00:00:00
hey everybody hey everybody before we drop this week's amazing episode just some quick information for you saak and
00:00:07
chamoff both had the week off so we had two Amazing Friends of the pod on Gavin Baker from at trees and Joe Lonsdale
00:00:14
from 8 VC what a treat to have them on the program but there is some big news huh freeberg yeah well the news dropped
00:00:21
after we recorded so it's not going to be referenced and the show might feel a little stale but here we go our friend
00:00:28
David Sachs is the White House Ai and cryptar of the United States of America congratulations to our boy amazing super
00:00:36
thrilled that is a big reason why he wasn't able to join us for the show he was in the middle of getting this news
00:00:41
ramped up yes it came out we had already recorded yeah take that into account as
00:00:45
we go into the show yes and uh according to Trump's truth social post saxell quote guide policy for the
00:00:52
administration in artificial intelligence and cryptocurrency he will also lead the presidential Council of
00:00:58
advisers for science and Technology huh how great is that freir wow science Corner in the White House can't wait
00:01:05
it's going to be fun ex pretty awesome I have no announcements uh the rumors about me becoming press secretary are
00:01:12
obviously premature but if ask to serve I will serve my country okay let's get to it don't worry besties all in isn't
00:01:19
going anywhere we'll be here every week for you except maybe Thanksgiving or a holiday now and again all right let's
00:01:25
start the show huh free bar great episode let's go all right everybody Welcome to the all in podcast I am your
00:01:32
host Jason calacanis how you doing freedberg I'm hanging in there I'm waiting for the tsunami to hit it's
00:01:38
gonna we're about 40 minutes away I'm a little anxious right now more anxious than normal is what you're saying like
00:01:44
on a scale of one to freeberg this is like as anxious as you get with this tsunami I don't know what's gonna happen
00:01:52
this current warning shows a 5 foot water rise or 5 meter I can't tell God I really hope we don't this episode and
00:02:00
there's like a total disaster it we're not going to make light of it it we get warnings once in a
00:02:08
while just to give everybody a little perspective here I'm at David Sax's house I've taken over as you can see I
00:02:14
got my Monclair hat on freeberg I uh I found Sax's robe see this year it was Sax's robe but I got a
00:02:22
red Sharpie and I just crossed it out and I put Jal on it and then I I went down and I was talking to Chef does sax
00:02:29
know that you're staying at his house he knows I'm staying here but does he though he doesn't know that I found the
00:02:34
actual cavar let your winners [Music] ride we open source it to the fans and they've just gone crazy
00:02:48
[Music] with with us today chamath couldn't make it this week and had surgery and now he
00:02:57
looks like Gavin okay yes yeah and saaks is taking a day off he's he's he's got the day off today I think he's
00:03:08
just winning too much with us two substitutes to jump in here for the team cackling you can hear uh the cackling
00:03:15
Joe Lan there's Joe lale take my mon Clair hat off here J I'm also winning too much but I'm
00:03:22
happy to be here last minute as a as a sub for David J J Joe lale for people who don't know is to the right of David
00:03:29
saaks he is venture capitalist and he started a couple of companies you might have heard of them paler I what are the
00:03:35
other Greatest Hits adapar adapar just across trillion dollars reported on it this month it's a good real company too
00:03:41
yeah open go sold this year we we saw start of a bunch of Cong good yeah um Joe uh gets he's you're a little bit
00:03:48
lower profile than all these accomplishments it's pretty incredible co-founded how many billion dollar
00:03:54
companies have you co-founded now I don't know maybe six or so six or so uh also with us Gavin Aker from a treaties
00:04:01
he is a hedge fund manager he does Private he does public one of the smartest guys I know great analyst
00:04:08
welcome to the program Gavin friend of the Pod thank you Jay Cal happy to be here great to see everybody yeah we are
00:04:15
experiencing a huge Trump bump the election is over the cabinet is being assembled and we're seeing do the
00:04:23
department of government efficiency as well as maybe regulations being pulled down and and we'll we'll
00:04:29
get to to our first topic about our new SEC chair but just generally speaking aan as a market participant for a living
00:04:38
what's your take on what we've seen over the last three weeks since the election
00:04:42
results came in so if they execute unstated plans and there are some of the world's
00:04:52
greatest execution machines involved um you know Elon generally does what he says he is going to do MH
00:05:01
um like I this is going to be awesome for America for markets for the world and the analogy I keep coming back to is
00:05:10
Sai Nella taking over a CEO of Microsoft Microsoft was a monopoly incredibly advantaged it had just been horribly
00:05:17
mismanaged for years all he had to do to start winning was stop doing really really dumb
00:05:25
things and that's an incredible place to be you know America like we're the greatest country country you know we've
00:05:30
got you know oceans on two sides peaceful neighbors incredible natural resources you know completely you know
00:05:37
can produce our our own food and energy like in many ways most privileged country on Earth but sometimes with
00:05:43
great privilege comes great like stupidity and California to me would be a leading example of that most in many
00:05:50
ways most privileged state in America and a predator away with bad policies and I do think one thing that
00:05:58
everyone of all political Stripes agrees on is there are too many regulations that result in far too many
00:06:06
administrators far too much complexity and an inability to build things in America so you know it was used very
00:06:15
effectively and as it should have been against the Harris Administration that they'd approved $42 billion for Rural
00:06:21
Broadband hadn't built anything had approved $40 billion for Ev charges or whatever it was hadn't done anything and
00:06:28
it's not that they didn't want to you know dig trenches and do Broadband they didn't want to make EV Chargers their
00:06:37
own regulations prevented them so I just think deregulation and simplifying regulations and the tax code
00:06:47
is going to lead to an immense amount of growth which is something that all Americans should be happy about Joe you
00:06:54
want to maybe give us your take I know obviously you're very vocal you're obviously a conservative run a think
00:07:01
tank and have strong feelings on all this but there is consensus I think amongst all Americans that we don't like
00:07:07
fraud waste abuse and those items those seem to be consensus building uh efficiency and paying low lower taxes
00:07:13
all of that seems like something almost all Americans most Americans can get behind so I guess maybe a little bit of
00:07:21
your take on what we've seen in the markets and the plan and then also are you going to be involved in this at
00:07:28
all well listen listen J I think I do agree I think almost all reasonable Americans can see that our growth is
00:07:34
ridiculously constrained and I think Jeff Bezos was saying yesterday like we need a growth oriented mindset if we're
00:07:40
g to get out of our debt problems out of our deficit problems so it's nice to see
00:07:43
everyone kind of coming on the team and saying yeah we need to fix these things I think what people don't understand is
00:07:48
like just how broken the government bureaucracy bureaucracies and regulations are right it's not like
00:07:54
they're kind of sort of bad like it's it's almost like they're companies that went bankrupt like think of the worst
00:07:58
company you know Silicon Valley they went bankrupt like 30 years ago and imagine if someone just like kept
00:08:04
pumping money into that worst company you know over like 30 years to keep hiring people so like Yahoo or AOL like
00:08:11
some Legacy company was failing it take the worst Department there and then like the worst
00:08:16
Department gets the most money so it's like it's like it's it's like more I guess you can use the word now
00:08:22
it's more than anything you've seen in a long time and and I think one of the important things is America used
00:08:28
to have these really hard test for 100 years you know this in 1883 we said you know what we shouldn't just hire our
00:08:34
friends if someone's going to run something in government let's have these tough tests kind of like China China did
00:08:38
for thousands of years and and and for a hundred years we had really hard test if
00:08:42
when we went to the moon when we fought the world wars you know we did them inhan project the people making those
00:08:47
decisions and hiring people had to pass things that really only like five 10% of
00:08:51
people could pass who took them and then in the late 70s we said not only are these tests racist so we can't test
00:08:57
people anymore of any background we also can't fire people anymore because we're
00:09:01
going to give them tons of protections so for and so the last 40 years it just got dumber and then 10 years ago you
00:09:06
started doing all the virtue signaling and and you know hiring based on your identity versus based on anything else
00:09:12
so so it's got even worse and so now it's so broken that yes we're letting tens of billions of dollars on Fire And
00:09:17
so there's really two things here one you got to take a chainsaw as Elona said you got to take a chainsaw and just like
00:09:22
cut a ton of broken stuff but then day two is you got to say how do we make this not stupid in the future and
00:09:28
there's things like maybe you bring back tests maybe you bring accountability thing I the thing I'm most passionate
00:09:33
about is you know right now there's over a million rules to the federal level it's stuff that everyone disagrees on
00:09:38
you can be the most left person trying to build like solar or wind or whatever and you're like what I have to do what
00:09:43
study over how many years this makes no sense so so we gota we gotta we gotta take these regulations and not only cut
00:09:48
them but we got to make a data driven system that forces regulations to defend themselves and that way instead of
00:09:53
having a cancer that just grows forever out of control you could actually have a
00:09:57
process that like naturally things naturally makes things fight for himself and that that way doesn't get as dumb
00:10:03
ever again I would why not just make them automatically sunsetting after five years if they're not renewed exactly but
00:10:09
make the process to renew them difficult and data driven exactly so they yeah yeah exactly so if you renewing them
00:10:17
will take so much time that it will slow it down I wonder where we got to the place freedberg I will bring you in on
00:10:22
this since really I think it was maybe two or three years ago you started to point out exactly the death spir going
