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all right everybody welcome back to the number one podcast in the world I am your host Jason calanis and with me
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again couple of my besties David fredberg you know him as our Sultan of science lots to get into today Sultan
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huh how you doing I'm keeping busy thank you keeping busy jamath and I on Valentine's Day we
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had a little Trio we were on MK Ultra podcast and it hit number four Allin podcast of course number one uh trat
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Reflections on our Megan Kelly our triumphant Megan Kelly Valentine's spectacular I was fine it was good okay
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wow thanks you're such a great performer here giving me so much to work with chamath as always but it was a great
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great pod shout out to our friend and friend of the Pod Megan Kelly and also we've got an incredible Duo for the
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first time we've invited a Duo to join us in The Red Throne David Sax's seat busy saving the country but we're really
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excited Coulson brothers are with us thank you for having us you guys want to hear a great lost porn story John has
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one for you the last time we met jamaath was 18 years ago when we were working on
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our prior startup automatic with Harge and and cool tagar you were how old they were 17 18 19 was one of these San
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Francisco setups where it was like a two-bedroom apartment there was a few of us living there I think maybe six people
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working out of there and a normal number exactly normal number is to load up a two bed apartment with and then jamath
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you came and and visited this is what's so brutal about this okay I could have invested a
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dollar one single dollar and I would have made a billion dollars I remember meeting these guys and I was with Alan
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Morgan who was my boss at the time I was a junior principal at Mayfield shout out
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and I think we tried to guys I don't know if you remember Patrick and John I think we tried to invest in in the
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business or it didn't happen or then you ended up shutting it down but right away
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you spun back up and started stripe and I just watched from the sidelines the whole way it is such a first of all it's
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an amazing it's an well no it's an amazing place for silen valley where you can like see these people just keep
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pushing the boundaries up and up and up number one number two the thing that is such a learning for me is like why
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didn't I just pick up the phone and call them at any point in the last 17 years what am I thinking so
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brutal let your winners [Music] ride and instead we open source it to the fans and they've just gone crazy
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with [Music] it it is oh my God so brutal two things one um first you probably don't remember
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this but I remember that meeting that you know we offered you you you want something to drink we did not have a
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broad selection I think we had water or or milk in the fridge and and you asked for a glass of water um and so I went
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over to the sink and I realized that we hadn't really been on top of the the washing up so I had to sort of gingerly
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wash a glass for you to get your glass of water which um can't remember if you touched it over the course of that
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meeting but then secondly like when we started out with stripe like the fintech sector basically
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didn't exist I mean the the the word hardly existed and didn't exist yeah yeah people just didn't think that I
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mean you know teenagers weren't actually teenagers at the time but you know people in the early 20s college kids
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taking on you know PayPal or the incumbents or regulated Financial Services or whatever you know people
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just didn't think it was a good idea so I don't know uh you you you you certainly were like the vast majority of
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investors we spoke with in the first year or two of stri turned us down so H you were you were not anomalous John
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tell us what that meeting was like and to just take you back to the moment here's a picture stop stop here's a
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picture no striking here's a picture of pre pre nine figure chath oh my God and this
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is when he shopped at Macy's does that maybe that jogs some memories John when that guy walked in with his khakis and
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that light pink Brooks brother shirt what did you think I don't know I think you can uh you can go back and find
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historical photos of anyone and use them to like if that's the worst historical photo you have that's pretty that's
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pretty lightweight stuff exactly Jason do you want to tell everyone in the audience what stripe is and I mean do we
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have to okay stripe processes payments this is a 10 plus year old startup that basically if you're a startup company
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and you want to do transactions you use stripe for example the all-in startup uses stripe to pay for the tickets and
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then we give these guys for some reason a half million dollars every year no discount they don't sponsor the event
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and uh they're making a fortune they got 10,000 employees and uh the company changed the world we've never been uh
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we've never been offered to sponsor the event I didn't know this was the this was an option but he hit us up for a
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half Millie last year I mean maybe this year you we can hit you up negotiate it live that's broadly accurate I would
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just fact check that it's nowadays not just startups even though they run on strip also the world's artist
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Enterprises Herz Amazon Ford all these kind of companies and so when we started out with stripe we thought it would only
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be for startups like we thought those were the people who needed a problem solved and we thought payments was
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broken for them and as time went on we just found out it was kind of broken for everyone and so sorry and is it public
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how much volume you guys do a year do you guys talk about that it's more than a trillion dollars a year a trillion
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dollars a year is process through your network yeah which works out to you Global GDP is around 100 trillion year
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so it works out to around 1% of global GDP and you could say well you know GDP is is final goods and and you know
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stripe processes more than only final goods so it's not if only you say that okay well look you could say it's not
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exactly the right or a fair comparison or something but but stripe mostly is used to sell final goods so I think it's
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I think it's reasonable and just the other thing I'd say is you know people I think reasonably think of stripe as a
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payments company because you know that is certainly what we started out doing and uh and it's uh certainly the largest
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line of our business but the thing we kind of realized a couple years in is that you know what business like the the
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the structural secular thing that's happening is that every kind of money movement is going from being manually
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orchestrated to being orchestrated by software and there's you know some program
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somewhere making the thing happen and so because of that like just because of what we hear from customers and the the
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pull there we're now you know helping with lending we're helping with card issuance we're helping with Treasury and
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money storage we're helping with crossborder money movement stable coins we got to talk about St coins got a
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stable yeah why' you do a stable coin stable coins are finally happening and they're really useful like we followed
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crypto for a long time the Bitcoin white paper dropped in 2008 the year before we
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started working on stripe and so it's been funny where stripe and crypto have grown up together and you know we tried
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to make Bitcoin happen as a payment method on stripe just wasn't that good as a payment method I mean it's good as
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a store of value as kind of a gold substitute but transactions are slow transactions are expensive you never
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know exactly how much you're going to get because it's not denominated in dollars the stable coins are now really
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good if you look at you know something on an ethereum L2 or salana or something like that and so we bought a company
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called bridge late last year who is building the stripe of stable coins and so if you're I mean I think you guys
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have talked about them a little bit but you know people like SpaceX using them for treasury management people using
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them to offer US dollar services to people all around the world just stable coins are I think the first really big
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payments use case and I think it's finally coming because the tech is good enough is there a moment guys where is
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it a regulatory event where you'll say the Visa Mastercard dapoli can get challenged is there a set of boundary
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conditions that you have written down where when you can check a few of these boxes you know that it's time for those
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companies to get dismantled the behavior we're seeing right now is that stable coins are most interesting and seeing
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most adoption where there is some crossb component and so uh you need to manage corporate treasury around the world you
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want to send remittances to people in other countries often it's people in other countries want to whole dollar
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balances or things like that what we've always seen is that I don't know in the US things work pretty well in Europe
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things work pretty well and so we even see this pre- crypto where the way people pay for stuff has been radically
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changing you know UPI in India picks in Brazil you have all these designed by central banks actually really good kind
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of government run venmo Solutions those have all happened in Emerging Markets broadly and not in the US and Europe we
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certainly keep our eyes peeled for that changing at some point but I think right
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now I don't know P would you characteriz it that way that like a lot of the interesting stuff we see is happening
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internationally yes so you know with respect to visa and Mass Master Card I think an important thing to keep in mind
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is that most of the interchange fees that are charged to Merchants and you know you mentioned what we charge the
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all-in podcast you know the vast majority of that flows right back to the uh to the issuing Banks uh in the form
