll keep discussing
00:26:57
uh this ongoing breaking news story in the coming weeks. But back to our zone of excellence, AI and tech, OpenAI and
00:27:06
Anthropic are scaling revenue and costs faster than we've ever seen in the history of well business the world.
00:27:13
Revenue at these two companies growing gosh like unprecedented levels. Here are the reports and I believe your investors
00:27:20
in both these companies. Brad Anthropic hit a $14 billion run rate last month, February. That means they have grown
00:27:28
revenue from 1 billion uh to 14 billion in 14 months. They have 12x year-over-year.
00:27:36
They're valued at a meager 380 billion uh last month. This feels like a bargain
00:27:41
given the growth. Openai ended 2025 at 20 billion annualized run rate and they've grown revenue from 2 billion to
00:27:49
20 billion in 24 months. They're valued at 840 billion last month. Uh, and man,
00:27:55
it looks like Sam Alman has Daario in the rearview mirror. He could get lapped any moment. Lots of debate.
00:28:03
>> Where did you find this? What the hell is this? >> That one? I made that. This is Daario
00:28:07
closing in. >> What is that? A velociraptor? What is that? >> It's the famous scene from Jurassic
00:28:14
Park. >> Oh, wow. But I mean, I don't think anybody expected Daario to be coming
00:28:17
around the bend this fast, but he's right behind apparently and they're winning obviously the businessto
00:28:23
business side of the business. The J curve on these companies is insane. Uh 250, 500 billion. Who knows what's get
00:28:30
gets invested before these companies reach profitability, Brad, but you're invested in these two companies.
00:28:37
>> Yeah. >> Unless you sold when uh Sam Wman told you he would buy his shares back on the
00:28:42
famous BG2 episode. I don't think you sold it. >> I bought a lot more since then, Jason. I
00:28:46
bought a lot more. >> Fantastic. That's important information for us to have. Quick question for you.
00:28:51
Number one, what's a better buy here? >> Yeah. >> Uh, Anthropic at 380, OpenAI at 840. Uh,
00:28:57
and then I think people want to know if these companies are going to go public. What you, if you think they should go
00:29:02
public, what is the chance of that happening? Take those questions however you like.
00:29:06
>> Well, I mean, listen, you know, Love Your Children equally. They're both
00:29:10
incredible companies. Anthropic unquestionably has a lot of financial momentum, you know, and OpenAI is seeing
00:29:16
a lot of momentum themselves, right? But the single most important question this
00:29:19
year, right, was would AI revenue show up? And just 60 days ago, 90 days ago, there was tremendous skepticism. No way
00:29:28
all of these infrastructure investments were going to pay off. There's no incremental revenue coming out of AI,
00:29:34
including many of our friends. But in February, we had in January and February, we really had kind of a
00:29:41
nuclear moment, right? The splitting of the atom moment. I mean, we had a $6 billion month out of Enthropic in
00:29:48
February, right? What widely reported. Okay, let that set in for a second, right? $6 billion in a month, and it was
00:29:56
only a 28 day month. Okay, that's more revenue than the annual revenue of data
00:30:01
bricks and snowflake that are two of the greatest software companies of all time
00:30:05
after 12 years, right? They could do in the first four or five months of this year the total revenue of SpaceX this
00:30:12
year. >> What is driving that? Just explain to the audience what's driving it. Is it
00:30:15
token use? Is it clawed subscriptions? >> We crossed a threshold with Opus 4.6,
00:30:22
right? And we saw it again with chat GBT 5.4 before where the models and the agents on top of them whether it's cloud
00:30:29
codeex chatbt they're no longer competing with IT budgets they're now augmenting labor they're competing with
00:30:36
labor budgets you could not possibly have a $6 billion month it is impossible to do that by displacing IT budgets
00:30:44
millions of other companies across America say oh my god let's spin up these agents and have them do things for
00:30:49
us and we're willing to pay for it because the product of that effort is worth the money to And the revenue and
00:30:56
the usage momentum, I will tell you in the month of March continues and it only accelerates from here. As Kevin Wild has
00:31:03
said, the models in the agents are the dumbest today they will ever be. Right? We're in the early innings of compute
00:31:10
and algorithmic uh capability. And so, you know, like that to me is the observation at this moment. Should they
00:31:17
go public? I've said yes, they should go public for several reasons. There's tons
00:31:20
of institutional demand. They need cheap access to money to continue to build out
00:31:25
uh the compute they need to support. They they there is more compute constraint in these businesses this very
00:31:31
day than they've had any time in the last 3 years. So they need access to the
00:31:34
capital. And then finally, I think you have to have the retail investor in the game. These are two of the most
00:31:40
important companies in the history of capitalism in the history of America. It's destabilizing not to have them
00:31:45
public. You know, Jensen said last week that he expected the 40 billion he recently invested in these two companies
00:31:52
would be his last money in because they were both going to go public. He thought
00:31:56
they he said they would both go public this year. I think that, you know, they're they're preparing and heading
00:32:01
down that path, you know, and and listen, I want to get some of these shares in the accounts of all these kids
00:32:06
that were opening up because they're really really important companies to the
00:32:10
future of the American economy. Shim, you had some insight into the quality, durability of this revenue. There's not
00:32:18
a single good example that we can find of sustained positive margin expansion and impact of AI inside
00:32:29
of a true corporate enterprise that is not right now a small test. There's not.
00:32:35
>> So where does six billion come from? because everybody has to show up to
00:32:40
their board and have an AI checkbox and everybody is thousands and thousands of companies. And when you have tens of
00:32:48
thousands of companies as customers paying $200 plus a month, it's not that hard to show up with that kind of
00:32:54
revenue. The real question is the following. If you take you use the data bricks and snowflake example, if you
00:33:01
look at the companies that use that software, those companies generate enormous revenues and enormous margins and these
00:33:13
products are in critical production workflows that underly those revenues and profits. That is just not true with
00:33:21
AI today. We have all kinds of claims, but we are still experimenting. Why are we experimenting? Because we
00:33:29
know it's important, but we don't yet really know what to do. You can't just
00:33:34
slot this in to a critical workflow in healthcare and all of a sudden show up where if you make a misdiagnosis or if
00:33:41
you make a a misccharacterization of a procedure, you can get fined and go to jail. The companies that are in
00:33:48
healthcare don't do that. If you're in financial services and you make a
00:33:52
mistake about somebody's portfolio or you make a misallocation and you point
00:33:55
to a model, you will get sued and you will be in trouble. None of these things have transitioned from it's interesting,
00:34:03
it's experimental to it's the core critical operational workflow. >> Just interesting.