00:10:29
to get in I want to give you a flowers here on the Pod because from this pod and your obsession uh and you're harping
00:10:36
on and on about this national debt problem you saw it early you talked about it constantly you brought a lot of
00:10:44
consensus on board and now we're seeing it as the issue of the transition is the
00:10:48
debt and we were sitting here for the past year or two saying when are politicians going to even pay attention
00:10:53
to this and now they are paying attention to it so first here's your virtual flowers
00:11:00
how are you feeling about the transition to date well I mean I think first of all
00:11:04
there's like three layers of the problem which I've been trying to Har on for almost four years number one is the
00:11:09
inefficiency and lack of accountability which Joe and Gavin are obviously talking about and that leads to
00:11:14
excessive spending and that leads to the debt problem and the debt problem creates this kind of arithmetic debt
00:11:21
death spiral which is um something you don't want to find yourself in so that's the inevitability that I've been kind of
00:11:27
really worried about and I think that you know look there's uh the first derivative and second derivative can
00:11:32
kind of get addressed and then hopefully you don't get to the absolute point where you have this breaking breaking
00:11:36
point I I think right now everyone's banking number one on can we deregulate in a way that can unlock growth and by
00:11:43
unlocking growth the right the the the the kind of arithmetic argument is grow GDP because you're not going to be able
00:11:50
to shrink debt super fast uh in order to grow GDP there there needs to be some unleashing happening and so if you can
00:11:57
get GDP to grow four five % and you can minimize the excess spending meaning you can minimize the
00:12:04
deficit the federal deficit and therefore minimize the increment in in the debt level the debt to GDP ratio
00:12:11
becomes more manageable because ultimately you can only tax so much of GDP so yeah I feel like this is
00:12:17
important in both senses one is just cut the inefficient wasteful spending get rid of the regulations and that'll
00:12:23
unleash the necessary growth one of the proxies I Look to and I I think that this is going to be kind of
00:12:29
the critical motivating factor for the United States whether it's this Administration or the next or on a
00:12:35
continuous basis there's going to be this kind of moment where we're going to look across the water at what China has
00:12:42
and you can see what China's getting what China is making what China is doing I've talked about this a lot as well and
00:12:48
I do think this is the most critical metric that no one talks about as much as I think we should which is the
00:12:54
increment in electricity production capacity in China compared to the United States and so we are going from one
00:13:01
terawatt to two terawatts they're going from I think two to eight over the same time period and they're doing so
00:13:07
important for the people who are listening who think you're saying I'll let Joe I'll let Joe answer that Joe go
00:13:13
ahead just unpack it for the audience I mean I obviously understand why this is important but I want you to the number
00:13:18
one thing I'd say is it's usually correlated to how well the working class is doing in your country to per capita
00:13:24
GDP to cost of goods I mean obviously I care about it because we want to scale AI for all the things we're doing and we
00:13:30
want to be able to do it effectively but if you just look over time it's really clear the relationship between how well
00:13:35
is your average working middle class person doing and their their quality of life their cost of life and the cost of
00:13:40
electricity and cost of power and it's it's crazy we're not just like ramping up and cutting things to do this more
00:13:45
electricity means more automation means more AI means more things are being done
00:13:50
for the for every person that are being done in factories or being done by machines and that
00:13:56
unlocks um a new kind of level of living and that's been kind of a continuous process for humans there's this guy that
00:14:03
writes these books that Bill Gates always talks about V Smith smear name SM SM he's got all these books on the
00:14:12
history of the relationship between energy and kind of prosperity there's definitely correlation there and there's
00:14:18
definitely causation there Gavin and I there's even like really simple ones I don't know if you've ever seen Lewan Yu
00:14:24
from you know the founder of Singapore essentially talk about just how air conditioning change the country's fate
00:14:33
it raises average IQ by two or three points it really matters but look I meend day at the end of the day my my
00:14:40
key point was we have to make sure that this Administration and Joe can hear me on this and I know he he believes this
00:14:47
but for me it has to be such a priority that we um accelerate a nuclear uh energy roll out in the United States
00:14:54
because that's what China's doing they have dozens of Gen 4 reactors that are going to get built built out Each of
00:14:59
which has a gwatt of production capacity and they're doing it at a cost that we can't compete with today but
00:15:06
fundamentally they can do it in the US we can't even do it and regulations it goes back to Joe yeah and so so regul
00:15:13
the regulatory structure prohibits our ability to actually expand energy capacity or electricity production
00:15:17
capacity which is a critical difference and that ultimately leads to a situation
00:15:22
where in 10 years we're going to be looking across the water at you know a competitive country that has 3x 4X the
00:15:31
electricity production capacity of our country and everything is cheaper everything is faster it gives them
00:15:37
superiority in a lot of functions that we can't this this is a key national security thing too because we need
00:15:41
manufacturing here to be affordable and competitive in order to for National Security you know David when you when
00:15:46
you texted me last minute to join this I was actually in a meeting with our friend from Founders fund who's building
00:15:50
nuclear fuel again for the first time in the US that's actually gone away too and
00:15:54
so so that needs to be approved but you know I know Chris Wright he's a nominee for the new you know energy a Secretary
00:16:00
of Energy and he you know he's super pro Liberty guy but super pro cheap cheap energy guy and he's Pro Nuclear So I
00:16:05
think we have some really great people who care about this we're gonna be fighting hard for it what's what's your
00:16:09
read on it yeah what's your read on energy and the blockers yeah I mean more nuclear more better like I
00:16:16
mean I agree with everything Joe said and the only thing I would just add is it is the most environmentally friendly
00:16:23
kind of energy source some way it's even more like I I think think it is highly likely that in my lifetime the world
00:16:31
just runs on solar like if you just you know we all know compound interest is the greatest force on Earth but if you
00:16:39
just look at the rate at which photovoltaic cell efficiency is compounding battery efficiency is
00:16:45
compounding and people make these balance of system arguments but it it it will it will
00:16:50
never be as cheap as nuclear but it will likely approach coal and I think a lot of the world will run on solar but
00:16:57
that's going to take 50 years um nuclear is arguably just as environmentally friendly done right and carefully and it
00:17:04
is here now and so I just yeah I mean that's yeah I I don't want I it is unbelievable to watch not
00:17:14
exactly Mor's law but this precipitative drop in the cost of just solar panels solar solar's very solar's very
00:17:22
impressive but in some ways to me it's a little dystopian to think about all these forests just covered with this
00:17:26
stuff I it's rate limiting it's rate limitting you have you have to have many many acres rolled out and with nuclear
00:17:34
you can have a building that can you know power the equivalent of many acres so the answer's both the answer is both
00:17:39
but it is like Elon has tweeted many times about the tiny fraction of you know deserted um desert
00:17:48
areas of America that need to be covered with panels and then you put in batteries there's still a space limiting
00:17:54
like let's just fast forward a 100 years on planet Earth and if you look at the past 100 years and the 100 years before
00:18:00
that like energy demand uh even on a on a per capita basis has this nonlinear kind of scaling problem and that means
00:18:09
that land consumption will scale nonlinearly now we have it if we're gonna say 100 years though I mean so
00:18:14
interrupt you're gonna say 100 years technology changes it's very clear you could probably do it from space if you
00:18:18
really wanted to I mean this sounds crazy but you probably could have like tons of these in space 100 years is far
00:18:24
I mean we have we have enough uranium in just the crust of the you know like Norther hemisphere to in other words
00:18:30
power to power everything we on thege of unlimited energy for all time just to wrap this up and move us on if we can
00:18:38
get out of our own way get out of our own way with a bunch of midwit who have put so much regulation in place and who
00:18:45
are working from home for four hours a week if we can just get them out of the way then maybe we could approve some
00:18:51
nuclear reactors and a little more solar batter did you just call did you just call government workers midwidth is that
00:18:57
just the ones who are block if you're not blocking and you're working 50 hours a week God bless a lot
00:19:03
of people working hard in the government I that's exactly my point but there's some number of them who are just
00:19:08
obviously do not see the forest through the trees by the way on that point Jal it is interesting Texas is the number
00:19:13
one solar producer in the country and it's not because everybody there is more environmentally conscious no we're not
00:19:20
that liberal subies it's just it's easy to build stuff in Texas build solar power plants this is I mean for the Libs
00:19:30
in cities who are so Pro solar and anti- natural gas or whatever yeah look at Texas they're just build as much as you
00:19:36
want and where Joe and I live in Austin home prices have gone down two years in a row rent has gone down two years in a
00:19:44
row they are building like lunatics because you don't need to beg and and bribe people to build stuff Joe maybe
00:19:52
some thoughts on what we've seen in regulation Austin Austin city council is not perfect Austin they called the
00:19:58
blueberry and the tomato soup so there may be a tiny bit of begging going on but despite that you're able to build
00:20:02
there and everywhere else around You're Building like M so it works there's there's there's plenty of Supply I agree
00:20:07
speaking of Regulation Gary Gensler is out Paul Atkins is in uh and Bitcoin just cracked a 100 this is all obviously
00:20:15