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of interchange and almost all of that flows right back to the consumers in the form of you know the lending that the
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that the you know the cards themselves represent but then also in card rewards like card programs are not actually big
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profit pools uh for most of the major Banks and so I think any you know any substitute for for visa and MasterCard
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in that sense you know the sort of a question of well are the consumer rewards going to go down are the
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consumer protections going to go down will we be extending less consumer credit and maybe other points in that
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space are viable but you know it it is a set of trade-offs and it's not as simple
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as this this enormous rent extraction happening John's totally right I think the interesting use of stable coins is
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cross border is outside the US I mean the big use case that's taking off right now is consumers in other countries
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seeking to hold dollars you know we in the US here today you know we obviously benefit from being able to do that the
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vast majority of people in the world have kind of a are subject to a worse currency worse in the sense that it's
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less stable H it's more inflationary you know storing savings is is is much less
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favorable uh you know if you look at the nirra for example there are a lot of people in Nigeria and the the currency
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there has devalued by a factor of you know three or four over the last couple years and so that use case of consumers
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being able to store dollars is really exploding and we think about this really as kind of an analogy to the to the euro
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dollar system where you know the euro dollar system in the 70s and 80s this was a way for companies to store dollars
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and to you know have something more stable and and and reliable and so forth but it was only except I mean I think
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the minimum transaction size was like a million dollars so there's kind of a very high barrier to entry whereas with
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stable coins now you can be a consumer in Ecuador and you can have like A1 us balance and that was just not a product
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that was accessible to you before and so I think it's I think it's a really big deal you know certainly for people in
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those countries and in some sense also for the us because the dollar status as the world's Reserve currency I think is
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is is know process of becoming much more deeply established yeah that is the huge
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win for allowing stable coins and you know making them legal giving them rails putting aside tether and all the bans
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and fugazy stuff they've been doing or have done and all the lawsuits that they've lost and the bands in different
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countries having usdc having yours and other ones in the United States means we can regulate them and they have to buy
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treasuries and so okay dollar Supremacy continues and that's fantastic but right
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now Allin just using the example could accept payment in stable coin correct with
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stripe we just check a button we get stable coins yes okay so then the next piece I have we follow with you
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afterwards to make sure we I'm actually really excited that you guys are going to be sponsoring the all in Summit this
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year that's actually exciting super exciting no freeberg is great at securing the bag yeah the thing that's
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interesting though is if let's say we had a Millie sitting in our stripe account and then we had to pay a venue
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or pay other vendors and we're sitting there in uh yourk coins called bridge is that what it's going to be called or is
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called bridge is the is the company is the platform and you know that's like there there okay so they're not
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stra correct correct but you all have a stripe stable coin at some point yeah like one Bri actually has one already
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yeah Bridge has a a small stable coin for but we don't need to get into details but but bridge is primarily set
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of software apis got it but you'll obviously have a strip stable coin the point is if you turn on stable coin
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acceptance with um you know for for all in today that'll use usdc perfect now could we then go pay people from our
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stripe account and then you could lower our fees if they were also doing stable coins is that exist today or is that
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something coming next year look you could pay people in stable coins but again to the point of where you'll see
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adoption first paying people via bank transfer in the US like yeah it's not great it's kind of slow everything like
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that but it's fine it's not the biggest problem today yeah yeah exactly whereas the people who are using Bridge it's
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like scale AI is you know they have to pay the contractors all around the world and when you want to get money to people
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in the Philippines that starts to get really annoying and expensive and so just from our point of view the like
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real hair on fire problem is the international stuff and domestic I assume you're paying domestic suppliers
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it'll come later I think you're I think I think you're answering narrowly to you
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know stable coins I think everything you just said is is right but I will say I think Jason your intuition that man it's
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really inefficient and annoying to you know engage in B2B transactions and to get these invoices paid and like the
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whole system and if you look at most companies they're losing 1 two 3% of Revenue to AP and AR now some of that
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might be because of the transaction rails themselves a lot of just because of you know baroke inefficient processes
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uh where you have humans sending invoices humans reconciling them you're trying to line up transfers in your bank
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account statement and figure out you know what corresponds to what and so on and that's super inefficient and so
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we're separately I mean Cil con would be part of the solution here but but but there's more to it separately we're
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trying to solve that with a product called stripe billing which we actually just announced last week has passed you
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half a billion in uh in ARR and so uh we we could send an invoice to somebody which right ex so it's like fresh books
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or whatever those other products in the market are all amazing all the back office is there a version of a network
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effect inside of stripe for their customers where if I just allowed you guys to just be integrated into my GL
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somehow and you gave me some kind of phantom bank account why isn't it just a ledger entry if I'm just making a
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payment from me to somebody else that's also on strip the thing we really want to solve is all the calculation the ID
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verification the risk like those are the things that are actually expensive um uh
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if you if you look at this flow uh it's where companies lose their money today having said that you're right um you
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know we're the fraction of money movement on stripe where you know the two counterparties are both part of the
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stripe network is obviously growing and so I think that'll be another way we can
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reduce fees over time although again I actually think the biggest part of that is is going to be because we reduce
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fraud like both counterparties are known and like I talked to a company a payroll
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company recently and they were describing you know how big a deal it is for them that you know people sign up
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you know frauding companies whatever and you know they can lose millions of dollars in a single attack and so having
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some kind of trusted node rather than just like routing an account number that would be a really big deal for them look
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you have a very good pulse and what I would say is that as a subset of the economy you probably reflect a large
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part of the global economy have you ever been approached or have you ever considered on a regular basis publishing
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some sort of economic sentiment one of the big things that we've talked about is how many backward revisions there are
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to everything from non-farm payrolls to GDP that they've become so unreliable and so it's very difficult for people
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that are transacting in Market to know what to do have you guys ever thought about that
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because I'm sure that you have a much more accurate sense of where the economy is than many other people we have and I
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feel a bit ruthful you know with you're asking that question because I feel like
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on some level we should have done it um the thing that makes it kind of tricky is because two two things one stripe is
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not like a full CR section of the economy you know we're more biased towards online we're more biased towards
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Innovative companies you know whatever that that you know it's kind of net that out somehow and you know there can be
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these stories where I mean during Co like the online economy was doing great H the offline economy was sort of a
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different story so the interpretation can be a bit tricky but then just the second thing is the stripe business is
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growing so quickly and changing so fast that again you know it's not necessarily
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representative of of the EC economy and even if stripe is way up year overy year
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you know you you have to be a bit hesitant in drawing conclusions from that having said that I think in
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principle you could draw you know some conclusions and you know one thing we we we did look at uh was just inflationary
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data over the last couple years and I think you can construct and the team did construct a pretty reliable kind of
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leading indicator huh for inflation and so we would like to share that openly because you know I think it's I think
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it's a public good forther to be better and more reliable economic data all right freeberg before we get into the
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doc you got any question for the boy here if you were to kind of build the financial system from scratch today
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we've got Swift we've got banks that store assets we have credit cards and these credit card networks then we've
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got transaction service providers that sit on top of this what's the right solution if we were to build a financial
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system for the world from scratch today and can you guys see a world where we Bridge away from the credit card