00:34:09
>> There will be a transition in revenue quality when that happens. A great
00:34:14
example of this is Amazon. Why does Amazon issue an edict that says you cannot use this stuff inside of AWS
00:34:22
unless a human now reviews and approves it? Because what happened? They had three or four sev one faults from a
00:34:29
bunch of code that was written by agents that brought down AWS. Now look, I've
00:34:33
told you I love AWS for one reason, because it's hyper reliable. I hate AWS for the same reason that hyper
00:34:40
reliability comes at enormous cost. I pay it, but I pay it to never have a SE one. The reason they have 12 9s of
00:34:48
accuracy is because it's humans and deterministic code that never fails. It doesn't mean that two companies can't
00:34:54
get to 20, 30, 40 billion of revenue. What it means is we have to be honest. This is an industry that's early. We are
00:35:01
all figuring it out. There's a lot of test budgets that are going at it. It will slowly and methodically emerge into
00:35:09
production. But let's not oversell what this moment is. >> Okay, Brad, I want to give you a well-
00:35:14
constructed question here to respond and then Sax, we'll go to you if you have
00:35:18
some input. Of the 20 billion, how much of it do you think is experimental? What
00:35:24
percentage is experimental versus production? Bas strip out the cons the consumer spending for because like you
00:35:31
know that's half of it, right? >> Okay, so let's I'll I'll put aside the
00:35:35
consu S. Great idea. We'll put the consumer subscriptions aside. they're
00:35:38
obviously getting value or they wouldn't be subscribing, but it's like Netflix.
00:35:41
>> And by the way, for that where it can be extremely faulty and there's no SLA that
00:35:46
you're giving, >> it's a phenomenal. These are phenomenal products.
00:35:50
>> Yes. For 20 bucks a month, well worth it. And consumers have decided it's
00:35:53
worth it. So, I think we're in agreement there. >> And also for the individual engineer, of
00:35:58
which I suspect there's a few million, who get to pay $200 a month and have their company subsidize it. The company
00:36:04
knows that these costs are being incurred, but there is no tick and tying at the end of it where then you review
00:36:10
the code in a different way because you you you're worried that there's hallucinations as Amazon just
00:36:14
demonstrated. >> Yeah, there's a story in the there's a story in the FT about Amazon having some
00:36:19
blast radius from some computerenerated AI and they're putting controls in place. We'll put that in the show notes.
00:36:25
Brad, let's get to the specific question I asked. of the tens of billions of
00:36:29
dollars in revenue between the two companies that's not consumer, what percentage do you think is production
00:36:35
quality versus experimental to Chimat's point? >> Yeah, I mean listen and I've been, you
00:36:40
know, I coined the phrase experimental run rate revenue, right, versus annual recurring revenue, right? Like I think
00:36:46
it's I think Chimas's point is a really important one. As an investor, I have to
00:36:50
discern what's repeating, right? What's recurring and what's not. What I would
00:36:55
suggest is of course there's a lot of experimentation because these things haven't been around that long. But I
00:37:00
suspect right that Palunteer, the US government, the US military, Nvidia, and a lot of other major enterprises would
00:37:11
argue they've gone full production. In fact, it's existential to the wartime
00:37:16
effort going on in Iran right now. That doesn't sound to me like experimental as
00:37:20
much as it sounds like production capability. And I will tell you what will prove this one way or the other is
00:37:27
in the month of March, do revenues continue and go up? Right? Do they experimentation go on forever? That's
00:37:34
not true. That's not true. The experimentation goes on forever. That sounds like recurring.
00:37:39
>> We've scratched the surface of of the number of companies that even know how
00:37:42
to adopt AI. So these numbers will go to the stratosphere. I'm not debating that.
00:37:46
>> Okay. >> Look, I'm on the same side of the bed as you are. I want these numbers to keep
00:37:50
going to the moon. I'm just being much more circumspect and honest with myself
00:37:54
to say I see it on the ground. I sit on top of these models. I am paying these models millions of dollars a year. I am.
00:38:01
>> Yeah. >> And what I'm telling you is my revenues don't go up faster than their revenues.
00:38:05
I'm consuming more tokens every single day. Do I get more economic output? I am
00:38:11
not. And I would say that my team is at the leading edge. And so I suspect a Fortune 1000 company is steps behind my
00:38:18
team. And if I am spending triple every 3 months and not seeing my revenues tripling, I suspect these other
00:38:26
companies are in a similar situation. >> I'd finalize it. But ask it on Friday
00:38:30
when you're with Michael Dell because I've had this conversation recently with
00:38:33
Michael Dell and Michael said a year ago companies weren't seeing ROI. Today
00:38:37
they're seeing very big ROI in their AI investments. But I think that's the
00:38:40
question on the table. But >> what companies? Which companies? Of course the second
00:38:46
of course is seeing an ROI. Sachs were agreeing. This is experimental in large part and this is a new tool. So by
00:38:56
definition you have to experiment before you put it in production. What's your
00:38:59
take on this grand debate? How much of this revenue is experimental versus real?
00:39:04
>> Well look when you're talking about enterprise revenue, what you're really
00:39:08
talking about is coding assistance. That's been the breakout use case. It's
00:39:12
really the first big breakout use case on the enterprise side. The consumer side's been more of like you know
00:39:18
research and writing that kind of stuff the chat bots but enterprise has all been about coding assistance. My sense
00:39:25
is that the demand for code is very scalable. Software engineers has always been an area of the economy where
00:39:31
companies have never been able to hire enough. Even in Silicon Valley which is the most attractive place for software
00:39:36
engineers to work. We've never been able to recruit and attract enough of them.