related Atkins was previously SE commissioner under Bush 2 in the early 2000s in the 90s he worked for both Bush
00:20:21
one and Clinton at the SEC according to the New York Times Atkins is admired among DC Legal C circles and Regulators
00:20:29
he's Pro crypto and he's been helping draft some best practices for the crypto trading platforms as you know Gary
00:20:37
gensler's approach to crypto was there's a rule set follow the rule set we're not
00:20:43
here to change the rules we're here to enforce them good luck and in some cases I think maybe he was right with icos and
00:20:51
a bunch of scams but he also gave good actors no path to go forward anybody have strong feelings on this I love Paul
00:20:59
J keelly I think he's I think he's gonna he's a fair guy yeah I've met him several times at conferences and groups
00:21:04
and he's really smart guy cares about the rules cares about helping innovators I the thing that really pissed off you
00:21:09
wenter off with Gary I mean I love you've probably seen like I think I think uh I think both coinbase with
00:21:14
Brian and the winlos twins that put something out they won't even hire anyone who worked with Gary on any of
00:21:19
this stuff they were doing and the reason they're that angry at them is they were purposely not defining the
00:21:24
rules in certain cases and then going after people after not having to it in order to kind of like play a Goa game
00:21:30
that was very dishonorable and Paul sees all that and there's no way he's going to allow that Gavin any thoughts here on
00:21:36
how this might change regulations in our business also the fund business Joe is a
00:21:41
venture capitalist hvc uh you in public markets and funds I have I do preedee so
00:21:47
yeah what do you think in terms of funds and regulations there and then crypto and and you know the SEC may be becoming
00:21:54
Innovative as opposed to punitive and you know what's the word for freed BG what's the
00:22:02
word I'm looking for here adversarial well they are a regulator they are a regulator but they don't also seem they
00:22:09
seem to have gone beyond just regulating they seem to have been aggressively adversarial yeah I mean they're
00:22:15
regulatory enforcement agency that's their job so I I don't know like you know I mean but not giving a path or not
00:22:21
even meeting with people I think that was the thing that I felt was kind of weird like they meet with you if you
00:22:26
were a big donor to the left they wouldn't meet with you otherwise that was part of it too that was sketchy that
00:22:29
was why SPF got tons of meetings but Brian got none right I mean it's nonsense like that ah go I do think
00:22:35
cryptocurrencies yeah go ahead at some level fundamentally reduce the power of nation states and that is something that
00:22:43
is of professed by the True Believers but it is true and so if you um are on the left and you know you are um a
00:22:54
devout believer in the power of the state to do good things I get why you not like
00:22:59
cryptocurrencies you know at the same time we're very early in crypto I do think I read with interest all of the
00:23:06
post that David Marcus and his peers at Libra made um made about what happened to them Libra was a Facebook project to
00:23:15
embrace cryptocurrency at a very intrinsic level onto the sort of identity level of every one of their
00:23:23
billions of users and I think you can argue it would have been really really good for not just America but the ENT
00:23:28
World um you know there are a lot of immigrants in American in America who send remissions back to their home
00:23:35
countries at extremely high um predatory rates yes yeah predatory rates it would
00:23:42
have made that free and that would have been amazing for a lot of really hardworking um people all over the world
00:23:49
it would have you know Visa Mastercard they do charge big fees I mean not Visa Mastercard do not charge big fees but
00:23:55
the um credit card complex and aggregate is a is a reasonably big fee I mean everybody oh it's just you know two two
00:24:02
and a half percent to make it you know perfect and safe um I think Facebook had a sound argument that they could have
00:24:08
done that cheaper and that would have been an efficiency game for America and it really did bum me out you know to
00:24:14
read some of the letters that they sent the way they killed Libra if anyone doesn't know and
00:24:21
maybe we can you can pull up David Marcus's post they just all these politicians sent letters to participants
00:24:28
and financial markets saying we don't know if they are doing anything wrong but we think they probably are and we're
00:24:36
going to look at this very closely and we want to discourage you from participating it was wor it was worse
00:24:42
than that it was like a mafia letter it was like if you are to support this and help with this we are going to look into
00:24:47
everything else you are doing and we may then find some issues it was it was like
00:24:50
a mafia threat we can't stop you legally but watch out like it was really sketchy
00:24:55
it was shered brown who who now is out of office who led this senator from Ohio but it was it was really bad it was
00:25:00
really bad what they were doing it was really bad I found it upsetting as an American and and it's you you kind of
00:25:07
hinted at this Gavin the fear of governments is that they will lose control of money supply and monetary
00:25:14
policy maybe unpack that a bit and then freeberg will go to you on the same sort
00:25:18
of uh thread yeah I mean look it's a it is a rational fear I mean controlling monetary Supply like at some level the
00:25:26
you know the greatest you know Powers we give the state are a monopoly on violence to keep us safe um and you know
00:25:34
control over the money supply has you know a means of exchange a unit of account um and those are great Powers
00:25:41
particularly if you're America and your reserve currency the only thing I would just say to balance this out um and I do
00:25:47
think people are are very positive on Paul Atkins I've never met him but the reaction from people who know him like
00:25:55
Joe and who I respect has been very positive is important to remember we have the best Capital markets in the
00:26:02
world you know the US equity and fixed income markets are the most trusted places on Earth and we can always make
00:26:09
them better but just it is very you know you you want to be very Vigilant about keeping them fair and keeping out things
00:26:18
like inside information which makes people feel comfortable doing business here you know making you know having
00:26:24
investors have confidence in a company's financial statements and those fincial markets are one reason America is such a
00:26:30
great country and Gavin to put this in context this was during a time period this David Marcus Libra process when
00:26:39
they felt certain people in government and I'm not saying I endorse this but this is their position Zuckerberg had
00:26:46
too much power Zuckerberg was censoring people the right felt they were being censored the left felt that Cambridge
00:26:54
analytica and people were using targeting the first Le the general Vibe and even JD Vance is kind of was in on
00:27:03
this as well was too much power specifically at meta too much influence now they've got this many people this
00:27:11
penetration and the algorithm plus we're going to give them money and they're going to have power over people's wallet
00:27:17
and then what does the government have they can't censor people they can't control the message and they can't
00:27:22
control the pur strings that that is the time period we're talking about here oh
00:27:26
no no I understand 100% why they did it I just think as an American at a minimum the way that they
00:27:33
did it yeah was to you know use one of Joe's phrases dishonorable you know if you if you want to say that we're going
00:27:40
to kill this then just like let's have a debate as a nation absolutely don't do it in Shadows yes rule of law rule of
00:27:48
law is also another reason America is a great country yes freberg your thoughts on Dave marcus' comments
00:27:58
and this sec pick and and just generally a more Pro less regulation kind of situation I think the is like one of the
00:28:07
most important agencies we have and I think they're one of the best federal agencies so I've worked with them and
00:28:14
I've worked with any other agencies and there's all these issues with the SEC but they play a very important job and
00:28:20
if you've worked in in foreign markets and you've dealt with foreign Securities Regulators you're going to be like thank
00:28:26
God for the SEC like can't wait to go back this whole crypto thing I there there's there's a distinction I think
00:28:33
between Bitcoin and cryptocurrencies as speculative kind of assets speculative trading what do you see those
00:28:40
differences as well I I definitely concur with Gavin I think Bitcoin fundamentally is meant to be supposed to
00:28:46
be ultimately will become a real threat to the US dollar and it's kind of ironic
00:28:52
that Trump had this declaration this week yeah that he's going to put 100% tariff on All These Bricks Nations that
00:28:58
try to participate in an alternative currency to the US dollar the greatest currency on earth when he literally
00:29:03
turns around and then says we're going to support Bitcoin it felt like the biggest irony of the week to me because
00:29:09
I do think Bitcoin is the big threat to the US dollar and I do think that at some point whether it's this
00:29:15
Administration or the next they're going to wake up to that fact and maybe the the Bitcoin does you know the network
00:29:20
State concept does emerge and that's where we end up but I do think we want to have and are going to have a strong
00:29:26
federal government in the United States for quite some time that's going to play an important role
00:29:29
in everyone's lives here and I don't know if you can really just say let the dollar you know be supplanted by Bitcoin
00:29:36
Bitcoin seems to be a more of a safe haven asset and that seems to be the trade that it's store value should be
00:29:41
kind of store value and alternative it's just gonna take over gold what do you think you think um the state has
00:29:48
reasonable concerns about crypto competing with it and then maybe specifically when you saw Trump talking
00:29:54
about hey congratulations on your Bitcoin I did this for you on 100K and taking credit for it at the same which
00:30:01
he should take credit for it he did it he did that last $40,000 per coin and then you see him talking about the
00:30:07
bricks and then we have the US currency so which is a bigger threat to American uh exceptionalism and Supremacy
00:30:16
on planet Earth Bitcoin or bricks so one represents a move towards Liberty and what one represents a move towards
00:30:22
authoritarianism if bricks were to become dominant if China and Russia were able to control global currency together
00:30:28
and and other players that is terrible it's bad for the US for so many reasons bad for us consumer for so many reasons
00:30:34
he's right to fight it at the same time having you know to channel biology having this like Pro Liberty Network