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networks where we move out of some of these Legacy systems or they so deeply ingrained and everything that it's it's
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going to continue to be this thing where we've got to build these complicated Solutions into an around the legacy of
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financial infrastructure I'll give my view and then I'm curious about um Patrick has I would say firstly there is
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just general Tech scalability you know there's the um you know the finance industry has its version of the M shafts
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for sure where uh everything should be uh you know highly scalable in real time and I think in a way stable coins are
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solving something that you would you don't technically need full decentralization to do but the ability
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to make kind of realtime payments any hour of the day or night is a useful property and again some private systems
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have uh also built that I think a big one for us is trust and the fact that the fraud problem hasn't really been
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solved in online payments a big reason people come to stripe is basically we are a reputation Network across the
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internet economy and so when someone comes and buys something from a stripe user
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93% of the time we have seen that card before and so the merchant can know something and know that they can trust
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this end user and it's gotten to the stage now where if someone comes along and buys with a credit card if they're
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you know signing up with an email address or a phone number or something that we haven't seen before that is just
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ipsofacto suspicious because you know they are coming along and maybe trying to a
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stolen credit card or or or or something like that and so a big part of what stripe ends up doing is act as a
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reputation Network to keep fraud out of the system that maybe you would have wanted to design in from from day one
00:19:06
well In fairness jth told me I could use that credit card anytime I wanted I don't think he remembered but I think
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you need to turn my account back on and freeberg I just got news from our CEO John MasterCard just canceled their
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sponsorship of all in Summit so this is costing us a fortune this podcast so far
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two things one to your point about just all these different networks and so forth I think stable coins are going to
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be a big part of a big part of the solution actually don't think that's going to supplant all
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the consumer facing networks I think we're going to see consumer facing networks built upon and that you know
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substantially leverage these things but I think stable coins will probably be the common Rail and then just secondly I
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think part of what you're hearing is most businesses lose more money to fraud than they do to the kind of pure
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transaction cost themselves and you know you're hearing us talk a lot about fraud
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here uh and that's because one it's just it's it's a huge economic cost for these
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businesses today and there's even indirect costs where you make the consumer experience more hostile because
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you have to protect against uh you know possible fraud like you know why why do you have to type in all lock out my bank
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account yeah all this stuff exactly but then secondly I think these we can just see in the data these problems are
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actually getting worse and harder because you know ml AI globalization yeah exactly and so like
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you know various fraud metrics across the industry and the ecosystem are way up over the last couple years now and
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striped actually down by 80% but it's it's really becoming a cute issue all right and we'll get into uh staying
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private longer and when you guys are going to pull the IPO trigger later in the show but we got to get through this
00:20:29
docket we got so many great topics to talk about let's get to our first story here it's a kind of a fun one Jamie
00:20:34
Diamond went on a rant about remote work and and zoom uh in a town hall and uh here's a snippet a lot of you were on
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the zoom and you were doing the following okay you know looking at your mail sending text to each other when ask
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the other person is okay not paying attention not reading your stuff you know and if you don't think that slows
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down efficiency creativity creates rudeness and stuff it does okay and when I found out that people are doing that
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you don't do at my goddamn meetings you go to meeting with me you got my attention you got my focus I don't bring
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my goddamn phone I'm not sending text to people okay it simply doesn't work the Young Generation is being damaged by
00:21:15
this that may they may or may not be on your particular staff but they are being
00:21:19
left behind they're being left behind socially ideas meeting people in fact my guess is most you live in communities a
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hell of a lot less diverse than this that's not how you run a great company we didn't build this great company by
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doing that by doing the same semi disease that everybody else does colon Brothers tell us about how you run
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stripe are you remote does this resonate with you four years after uh we've come
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out of the pandemic I love listening to Jamie Diamond rants like I feel like that's
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business ASMR um business ASMR that itself s to be a great podcast I was about to say I'm subscribing that's an
00:21:56
instant $10 a month subscription what do you think yeah I don't know people just said a lot of sh during the
00:22:03
pandemic like do you remember it's like oh handshakes are going to be over business travel is going to be over
00:22:08
every company is going to be fully remote I would say stripe broadly is in a pretty similar spot to
00:22:13
where it was beforehand which is most people go into an office like most people are you know uh part of our San
00:22:19
Francisco office or New York or Dublin or or Singapore wherever and then we have a bunch of people also who work
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remotely I think kind of obviously you know Jimmy is right on some points I think also working remotely has had a
00:22:32
bunch of benefits where there's a way larger talent pool available to companies like stripe and there's a lot
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of people you know you see uh kind of the two body problem where it allows a lot of couples where you know maybe one
00:22:44
partner is assigned to some Hospital in Idaho and like they don't get to choose what hospital necessarily they got
00:22:50
assigned to and the other person gets to work a a high paying Tech job and so I don't know I think when like like one of
00:22:56
the theories for declining dynamic in the US in declining tfp is that allocative efficiency uh of of you know
00:23:02
people declined as women enter the workforce because now you have you know what John describes this two body
00:23:08
problem where you know both people have to make coordinated switches and uh remote work Sol it actually yeah
00:23:16
freeberg you're running a company now you're the CEO of ohalo tell us uh does this resonate with you what do you think
00:23:23
especially about younger people his point and like being rude or being focused being in the media and then like
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maybe there's too many meetings where people are partially paying attention maybe there should be half as many
00:23:33
meetings and people should be paying attention what do you think well there's always room for optimization there we we
00:23:38
deal with this too too many meetings too many people I think what was most striking for me about the Jamie Diamond
00:23:43
rant and the resonance it seems to be having particularly in Silicon Valley and particularly with folks that are in
00:23:49
leadership positions or on boards is that this is another example of what I think is kind of a different tenor for
00:23:57
leaders in business right right now relative to where we were a few years ago leaders are starting to step up and
00:24:03
speak their mind and speak more directly and lead from the front rather than lead
00:24:08
from the back I think the last couple of years and I would say that the whole kind of transition a away from wokeism
00:24:15
and coddled employee workforces which is something that a lot of folks talk about
00:24:19
I'm I'm not trying to just characterize it I'm just saying that's the characterization that's been placed on
00:24:23
it is that the employees made the decisions and then the leaders kind of said okay I'm Ed to the employees whims
00:24:29
and needs and look at what's gone on with Zuck he said you're with me you're against me here's a buyout option Elon
00:24:35
obviously was an Exemplar of this at Twitter uh We've now seen this become coinbase Brian and his letter and we've
00:24:43
now seen this become I think a bit more of a standard in the kind of emergence in the postco era that leaders can lead
00:24:50
from the front speak directly and say this is the way things are going to be my job is not to coddle my employees my
00:24:56
job is to lead my employees so that our organiz our team wins and we achieve our mission
00:25:01
that's the objective it's not to create a family workplace for everyone to be happy all the time it's to help the
00:25:07
organization succeed and so I think I have heard from people individually I've seen this tenor shift underway right now
00:25:14
um and I think that Jamie Diamond is another kind of Exemplar of this that that seems to have some resonance all
00:25:18
right shth I want you to respond specifically to this next clip let's play the second clip about
00:25:24
organizational bloat every area should be looking to be % more efficient if I was ready to depart with 100 people I
00:25:31
guarantee you if I wanted to I could run it with 90 and be more efficient I guarantee you I could do it just I could
00:25:37
do it in my sleep and the notion these bureaucracies I need more people I can't get it done no because you're you're
00:25:44
feeling that request that don't need to be done your people going to meetings they don't need to go to someone told me
00:25:49
to approve some his wealth management that they had to go to 14 committees I am dying to get the name of the 14
00:25:56
committees and I feel like firing 14 chairman of committees I can't stand it anymore all right shth the bloated
00:26:03
bureaucracy at big companies your thoughts well you know there's that adage that says something akin to 50% of
00:26:10
advertising is useless we just don't know which 50% yeah I think it's probably true for most corporate
00:26:17
structures in general which is that a lot of the organizational bloat has evolved because of the way that people
00:26:26
have responded to how you use technology so meaning if you went looked back 50 years ago if you look at that famous
00:26:34
picture of the Microsoft early team they didn't rely on software necessarily there wasn't Salesforce there wasn't
00:26:41
workday there wasn't all of this infrastructure and so instead they probably organized by what they were
00:26:47
good at and they just tried to do things efficiently and I suspect that many companies in the absence of Technology
00:26:53
found a way to just be very efficient that started to change when you had these rigid demarcations of where one
00:26:59
job ended and another job started and part of why that happened is because you had all this software that went in and
00:27:05
convinc people this will create efficiency but in return the chief marketing officer's job is X Y and Z
00:27:11
this is how the roles are defined this is how people do it and so I think that the reason why things have become so
00:27:18
bureaucratic and Bloated is that there is just this propensity to run towards software because you think it's a
00:27:26
solution at best it's a symptomatic Aid it doesn't address the root cause and in fact it promotes
00:27:33
bureaucracy and it promotes the bloat that Jam's talking about and if you look at Jim's p&l he spend $6 billion dollar
00:27:40
a year on it and I suspect that if you screamline that you'd actually have half as many people because they'd be doing
00:27:47
the job in a wholly different way and by the way the the counterfactual to it is
00:27:52