00:39:41
The rate limiting factor on the progress of every startup I've ever invested in
00:39:45
is not having enough engineers to code up the product roadmap. And then you look at the rest of the economy, the
00:39:51
Fortune 500 and so forth and so on. They have hardly been able to recruit software engineers at all because
00:39:57
they've all gone to Silicon Valley. So I think you're dealing with a part of the
00:40:00
economy where there's always been a massive supply shortage. And I don't
00:40:04
know what the natural limit on that is, but my sense is that there's a tremendous latent demand for the ability
00:40:11
to generate code in large quantities, create new products. You know, as the cost of code goes down, as the coding
00:40:20
assistants get better, you can code up new types of products. And then, of course, it's going to lead to agents,
00:40:25
which is another way of basically using the code that gets generated. So, my sense is that this could be very
00:40:32
scalable. I don't know where it it taps out exactly. Where I think Chimatha is
00:40:37
right is that I think there is a change management aspect to this in Fortune 500
00:40:43
companies for example and they haven't really wrapped their heads around how
00:40:46
exactly they're going to use this. There's a McKenzie study that showed that a lot of these pilot projects in
00:40:52
Fortune 500 companies were experimental. A lot of them were proving not to be successful. So I do think like as you go
00:40:58
beyond coding into you know company transformation things like that it becomes a little bit more speculative.
00:41:05
That's not to say it won't happen. I think it will happen. I'm actually I'm
00:41:09
bullish. But I do think that >> we're still waiting to see what the breakout use cases beyond coding will
00:41:15
be. Probably agents will be the next big one. But I think Brad's right that that's big enough to see, you know, this
00:41:21
scale for a while because, you know, the thing about the thing about code is you're paying for code on a metered
00:41:27
basis right now. You're paying per token, which is kind of an amazing deal for companies, right? Because before
00:41:33
they had to go through this recruiting process to find engineers, source them, vet them, you know, keep them happy,
00:41:40
give them all the perks, the kind bars, all, you know, uh, and so to be able to buy code on a metered basis as the cost
00:41:48
per token keeps going down. >> It's kind of metered before. It was just
00:41:52
metered on people. Now, now to your point, it's it's metered. It's metered
00:41:56
in a different way, but it's still metered. >> Yeah. And let me just, you know, you use
00:42:00
this term labor displacement, Brad. That's like the one part where I might disagree with you is because there was
00:42:06
such a shortage. >> Yeah. >> Of software engineers. I think when people hear the word labor or term labor
00:42:12
displacement, they might >> start to think that 6 billion of incremental revenue means 6 billion of
00:42:19
layoffs. No. >> And I don't think it does. And and the way to to thread that needle is the fact
00:42:23
that we were artificially constrained in the number of software engineers and how
00:42:28
they could be used and how rapidly they could be acquired and all that kind of stuff. So to be able to now turn that on
00:42:35
like electricity and that's kind of what we're talking about. >> Exactly.
00:42:38
>> Is just such a huge >> game changer and unlock for the whole economy.
00:42:43
>> Yes. >> And that's what I think is really exciting about it. >> It's augmenting it's augmenting human
00:42:47
labor, right? We're not at a place yet where it's displacing. And this is the
00:42:51
definition of productivity gains. >> I'm going to make just uh two quick
00:42:54
points here. The place to look for this actually moving from experimental into production is not not at big companies.
00:43:02
Big companies are actively resisting this. Management in big companies will resist it because it means lowering
00:43:07
headcount and it means the person who implements it might actually implement themselves out of a job. So that is the
00:43:13
natural resistance you'll see in big companies. That's not where to look for
00:43:15
adoption of new tech. >> That's not why it's happening. That's
00:43:18
not why >> let me finish and then you can you can counter it. >> Startups are the place to look at this
00:43:24
and that's where I am on the ground. And what I'm seeing there is that startups
00:43:29
are using this in production for their legal work for their marketing for SDRs uh for their accounting reviewing legal
00:43:38
documents. This is all uh work that would normally they would hire consultants for outsource uh or make
00:43:45
hires for. And what I'm seeing on the ground is it's production ready in
00:43:49
startups who are using it in those categories. HR as well, accounting, marketing, all of that, all that
00:43:56
blocking and tackling, all those chores are being done currently with these LLMs
00:44:00
and they're doing it in production and they're doing it at scale. Just a quick
00:44:03
second point here. Here's the J curve. And this is the question I think we'll
00:44:07
get to in our next segment. When does this become a profitable business? If uh and you asked this of Sam in that famous
00:44:13
clip on the BG2 podcast, RIP BG2, here you go. The LLM industry, Jacob, I just asked Claude to make this for me. Um, if
00:44:22
you have 500 billion, I think you would agree it's probably going to be around
00:44:25
that number, Brad, invested in all of this. And then >> more a lot more. >> Okay. So, five billion is an
00:44:32
underestimate here. And then when do we actually see these large language model companies hit profitability in a in a
00:44:38
calendar year? It took Tesla, Uber, Amazon, you know, decade plus in each of those cases
00:44:45
>> to win back their investment. 10 billion. >> This is a really good chart. Here's the
00:44:49
precise math on this. So, I am building a 1 gawatt data center in Arizona. >> Okay.
00:44:54
>> When I green lit that project, I thought it was going to be a four or five
00:44:57
billion investment. I was like, okay, whatever. Then it went to 10. Then it went to 15. Then it went to 20. And now
00:45:03
it's upwards of $50 billion for the powered shell, for all the land, for all
00:45:08
the permits, then for all the infrastructure, all the people, all of it. Okay. Sarah Frier said, I think it
00:45:15
was about a year ago, maybe less than a year ago, that for them, every gigawatt is about 10 billion of annual revenue.
00:45:21
So if you think about that J curve, Jason, really the way to think about it is look, energy equals intelligence. For
00:45:27
every gigawatt that they're trying to spend, they have a fiveyear payback is
00:45:30
roughly what it means just to get to break even. And then year six, seven, and eight will be where the profit is.
00:45:35
Now, how do you shrink the Jaker? You have better silicon. We're going to see
00:45:39
something from Jensen in a in a week or two that uses a bunch of the stuff that we partnered with him at Grocon on.