00:30:40
State like like forces in that direction like for example I think rather than just you know Hong Kong and Singapore
00:30:46
Hong Kong's been lost we should have like more Hong Kong and singapor in the west to compete with the US that'd be
00:30:50
good for all of us who are on the pro Freedom side of the US and make the US wealthier would show examples of of new
00:30:55
experiments that create great wealth and then that's kind of the side of Bitcoin
00:30:58
is you want more experiments and competition from the Liberty distributed side you don't want competition from the
00:31:03
authoritarian side so to me it was very consistent yeah well I would just say Texas is the Singapore of America you
00:31:09
know and it is putting pressure on the rest of America and I don't say that just because I grew up in Texas um it's
00:31:14
just a fact I do think longterm Bitcoin I do not think the bricks will ever be able to replace the
00:31:22
dollar just rule of law even if it has occasionally been corrupted in America is very very powerful yes as opposed to
00:31:32
rule by law and but I do think Bitcoin will at some point be a serious threat to the US
00:31:40
dollar and that just is what it is and we'll see how different administrations react would that it's a check on it's a
00:31:47
check on the most aggressive mistakes first of all if the debt is doesn't get under control if our deficit is
00:31:51
ridiculous Bitcoin is a wonderful check on that you actually want healthy competition from something good because
00:31:56
you want to check the excess is and the craziness you want you you need someone coming from the outside to say no don't
00:32:02
do that let's just say at some point an AOC like person gets in charge it could happen in the next 20 years you need
00:32:07
some kind of check on the dollar and it's much better to come from the Liberty side than from the other side I
00:32:11
agree with all that I will just say on AOC I thought it was very interesting I think if you're a Democrat I think
00:32:17
you're probably largely heartened by the kind of intellectual leaders of that party their reaction to losing you know
00:32:24
it's focused around hey we do need to D regulate it is too hard build Josh Shapiro's been tweeting every three days
00:32:30
about how he's making it easier you know to do business in Pennsylvania it used to take 20 days to become get a
00:32:36
hairdresser license now it takes an hour all that is good um but I actually thought AOC who is a very talented
00:32:43
politician she's an extraordinary Communicator she's an extraordinary Communicator her reaction was like she
00:32:49
posted this on Instagram if you voted for Trump I want to hear why I want to hear the things you listen to that
00:32:57
convinced you like I don't say this out of anything other than genuine curiosity basically
00:33:02
clearly I am missing something and I you know I want to listen and I just thought
00:33:07
that was a very interesting reaction that is the proper reaction yeah absolutely yeah I want to point out one
00:33:13
thing I did I was doing some research uh before the show and I found this SEC speech this is uh really fascinating
00:33:21
this is from 2007 from Paul and he was kind of giving his State of the Union here and he talking about doing some
00:33:30
self-reflection and he's talking about accreditation rules in 2007 before the great financial
00:33:36
crises the concept of economic risk and return also affect a different proposal of the commission the
00:33:42
SEC relating to private investment funds specifically part of The commission's Proposal proposal would add an
00:33:47
additional requirement for any natural accredited person to have at least 2.5 million investments before he or she
00:33:54
could invest in private investment F in a private investment fund like AE fund or private Equity Fund other than a
00:34:00
venture capital fund the underlying premise for the commission's proposal is that these types of Investments are too
00:34:05
risky for individuals other than the very rich therefore we would have to presume that the non-rich are either
00:34:10
unsophisticated or lack access to sophistication and it is simply not tolerable to have these types of people
00:34:16
at risk of losing their money on a hedge fund assuming that these premises are true however what Evans does the
00:34:21
commission have to support the conclusion that private investment funds are the most risky what makes a hedge
00:34:27
fund fund or a private Equity Fund more risky than a venture capital fund great question and how does the risk profile
00:34:34
of a pulled investment compare with the risks of investing in Securities of a single issue for which this new 2.5
00:34:39
million standard is this is where it gets super interesting many public comment letters Express indignation at
00:34:45
the commission's proposal one commentator wrote stay out of my wallet stop trying to protect me from myself
00:34:50
stop presuming to know more than I do about my own life risk tolerance and financial sophistication the
00:34:56
commission's pr me very well prevent the non-rich from losing their money in private investment funds but it also
00:35:02
certainly will prevent the non-rich from participating in any upside profits and
00:35:06
gains on these funds does this mean the rich get richer while the non-rich should be content to just hold their
00:35:12
place on the economic ladder this to me when I saw this I was like you know what
00:35:18
I am feeling absolutely fantastic about Trump if he stops these wars or stops one out of two and keeps us out of you
00:35:25
know participating even though we're not on the around with the other any new ones and he removes regulations and we
00:35:32
have people in power who understand that moving up the socioeconomic ladder is as
00:35:37
important as protecting the downside risk especially when we see wealth polarization this is a great pick now
00:35:45
the other picks there's some wackpack picks in there I'll be totally honest I don't know what the strategy is Joe I'll
00:35:50
ask you that in a minute but what do we think um Gavin of this sort of approach here which is really thinking
00:35:58
thoughtfully about what is sophisticated and and what are we doing here what is the outcome we're looking for yeah no I
00:36:06
think it's great and you could just I mean the reality is a hedge fund that runs with a lot of Leverage probably is
00:36:11
more risky I don't know that it's more risky than a single security but um like at the end of the day since he
00:36:19
wrote that letter it was an incredible 15-year run for private equity and you know now all the big private Equity
00:36:27
firms are making a huge effort now um when probably the business is more mature and maybe the return
00:36:34
opportunities aren't what they were to appeal to Main Street America like it would have been cool if you know
00:36:40
Blackstone or KKR or whoever in 070809 2010 you know could have had their fund up on like the Fidelity Marketplace for
00:36:50
subscription that probably would have been good for America so I think his comments are well taken imagine if Elon
00:36:56
could raise for SpaceX like you know from regular Americans I'm sure he would have loved to do that if it wasn't crazy
00:37:01
risky with the SEC right so there's all these people they're blocking us from letting the average person be part of it
00:37:05
it does keep them from climbing the well flatter I think it's crazy yeah freeberg
00:37:09
any thoughts here I mean this has been my pet peeve for a long time is letting people do what they want with their
00:37:15
money if you don't allow people to take risk with their money and move up from poor to middle class from middle class
00:37:21
to upper middle class and maybe eventually becoming affluent Jason there's a lot of places people can
00:37:25
invest their money they can buy public stocks there there's $20 trillion of public stocks they can buy I don't think
00:37:30
that you're prohibiting people from transitioning their wealth like banss by not being able to buy private stocks in
00:37:35
fact I think it's more likely than not that people are going to go market Securities in private markets
00:37:41
and rip poor people off even worse and that's why there are these regulatory kind of barriers and I don't think that
00:37:47
it's necess look everyone says let's make it everything free and everything libertarian seems like a good idea until
00:37:52
someone gets punched in the face gets ripped off someone dies from a drug you know that's not properly tested and then
00:37:58
we're all like where were the Regulators where were the agencies to protect the individuals and I think that's the role
00:38:04
that these agencies are are kind of providing and that's the reason these rules are in place I don't think that
00:38:08
this is like one of these things where oh Liberty's being denied I think it's you know there's a there's a care
00:38:13
there's a careful line to walk I'm generally pretty CC in most things so I agree with what a lot of
00:38:20
David said and I do think if you were to allow ordinary Americans to buy private
00:38:26
companies that are held to a lower standard of disclosure and Reporting than public companies like something
00:38:32
would have to change like you know just hey if if a private company wants to like public companies are you know
00:38:40
are held to certain standards for reason TW the numbers and non financials and yeah and there is a lot of fraud in
00:38:48
Venture there are unethical people there are and smart diligent people can't even
00:38:54
find it all you know that's it's like the smartest most diligent people are still getting ripped off yeah I mean
00:38:59
look at FTX I mean I mean FTX ripped off some very very intelligent friends of ours did did any diligence at FTX yeah
00:39:08
but well which is an important part of this but I mean if you had a sophistication I mean there's such an
00:39:12
easy solution to this you just do a sophistication test people take a 5 hour course and they answer 50 questions the
00:39:18
end like a driver's license well I do think it is a little that's why I talked about private Equity these are extremely
00:39:25
sophisticated institutions who are always in vesting alongside their clients y um and they're buying
00:39:30
established businesses they're putting leverage on them but like I think private Equity is kind of a middle
00:39:36
ground and a on a pooled basis I think you could argue and you know maybe those funds would need to change their
00:39:43
reporting and their disclosures to deal with kind of the average American but um
00:39:48
and by that I mean strengthen it but I think private Equity his comments were well taken
00:39:56
that's what I would say Joe what are your thoughts yeah I mean I think the AL here the alha of the room that's really
00:40:01
funny here is that you have the people on the left saying the only people with lots of money are smart enough to be
00:40:06
allowed to do this which I think is just a very funny position to take if you just like you have to have a few million
00:40:11