if you look at companies like Facebook or Google or Tesla or SpaceX who design and I'm sure stripe is the same who
00:27:59
designs a lot of stuff internally that's custom built for their or I think the way that you see this in the revenue per
00:28:06
employee and a bunch of these other metrics in terms of the efficiency of those companies so I think what he is
00:28:11
talking about is that he is a victim of this push to productivity because he would look like a lite if he
00:28:18
didn't adopt technology but by adopting the off-the-shelf stuff he introduces organizational blo because these things
00:28:25
are demarked very very rly you got the marketing team as you mentioned using HubSpot and then you got like the sales
00:28:31
team using I don't know organizational bloat the other thing I just want to say on the first
00:28:36
topic is I've mentioned this before other than Engineers who are who are naive but can be extremely
00:28:45
productive from day one there are very few other job types where naivity is an asset most people early in their career
00:28:54
are in a jcurve where they are negatively contributing and the go everybody down and the whole goal is
00:29:01
that you invest in these people so that they come out of the J curve there are probably other jobs that are like
00:29:05
engineering but many many are not and so I think it's important to get the kind of mentoring you get by being in an
00:29:12
office and in the absence of that I think these young people like Jamie said are totally lost that's that's on them
00:29:19
but then for the company they're completely unproductive and useless which is on us hey John uh Toby I I
00:29:25
don't know if you know Toby from Shopify but he did this like zero based budgeting kind of concept for meetings
00:29:30
he just purged all meetings at the beginning of the year he just like deleted everybody's meetings from the
00:29:35
top down I'm curious how you think about bloat and just all of these meetings and
00:29:41
committees do you worry about that at strip we know Toby very well and I don't know I always feel like yeah we should
00:29:48
I'm tempted to uh take some of the ideas like we haven't done the meeting deletion one and you just say oh the
00:29:53
meetings get recreated but they measured it and they didn't it sounds like uh and
00:29:58
I do always enjoy Toby's perspective which I think that you know many organizational problems are in fact
00:30:04
software problems and you know you just need to write a script to literally like
00:30:07
I think he wrote the script to all the meetings uh you know from the Google Calendar instance but uh there's kind of
00:30:13
this Purity that uh uh you're you're over intellectualizing your problems and I do agree with jamat on the remote
00:30:18
thing where like it's it's very dangerous I one thing that can be dangerous with as CEOs think about this
00:30:25
stuff is I think there is these unfair anecdotes that feel unfair that get people really riled up the quiet
00:30:32
quitters the anti-work subreddit you know all these talk of people working two jobs and that generates a lot of
00:30:38
energy with corporate leaders but you don't want to design your policies around like the bottom 5% of the company
00:30:44
that would be a horrible mistake yeah you want to design your policies against the top town and we have some like
00:30:48
outrageously productive remote people and they're off and again the cabin Idaho somewhere just you know Co coding
00:30:53
up a storm the thing that we have seen and interestingly we measured this before covid cuz we were doing a lot of
00:31:00
remote hiring and we wanted to see we wanted to see how much we should lean into it is that it is not good for early
00:31:06
career people we could actually measure it in our productivity Data before the whole discussion about remote work
00:31:10
happened during covid and it's bad from a work point of view it's also just bad from a personal point of view where they
00:31:16
go mad because they're 23 years old and they're not Sol conf exactly literally solitary confinement it's ridiculous and
00:31:25
by the way breaking news here Jamie Diamond now now uh knows which 2,000 or I'm sorry
00:31:30
1,739 employees to lay off first there is a coworker.org petition to get Jaimie to retract his statement so the optin
00:31:40
has been created if I know Jamie I know he'll be uh retracting that statement right away absolutely he will bend to
00:31:46
the pressure of those 1700 mids Patrick how do you deal with mids at stripe how do you deal with the mids the people who
00:31:53
I'm not saying you have any but maybe you've run into because you got over 10,000 employees when somebody's average
00:31:59
that must make you crazy how do you deal with it no the median employee at stripe
00:32:03
is awesome the median employee Atri employee at stripe is is not the median person in the population at large
00:32:10
although I think the median person in the country is we um you know we employ well no I was using the term mids
00:32:17
mids are people who are just average people not the above average strip people who opt into that but how do you
00:32:21
deal with low performance is kind of what I'm getting at well look you need to have an aggressive Performance
00:32:25
Management culture and to stay on top of that and look at it's not it's it's not
00:32:29
good for anyone to keep those people around because nobody likes feeling that they aren't succeeding and so if those
00:32:34
people are you know their careers aren't advancing they're not getting you know positive feedback from their manager
00:32:39
from their peers they aren't shipping things like whatever this is just like not a good equilibrium for anyone so we
00:32:43
really try to you know stay on top of that we track it closely the thing just on this discussion broadly to say is I
00:32:48
think people very readily fall into a kind of normative moralizing perspective on this
00:32:54
stuff of people should be in the office they shouldn't be in the office but like
00:32:57
there's a lot of should here I think it's helpful to just one kind of as John referenced with you know some of the
00:33:03
analysis just you know be quite empirical and objective and just like look at what the data says and and then
00:33:07
second just recognize there's a lot of heterogeneity as in people have different preferences people have
00:33:12
different abilities to work effectively you know when they're by themselves and you know some don't organizations are
00:33:18
doing different kinds of work Nvidia you know last I checked is doing pretty damn
00:33:22
well and you know Jensen is on the record of saying he know doesn't give a about where you work coinbase
00:33:28
Shopify you know they're all these you know remote first companies and then you know I was recently ched the folks at
00:33:32
Jane Street and they really believe that you know being collocated and be able to
00:33:37
share ideas on the trading floor and so forth is is really important but I don't
00:33:41
think these pictures are NE or these worldviews are necessarily contradictory they probably hire different kinds of
00:33:45
people or in different kinds of businesses and so on and so I don't know I guess I'm just skeptical of flat
00:33:50
shoulds in this space and many to yeah many paths to Heaven uh all right so let's move on to our next story
00:33:59
last we just keep in mind and labor productivity in the US is up like 20% in the last 10 years and so just like again
00:34:05
you just you just look at the data just the median person in the economy or the average person is H is producing 20% on
00:34:11
an inflation adjusted basis more than they were 10 years ago yeah that's going to keep wrapping up with AI and all
00:34:16
these amazing tools that are coming out we'll leave that on the side for now because that would be an hourlong rabbit
00:34:20
hole we could jump down but we got to get back into Doge the number well I've heard a couple criticisms of Doge one of
00:34:26
them is it's one-sided we're only hearing about you know people on the left doing griffs and US Aid the other
00:34:32
one is hey you're you're pointing at little tiny things like USA when are you going to get to defense spending and
00:34:39
Social Security well here we are Washington Post is reporting that in between doing sets of 47 push-ups
00:34:46
defense secretary Pete hegf asked senior leadership at the Pentagon to develop a
00:34:51
plan to cut 8% from the defense budget each of the next five years that's compounding 8% here's a chart we're
00:34:59
talking about close to 300 billion in savings over 5 years if uh they hit which isn't a crazy Target 8% a year
00:35:06
it's just crazy in our country where we haven't even been able to have our defense department pass a basic audit if
00:35:14
you've seen those type of reports let's pause there and just talk about military
00:35:21
spending chth I think that military spending needs to sit Downstream from technology because if you if it doesn't
00:35:31
you're sort of misappropriating the money and what I mean is that we're inventing incredible capabilities in Ai
00:35:39
and autonomy I think that you need to take those things first and figure out how to productize them because I think
00:35:45
that builds the kind of modern war machine we need otherwise what happens I tweeted about this Nick maybe you can
00:35:51
find it but like the CBO red flagged a project where the Navy was about to appropriate $1.2
00:35:59
trillion to build frigs now there's a body I think of of military planning that says this is a projection of power
00:36:06
and so you need to spend this kind of money because people want to see the big boats and the Big Iron in the water okay
00:36:11
and and maybe there's something about that but the reality is you can't be spending three or four billion dollars a
00:36:17
boat and taking you know eight nine 10 years to build these things it's so this is not sustainable and part of why they
00:36:25
do that is it's not coupled to what's actually happening with respect to Innovation where there are core pockets
00:36:32
of companies Sanic just announced a $600 million raise today sa drone announced hundreds of millions of dollars of
00:36:41
contracts with the Navy andril is doing that with the army so I think that military spending needs to happen
00:36:46
Downstream from what's actually happening in technology broadly speaking we don't have that what you have instead
00:36:53
are system integrators with extremely deep connectivity that are able to contract well not necessarily to invent
00:37:01
well freeberg any thoughts there on cutting defense spending obviously we have uh to chat's point amazing Founders
00:37:11
like my guy pommer lucky cutting the cost of very important uh AR he hates that's my guy my bestie oh no we it's
00:37:19
all a joke everybody calm down we just have a little hates you Jason heally listen I know all the board m
00:37:29
Rel to your Ranch he loves J he loves it everybody needs a foil uh it's all sorts
00:37:35
of problems for the rest of us when you go out and talk about people for no reason it's great what are you talking
00:37:39
about I never talk about stripe guys you don't have any beef with employees mids for no reason for no
00:37:45
reason you're just like oh what about your mid was a hypothetical yeah okay I did say that you you guys pocketed 500
00:37:51
large look we we can come to the summit and you know Palmer Style just like long list of things I've said
00:38:01
about yes absolutely shout out to my guy Palmer lucky but what do you think freeberg for serious let's get back on
00:38:06
track here okay so here's what I here's what I think if you take defense down to
00:38:10
First principles there was an excellent tweet that we were all texting about yesterday it made the
00:38:16
observation that Trump's negotiations with Russia and China where there's all of this Heming and hawing about those
00:38:23
negotiations being complying with the wants and needs of dictators may actually be a shift in strategy on
00:38:31
the global relationship the United States has with other Global powers in particular a shift from the objective
00:38:39
being about us Primacy and the us being kind of the sole great power on Earth to
00:38:45
recognizing that that's no longer the case and that in a multi-polar world we no longer need to invest in Wars need to
00:38:53
invest in conflicts need to invest in defense with supposed allies to try and build up our strength across the globe
00:39:02
and I'm not saying that this is necessarily the right strategy but it was an observation that maybe the
00:39:06
Strategic imperative is now to have kind of a a multi-polar stance in the world rather than a stance of Primacy and in
00:39:12
that framing you then ask the question okay at make that the case now if we do agree that we are all going to settle
00:39:19
into a new world where China Russia the United States are not necessarily equal Powers but shared Powers across the
00:39:26
globe in that context do we need to have as much of an investment in global defense do we need
00:39:33
to continue to pour dollars into building up arsenals and military bases and troops and stations and positions
00:39:40
All Around the World perhaps not perhaps the world gets divided peacefully and we
00:39:44
open up global trade relationships and everyone benefits economically from the advances in technology and improvements
00:39:49
in productivity and the world order is peaceful but multi-polar maybe that's the new era that we're entering and in
00:39:56
that context you need as much of a defense and separately to chamat point there's different technology that's now
00:40:02
in play we've seen it in the Ukraine Russia context that a $10,000 drone can destroy A10 million piece of equipment
00:40:08
and China now has drone factories that can output millions of drones each month so if China develops this new type of
00:40:14
Arsenal with millions of autonomous flying systems that can go and attack troops and attack expensive pieces of
00:40:21
equipment do we really need aircraft carriers do we really need tanks and I think that's the whole hegf Le um Trump
00:40:28
Le conversation that's underway in defense right now number one multi-polar number two therefore we don't need as
00:40:34