00:45:46
There'll be other people. There'll be open source. So, all those things can
00:45:50
shrink the depth and the surface area of that JC curve so that you can get out of
00:45:54
it faster. But right now that that thing is roughly accurate which is it's about
00:45:58
50 billion per gigawatt and it's about a five to six year payback just to get
00:46:04
into the money and then it's about 10 billion a year and the technology industry has to do something to make
00:46:10
this better. Could I though take a step back and give you just a different framing of all of this
00:46:17
>> please? I think the big thing that we're debating is actually something we've
00:46:22
seen in every other technology trend when it started to get some really meaningful traction. So in the first
00:46:30
generation of the internet when you started to see e-commerce and all these other business models then in the second
00:46:35
big wave of the internet around the move to mobile and the move to social and then now we're seeing this big wave
00:46:40
around AI and I think what happens is in step one entrepreneurs are AB testing what it takes to raise money. Okay,
00:46:54
that's step one. And I think what has happened is that at least some parts of the AI ecosystem
00:47:02
have decided that this crazy scary doomerism is the best way to raise money where every now and then they come
00:47:12
out and they say all the jobs will be destroyed anthropic you know Daario says that this thing is sentient and
00:47:18
investors are like okay here's 10 billion here's 50 billion here's 100
00:47:22
billion but then the second step happens they get the money, they start to do the
00:47:27
training, they start selling, and then the investors are like, "Hey, where's
00:47:31
the revenue?" And so then they start selling everywhere. And then if you see in the Department of
00:47:37
War example, all of a sudden you flip-flop, you become sort of an unserious dilotant like partner to the
00:47:43
American government. They're like, "We're going to boot you out. That's
00:47:45
billions of revenue gone." And what happens? Those same investors that gave
00:47:48
billions of dollars are like, "Hey, hold on a second. That's absolutely not
00:47:51
allowed. You need to conform and get back on track." And so what does Dario
00:47:54
do? He flip-flops and he's like, "Oh, I'm really sorry. I didn't mean to.
00:47:58
Let's sort of make good." All of that to me is an industry that's still in its
00:48:02
very early phases and still figuring out what its place in society is. So, what is the problem? The problem is the
00:48:10
following two clips, and I'll just have Nick play these, and I'd love your guys'
00:48:14
reaction. The one thing though that I think even now is underestimated by all actors in industry and including in
00:48:23
Silicon Valley is how disruptive these technologies are. If you are going to disrupt the economic and therefore
00:48:30
political power significantly of one party space, highly educated, often female voters who vote mostly Democrat
00:48:39
and military and workingclass people who do not feel supported. and you feel like
00:48:45
that's you believe that that's going to work out politically, you're in an
00:48:48
insane asylum like that you cannot have a this technology disrupts humanity's
00:48:54
trained largely democratic voters uh and and makes the economic power less and increases the power economic power of
00:49:03
vocationally trained workingclass often male uh voters. and and and so these disruptions are going to disrupt every
00:49:11
aspect of our society. And it to make this work, we have to come to an agreement of what it is we're going to
00:49:20
do with the technology. How are we going to explain to people who are likely going to have less good and less
00:49:26
interesting jobs from their perspective? And how is it that we are going and by the way on the military thing, these
00:49:34
technologies are dangerous society. the only justification you could possibly have would be that if we don't do it,
00:49:41
our adversaries and uh will do it and we will be subject to their rule of law. So
00:49:47
you if you decouple this from the support of the military, you're going to have an enormous problem explaining to
00:49:52
the American people why is it that we're absorbing the risk of disrupting the
00:49:58
very fabric of our society, including the most powerful parts of our society. uh if it's not
00:50:05
because it's about maintaining our ability to be American in the near term and and and long term.
00:50:10
>> Now watch Sam's reaction. Fundamentally, our business and I think the business of
00:50:15
every other model provider is going to look like selling tokens. But we see a future where intelligence is a utility
00:50:26
like electricity or water and people buy it from us um on a meter and use it for
00:50:34
whatever they want to use it for. So if you take those three messaging veins on a spectrum, one is we have a sentient
00:50:41
super god. We're the only ones that can protect you from it, but you know your
00:50:45
days are numbered. That's Daario. Alex, which is, hey, hold on a second. You
00:50:48
can't have it both ways. You can't both say it on the one hand and then try to
00:50:52
run the fabric of society and flip it. You need to be much more circumspect. And then Sam's, which is we want to sell
00:50:58
tokens as a service. I think the point is that this industry right now that revenue traction if
00:51:04
anything else has distracted people from actually getting on the same page and being much more methodical and much more
00:51:11
reliable and trustworthy in explaining all of this and managing the expansion of this. And so what I would say is all
00:51:19
of this fundraising gobbledegook has actually created this breathlessness that is not useful and isn't helping.
00:51:27
And I would say there needs to be a lot more seriousness by these folks to actually run this business thoughtfully.
00:51:32
You can't be a dilotant. You can't flip-flop. You can't pressure test AB
00:51:37
test this kind of messaging in public. But I understand why you're doing it because the stakes are so high. You're
00:51:43
playing this enormous poker game. But I think we need to do a better job of explaining all this to people because
00:51:48
right now my end of this is look at this chart. This is now the result of those three messages. Here is where AI is. It
00:51:55
is slightly above the Democratic party and an autocratic state. That's where AI
00:52:01
is. ICE is more popular than AI. So >> not very popular. >> So to me, this is really at the crux of
00:52:11
this where we are not really being honest. It would be much better if we said soberly, there's a lot of
00:52:17
experimenting. This revenue is great, but we don't really know what's real.
00:52:21
We're going to try to figure it out. We're going to work methodically. There's a lot of regulated industries.
00:52:25
We're going to work within those. We're not going to flout the law and the
00:52:28
rules. Lensure will still mean something. That's a way better, thoughtful, mature message.
00:52:36
And what do you think? >> And rant. Great rant. Uh Brad, does the industry have a PR problem? Obviously,
00:52:43
these recent surveys and especially comparing them to China where people see AI as abundance and like this incredible
00:52:51
new technology they want to embrace. Here, people are scared. People are scared they're going to lose their job.
00:52:56
People are scared about wealth u disparity. The rich get richer, the poor get poorer. There's a lot of fear here
00:53:02
in the United States. What can our industry do to turn this around in terms of communication from the big companies?
00:53:11
They don't seem to be communicating in any coordinated fashion and and they obviously are scaring the [ __ ] out of
00:53:17
the public. >> Yeah. No, listen, I think it's uh I think it's a fair rant and a fair point.