dollars to be sophisticated enough to be allowed do this I like your idea JC of a
00:40:15
test like like there should be there should be some other way of accessing this if you really want to I me I agree
00:40:20
I agree listen I don't want to live in a world where we're all constantly being spammed to the average person by like
00:40:25
stupid Financial stuff that's just like we would be scammed all the time there probably should be some rules like I
00:40:30
agree I I'm not like a total libertarian on this I think it'd be really annoying
00:40:33
but yeah but just to totally block people from participating to me that sounds crazy like I mean a finance college
00:40:41
professor you know might um unless they had another job might not you know be able to
00:40:47
do $250,000 let's talk let's talk about a very important Public Market set of transactions G I'd like your point of
00:40:58
view on Michael sailor's convertible note issuances being used to bitcoin the to which this morning this morning
00:41:06
Bloomberg reported is the hottest trade in hedge funds right now Nick if you could pull up the article and then jel I
00:41:13
know you've been an outspoken opinion Setter on Michael sailor's promotion of his Securities
00:41:20
actions we'd love your point of view Gavin just say at some point this does get too big for a while when it was
00:41:26
smaller you know you could support the debt sorry could you explain it could you
00:41:30
explain it to everyone Kevin yeah so what he is doing is issuing debt and buying Bitcoin with the premise that
00:41:36
Bitcoin is always going to go up and he you know has made eloquent arguments why
00:41:41
why that is the case no trees grow to the sky and I think the interest expense on his
00:41:51
convertible notes is 75 million off the top of my head and by the way I am I could care less about micro strategy
00:41:59
like I'm not close to it I'm not involved yeah I don't know any hedge funds who own it no horse in the race
00:42:07
yeah yeah I I think a lot of hedge funds are short micro strategy but I have no horse in the race but the but his the
00:42:14
underlying business that you know pays the interest expense on the debt only does $400 million a year in
00:42:24
revenue and it's you know high gross margin Revenue but I just unless debt investors have absolute confidence and
00:42:35
Bitcoin has collateral and I don't think that's where fixed income markets are yet he it will get to a point where it
00:42:45
is it is too big for the size of his company and then yeah maybe he can over collateralize it and you know have $10
00:42:53
in Bitcoin for every dollar of debt but then like the the magic money creation machine that you know I see
00:43:01
discussed on X breaks down because that's like you know that's [Music] um that's very very different than what
00:43:10
is being discussed today Joe do you have a point of you because Joe's got a run by the way so Joe you want to close this
00:43:16
out defense people down here in La listen listen I am very bullish Bitcoin I love the all energy of our society
00:43:22
around it I I agree with what you said Dave that there's like there needs to be some barriers for the public taking
00:43:28
crazy risks and I think the risks around how he's accessing this is actually very
00:43:32
unusual and does scare me a bit and people need to do their research so they shouldn't just like throw money without
00:43:37
studying it it it does scare me a little bit how blly people are throwing money at this without knowing the kind of
00:43:42
Leverage he's taking you know yeah Joe anything else you want to share that you're up to that you're excited about
00:43:47
before you head out uh well you know uh I this this weekend is the annual Defense form at the Reagan Library we on
00:43:53
the board it's the biggest biggest defense event of the Year everyone's coming and I I guess I guess I'm really
00:43:58
excited that America has like woken up in assuming we can bring back more advanced manufacturing here I think
00:44:03
there's enough top companies now with andrel with seric we're gonna be building thousands of these vessels for
00:44:08
the Navy with AI uh with epis we're like turning things off you know 10 miles away whatever fairly far away with
00:44:13
microwave radiation there some really cool technology coming that actually is going to make us be able to deter our
00:44:17
enemies so if you ask me six seven years ago I was panicked we we're gonna like get way behind China I'm feeling really
00:44:22
good about it now I think and and I think I think you know just this the Pete Heth pick uh you know is actually
00:44:28
someone I'm quite bullish on from everything I'm hearing so I I think things are going the right direction is
00:44:32
there a wholesale upgrade happening in defense in the United States are all systems and all strategies being
00:44:39
rethought right now uh using technology and Innovation and kind of a performance-based product mindset
00:44:46
leading uh kind of a reinvention of Everything Is that what's going to happen in the next four years Warfare is
00:44:51
fundamentally totally shifted we're seeing some of this in Ukraine there's all sorts of new ways you want to swarm
00:44:56
things on the LAN land swarm things in the water swarm things in the air how do they coordinate and how do they work
00:45:01
together how do you manufacture enough of these things and and how do you use electronic warfare and new ways to you
00:45:06
know it's basically created by this and so that it's just a whole new way of doing things and we are going that
00:45:11
direction too much of the money David like 95% of the money is still going towards like frankly like wasteful
00:45:17
Legacy like mostly things we don't need plus main but enough is Shifting and there's
00:45:23
enough good people fighting and as long as we keep just allowing open competition to say okay which is better
00:45:28
and just let the best things win as long as we keep doing that I think it's going
00:45:31
the right way I'm feeling very good about it is the Chinese position shift in their technology strategy and their
00:45:38
system strategy gonna motivate a shift here do you think shift underway already I mean it definitely already has so we
00:45:44
don't we don't need big aircraft carriers we don't need f35s we need drones we need lasers I there's a ro I
00:45:50
think there's a role for carriers and force projection I don't think we need like incrementally a ton more of them I
00:45:54
don't I'm not I'm not like this radical where you get rid of all this but yeah on the margin I'd much rather have
00:46:00
10,000 more smart drones above and below the water than like an in incremental carrier right so there's there's on the
00:46:06
margin there's all these things that are better uses of money and I think we're pushing that way and is there a huge
00:46:11
tidal wave of venture money I was at a dinner last night where there was this conversation about defense Tech used to
00:46:16
be off limits and a lot of LPA say you can't invest in defense companies that's now changed or is changing and
00:46:21
everyone's kind of coming up with their own defense Tech strategy do you think I
00:46:25
mean you were obviously in this cabin I don't know if you're an investor in the space but are you guys seeing a big
00:46:30
shift yeah I I obviously you know listen there's only been nine unicorns I think
00:46:34
still at this point and I started three of them and invested three of them the first round so I'm obviously pretty
00:46:38
involved in in the space and I think listen it helps me if there's more money for my companies which is really great
00:46:45
um right I think there's probably the right answer for the US is not going to be like a thousand businesses or 100
00:46:49
businesses it's gonna be it's gonna be like seven to 10 new primes one of them's obviously andal I think one is
00:46:54
probably cic and epis we'll see but like there's going to be 7even to 10 new primes and that's what it's going to be
00:46:59
so there's going to be a lot of zeros and a lot of bad Investments but yes these seven to 10 new primes are going
00:47:03
to be huge and if you can get access to them you're gonna do really well Gavin how do you look at that market you agree
00:47:08
I I agree with everything um Joe said the only thing I would just add on China what we are doing by restricting their
00:47:16
access to Advanced um compute and advanced networking if you have read or watched the three three body problem
00:47:24
America is unfolding a sofon over China yeah yeah that's great way I say it I have been really impressed with um some
00:47:32
of the Chinese models that have come out and I think the risk to this strategy is
00:47:36
necessity is the mother of invention and despite this handicap they're managing to stay just behind the Leading Edge of
00:47:44
America which is amazing but you know nvidia's Blackwell chip comes out next year you're gonna
00:47:49
have new chips from AMD new A6 from broadcom and I I think at that point it it is not going to be possible for them
00:47:58
to keep up anymore so that's actually positive regulation and great in your mind
00:48:07
foreign policy um it is very aggressive foreign policy yeah clearly you know that could have
00:48:17
lots of unforeseen consequences yeah what do you think about the the rare earth trade restrictions coming to us
00:48:23
and is that going to actually affect this Supply we have lots of rare earth here in America like in America we have
00:48:29
everything in America like we you know and I think there's a project underway to restart Rare Earth production there
00:48:35
ever ever to be a conflict all this stuff would go away it's it's it's a cost and it's allowing us to do the
00:48:40
refining here so refining some of this stuff like we desperately need gallium gallium nitride for things I'm doing
00:48:45
right with with like shooting the microwave radiation the problem is the refining is really messy if you let it
00:48:51
happen in the US it will still be messy but it will be cleaner but we're not letting it happen so there's things like
00:48:55
this ulation and obviously the cost here is different we have a different cost structure Joe you got to go meet 20
00:49:01
Senators so thank you we appreciate good times jcal do you want do you want to talk about AI with Gavin
00:49:09
and I think that would be like a a great next place to go would be to talk about
00:49:14
the supercomputer being built by friend of the Pod Elon he's now got the world's
00:49:20
largest super computer and he's going to 10x it according to reports yeah and I would just say this
00:49:27
is I think a very important moment for AI you know for this entire AI trade in public and private
00:49:37
markets you know everybody I'm sure who watches your podcast is very aware of scaling
00:49:42
loss and we have not had scaling loss for training or if you 10x the amount of compute used to train a model you
00:49:48
significantly improve the intelligence and capability of that model and often there are these um you know kind of
00:49:55
emergent properties that emerge alongside that that higher IQ no one thought it was possible to make more
00:50:04