much defense spending number three maybe the defense spending that we do do should account for the new technology on
00:40:40
in play in the battlefield and that really changes the character of how the defense department is structured and how
00:40:46
funding is structured so that's really I think the way to look at it versus hey let's just cut defense spending for
00:40:50
cutting sake um and that might be what's going on right now a holistic view of it
00:40:54
Patrick any thoughts on uh what we're seeing in fense Tech and uh saving money through Doge well obviously what um what
00:41:03
you know Andel and others are doing is is pretty amazing um but you know we're we're obviously not defense experts uh
00:41:09
but sort of just bring the credit card merchant uh perspective uh to Bear here uh you know we naturally just go and
00:41:14
look at the the time series um and the sort of the data around it and I guess I'm struck by again maybe I'm getting
00:41:20
some of the details wrong here I'm this is outside of our Zone but as far as I can tell the cuts proposed over the next
00:41:28
couple years of the for the defense department are of approximately the same magnitude as the reduction in the
00:41:34
defense budget that occurred between 2010 and today and so it's not like this is some unprecedented transformation in
00:41:42
DOD budget uh we we we've done this and then secondly you know as far as I can tell one of the most ecumenical
00:41:51
uniformly shared bipartisan issues in Washington is the in efficiency and the pricacy of Defense procurement you jimes
00:42:00
Fallows writing a book about this in the late 80s you had you know Augustine's laws and their whole book about this
00:42:06
just everyone seems to you know uh fervently believe um that defense procurement is monstrously inefficient
00:42:12
now you know it's possible to make budgetary changes without fixing that but obviously the prospect of meaningful
00:42:19
Improvement there uh seems uh seems like it would be you know really beneficial and if I can just give a
00:42:25
quick book recommendation this book Boyd by Robert korm about John Boyd the Air Force Colonel who you know was part of
00:42:31
the reformist uh movement I feel like everyone in Silicon Valley has that book on their shelf and no one's actually
00:42:36
read it but it is a exactly it it is kind of referencing sprinkling some UDA Loops into your remarks uh always helps
00:42:44
exactly yeah yeah yeah um sounds smart but uh that is a great book and it's a book about Air Force procurement
00:42:50
essentially where he had his you know basically the story is that the Air Force generals of the time wanted planes
00:42:56
that were bad and he had a theory about better fighter jets uh and he had his fingerprints all over the F16 and the
00:43:01
A10 and the F-15 and uh various aircraft and it was a real battle to get the Air
00:43:09
Force to produce better aircraft and they really you know the generals really wanted these bad aircraft that they had
00:43:14
planned and so that's a fun read at this moment in time when it feels like we have this similar transition from man to
00:43:21
name of the book again I know there's many books about it's called Boyd by Robert corm and it's a it's a really
00:43:26
engaging read it's also just very well written it's this kind of narrative non-fiction style yeah this there it is
00:43:31
okay everybody another book selection from the all-in book club brought to you by stripe use the code Allin to get a
00:43:40
year free of got the stripe press books absolutely oh you do actually have a series of cool books yeah we'll uh we'll
00:43:46
plug those towards the end uh all right shath you added a crypto update crypto corner is back we had an exciting week
00:43:55
of innovation in the crypto space last week Argentine president mle who is a hero to a lot of people in uh on the
00:44:04
right or for government efficiency promoted a meme coin it was called Libra dollar sign Libra and uh he originally
00:44:12
tweeted this private project will be dedicated to encouraging the growth of the Argentine economy uh with a link to
00:44:22
Libra for his citizens to go buy it and buy it they did but he deleted that tweet when this whole thing came apart
00:44:28
and said I was not aware of the details of the project and after having become aware of it I decided to not continue
00:44:35
spreading it the market cap ripped 4 billion it crashed 95% as these meme coins always
00:44:41
do 74,000 Traders lost almost 300 million 24 wallets had losses over a million and mle has been
00:44:51
sued 100 plus times already and this just happened last week he's being investigated by his own government now
00:44:59
and uh there is an impeachment uh attempt underway by the opposition mle's team told CNN that his endorsement of
00:45:07
the coin was a mistake really oh wow going on a limb there according to insiders Malay never actually owned any
00:45:13
Libra and was not associated with the coin I think family members maybe put him up to it the details of why he
00:45:21
promoted it remain a little bit unclear there's a lot of speculation jamat your thoughts it's kind of crazy I mean he
00:45:28
was on such a positive upswing of momentum it doesn't make much sense why he got embroiled in all of this the the
00:45:35
problem with this though is I think that the cover up is always worse than the crime itself so the first message was
00:45:41
you know very Clinton esque like I did not have sexual relations with that woman he was like I did not endorse it I
00:45:49
just shared it was his justification for how he how he um could rationalize what
00:45:57
he did the kid that's behind this thing Hayden Davis I think is his name he was on coffeezilla was an incredible one
00:46:06
hour did you see that the coffee Zilla intervie well I saw I saw some of the clips on X and it was pretty Brazen
00:46:11
because he he essentially said that he had Javier Malay in his pocket and then there were text messages that use some
00:46:19
pretty colorful language to basically say the same thing then on top of that there were some text messages that
00:46:24
seemed to implicate malle's sister as having got some of the money from all of this I don't know the whole thing just
00:46:30
makes absolutely no sense that he was doing so much good and now he's goingon to go through this whole cycle of trying
00:46:36
to wash his hands of this whole thing it's a complete waste of time and effort I don't know why he did this and there
00:46:42
was another like interesting little tidbit uh fredberg uh friend of the Pod David pornoy supposedly he's been
00:46:51
getting in on this and he's a gambler and he loves gambling and he looks at as gambling obviously he had put reportedly
00:46:56
millions of dollars into this and this guy we're talking about gave him his money back this guy also has something
00:47:03
like a hundred million sitting in a bank account anywhere what's your take on all
00:47:06
these meme coins Freer I don't like them I don't think that they're okay like good I don't
00:47:13
think they're productive all right I think that a bunch of people are going to put money in and lose money and a few
00:47:19
people are going to make a lot of money and you know but at the end of the day it's no different than the people that
00:47:24
sell trading cards or the people that create and sell Collectibles and get paid for them and this is just
00:47:30
effectively a digital Collectibles business unfortunately I think it's like Amplified by like a thousand X because
00:47:36
Collectibles businesses have friction and they're manual and you got to ship them and this creates um a bit more of a
00:47:42
digital frenzy where you see the social feedback loop happen really quickly in real time and that drives these things
00:47:47
to a high value which means people have the ability to lose a lot more than the otherwise qu but look I mean these are
00:47:52
not helping the financial system get rebuilt as we talked about earlier they're not uh creating productive value
00:47:58
they entertainment mechanisms just like any other kind of gambling system might be and you know people can choose to do
00:48:04
that if they want but personally I'm not into it I just think it's stupid but whatever Patrick their own yeah do you
00:48:10
think these are like Collectibles or do you think they are perceived by the people buying them more like Securities
00:48:19
and more like Bitcoin they do uh to steal me on the other side of the argument uh they do trade with a ticker
00:48:24
symbol they are traded uh on major platforms like coinbase and Robin Hood and people share charts about them and
00:48:35
so where do you stand on it you're in the finance business mem coin's good mcoins
00:48:40
bad I'm basically with Dave I mean I well they seem to me to be maybe analogous to to gambling um which you
00:48:53
know I don't know that we want to ban gambling uh like if you're able to do it responsibly and you
00:48:59
understand what you're getting into and so forth like I guess that's fine but as
00:49:04
you say judging by the tweets that I see there are a lot of ticker symbols and charts and prognostications about future
00:49:16
price trajectories and so forth that lead me to think that people are placing somewhat more weight on the asset and
00:49:22
security value of these uh as compared to the I don't know some numinous intrinsic
00:49:27
aesthetic value so John maybe two things could be true here people are gambling and they are
00:49:35
being presented as financial instruments and they're trying to trick the suckers
00:49:39
at the table the suckers in this case being the people who voted for Malay to chat's point this is the unbelievable
00:49:45
self home of the of the decade yeah look I don't like meme coins I think they're
00:49:51
bad and I think they're part of like Patrick said a broader swaye of things that we need to figure out Society where
00:49:59
the legalization of sports betting and combined with highly targeted advertising I don't know if you guys
00:50:05
have seen the stats on you know whales in sports betting losing very large amounts of money and it's just these
00:50:11
heartbreaking tales and there's a very large number of them of people kind of losing much more than they expected and
00:50:19
I don't know we have to to reckon with these societal questions I don't think the super easy answers they come along
00:50:25
from time to time learned recently that um state lotteries are a relatively recent phenomenon like I think it was
00:50:31
one state started doing it in the 1970s and then a bunch of the other states followed suit but it's kind of odd when
00:50:36
you step back that like I pass a billboard on 101 for you know the state of California trying to you know get me
00:50:43
to buy Lottery a negative e EV bet yeah just like but but that's become very normalized and so I think it's a bucket
00:50:50
of hard questions here around you know beam coins Sports gambling whatever I don't know what you do but there's a lot
00:50:57
of meme coins are not the only place you find these very heartbreaking stories this is the this is the first time where
00:51:03
they've actually talked about at least where I saw the details of how this stuff happens because he laid it out and
00:51:09
there's these people called snipers that go and like pump up the bids right as soon as the coin gets launched and then
00:51:16
they're able to Fe so there's like this entire mechanism Soo shady I was gonna say some there where I I feel like the
00:51:24
specific thing within beam coins probably most pernicious is like the rugging dynamic and if you could have meme coin
00:51:32
girl but without the without the pump and rug if it was like I don't know just some mimetic tracker of some sentiment
00:51:40
or something like maybe that' be okay but the the the like the particular way in which they seem to be you know
00:51:46
employed is like yeah some some sort of discontinuous run up and then well the rug what do you think J I agree with you
00:51:52
chath uh Malle had the greatest PR run of all time I think I mean he became an inspiration to all
00:51:59
of us here in America who were concerned about the deficit and outof control spending and ridiculous departments we
00:52:07
heard Jamie Diamond talking about ridiculous committees and all this nonsense I don't know if you guys
00:52:11
remember but remember he was like minister of culture AA and minister of genda AA this was the precursor to of
00:52:19
course Doge where now we're like USA deleted Department of Education deleted you know defense department Min - 8% and
00:52:28
you know what I really find terrible about this is that what it means for leadership what mle did was he rug
00:52:37
pulled the people who put him in office the people who voted for Malay are the ones who got hurt here and when you
00:52:44
think about leadership at its core it really is about putting the needs of your constituents ahead of your own
00:52:50
interest the needs of your investors in the case of you know if you were running
00:52:54
Stripe Right you got to think about all these shareholders leadership you know at its core is I think setting the
00:53:00
example right you set the St the standard the moral the ethical The Vibes the culture you set that standard he had
00:53:07
set such a great standard that we all loved and you know the appearance of impropriety is impropriety in my mind
00:53:16
that's the leadership standard that should be here so even being near this your sister launching it your brother
00:53:21
launching whatever it is he then went on to taunt this is where I really you know
00:53:25
like people make mistakes but and this is a stupid one to make but the taunting of his own followers you know I'm out on
00:53:32
Malay right now this is what he said the reality is if you go to the casino and lose money I mean what is the claim if
00:53:38
you knew that it had these characteristics this is another failure of leadership leaders own their mistakes
00:53:45
they don't attack the victims you take ownership of it and the way you should judge people I think is what they do
00:53:51
when they're given a lot of power and what they do when they make mistakes mle is a failure on all of those those
00:53:56