00:53:22
At the start of the industrial revolution at the start, you know, in the in the late 1800s, we had similar
00:53:29
social responses to innovations that were occurring. We in fact had some violent clashes. We had demonstrations
00:53:36
in the street. We had the entire robber baron movement you know so class warfare
00:53:40
and worse is you know has come with other re you know kind of industrial changes of this magnitude so it doesn't
00:53:48
surprise me that we have a lot of anxiety by people that they may lose their job and I think there are people
00:53:54
out there who are kind of forecasting into the future in ways that are scary to you know the average person who's
00:54:01
who's listening to this and I don't think that's particularly helpful so
00:54:04
could we do a better job messaging no doubt about it. But if I just rewind to kind of where we started, I actually
00:54:11
think the industry is um you know this is going to be a pivotal year for the industry to demonstrate right how this
00:54:19
is really beneficial for humanity. I think we're going to be able to demonstrate that it's very beneficial
00:54:25
from a health care perspective, from a drug discovery perspective, from an education perspective, etc. But we need
00:54:31
to have a coordinated effort because Chimas right is deeply unpopular in the country. I happen to be on the
00:54:37
optimistic side of this. 70% of the jobs that exist in the United States today did not exist 40 years ago. Right.
00:54:44
Right. We've gone through the digital disruption that put a lot of people out
00:54:49
of work. But the abundance and the and the recreation of new jobs, right, expanded the pie for for largely
00:54:57
everyone. I think that will be the case here. If you listen to Daario, he says the concern is that the disruption
00:55:02
occurs at a faster and and and and bigger rate and so that we can't keep up with kind of that replacement. I think
00:55:08
that's another fine point. But if we just go back to where we started the conversation, which was are these good
00:55:14
investments, right? Do >> That's not the conversation. No, of course they're good investments. Of
00:55:19
course you're going to make money. >> No, no, no. That's not what it's about.
00:55:22
>> That's not it. >> He asked the question. You made the argument. Jason asked the question,
00:55:27
right? Are these companies simply selling do tokens at a loss? Right? And we moved into this.
00:55:33
>> No, no, no. They're they're selling at a profit. I'm buying them and losing
00:55:36
money. >> Right. >> In the 1849 gold rush, >> Anthropic and OpenAI and all of these
00:55:42
model makers are selling the pick and shovel in the gold rush. >> I am buying it and I'm trying to pan for
00:55:48
gold. But as with the gold rush, most of these companies will go out of business.
00:55:53
And all I'm saying is if we are really circumspect and honest, there is still
00:55:58
way more to figure out than has been figured out. This is not a solved problem. And I think we it would behoove
00:56:04
everybody to just tell the truth about this. It would be way better to be honest. This is not figured out.
00:56:10
>> I would say I think the data the cards that are being turned on the table move
00:56:13
me in the exact opposite direction. >> Okay, let me get Sachs involved and then
00:56:17
I'll give my take. Sax, you have any thoughts here? Well, I I have some thoughts on the question you asked about
00:56:22
is the industry doing a good job with PR. I think the answer is clearly no. I think they are scaring the be Jesus out
00:56:29
of the public and that's why the popularity is right down there with I don't know what was it Iran. I mean it's
00:56:35
pretty I think we're a little more popular than than Iran. But um but look, >> Iran Iran's had 100 years to [ __ ] it up.
00:56:42
So we've only had two. >> Yeah. Or 47 anyway. >> Yeah. Iran's had 47 years to We've only
00:56:47
had two. But it is very much a US-specific problem. If you look at data, sentiment data across countries.
00:56:55
What you'll see is that other countries are much more optimistic about AI than
00:56:59
the US. I think the Stanford did a study on AI optimism. They simply asked the question, do you think AI is going to be
00:57:06
more beneficial than harmful? Something like 80% of people in China said yes. In
00:57:10
the US, it was in the 30s and it might be even lower now. And it's not just China and the US. you see across Asian
00:57:16
countries, they tend to be pretty optimistic and then the US and Western Europe tend to be pretty pessimistic
00:57:21
about it. I think that's less about the reality of AI and more about our media
00:57:26
environment and who influences it. Obviously, you have the influence of Hollywood. It's created a lot of
00:57:31
dystopian films about AI. You've got the fact that like we talked about these
00:57:36
CEOs are doing a horrible job and they keep talking about putting everyone out of business. I mean, this has I think
00:57:42
been not accidental. Well, I would say some of these CEOs are speaking this way because they're not very good at comms.
00:57:49
I think others are actually doing it because they see a strategy there. You know, they're going for a regulatory
00:57:55
capture. >> Such a good point. It's delusions of grandeur plus they're positioning their
00:58:00
companies. Yeah. >> It could be for financing reasons like you've mentioned Schmoth. like they want
00:58:04
to tap the stuff for fundraising, but also I think that some of it is to create a regulatory backlash that they
00:58:13
can then control. You know, create a licensing scheme or permissioning scheme. And that's a big part of it,
00:58:19
too. And then I think you just have the fact that in our media environment, the scare stories are the ones that get a
00:58:26
lot more attention than the heartwarming stories. You know, if it if it bleeds, it leads type thing. So you can just see
00:58:33
how unpopular it is for all of these reasons. >> You know, New York is about to outlaw
00:58:36
medical and legal advice from AI chatbots, which by the way, that's probably the the most obviously
00:58:43
>> valuable and highest ROI thing for for a consumer people the worst. Hurts poorest people
00:58:50
the worst. But do you understand like if you're say a professional association
00:58:55
that sees it as your job to protect your industry from disruption, you might actually want to spread FUD about AI in
00:59:03
order to then seek those protections through your state legislature. >> Well, if you have companies that are
00:59:09
fanning those flames and those companies are the ones in the industry, it's making your job even easier.
00:59:14
>> Well, just think about the poorest person. they they can't afford a lawyer
00:59:17
and they want to do their own research and they research the legal stuff to in order to fight an eviction or there are
00:59:24
poor people who don't have a primary care doctor. They're not insured and
00:59:27
they find a way to deal with, you know, some medical issue they're havinging.