than 25,000 maybe 30,000 in 32,000 pick a number Nvidia Hoppers coherent and what coherent means is in a
00:50:14
training cluster that each GPU to kind of simplify it knows what every other GPU is thinking so every GPU
00:50:23
in that 30,000 cluster knows what the other 29,9 199 are thinking and you need a lot of networking to make that happen
00:50:31
enabled by infiniband right uh infiniband and and I think even more importantly in vlink although a lot of
00:50:38
ethernet is um you know never bet against the internet NE never bet against ethernet um like if you read the
00:50:45
Llama 3.1 technical paper you know got a lot of people excited about skinny link
00:50:49
ethernet but um just to slow down for the audience here Gavin maybe explain why trans sporting information between
00:50:58
the gpus is important and we're talking we we're in the weeds here a little bit everybody's heard of ethernet but some
00:51:03
of the other protocols and ways of moving stuff around large amounts of data that's what these h20s h100s do
00:51:11
particularly well they'll move a couple of terabytes a second from One processor
00:51:15
to the next processor yeah so um you know picture a server in the case of GPU it looks like maybe three pizza
00:51:28
boxes stacked on top of each other and it has eight gpus together and those H gpus are connected
00:51:36
today with something called NV link probably you can think of the speed of communication on chip is the fastest tip
00:51:46
to memory next fastest you know um chip to chip within a server next fastest and so you take those units of
00:51:55
servers which are connected the gpus are connected on the server with a technology called NV switch and you
00:52:01
stitch them together with either infiniband or ethernet into a giant cluster and
00:52:10
each GPU has to be connected to every other GPU and know what they're thinking they need to be coherent they need to
00:52:17
kind of share memory for the compute to work the gpus need to work together for AI
00:52:27
and no one thought it was possible to connect more than 30,000 of these with today's
00:52:34
technology from public reports Elon has he so often does Focus deeply on this thought about
00:52:42
it from first principles how long it should take the way it should be done and he came up
00:52:48
with a very very different way of Designing a Data Center and he was able to make over 100,000 gpus
00:52:58
coherent no one thought it was possible if uh I was I was a last minut ad for this but I would have said there
00:53:07
were all these articles that were being published in the summer saying that no one believed he was going to be able to
00:53:14
do it it was hype it was you know Ridiculousness and that was coming the reason the reporters felt comfortable
00:53:22
writing those silly stories is because engineers at meta and Google and other firms were saying we can't do it there's
00:53:30
no way he can do it he did it and I think the world really only believed it when you know
00:53:38
Jensen did that podcast I think with uh was it with gersner am I with gers yeah it was with kerser and said um what Elon
00:53:47
did was superhuman no one else could have done it and I actually think you can argue that Elon doing that in a lot
00:53:54
of ways kind of Saved Nidia from a tough six-month period when Blackwell was delayed because everyone who was waiting
00:54:01
for Blackwell and thought it was impossible to make a 100,000 Hoppers coherent rushed out and bought a lot of
00:54:07
Hoppers to try and do it themselves now we will see if someone else is able to do it it was really really
00:54:14
hard no one else thought it was possible and as a result of that gr 3 is in trading now on this giant Colossus
00:54:25
supercomputer the biggest in the world 100,000 gpus Memphis the old Electrolux Factory and they're they're putting a
00:54:33
lot of energy in there a lot of natural gas a lot of yeah a dingy Electrolux Factory yeah with a lot of Mega packs
00:54:41
around it and the City of Memphis is all in unsupportive this yeah which is obviously smart for them but you have
00:54:48
not had a real test of scaling laws for training arguably since gp4 and this will be the first test and if scaling
00:54:55
lws for training hold grock 3 should be a significant advance in the state-ofthe-art
00:55:02
that is an immensely you know from like a basian way to look at the world that is like an immensely important data
00:55:11
point but it if that card doesn't work and I think it is going to work I think rock rock 3 is going to be really good I
00:55:20
should note that I am with consumers yeah you're you're involved my firm is an investor in X got it yeah they
00:55:26
they've raised a tremendous amount of capital A lot of it from the Middle East and they're supposedly going to build
00:55:30
Colossus to a million gpus is the state of goal 10 times bigger than it is currently there's been some debate back
00:55:38
and forth freeberg about hey are we hitting a wall here maybe you could explain the wall either of you to the
00:55:45
audience yeah David well I'll I'll let Gavin speak to the wall I I mean Gavin I think one of the questions also is you
00:55:52
know do we see an evolution if if the kind of increment in performance relative to the investment
00:56:02
in net kind of training compute resources declines do we start to see a shift in
00:56:10
um how the architecture of the systems are run meaning like do we start to build models of models and that starts
00:56:16
to resolve a higher level architecture that unlocks new performative capabilities so I would just say we're
00:56:24
already building models of models you know almost every application startup I'm aware of is chaining models you know
00:56:29
you start with a cheap model you check the cheap models work with a more expensive model you know lots of very
00:56:35
clever things are being done you know every every AI application company has what's called a router so they can you
00:56:41
know swap out the underlying model if another one is better for the task at hand
00:56:45
[Music] um as far as what the wall is there's been a big debate that we were hitting a
00:56:51
wall on these scaling laws and the scaling laws were breaking down and I just thought that was deeply silly
00:56:59
because no one had built a cluster bigger than you know 32,000 h100s and nobody knew it was it was a
00:57:08
ridiculous debate and there were you know really smart people on both sides but there is there there's no new data
00:57:15
grock 3 is the First new data point to support whether or not scaling laws are breaking or holding because no one else
00:57:23
thought you could make a 100,000 Hoppers coherent and I think based on public reports
00:57:28
they're going to 200,000 um Hoppers and then the next chck is a million it was reported they're going to be first in
00:57:35
line for Blackwell but grock 3 is a big card and will resolve this question of whether or not
00:57:42
we're hitting a wall the other question you raise David is very interesting and by the way we should note there is now a
00:57:48
new axis of scaling some people call it test time compute some people call it inference scaling and basically the way
00:57:55
this works you just think of these models as human the more you speak to one of these models the way You' speak
00:58:00
to your like 17-year-old going off to take the SAT the better it will do for you as a human you know if I ask you
00:58:06
David what's two plus two four flashes in your mind right away if I ask you to you know unify a grand unified theory of
00:58:13
physics that accounts for both quantum mechanics and relativistic physics you will think for a lot longer we have been
00:58:20
yeah nobody knows we have been giving these models the same amount of time to think no matter how complicated the
00:58:27
question was what we now learned is if you let them think for longer about more complex questions test time compute you
00:58:34
can dramatically improve their IQ so we're just at the beginning of this new scaling law but I think the question you
00:58:41
rais on Roi is very good and I'm happy to address and there's a context window oh shift under way as well which
00:58:51
also creates a new kind of scaling access arguably in terms of potential set of applications so networks of
00:58:59
models think time context window there are multiple Dimensions upon which these these tools ultimately kind of resolve
00:59:08
to better performance oh yeah we have even if scaling laws for training break we have another decade of innovation
00:59:14
ahead of us exactly and and and as my understanding from speaking to folks I'm certainly not as deep in and well versed
00:59:20
as you but there's a lot of effort and research going on in re-engineering various parts of the uh the stack to
00:59:28
reduce energy to reduce every resource that effectively drives model performance to basically re-engineer
00:59:34
architecture it was all like very Brute Force for a period of time and it was like push push push but now as we go
00:59:39
back and we start to re-engineer and architect things in perhaps a more designed way we get better performance
00:59:44
and there's a lot of work to do there still absolutely this is one of the great things about capitalism and a
00:59:50
functioning Capital Market is you've got people working just on the context window for people who don't know what
00:59:55
that is is that's the number of tokens a token is essentially a word you can think of it a
01:00:00
piece of information the number of tokens you can put into a conversation with a large
01:00:06
language model some people have really large context Windows some people have smaller ones but you can basically put
01:00:11
an entire book in the context window and start asking questions against the model
01:00:15
and the speed of those is critically important as well because if you put the book in there and it takes you 10
01:00:20
minutes to get an answer that's not functional right Gavin are you an investor in open AI oh I absolutely not
01:00:26
yeah can you kind of theorize on what the buildout that's being done with Colossus does to the advantage that open
01:00:33
AI has today how long till we kind of catch up there with xai and you know how much is going to be disrupted and how
01:00:41
quickly here well if scaling l Hold the best information I have is the largest cluster Microsoft has after
01:00:52
panicking is still smaller than XI cluster in if you didn't believe it it was possible
01:00:58
you you weren't even working on it grock 3 should takes the lead if scaling laws
01:01:06
hold in January or February I do think a lot of talent has left open AI I thought it
01:01:17
was a really shocking statement from Mira moradi that she um resigned during a fund raise that's the only way she can
01:01:27
express disapproval of what is going on there and still probably get her money right so I
01:01:35
think I think there's there's a lot of reasons if scaling lost hold to be to to be optimistic about Croc
01:01:43
3 but I think um and and then by the way on the power question and and they are you know 20 23 and 24 it was just a
01:01:51
panic to get gpus and get them plugged in now we're you know trying to make them efficient and thoughtful into your