fronts it's absolutely abhorent that's it thanks for coming to my TED Talk No I'm just I'm on fire about it I
00:54:05
just think it's like really terrible do you need help getting off your moral grandstand now I do
00:54:11
actually yeah I'm over I'm sorry I actually care about morals ethics and Leadership I think that there's a
00:54:17
standard set by these people that's what I that's what I think about when I think
00:54:19
about you yes of course thank you uh all right with friends like these cson brothers can you imagine imag please say
00:54:27
okay I'm so annoyed can you please say their name pronounce the goddamn eye I'm pronouncing the Irish okay we we
00:54:35
speed things up a little bit we we put them together it's a little bit different you wouldn't know this from
00:54:39
being from Sri Lanka a great country you guys wouldn't know why anyone watches this show would you yeah
00:54:46
I don't knowbody says no context for this why you make every show a train wreck and we
00:54:52
have to get it out of the the banter is why why people come people listen you know so many TV shows are about it's
00:54:58
nice to have friends I mean you look at friends or How I Met Your Mother my wife
00:55:01
and I are rewatching The West Wing right now and it's basically a show about you
00:55:05
know yeah but it's just like all buddies and loyal to each other and everything and I think the underlying idea behind
00:55:11
lots of TV shows is it's nice to have friends and I think that's the the success the all in sng by the way is an
00:55:17
Inc is an incred which season are you on it's an incredible show we're up to season four now God I gotta get five or
00:55:24
seven never got in on the west of course sorin left after season 4 and so many people said of the whole thing about the
00:55:32
great debate that America needs to have I think is still like the missing aspect
00:55:36
of modern politics is the great debate yeah well the great debate is like let's talk about the topic that's at hand and
00:55:42
talk about it on the merits of what's right for the country as opposed to everything being about attacking because
00:55:47
the other side brought the idea forward and now we have to attack the other side
00:55:52
and frame the idea as being beneficial to them and hurtful to us nothing actually gets resolved because we don't
00:55:58
end up having objectivity around these conversations around some of the major issues that the country faces many of
00:56:03
which by the way both sides have valid points of view and if we can kind of have the great debate if we can have
00:56:08
these conversations like Doge right like abortion like you know the rights of States like spending like there are all
00:56:16
these things that we should be talking about rather than use that moment as a way to attack the other side politically
00:56:21
so I can make sure I've got points and Kudos leading into the next election cycle it's just awful anyway I missed
00:56:27
that about the West wi it feels like a purest like just a beautiful like way of thinking about I wonder what it would be
00:56:32
like to watch the westwing and then House of Cards back to back that's something I should no but it's like
00:56:38
really a ju to position those two different shows yeah but they've isn't The West Wing kind of the opposite of
00:56:43
what you just said you want the all in to represent because I see I see the westwing as being sort of fully immersed
00:56:50
in and representing you know one sort of particular worldview there was you know
00:56:55
there was inms since we look back on the 990s at the Clinton years or something as you know this period of great Harmony
00:57:00
in the country and you know that Harmony might have been great and the economy was doing well and you know all the
00:57:03
things um but it wasn't exactly a period i whatever I wasn't here in the 90s but
00:57:08
you know from afar it did not feel to me when I was eight or whatever as a period
00:57:12
of tremendous ideological uh debate and fervor and schisms and all the rest during the 90s during the Clinton era
00:57:20
you're think yeah yeah and I think I mean maybe I'm wrong but I think of the west wing as you know a kind of
00:57:25
recapitulation maybe they were I mean maybe they were the compromising party because I mean
00:57:31
tell me another modern Democrat president that's had any point of view on balancing the budget and creating a
00:57:37
surplus which was aligned with the Reagan point of view at the time and he kind of you know again as Jal says he
00:57:43
was a Centrist and he brought brought the the parties closer together rather than further apart with how they I agree
00:57:49
with Patrick the thing that makes the westwing a great show is that it's about The Insider nature of the White House
00:57:55
and the West Wing where you see these characters like Toby who would never be a star in any other show under any other
00:58:03
circumstance on any network ever and instead he's one of these Central quasi good quasi nefarious bully kind of you
00:58:13
know he was like a the precursor to the Rah Emanuel archetype in the Obama White
00:58:17
House I think I also find it funny where you know the way uh Dominic Cummings has
00:58:22
talked about just his experience of life in government was that it's so distracting trying to get anything done
00:58:28
because you know you have some plan you get up in the morning and you're going to go do something that matters for the
00:58:32
country and then you're just instantly by 8 a.m. you know sideswiped by some kind of silly controversy of the day
00:58:38
that's basically many of the episodes of the westwing where they like have some actual important thing that they want to
00:58:44
get done and then they just get whed by a silly controversy yeah seems to me like you're also the product of the
00:58:52
technological innovation that occurred during your presidency and during your term and if you think about Clinton he
00:58:58
got to ride the internet and this massive economic boom and you look at you know Reagan the pce boom I mean
00:59:06
sometimes the timing really matters I think um though I think you know and again I'm not any Grand expert on the on
00:59:13
the Clinton years but I think you know it is interesting where you know one of the first acts of the Clinton presidency
00:59:18
was the was the deficit reduction act um you know Dave to your point you know when's the last time that a you know a
00:59:23
Democratic president you really really cared about the deficit and I think federal spending fell by Five Points of
00:59:30
GDP over the course of the of the Clinton presidency which is really not a small amount you know so obviously there
00:59:35
were some kind of structural Tailwinds from you know technology and the internet and all the yeah a bunch of
00:59:40
that was defense but but like nonetheless so he did the in the last two administrations and you look at
00:59:47
California there were massive Windows of surplus and there were massive Windows of a surging stock market over the last
00:59:54
eight years and we plundered and we wasted them by adding 16 trillion to the debt during a good time like what's
01:00:03
going to happen during a bad time just absolutely brutal let's move on where do we want to go here we got grock 3 we got
01:00:11
the China private sector we got a victory lab for freeberg I want to ask you guys questions about Arc Institute
01:00:16
and the Evo model we should do that let's do the arc Institute freedberg why don't you ask the question Patrick runs
01:00:23
the arc Institute right okay yes I'm one of the co-founder and then there were scien and you guys are fund of it or
01:00:29
yeah maybe you guys give us the a lot of money into this yeah yeah so the arute is a nonprofit it does basic biology
01:00:36
research it's in paloalto Nexus Stanford it's about 230 people today and uh yeah
01:00:42
John and I are among the funders of us but there's a there's a bunch of other very generous donors can you explain
01:00:47
idea of curiosity driven research that's on the website yeah there's kind of two
01:00:50
things behind this so the first is scienti the vast majority of biology scientists today receive NIH grants
01:00:57
doing basic research and the NIH grants are one just hard to get and annoy to get you know assigned TOS spend 40% of
01:01:03
their time working on Grant overhead and so forth but worse like even more perniciously the grants are very
01:01:08
restrictive in terms of the kind of science they can do and so we ran a survey of scientists back a couple years
01:01:13
ago of top scientists and four out of five like 79% of them told us that if they could just spend money however they
01:01:21
wanted if they weren't kind of limited by you know what they're prescribed by these nhh grants for told us they would
01:01:26
change the research agenda a lot um and so I think the analogy here is imagine if there was only one VC firm and it was
01:01:33
run by the government how would that VC firm had strong opinions on what kind of
01:01:37
companies people should build exactly and you know literally the the grand panels at the NIH are um they're
01:01:43
consensus based like explicitly they've consensus based scoring mechanisms and they you know penalize you if you're
01:01:49
doing work outside of your field and so forth so I we we kind of we go to all this work to train these amazing
01:01:55
scientists and then we sort of don't let them pursue their best ideas that's kind
01:01:57
of problem one and Arc The Arc investigators you know they're fun to do whatever they want curiosity driven
01:02:03
research and then the second thing behind Arc is is this idea that you can kind of divide diseases into three
01:02:08
categories you know you have infectious diseases and we we you know broadly speaking know how to you know generate
01:02:14
cures for and treatments for infectious diseases we've monogenic diseases like one genetic mutation or something and we
01:02:20
don't know how to cure those in most cases but we can we can you screen for them and so on um and then we you know
01:02:26
what the biologists call complex diseases where there's some kind of Gene environment interaction that's most
01:02:30
cancers most autoimmune diseases most neurodegenerative diseases and so forth Alzheimer's things like that exactly and
01:02:37
we've never cured a complex disease and you know many of these diseases are very
01:02:41
tragic precisely because you know we not only have we not cured them we don't even have treatments as you know as John
01:02:46
says uh in in the case of Alzheimer's for example and so you know the question is can we do something about this and
01:02:52
you know what would a research agenda and program that you know can that can help you know shine some light on these
01:02:58
complex diseases look like and our hypothesis you know we'll see we'll see uh how much it's born out but our
01:03:03
hypothesis is that we've gotten a couple of new technologies over the last couple
01:03:08
of years single cell sequencing we can sequence the the DNA or the RNA just like in one cell uh We've you know fancy
01:03:15
new functional genomics and crisper Technologies uh so you can make these you know fine edits and perturbations
01:03:20
again even just in a single cell and then obviously you have Transformers and Ai and ML and all this stuff and this is
01:03:25
kind of a new read think write Loop in biology that just didn't exist a decade ago and again
01:03:32
the question is is this powerful enough now to you know solve some of these previously intractable uh diseases and
01:03:38
so yesterday Arc released this new uh Foundation model for biology it's the largest biology ml model ever it's it's
01:03:48
it's actually I think the largest open source AI model ever this is evo2 you're talking about EO the number two Evo two
01:03:56
and so it's not just open weights like uh like you know the Deep seek model or or llama or something it's actually it's
01:04:02
open source and the training code is uh is public and you know you can people can go read the blog post of the paper
01:04:08
whatever the thing I find amazing about Evo and that just really surprised me is
01:04:12
so it's trained on nine trillion base pair Gene tokens so you know uh chat gbt llms are normally trained on on you know
01:04:21
the on on human language this is a a language model but it's trained on on DNA the language of life and there's
01:04:28
only one human genome in the training set it's mostly other species and even though it's only seen
01:04:35
one human genome it's state-of-the-art at predicting the pathogenicity of human genome mutations and so you know a
01:04:44
famous mutation is the brocha mutation for breast cancer like it's state-of-the-art at predicting the the
01:04:50
pathogenicity the harmfulness of uh of brocka mutations again it only desite never having seen one humans it's it's
01:04:57
only seen one human genome and that human you know did not have these pathogenic mutations and so it's it's
01:05:02
kind of learning something deep across the tree of life and I know I find that pretty cool and sorry is there a
01:05:07
phenotypic data set that's used in training so I think like you know typically right and so when you're
01:05:14
building models in typical like genotype by phenotype models you're trying to look
01:05:20
at the phenotype the physical characteristics of the organism what can it do what is look like what are the
01:05:26
features and then you look at the genome and so that tells you hey these are the
01:05:30
specific genes or alterations or mutations that drove this particular phenotype is kind of what the model
01:05:36
tries to learn over time with the objective being hey can I ask it to define a genotype or a genome based on a
01:05:42
phenotype based on a physical set of characteristics I'm looking for vice versa maybe you can just help us
01:05:47
understand what what is it trained on and how you know how did that kind of you know prediction in braa you know how
01:05:53
how is that possible great question so it's totally unsupervised that is to say You Know You're just showing us lots of
01:06:00
genomes uh and any kind of latent structure that it learns is just based on trying to figure out how to kind of
01:06:05