00:59:31
This is the greatest thing. It's the le it's a it levels the playing field for
00:59:36
poor people or people without resources. So, this is the craziest legislation ever. New York City is a disgrace. I
00:59:43
give them out of the week. No, the pro the problem is very specifically that these people that rely on these models
00:59:50
to make a healthc care diagnosis or get a legal opinion to help improve their lives, the makers of those tools are
00:59:57
telling everybody that they're about to bring death and destruction upon the
01:00:01
economy and the world. So then the lawyers and the doctors are like, "Well,
01:00:05
then maybe we should slow this down." and they tell their lobbyists who then
01:00:08
go to New York and then tell the New York legislators, hey, uh, these guys are like trying to wreak havoc and then
01:00:15
they're like, oh yeah, well then maybe we should shut it down. That is the loop
01:00:19
that's happening. >> That was the Bernie Sanders moment this week where he said we ought to have a
01:00:24
moratorum on all data centers being built in the United States because AI is dangerous. That was his message and that
01:00:30
is what he's pushing. And actually that brings me to another point which is if
01:00:34
you look closely at Bernie Sanders messaging, one of the talking points he used was literally verbatim from Future
01:00:39
of Life Institute. Uh I think it was something about how AI is less regulated than a sandwich shop, which is just not
01:00:45
true. But future of life is one of these EA funded doomer think tanks and they've
01:00:50
got something like a billion dollars. Vitalic Butering donated $600 million of dog coins to to the Anyway, you've got I
01:00:58
mean this is one really weird sort of quirk about our media environment is we have these EA funded think tanks with
01:01:05
literally billions of dollars. You know, it's guys like Dustin Moscowitz and
01:01:10
>> they're the Dels, they're the Democratic Socialist kind of arm. It's so weird
01:01:13
that like New York is now taking the crown of most [ __ ] state from California. I don't know how this
01:01:18
happened, but they just seem to be making every mistake possible. Yeah, but but hold on, let me just finish my point
01:01:22
because you've got these, let's call them doomer think tanks funded by these
01:01:25
EA billionaires. They have literally billions of dollars. You can influence a lot of public discourse with that a lot.
01:01:32
>> Sure. >> And they are behind a lot of the nimi stuff around data centers. They've been
01:01:36
spreading a lot of the FUD around data centers increasing your electricity prices, which again I think is a solved
01:01:42
problem now because the users, the AI companies have agreed to pay for the incremental costs and stand up their own
01:01:48
power generation. They've been spreading a lot of stories about water usage,
01:01:52
which is just totally made up. I mean, the modern data centers recirculate water, so they don't use up water. But
01:01:58
again, you've kind of got these doomer groups who are just trying to stop AI
01:02:02
however they can. >> And they're extremely well funded and they're having a big impact. And I think
01:02:06
actually this is one of the reasons why you're seeing in the US again that AI I
01:02:11
think is it's basically the least popular thing they can pull for except for the Democratic party and Iran. And
01:02:16
by the way, FLI, the Future Life Institute, they also fund journalism fellowships and endowments at
01:02:22
publications. So, >> who probably writes negatively about AI? >> Yeah,
01:02:26
>> exactly. >> Here, Sax, look at this chart. It goes back now a little bit earlier than 23,
01:02:31
but I had the data accurately from 23, so we're going into the fourth year. About 40% of all protested data centers
01:02:39
in America get cancelled. And so, in 2023, this was a non-issue. There were a few data centers that were
01:02:46
protested and a few of those 40% of them I think it was literally like one or two
01:02:51
got cancelled but then starting in 24 when you had this divergence of messaging or this chaotic slipshot
01:02:57
messaging and it was just a fever pitch to raise money what you started to see was this fermenting of negative
01:03:05
perspective by individual people on the ground and so in 2024 about 40% of all protested data centers were cancelled
01:03:13
still a small number, you could ignore it. But last year was when the bottom fell out. We had about 25 data centers
01:03:20
canled, about five gigawatts that got cancelled. If you use Sarah Frier's number, that's $50 billion a year of
01:03:29
revenue, which is off the table because of what happened in 25. Now, that has implications to everybody. Look at the
01:03:37
amount of taxes that that would actually raise for federal and local and state governments. All gone. Vanished. in 26
01:03:45
just at the end of February there are about a 100 data centers being protested which if you flow that through will mean
01:03:53
about 40 will get cancelled and that number right now is about 7 gawatt so another $70 billion a year of revenue so
01:04:03
just last year and this year we've taken off the table $120 billion of [ __ ]
01:04:08
revenue per year this is a wakeup call that this messaging is These people are not doing what is right on behalf of a
01:04:16
very nent and critical industry for America. There's only so much that Sachs
01:04:21
can do, the White House can do. All these other people are kind of at the periphery. But if the people that are on
01:04:26
the ground don't get their [ __ ] together, this is a national disaster. Just to give people a uh sense of where
01:04:33
this is happening, almost all of these cancellations are Virginia and Indiana according to some just cursory research
01:04:39
here. And there have been zero cancellations due to local opposition here in the great state of Texas where
01:04:45
we have over 150 gawatts of data capacity requests. So if you want to do this, come to Texas, talk to Abbott,
01:04:53
talk to Ted Cruz. You just CC them on your tweet and they'll have you to the
01:04:56
poker game and they will greenlight it. Brad, before we move on, want to get your opinion on open source and how
01:05:03
powerful it is and how powerful Apple silicon is getting. I'm not sure how you
01:05:08
factored this in at alimter into your thinking, but this seems to me to be a massive headwind against the two big
01:05:16
bets you have all of these open source models. We started running them picking up about
01:05:21
85% of our tokens right now and every startup I know is saying we are standing up our local models and we only use the
01:05:30
top models, the paid ones uh when we have jobs we can't do. So I I'm just
01:05:34
curious your thoughts on that and you can add to that the auto research project from Karpathy that came out this
01:05:41
weekend for people who don't know we now have a group of tinkerers who are setting up their open clause and now
01:05:47
setting up large language models and now trying to train them with this auto research tool. This seems like a
01:05:52
parallel track that could be material. I'm just curious if you're monitoring it
01:05:56
at all. >> I mean first I would say that uh I am very enthusiastic for open source.
01:06:02
>> Okay. We see it in widespread use everywhere. But here's the interesting
01:06:06
thing, you know, for the advanced companies, they're doing some like planning, you know, with the frontier
01:06:12
labs and then they're kind of doing the execution, if you will, with the open
01:06:15
source models. So they're running an ensemble of model strategy. But here's
01:06:19
what I think's more impressive. We have incredible open- source models nearly on
01:06:25
the frontier. And notwithstanding that, we're seeing companies like Anthropic
01:06:31
add five or six billion dollars of revenue in a single month, which is extraordinary. We've never seen anything
01:06:37
like it in technology. And that's in the face, Jason, of all this open- source
01:06:42
usage. So, what does it tell me? It tells me that the TAM >> is dramatically bigger than any of us
01:06:48
think that it is. And that, you know, when we when we look back on this period, >> you know, that will be the big takeaway.
01:06:55
It's a takeaway with Uber, the takeaway with Google, the takeaway with Amazon.