01:01:57
point re architecting them and the h20s now are 50% less power and either 50% more twice as much compute depending on
01:02:06
the task they they have a little more compute and a lot more memory which really matters um so per kind of unitive
01:02:12
effective compute they're a lot more power efficient they two or three times you
01:02:17
think or no the h20s probably not probably not 2x but a good increment and the h100 was a great chip and then
01:02:26
yeah yeah black well is just around the corner and that's an entirely new architecture with an entirely new set of
01:02:32
networking technology what would consumers if we had to sort of speculate here what would consumers how would
01:02:37
consumers experiences change in using forward-facing language models and then maybe what are developers going to see
01:02:44
on the back end you know in terms of what they're going to be able to build if if this hands out you know in the
01:02:49
next you know right now two years yeah right now you have like a friend in your pocket who has an IQ of
01:02:58
115 110 maybe but has all of the world's knowledge yeah accessible to it and that's what makes it amazing I think
01:03:06
this will be like you have a friend in your pocket but and they sometimes make things up again they're very human and a
01:03:13
lot of humans when they don't know the answer they dis symble yeah these AIS do it too so you will have a friend in your
01:03:21
pocket with an IQ of what maybe 130 that knows everything has more upto-date knowledge of the world
01:03:30
and is more grounded in factual accuracy and it is interesting for any question involving realtime information
01:03:39
mostly Sports and finance you know I always you know if there's a stock down 25% ask every AI why is the stock down
01:03:46
25% generally grock is the one that knows um but yeah no Gro grock because of the
01:03:53
Twitter data set exactly knows what is happening at the moment in the world today all right and then you know as we
01:04:01
sort of wrap up here on the AI issue what about the ROI here that David was mentioning yeah so the I find these
01:04:10
these debates also very funny you know there have been articles written about multi hundred billion dollar Roi
01:04:16
questions those are very strange to me because yeah the biggest Spenders on gpus are public companies and they
01:04:25
report Financial results every quarter and you can calculate a metric called return on invested Capital yes and roic
01:04:34
Roi has gone vertical since they ramped their capex on gpus it actually just started to level out in this latest
01:04:42
quarter so the ROI on AI has been very positive thus far just a fact it's a really good question will it continue
01:04:51
particularly if you know it's going to cost a hundred billion dollars to train a model in two or three years um which I
01:04:56
think is a realistic estimate um however gu the counter to that isn't the counter
01:05:02
to that that maybe there's a little bit of hype that you know maybe there people
01:05:07
are trying to determine the ROI and correlate it more precisely and I guess that's the
01:05:13
challenge you know meta doing AI across its entire Enterprise you might see and Google you might see
01:05:19
it directly making ads more effective as an example 100% yeah go Oni yeah but then for other folks like
01:05:29
you know is it actually happening or is it a toy I guess is the criticism I hear
01:05:34
I'm not saying that's my position but that's the criticism I hear is like are people actually getting money from the
01:05:38
co-pilot or maybe this is just product Market fit Discovery process because the the AI
01:05:44
laptops AI Intelligence on Apple and let's say some general llms people feel maybe aren't worth the money or co-pilot
01:05:53
for Microsoft maybe not worth the money yeah I mean I personally have not had good experiences with co-pilot but I
01:05:59
would say that and I'm sure both of you have come across these there are lots of
01:06:07
companies that are just these thin rappers over a foundation model and they go from zero to 40 million
01:06:15
instantaneously yeah and they're profitable and for their customers they're replacing labor budgets I think
01:06:23
I'm sure you guys are noticing this too but startups today at a given size are employing fewer people than they would
01:06:29
have three years ago and just like you know it's funny people were very SK I would say 50% less yeah and that's the
01:06:35
ROI on AI and like in you know I went to the first AWS reinvent conference and no
01:06:40
big companies were using cloud computing it was all startups startups always adopt Technologies first so outside of
01:06:47
the ROI on AI that you're seeing in Google and meta from you know using this across their businesses you seeing real
01:06:54
Roi on I from startups the same way they saw real Roi from cloud computing before
01:06:59
anyone else it's crazy but I don't think these companies are in a classic prisoners dilemma they all believe to
01:07:07
varying degrees that whoever gets there first to artificial super intelligence is going to create tens or hundreds of
01:07:13
trillions of dollars of value and I think they may be right and I if they get there and they think that if they
01:07:19
lose the race their company is at Mortal risk so as long as one person is spending I think they will all spend
01:07:29
even if the ROI decelerates it is a classic prisoners dilemma competition is amazing it really is when you have a
01:07:35
free market with competition we're sitting here two years ago three years ago on this pod Gavin just lenting like
01:07:42
oh my God what could happen and China could just roll over us they've got everything dialed in we're a disaster
01:07:46
and now here we are China's a disaster they've got all kinds of challenges and the free market is even with weapon
01:07:53
systems we're seeing capitalism applied in competition applied there all right I
01:07:56
think we should just wrap up on this uh Brian Thompson Story the CEO of United Healthcare was shot and killed in
01:08:01
outside a Manhattan hotel on Wednesday morning United Healthcare is an insurance subsidiary of United Health
01:08:07
Group and uh they employ over 140,000 people they provide coverage to millions and this
01:08:16
was I don't know if you've seen them assuming you guys have seen the video on social media or go by on
01:08:21
X it there's been a big debate was this like a really well-trained killer like an assassin like a Hired Gun was it
01:08:29
something personal maybe and this person's a hack and they're not really good at doing a hit like this and most
01:08:35
people are sort of coming somewhere in between ABC has reported and this is where this thing is taken like a crazy
01:08:43
turn that the words deny defend and depose were discovered on the bullet casings at the
01:08:49
scene and those are the terms two of the three are in a book about how health insurers uh reject many
01:08:58
of the claims every year they deny it they defend it and then they will depose people to harass them
01:09:03
essentially this is a crazy crazy story and it's breaking here I don't know if anybody has any insights on it but I
01:09:12
thought I would bring it up here to just maybe intelligently speculate about what
01:09:17
we've seen I mean it seems like the most likely case is someone's loved one died
01:09:22
for they were denied coverage and what whether this person was hired or they're a victim or related to a
01:09:29
victim I don't know if it matters I I think there's the observation I'll make is a
01:09:37
question which is should CEOs be personally responsible for corporate actions generally speaking
01:09:46
so there's a difference between a CEO committing fraud or being negligent but if you don't get a good service or
01:09:59
good quality of service or the product you expect even if it is something you depend on
01:10:05
for healthare for example let's say you take a drug and the drug causes a side effect that causes some permanent damage
01:10:12
should the CEO be individually held accountable and if that were the case would anyone want to be a CEO of a
01:10:19
company that sets out provide services that are critical like this it's a very like I think challenging question to
01:10:26
think about because certainly you could feel like you want to hold someone responsible because a loved one died
01:10:33
because that CEO's job was to make more money for their shareholders and therefore deny claims and therefore the
01:10:40
way that they run that business is wrong I think ultimately we've got to kind of have this distinction between
01:10:49
negligence fraud and acting on the corporate behalf there's a there's a for a period time all of these um
01:10:56
documentaries and this movement against the idea of the corporation generally speaking you guys remember this was like
01:11:03
a decade ago or 15 an capitalism movements yeah and it's like this the corporation Shields
01:11:10
individuals and the corporation creates a shield for individuals to do harm is kind of the argument that's made and so
01:11:18
there's a lot of people in this camp that think that these all CEOs of companies that let people down are evil
01:11:24
should be killed should be put in jail whatever the awful kind of contextualization of that is and I do
01:11:30
think like it's really important to think about well if no one were to be the CEO because they face that threat
01:11:35
and those companies can't make money as a business then those Services go away entirely that's kind of the end state of
01:11:41
where this goes there's going to be these difficult situations if a CEO does something negligent fraudulent
01:11:48
wrong there's a court and there's a system and there should be kind of laws that protect people I I don't know man
01:11:54
the whole thing is pretty depress pressing to think that a guy who's the CEO he's you know from from what I heard
01:11:59
guy got a family yeah I mean he's got a family he's got a wife you people that have known him said he was like a nice
01:12:04
guy and a good guy and he runs a tough business you know insurance is a very tough business well and to your point
01:12:10
about this seems like it's very personalized with the casings if that is in fact true again this is breaking news
01:12:16
so we're speculating here you hopefully informed this chart has been the one that's been circulating on social media
01:12:22
now this has now become Gavin like a raw shock test about how you feel about Corporate America Healthcare Etc but
01:12:30
United Healthcare at least according to these charts that are speculating deny claims at a rate at a multiple two or 3x
01:12:39
other people in the industry and that they are the most hated not that any of this obviously results in somebody
01:12:46
deserving to die I mean I can't believe I'm even saying this but tellor Len was went
01:12:56
viral with a series of tweets not tweets I think she's on whatever the blue thing
01:13:01
is sky blue blue sky where she uh wrote some quotes here and people wonder why we want these
01:13:10
Executives dead Loren wrote on Blue Sky a microblog social media side alongside an article about how Blue Sky Blue Cross