organize uh that knowledge but we're not showing it any labeled data or phenotypic you know kind of outcome data
01:06:11
or you know what have you and so then you're able to you can give it a genetic sequence and ask relative to its
01:06:18
understanding of genetic Universe how lightly is this particular sequence and so then you can do things like uh like
01:06:24
you know predict anomalousness or pathogenicity or whatever right you can also then kind of using the embeddings
01:06:32
of the upper layers we need to get two technically here but like you you can train another model on top of the model
01:06:38
um and uh and even if you show it maybe only a couple of examples it learns very
01:06:42
quickly okay kind of here's you know here's how the weights of evo2 correspond to this particular task and
01:06:49
those uh those sort of models trained on top uh turn out to be you know really accurate you guys open source the base
01:06:56
model or you open source the fine-tuned or both we open source the base model but there's no kind of proprietary
01:07:03
reason that we didn't open source the fine tunes like it's really easy to produce them and yeah if anyone wanted
01:07:08
one of them we we we'd happily share it where does it stand in the spectrum of different tools that folks would would
01:07:15
use to solve these Life Sciences problems there's cell models that are being developed by some then there's
01:07:20
these protein models where does this fit this kind of landscape of of um of foundation models in biology it's
01:07:28
obviously very new so it's a um it's a bit of an open question sort of how exactly people are going to find you
01:07:33
know ways to to to use it and and applications for it part of I think is cool is
01:07:38
that proteins and RNA and I mean phenotypic expression and everything you know all these things sit on top of the
01:07:45
DNA like in some sense the DNA encodes everything because you know the the whole organism comes from the DNA and so
01:07:51
I guess the question would be and you know we don't really know yet is DNA all you need uh and with EVO One we saw some
01:08:00
you know encouraging uh suggestions that for example you can build really good protein structure prediction models out
01:08:07
of a DNA Foundation model even if you don't train on a lot of you know protein structure uh data so but I I'd say just
01:08:13
it's a really exciting time and it's kind of an open question and I don't know if you analogize evo2 to I don't
01:08:19
know whether it's gpd2 or three or something but you know I think we're going to see a similar Cambrian
01:08:24
explosion of of applications over the next couple years the thing we really excited about at ARC is is training yeah
01:08:32
cell State models and trying to better understand you know how cells you know what what causes them to change States
01:08:39
and so we're thinking a lot about that but but you know the reason the the weights are in hugging face and
01:08:42
hopefully we'll be surprised in in what Patrick do you just expect that over time as stripe continues to grow you can
01:08:48
just take the ex some of your own excess capital and other people will do the same and keep funding Arc and then if
01:08:54
there's something that Arc creates or innovates on if it can generate some amount of money it would just kind of
01:09:01
flow back is it meant to be self-sustaining or is it always just going to be via patronage from
01:09:06
successful folks that just want to keep it going John and I are you know we are ourselves very committed to it and um
01:09:13
and you know we're we're kind of underwriting it in that regard but well one we're just lucky where there's a a
01:09:20
growing donor pool of other people supporting it I think it's just better for an institution if it's not kind of
01:09:25
be P into the whims of you know one donor one group of donors or something so I think that's just a much healthier
01:09:30
uh structure for it I think there's also a larg group of people who are just becoming interested in science and
01:09:35
realizing I mean you know Jason was on his uh his moral Pulpit my Pulpit is that you know all is not well in basic
01:09:43
research uh in the US today and again the way to see this is to just talk to the scientists themselves and they tell
01:09:51
you um how kind of inhibited they are and you know the the the kind of problems caused by the
01:09:56
strictures and structures around them and we don't see Arc as you know the answer hopefully it can be sort of one
01:10:04
point in the space but then you know there's other people doing cool stuff you know Brian Armstrong of course
01:10:07
started ACC companying the longevity space and Yuri mner and other started alos and you know this is people this
01:10:14
the Chan Zuckerberg Institute and so you know people are trying different things but
01:10:20
no Arc is um you know we're we're very happy to support it and then if if you know it's possible that Arc over the
01:10:25
long-term become self- sustaining but you know that's well that was my next question is yeah it takes a while to get
01:10:29
things into the clinic so you know we're not holding out for that tomorrow well I
01:10:33
you know when they uh they have this technology transfer department at every major university where when scientists
01:10:39
get grants and they work on some Innovation it gets monetized and so what happens here who owns the Innovations
01:10:46
how do you license them because it would be amazing if it just wasn't based on I
01:10:51
believe you guys have put over a billion dollars into this that was my understanding is that true just like you
01:10:56
guys are over a billion dollars into this effort not quite the numbers yeah not quite the numbers are public so Arc
01:11:02
spends around 100 million a year oh okay and it started about uh three years ago
01:11:09
so so hundreds of millions of dollars this is a really significant thing yeah and and again I want to emphasize there
01:11:14
there are other donors um so it's not just us but I mean it's a nonprofit there there have been spin outs and
01:11:23
there will continue to be and so if one of those know really if one of those becomes madna or you know the next OIC
01:11:29
or something then you know that could be really good for Arc and Arc might have an endowment and be able to kind of
01:11:34
self- sustain and so forth uh we're we're there's no Prospect for us to make money on it in the sense that you know
01:11:40
it's aprit yeah well actually John yeah just one thing there I was talking to a friend of mine you could if this thing
01:11:47
actually hits you could flip this nonprofit for profit I got a guy you could talk to John go ahead oh strays
01:11:55
on the whole like modeling world we talk a lot about the idea that you can kind of use a computer State the phenotype or
01:12:02
the physical characteristics you want in a biological organism and have the software resolve the whole genome all
01:12:09
the DNA needed to make that physical organism real and it can do it from its prediction ability on what genes what
01:12:18
combinations but we're a couple orders away from that right I mean I think like ultimately we we always talk about hey
01:12:24
we want to be to define or have the software Define the plant that can grow on the surface of Mars it knows the soil
01:12:31
type of Mars it knows the air you know it knows that it's carbon dioxide based it's 10% of the Earth's atmosphere it
01:12:38
this is what the day the daylight structure looks like it needs to be wind tolerant and then the software predicts
01:12:44
an organism that might be able to do that you know and obviously there's a lot of this predictive work going on in
01:12:48
proteins then the higher order is cells so single cell organisms microbial organisms and then ultimately multi
01:12:55
cellular organisms so plants and then finally animals where you could basically create organisms from scratch
01:13:00
using software because we have all the other tools to biologically put these pieces together today but this is a
01:13:06
great kind of I I view it as a pyramid there's a ton of phenotypic data that still needs to be fed in ultimately to
01:13:11
kind of have us all understand protein protein models and and a lot more to it but it's a great I think I think that's
01:13:17
right like you can uh this there's a certain amount you can probably derive sort of uh you know from first
01:13:22
principles just by looking at the genomes but I think the really powerful model model are going to need to do
01:13:26
exactly what you say and to feed in a lot of ancillary phenotypic and and just kind of other data how they fa in
01:13:32
different environments and the sequencing data got ahead of the phenotyping data because there's so much
01:13:37
sequencing data that's com in so you can do a beautiful job predicting like correctness in a genome but and this and
01:13:44
the sequencing data is really nicely digital whereas you know the phenotypic stuff it's like well even is the data
01:13:50
yeah totally Dave sorry while we're in the science corner I have a question for you Dave which your strawberries you
01:13:54
might know answer to this a bunch of tree species around the world are under attack so in Ireland we have this
01:14:01
problem of the Ash dieback Ash is kind of Ireland's national tree they use it to make Hurley which is you know the for
01:14:06
the national sport and uh since the mid-2010s you know especially as the live plant trade has ramped up we need
01:14:11
to get a a hurl for uh for for for Jason Jason absolutely I put right here on the
01:14:17
Shelf the American chestnut here yeah no exactly I was going to reference the American chestnut as well in the US but
01:14:23
it feels like we have this real problem and it's so where so many beautiful trees are under
01:14:27
attack the bar the bark beetle in in California and you know the the various conifers that we're losing so we got to
01:14:33
Sol the blackp disee the blackp fungus and cacao and coffee is being destroyed TR4 is destroying banana right now Doom
01:14:40
let's go no no like it's a real like is a real this is a real issue down to the science corner here so this is um yeah I
01:14:47
mean this is exactly what we aim to address at ohal so in some cases you can actually silence a gene that's a
01:14:53
suppressor of immune function of the organism which can actually improve disease resistance but how do you do
01:14:59
delivery of that do you like this Airborne sprays or what's the yeah how do how do how do you treat the tree yep
01:15:05
so ultimately if you're going to use a a genomic method you would transform the genome so you would edit the genome and
01:15:13
you would regenerate a plant or regenerate a tree and then propagate that tree okay but then like we we have
01:15:17
to replant all the trees we to replant the trees we'd have to replant the trees and ultimately do custom projects can we
01:15:24
do a little thing on Ash in Ireland absolutely that is some of the work we do so we announced a few weeks ago a
01:15:29
partnership with University Florida to use our methods to basically introduce disease resistance for major fungal
01:15:36
pathogen that's destroying the Florida strawberry crop and so that's what we call a trait program at ohol where we
01:15:41
can identify specific genomic trait that we can go and introduce into that plant
01:15:46
but then you're right you do have to grow all the plants back and then put them back in the ground that's the
01:15:50
second best to to Pure Extinction but um I have in in Ireland I ended up owning this kind of country house and uh virgin
01:15:59
woodlands where you know Woodlands that Ireland was used to be fully forested and then was denuded with the arrival of
01:16:06
Agriculture and there's uh some kind of ancient Woodlands on it that are from the original when Ireland was fully kind
01:16:11
of covered in trees and I find the die off of species very sad and so we got to get yeah but no it's I'm not like I I'm
01:16:19
I'm very optimistic like we know how to address these Solutions we know how to regenerate the trees we can we we can do
01:16:25
this quickly we can resolve these problems but you are right I think you should be selling a skew a skew to the
01:16:30
people in Tahoe like you know the Tahoe Basin has been so worse than decimated as in decimation
01:16:36
is only one in 10 which is like you know half the half the trees in in Tahoe have
01:16:39
been hit by by bark Beetle so those are very interesting ones because insects you can actually build very specific
01:16:46
defense mechanisms against uh insects but we generally have to improve genetic diversity and in doing so you know there
01:16:55
there's a natural resistance because the evolutionary like like the reason we have a TR4 problem in banana all the
01:17:01
world's banana that we grow commercially comes from one original banana clone called dwarf Cavendish and they took
01:17:07
that one plant they cut clippings of it put it in the ground grow another plant cut clippings of that and they kept
01:17:11
multiplying it so all the bananas we eat and all the bananas that are planted across tens of millions of Acres
01:17:15
worldwide come from one original clone and because of that this fungus has been exceptionally capable of evolving itself
01:17:22
to better eat that banana plant and so 60 cents of every dollar we spend on bananas today goes towards fungicide
01:17:28
we're spraying these banana trees once or multiple times a week to kill this fungus we're consuming that it's super
01:17:34
expensive and if we had genetic diversity if we had better genetics in the banana programs around the world
01:17:40
we'd be able to radically matter what the administration says you think we need more diversity are you in favor of
01:17:46
Dei freedberg they cornered you freedberg I got you got to make one promise to me here it comes you're not
01:17:51
going to start working on Raptors I don't want to see any of these Raptors running around uh San Francisco okay
01:17:57
jamaath your thoughts here on um science corner here it's been a really enthralling one the Raptors are coming
01:18:03
for you I find it incredibly inspiring that there's just so much movement in these foundational
01:18:12
models it's incredible like every day just seems like there's something new the biggest problem that I think that