01:06:59
The TAM was way bigger. We've crossed an important threshold. Open source will be
01:07:03
a part of it, but clearly the front Frontier Labs can do well even in the face of it. All right, a little
01:07:09
housekeeping. The All-In Summit is coming and liquidity is uh I think it's sold out. We're about to sell out. We
01:07:16
might have a couple tickets left. You can find both events at allin.com/events and all-in summit tickets if you want to
01:07:23
get there quickly before they sell out September 13th, 14th, and 15th in Los Angeles. Again,
01:07:30
uh for all the all-in listeners, we're launching a survey today. This is super
01:07:34
important to take the all-in survey. If you made it to this point in the podcast, if you are an early true
01:07:40
believer in the pod, if you're one of the uh all-in stands, we need you to fill out this survey.
01:07:45
Allin.com/servey.allin.com allin.com/servey. All right, let's uh wrap up with this
01:07:50
final story that went viral. The millionaire tax has hit Washington State. Howard Schultz, CEO uh longtime
01:07:57
CEO of Starbucks has bailed and he's gone to Miami. >> Surfside. He's in Surfside. He He bought
01:08:05
a He bought a condo in Surfside. >> He uh he pulled a JCO. >> He pulled a JCL.
01:08:10
>> I think you mean a sexy boo. Well, yeah, but I was never I was never a Starbucks
01:08:14
liberal before I left the state of California. >> Listen, I I don't know how many times I
01:08:18
have to make this correction. I am a moderate. I literally voted four elections in a row for Republicans.
01:08:23
People have asked me for the receipts. Pitakei, Giuliani, um, and Bloomberg. I literally for almost a decade voted
01:08:32
exclusively Republican. Washington's millionaire tax passed this week. Here's
01:08:36
what the tax is. People making more than $1 million a year will pay an extra 9.9%
01:08:42
in tax starting in 2029. The budget center estimates the tax will impact 30,000 households, bring in
01:08:49
another 4 billion uh for the state's general fund. Um the funds are supposed
01:08:54
to go towards public schools, higher education, healthcare. In a huge coincidence, on the same day the new tax
01:08:59
was passed, Howard Schultz, the billionaire Starbucks founder, um >> a huge coincidence, did you say?
01:09:06
>> Yeah. just just unrelated stories. >> Unrelated an unrelated story. Yeah.
01:09:11
Unrelated news. >> He will be leaving Seattle after a 44 year run because he found out about
01:09:17
these incredible Cuban. >> There was there was an opportunity. There was an opportunity to buy a $44
01:09:22
million condo in Surfside. He couldn't pass it up. It just happened to be on
01:09:25
the same day that they passed a millionaire tax. >> He he had the uh Cuban sandwich at Liss
01:09:30
Sanguich and uh he he fell in love. Schultz has been getting crushed after saying when he ran for president that he
01:09:38
would be willing to pay more taxes. Uh Bezos obviously left back in November of 2023
01:09:44
>> and people speculated maybe the 7% capital gains tax um would um have influenced that. Who knows? So I guess
01:09:53
Shimoth what is the endgame here? Because for these local politicians, they must have learned the lesson that
01:10:04
people of means can move. They have the ability to buy new homes, put their old homes on the market. They're very mobile
01:10:14
and they could even leave the United States and go to Singapore or Dubai or other locations in the world. Why are
01:10:21
they still enacting these? and will they continue to sell enactes until we get to
01:10:24
60 70% tax rates and we just lose all of the creators and this becomes an Randian.
01:10:30
>> I think that state politicians on the west coast are very ineffective and not
01:10:36
not very smart. Nick, there's a there's a tweet that was published I think maybe
01:10:41
it was a infographic that showed net migration rates of every single state for 2025. Washington is a few months
01:10:50
behind California in trying to enact these stupid taxes. And the reason they're stupid is these kinds of things
01:11:00
don't work at the state level. And we know what it's already done in California because the Hoover
01:11:04
Institution just published something this morning and it's a complete indictment of of what the billionaire
01:11:11
tax was trying to do. And by the way, this billionaire tax is only polling right now 25% of the votes it needs. So
01:11:18
maybe it'll find a way to get on the ballot and then even then it'll have an
01:11:22
uphill climb to get voted in. But look at the destruction that it has done in California by just announcing it. The
01:11:29
Hoover Institution basically ran this Monte Carlo simulation. They ran 100,000 runs and in 71% of those runs, it comes
01:11:37
out with a negative NPV. And if you expected value it out, it's about a $25 billion hole. They also
01:11:46
found that they overcounted the number of billionaires in California. So that number was wrong. They underounted the
01:11:53
amount of revenue that they pay. So that was wrong. And they overcounted the estimate of how much money that they
01:11:58
would make. So that >> they're not good at math. They're not good at math.
01:12:01
>> So when you add it all up, they thought they were going to make a hundred.
01:12:04
They're actually going to make 40. The people that left pay, you know, $3 to5
01:12:08
billion a year of taxes. It's going to create a $25 billion hole. You're going to have
01:12:15
the middle class that's now going to have to foot this because this is net revenue that's not going to come into
01:12:20
the budget. That's about 2500 per middle class household. There's about 10
01:12:25
million in California. So that's what's happened just by making the threat.
01:12:31
>> Washington had a 23-hour debate and passed the law. So I suspect when you
01:12:36
look back on this in 18 or 24 months, it'll be as bad or worse than California. These things don't make
01:12:44
sense. The reason they don't make sense is that you are putting good money after
01:12:48
bad. We all know that money that goes to the state governments are wasted. We just don't know how much. And so when
01:12:55
you keep asking more, eventually the smart people say enough's enough. I'm
01:12:59
out of here. We might find out how much. I think uh Bari Weiss is on the case. I
01:13:03
don't know if you saw her do her CBS report this week. She's she's going hard
01:13:07
for fraud. And until you get fraud out of the system, I don't think you have
01:13:11
the moral high ground to raise taxes. I think that should be the message that all Americans
01:13:16
>> send to politicians. >> That should be your campaign promise when you run whatever whatever you do.
01:13:21
>> Hi, I'm Jason Caliganos and I will get rid of fraud and lower your taxes.