01:13:17
Blue Shield no longer cover anesthesia for the following surgeries uh that's according to the New York post Gavin
01:13:26
your thoughts on this insanity and tragedy yeah well first of all it's a tragedy and actually I'm in New York as
01:13:32
we record this and it happened one block from where I am and I mean it it is Absolut it's a
01:13:42
human tragedy Taylor lorens was not the only person on social media who reacted that
01:13:48
way which I thought was deeply troubling it was a large group of people who were
01:13:52
writing very morbid comments there was a lot of anger around this issue that I was unaware of I was completely unaware
01:14:00
of it well I think we all probably are very privileged to have great health care and able to pay our premium so
01:14:07
we're not affected by this at this stage in our lives I was very affected by this
01:14:10
30 years yeah we're we're all very lucky on this podcast yeah and like I can't imagine how I
01:14:18
would feel if you know someone I loved had been denied Medical Care and and died and I felt like it
01:14:25
was unnecessary and you know due to you know some Corporation trying to make more
01:14:35
money but I just I cannot believe I'm sure I'd be outraged I just can't believe I was deeply Disturbed as a
01:14:46
person by the number of people online celebrating this it's really crazy yeah I thought it was it was awful
01:14:56
and I guess the last thing I would just say about that chart is I think it is a little misleading I think that is
01:15:00
initial denial H you know maybe the you know in other words maybe the company that you know
01:15:07
only denies 7% That's a final Deni you know they yeah and who knows if the chart's even correct I bring it up only
01:15:15
that it is the trending item and people are I find in these tragedies they become shock tests right like yeah
01:15:23
United healthcare's Medical loss ratio is about 85% so 85 so 85 cents of every dollar they
01:15:31
collect an insurance premium they're paying out in claims if you guys want to look at what the most egregious
01:15:37
insurance industry in the world is it's title insurance and I'll give you the list of the rest travel insurance is
01:15:43
pretty bad they pay out like nothing you were in Insurance business for a bit there yeah yeah like I mean you know
01:15:48
health insurance is the hardest one of the hardest besides auto insurance businesses to be in uh you're paying out
01:15:53
constantly and uh there is a very difficult kind of process of managing losses because the number of claims that
01:16:00
comes in it's very easy to suddenly pay everything out and then your premium goes up and then people can't afford the
01:16:05
health insurance so they you're striking this balance of making health insurance
01:16:08
affordable against the cost of medical claims so it's a very kind of difficult business to be in I think it's very
01:16:15
complicated to walk people through the how they in their individual circumstances aren't necessarily
01:16:21
motivated by some corporate you know malic it's just the way the thing has toate
01:16:28
unfortunately let me just say I I think that much like we saw with Hamas and the the attacks in Israel or
01:16:35
uro there were people celebrating that behavior and we've seen that several times since and and and people have
01:16:42
become very vocal about their celebration of what they view to be uh the death and harm done to those who
01:16:49
view who they view to be oppressors in whatever context you want to kind of fit this to and put that oppressor label on
01:16:56
an individual and that mindset seems to hold true through any social Financial economic political context there's an
01:17:04
oppressor group and there's an oppressed group and if you're in the oppressor group you deserve harm you deserve death
01:17:09
you deserve jail and this is another manifestation of that mindset playing out this is an individual with a family
01:17:17
who ran a business who worked very hard for many years and wasn't trying to hurt
01:17:20
people and uh for him to kind of be be have his life taken like and for people to say that person is an oppressor I
01:17:27
think really speaks to How Deeply uh people's minds have been contorted by this concept that there's oppressors and
01:17:34
oppressed it's almost like a mind virus and I'm not going to call it the W mind virus but uh because I just think you
01:17:39
immediately shut down and won't hear that because it sounds cliche but there is this concept of like everyone is in
01:17:45
one of two groups you're either being oppressed or you're an oppressor and if you're an oppressor there is no limit to
01:17:49
what I should do or what should be done to you I think it's well said it's a very it's a very Stark it's a very Stark
01:17:54
and sad kind of commentary on right what's going on right now sorry if you're oppressed the Cory to that is if
01:17:59
you are considered oppressed you can do no wrong you can do no wrong and that is
01:18:05
and obviously there are people who are oppressed on this planet but they can still do wrong they should still be held
01:18:12
to a moral standard yeah there there and there is a moral standard and there is a
01:18:16
standard and murder obviously an assassination like this is not uh acceptable and it's just tragic I just
01:18:23
feel so terrible for this these kids let's end on a happy note so we'll see you on Saturday big party excited hard
01:18:29
turn here but uh looking forward to seeing everybody on Saturday for the all-in holiday Zoom is sponsoring the um
01:18:35
all-in Holiday Spectacular so if you want to go to allin.com you can go sign up there right Free Break yeah and then
01:18:41
you can sign up for the zoom Gavin we expect you to sign up yes we have a cavar budget we have to replenish over
01:18:50
here at s we do appreciate Zoom helping us out for the event Zoom AI companion helps set up the uh the live stream so
01:18:56
thanks to zoom for doing that everywhere I have to say you know what one of the great exper I I I have a couple of
01:19:02
experien with the AI that are really Great Notion has a phenomenal AI built into it and so
01:19:08
does Zoom with the AI summaries I love getting these AI summaries of calls I ask people permission to turn it on and
01:19:14
we get a summary in the bullet points really well done I went to I we did a hackathon in the office a couple of
01:19:20
weeks ago and we used have you guys actually built applications with cursor you guys have not was it fun to build it
01:19:27
it well it was great because we had so many people that have never built software applications in the hackathon
01:19:33
and they built tools from scratch deployed them in production and are now using them and I think it really
01:19:40
showcases the um kind of the impressive impact that AI is having on workplace productivity you don't need to buy saf
01:19:47
tools you don't need to have service providers do stuff for you individuals in and by the way it's only getting
01:19:51
better and you can the ability to just wake up in the morning and say I want this app and have it built for you it is
01:19:58
and and by the way I'll just say it's it's like 70 80% there you still have to debug you still have to have someone
01:20:02
come in and help kind of get things into production so there's still a little bit
01:20:05
of work just pages right going back going back to the going back to the architecture question two months ago and
01:20:11
and they go back to 60% there now it's 70 to 80 and and you fast forward 12 months and now you've got the
01:20:17
architecture where the AI can run its own QA testing and debugging and the AI can run its own kind of Sal marketing
01:20:24
and it's own ux of the application and it can run everything so you're basically going to say I want this app
01:20:30
to do this it builds it it tests it it builds the ux it tests the ux it iterates the ux it does everything
01:20:36
streamlined for you and then you show up a couple hours later and you're using a
01:20:40
new product that was built on the Fly for you it is and and we're literally like climbing this ladder Gavin like
01:20:47
very quickly that it's going to totally change this entire software industry is like getting re architected I could
01:20:53
guess freeberg at his company hackathon what do you think I made I made a vegan version of
01:21:00
Yelp only profiles all the vegan restaurants I actually I actually tried to make a CRM tool so that I wouldn't
01:21:06
have to pay for CRM licenses I tried nine months ago to make a Benny off sorry go ahead Gavin I tried nine months
01:21:14
ago to make a uh multiplayer um app for Skyrim um which I was very excited about
01:21:20
Skyrim is a video game but I do think I failed um maybe I should give another go
01:21:25
but the um you learned you didn't fail I learned I learned I didn't fail I learned yeah I have a growth mindset but
01:21:30
the um we learned we learned the limits we we all T yes we tested the app but I think next year the human language will
01:21:37
be the dominant programming language totally totally awesome it's totally yeah it's I you really made a great
01:21:46
Insight earlier Gavin with you know startups is where you see these Innovations happen and I I always say
01:21:54
internally re resource constraints really do Drive Innovation and when you only have a
01:22:03
nickel you got to try to get a dollar out of it when you got a dollar and you got a lot of dollars you're like it's
01:22:08
okay if I get a nickel out of a dollar I got more dollars laying right over here
01:22:12
and Dylan always talked about this as well like they they asked him like why did Blood on the tracks like why did you
01:22:19
do that it was incredible like it's this Rolling Stone interviewer was talking to
01:22:23
Dylan about it he said this was like my favorite album and this is incredible whatever and like what was the
01:22:27
inspiration take me behind it and he said well you know I owed Columbia Records and album and they had given me
01:22:31
an advance and they were going to sue me and I had to give the money back and I had just gone through a divorce and I
01:22:36
needed the money and I I couldn't do it so I wrote the album this guy was desperately was crushed that Dylan's one
01:22:44
of his best albums and pieces of Art in his life was strictly a function of the pressure
01:22:51
of is the mother of both there it is and creative invention absolutely all right everybody four thanks guys Gavin
01:23:00
Baker Joel onale David freedberg and we miss you saaks uh uh taking an a a victory day I it's taking a victory day
01:23:09
today and uh chth both out of the office today uh I am the world's greatest moderator and we'll see you next time on
01:23:16
the Allin podcast byebye let your winners ride Rainman David and instead we open source it to
01:23:29
the fans and they've just gone crazy with it love [Music] youen besties are this my dog taking your
01:23:45
[Music] driveway oh man myit will meet me at we should all just get a room and just have
01:23:53
one big huge orgy cuz useless it's like this like sexual tension that they just need to release
01:23:58
[Music] Som we need to get mer [Music] our going [Music]