01:13:25
Look, you may have seen an even more severe attack was proposed at the federal level where Bernie Sanders and
01:13:30
and I think Roana came out with their version of a national wealth tax where it wasn't just 5% once like in
01:13:38
California, it was 5% per year, >> per year. >> So, in other words, in roughly 20 years,
01:13:42
the federal government's just going to take all of your money. I mean, that's
01:13:45
it. Look, this is socialism. This is another way to get to the same end point, which is the government owns
01:13:50
everything. >> They seize. Well, I mean, the seizure part of it, I think, is the nuance point
01:13:56
we have to get across, which is if you earned it and paid your taxes already, >> and then the state can just decide, you
01:14:02
know what, we didn't take enough 10 years ago, we need to go seize that. Hey, when you sold Yammer, we didn't
01:14:08
take enough. We need to take it now. >> Raise your hand if you believe the
01:14:11
things you own are better off being owned by Bernie Sanders and Roana. Raise your hand if that's what you believe. I
01:14:17
mean, you'd have to be an idiot to believe that. Well, I'll tell you the
01:14:21
last time we saw these proposals of asset seizures was during the guilded age, you know, 1870 to 1920.
01:14:30
>> You know, then it was Carnegi and Rockefeller. You know what's interesting? I went back and looked at
01:14:34
it. There were actually like it was actual warfare. We had hundreds of people killed in clashes um you know
01:14:41
during the great railroad strike, the Pullman strike, etc. Um and it was all over this. And so I think shame on the
01:14:47
politicians that are fanning the flames of class warfare. Um we all need to bring the temperature down. There are
01:14:54
fair debates on whether states have enough resources to fulfill their obligations to the citizens. There are
01:15:00
fair debates about fraud. All has to be taken on. But I think it's interesting
01:15:04
in the state of California, right? I think the teachers union is against the the billionaire's tax because they know
01:15:10
it's going to lead to less dollars for education for the state of California.
01:15:13
and Matt Mayan who's running for governor is against the tax. The current sitting governor, Democrat, against the
01:15:18
tax, right? They all need to step up and explain not just that they're against
01:15:23
the tax, but we you're either on the side of business and entrepreneurs and creativity and moving the state forward
01:15:31
and growing the economy or you're against it. And that's what's at stake
01:15:34
here. And fortunately, the outcome of the battle uh you know during the guilded age was that America didn't
01:15:41
abandon entrepreneurialism. We didn't abandon capitalism like Europe did and
01:15:46
now we leaned into it. Now we played it out. >> One point on that. So you mentioned that
01:15:50
some of the unions in California are opposed to this this asset seizure tax. That's only because they weren't cut in
01:15:57
on it, >> right? >> So there's already rumors that the California Teachers Association is
01:16:02
working on their own version. >> Oh boy. >> Billionaire asset seizure
01:16:07
>> for not this election cycle, but for the next one. Yeah. >> And next time they're going to have
01:16:11
their ducks in a row and they're going to have all the pigs at the trough and
01:16:14
all the unions are going to get together because the SEIU uh they did this on their own. So again,
01:16:21
they didn't allow all the other groups to wet their beak. So I think that unfortunately I think that's going to be
01:16:27
corrected. If this one doesn't pass, they'll correct it for 28 and it's more
01:16:31
likely to pass because they're all going to do it. And the other thing is that I
01:16:36
think that by 28 this national wealth tax will just be a standard part of the Democratic platform.
01:16:43
>> Table stakes. Yeah. >> Yeah. It's table stakes. I think that you know the Bernie Sanders Roana
01:16:46
position will be the position of the Democratic party. And you even see Gavin Newsome creating wiggle room for himself
01:16:52
to embrace his position. If you look closely at his statements formally opposing the the BTA in California, what
01:17:01
he says is that a state can't do this by themselves because they got 49 other
01:17:04
states to compete with. >> So what he's saying is that, you know, look, California is operating in a
01:17:10
comparative environment. One state can't do it. And then he's leaving the other
01:17:15
part elliptical, which is well the the federal government needs to do this. And I think that you can expect him to
01:17:21
embrace that position by 2028. There is a way out here from this socialist movement. It's a it's very simple if you
01:17:29
think from first principles. What does an American want? What does an American family want? What what do mothers and
01:17:33
fathers in this country want? They want to educate their kids. They want to be able to own a nice home. They want to
01:17:38
have decent healthare. They want to have healthy food. It's a very small subset
01:17:42
of issues. And AI is uniquely positioned to solve a lot of these problems. and entrepreneurs can come in and take these
01:17:50
highly regulated industries if we're allowed to participate in them. Education, we have to break this
01:17:57
accreditation, you know, uh, cartel. And then housing, we have to break these regulations like the great state of
01:18:03
Texas, Nevada, and Florida have. And then you know when it comes to healthare this is where AI could have a tremendous
01:18:10
impact and entrepreneurs could have a tremendous impact in lowering the cost of healthare and letting people solve
01:18:15
for that with their own um you know healthcareled you know self-led healthcare. These are the problems. If
01:18:22
you solve for these problems people's homes, people's health, people's
01:18:25
education of their kids, we're going to solve these problems and we don't need
01:18:29
to go to socialism and seize people's assets. That's what entrepreneurs should
01:18:33
be doing. That's what entrepreneurs should be working on and that's what
01:18:36
where the government can help. That's where Trump's uniquely qualified. He is
01:18:39
the regulatory breaker. He got nuclear back on the agenda. No other president had gotten nuclear back on the agenda
01:18:46
for America. He can get housing back on the agenda. We have to break those things and not start foreign wars. My
01:18:52
earlier point and start creating houses for Americans. Another amazing episode of the All-In podcast. Gentlemen,
01:18:59
>> you always give yourself the last word, Jal. Well, I go last. If you'd like, you
01:19:03
can moderate and I'll go first. But I always go last, but you can you I'm you
01:19:08
could give me a round of applause or you can throw a tomato. Go ahead, Sax. It doesn't matter.
01:19:12
>> It's all good. It's all good. Go for it. >> All right, everybody. Another amazing
01:19:15
episode of the All-In podcast. Thank you, Bestie Brad, for joining us. Thank you, Bestie Brad. Love you, boys.
01:19:22
Byebye. >> We'll let your winners ride. And it said, "We open sourced it to the
01:19:33
fans and they've just gone crazy with it." Love you, Queen of >> Besties are
01:19:47
my dog taking notice your driveways. >> Oh man, my habitasher will meet up.
01:19:54
>> We should all just get a room and just have one big huge orgy cuz they're all
01:19:57
just useless. It's like this like sexual tension that we just need to release
01:20:01
somehow. >> Your feet. >> We need to get merch. >> I'm going all in.
01:20:17
I'm going all in.