01:18:19
the commercial Community is going to deal with is how to actually take advantage of it because you're kind of
01:18:24
head spins because you don't exactly know where to start the biological models are are different in that I think
01:18:28
it's a much smaller population of people that will use it and I think they do have to figure out how to take these
01:18:34
models and and complement the existing pipeline they have the pipeline they have right now I think is pretty brittle
01:18:40
I think we all know that in life sciences my wife struggles with this a lot is how to complement a very
01:18:48
traditional Pipeline with this kind of stuff so I see it firsthand in how she tries to allocate Capital towards these
01:18:55
problems on the other side I just think these foundational models are really incredible and I think that I was
01:19:00
completely wrong on a couple of my earlier thoughts one thought that I had for a long time was
01:19:09
it just seemed like all these base models were ASM toting and so I was not convinced where all this
01:19:15
capex would go in a productive way like why are you buying all these Nvidia gpus
01:19:20
and then I think if you looked at Colossus the elon's Colossus xai built the largest data center over 100,000
01:19:32
gpus going to 200,000 in 122 days I mean basically what he proved was that there are still valuable
01:19:42
gains in pre-training and so the larger the cluster the more value that there is now
01:19:48
he also benefits I guess from the X feed but was really interesting so now I'm like a little bullish on Nvidia I'm
01:19:57
like oh my God if this is true then all this capex may be justified you could be
01:20:00
buying a lot of stuff then you look I I actually also just to maybe Riff on this
01:20:05
grock 3 thing for one second I had three takeaways my first takeaway was I was sneakily surprised on the pre-training
01:20:14
upside on having a larger cluster so I think that that's very Pro Nvidia actually and and it's actually also just
01:20:22
really good in general for foundational model so I think like that's like a really positive thing the second thing
01:20:29
is I don't know if you watched the live stream but did you guys hear some of the
01:20:34
stuff that these guys had to pull to pull this thing off one of the most incredible so the way that Elon narrated
01:20:41
it was we first had a physical problem so we just had to search all around the country for one single location where we
01:20:49
could actually put 100,000 gpus and they found it which was an old Electrolux Factory in
01:20:55
Memphis that's kind of interesting he only had like 15 megawatt and he had to get a quarter gwatt and so
01:21:02
he had to basically buy every useful generator that was available but then they had to liquid cool it and so they
01:21:08
bought onethird of all the portable liquid cooling capacity in America and located it on Prem but then they figured
01:21:16
out that there was a power problem so then they took all these Tesla power packs and then had to do power smoothing
01:21:21
which had them had to rewrite all of the Power Pack firm in all of this you know how we talked
01:21:28
about deep seek being this moment where we had lost sight in America of uh Capital being the source of innovation
01:21:36
he proves actually a more generalized rule that I took away from this which is you always have to have a constraint so
01:21:42
meaning let's say that there's like infinite capital in his case and infinite talent because he can basically
01:21:48
recruit anybody he wants what did he do instead he created this artificial constraint of time and so he was just
01:21:55
able to sayou going to get this done in a moment and Nick I show the the third graph that the guys at artificial
01:22:01
analysis sent to me I just want to put it up here because it shows you guys the quality of grock 3 relative to the
01:22:09
amount of time that they've spent on this problem is to me what's staggering so if you just sort of project the rate
01:22:15
of change of this and this is without judging open AI or anthropic or anything else those guys have been doing it for
01:22:23
years these guys have been doing it for a year and they did all of this mcgyver engineering and were able to pull this
01:22:32
off so that's my second takeaway is that Innovation needs a constraint sometimes
01:22:38
it's Capital sometimes it's talent and sometimes it's time and so if you can basically
01:22:47
be just completely rigid on one of those Dimensions you can get a great team to create something so that was an
01:22:55
interesting takeaway and then the third is I think what this also speaks to is the notion of like a cetu right which is
01:23:01
like the Japanese word for like companies that work together while still remaining independent conglomerates yeah
01:23:08
lose part it's more interl companies inter you know Koreans have chals right Japanese Japanese have cetus but this is
01:23:16
the manifestation of an American ketu which is Elon is able to get Engineers from Tesla he's not just buying the
01:23:24
power packs he had them re-engineer the actual firmware in real time on site and
01:23:29
so there's this this positive ability to just like organize effort and human capital like look could we all stand up
01:23:37
at Data Center and go and buy $500 million a power packs from Panasonic absolutely it would take a few months 18
01:23:45
and then when it looked like we need to rewrite the firmware it would take another 18 months to your point Jason so
01:23:49
it's really incredible what what these guys are able to do together those are my it was really really inspiring chath
01:23:55
a book I think you might find really fun is uh it's called Henry Kaiser builder in the American West but Kaiser is kind
01:24:01
of underappreciated these days he was the Elon of his time he started as a road builder of all things he won the
01:24:07
contract to build the Hoover Dam he built the Hoover Dam he started a shipyard during World War II uh yeah
01:24:12
exactly this made cars he he he decided to make cars he decided to make airplanes stations TVs the the famous
01:24:19
4day Liberty ship uh remember the propaganda win during World War II of you know they were able to lay down that
01:24:24
was at the Kaiser shipyards Kaiser Permanente spun out of them as part of their um John I was literally TR was saying
01:24:33
that pulling up my notes from the book um and uh just he was just a complete phenam and he just kept finding new
01:24:39
Industries it's like oh building cars how hard can it be oh building airplanes how hard can it be yeah I mean that is
01:24:46
the nature entrepreneurship the nature of Entrepreneurship is doing something delusional and then just letting you
01:24:53
know most R preneurs just do one delusional Thing Once and stay that like again Elon and Henry Kaiser back in the
01:24:59
day it's in the world of atoms very hard things short timelines and S San Francisco now kind of at least in the
01:25:06
physical domain stands for a kind of stasis you know it takes you 10 years to you know build anything um but when he
01:25:12
had the ship the toilet the ship building yards here he went from zero to 100,000 people in Richmond in one year
01:25:20
he basically built the city of Richmond California how do you how do you but guys okay let's just double how how do
01:25:27
you think these guys pull this off I personal sacrifice massive personal sacrifice I understand that Jason but
01:25:35
I'm I'm talking about like tactically pull this off where you have to be on site at some point organizing this team
01:25:42
directing this team being able to help isolate these problems fix them it just seems impossible to do it once let alone
01:25:49
six I don't understand how they do I actually have some insight to this just from knowing Elon this lot of these
01:25:54
things compound a lot of what he learned in Material Science doing SpaceX and about making uh the engines and then
01:26:02
working with metal you see in his production at Tesla and specifically in the Cyber truck he has learned so much
01:26:12
about factories I don't think there's a person on the planet who knows more about factories now having built a
01:26:17
battery Factory a space Factory an engine Factory and a car factory and now building Optimus on of that so these
01:26:24
things compound and then a lot of the engineers will float between the companies so there are folks who have
01:26:30
worked at SpaceX who then go do a tour over at Tesla Etc and a number of those wound up coming into
01:26:39
um you I'm going to read you a few quotes in this book I'm just going to see if they remind you of of anyone
01:26:46
Kaiser's managers challenged convention from the start as Builders they were expert at coordinating workers and
01:26:52
materials Kaiser was almost contemptuous of traditional methods his Partners had
01:26:57
long since despaired of getting him to follow customary procedures in preparing his bids for
01:27:02
each new job Kaiser would try to conceive every possible technique that might justify uh making a bid low enough
01:27:08
to win the chob once the construction was underway he was forever trying to come up with ideas that would expedite
01:27:14
the work perhaps more than any other Builder he believed that the faster a job gets done the lower the costs can be
01:27:21
that's incredible incredible well and what happened with is they had told Elon that it would when
01:27:29
he wanted to use other network operation centers to host Colossus you know and he
01:27:36
looked they were not available and when he did find quotes from them they told him 18 to 24 months he just determined
01:27:43
hey if this there's no reason to even do this if I can't get this done in you know a 100 days or something why even
01:27:49
join the race I'm going to be so far behind and if you look just to wrap this segment up and get on to our final two
01:27:56
segments if you look at these two charts about grock it's now uh and you know listen these benchmarks and these Arenas
01:28:04
and testing there's a lot of controversy around them and people keep leapfrogging
01:28:08
each other but they they do give us I think our best shot at looking at progress this is The Benchmark here for
01:28:15
grock on a bunch of different tests Math Science and coding and as you can see grock 3 has now eclipsed Gemini which is
01:28:25
uh Google's llm and deep seek from China Claude and chat GPT 40 and so to your point it's pretty impressive yeah top of
01:28:38
the lmis leaderboard the the thing here I think freeberg I'd like to get your um comment
01:28:44
on is if Hardware is the constraint does that mean that the person who understands hardware and
01:28:53
buildout as chth was pointing to does that mean that they by default win Jason hold on this is what's counterintuitive
01:29:00
it wasn't clear because no it was not yes I would guess that the last couple of iterations it seemed like open AI has
01:29:09
moved to what comes after the base model meaning in the allocation of resources in terms of what they were creating and
01:29:16
so this is what's so counterintuitive he was like No And so I I don't understand
01:29:21
what he knew that everybody else didn't know but that the size of that cluster made no sense and it could only be a
01:29:27
result like this where he basically proved that there was still value in pre-training where size actually led to
01:29:32
better outcomes that's that's not that I think that was counter it's super consequential is my is I'm in complete
01:29:39
agreement with the chth and just freeberg to wrap the segment up and put a bow on it we see these llms they've
01:29:45
made incredible progress as we just heard from ev2 or evo2 I'm sorry a Gro and we're making these giant gains in
01:29:52
space uh you know in work and specifically in space Dave do you think this will get us any closer to
01:30:02
Uranus so sad so sad it didn't even land okay let's do our final don't even don't
01:30:07
even acknowledge don't even acknowledge it do not acknowledge it because we'll just do more of it I tried to get your
01:30:11
mouth to do one he wouldn't do it okay last two segments we're going to talk about staying private longer and when
01:30:17
you guys are going to go public and then there's an asteroid coming what do we want to do first boys you want to talk
01:30:22
about this asteroid coming is it the end of the world if it hits us what's going
01:30:26
on NASA dropped the probability of it hitting Earth to one and a half% so every day when the sky gets dark they
01:30:33
can do a better job seeing this asteroid that everyone's freaking out about so we
01:30:38
finally got a good night sky two nights ago the telescopes were able to get a better trajectory reading on it and that
01:30:45
allows the models to make estimates on the probability of this asteroid hitting Earth in 2032 when it's projected uh to
01:30:54
our orbit and so right now the probability is estimated at 1.5% that it will hit the earth and based on the size
01:31:01
of this asteroid there's this range it goes up to 320 feet in diameter as small as 80 feet in diameter which actually
01:31:08
can have a pretty big effect on how big of an energy release there would be if it actually uh you know hit the earth so
01:31:17
even on the high end if it was call it 300 feet it would be the equivalent of call it a 20 Megaton bomb wow which is
01:31:24
not insignificant if it were that big it would hit the earth if it was smaller than that it would probably just
01:31:29
detonate me air and create a massive shock wave and and Firestorm but the region that it would decimate would be
01:31:36
limited uh to probably a couple dozen miles up to a thousand miles of effect and if you look at the total surface
01:31:42
area of the Earth you know we're talking about 10 to 15% of the earth having people that habitate you know enough
01:31:48
people to habitate probably going to land in an ocean right I mean all right yeah so it's one and a half% chance of
01:31:52
hitting the Earth and then call it a 15% chance of it hits the Earth causing loss
01:31:56
of life 10 basis points it hits a city one basis point City and right and then it's a function of how big it is if it's
01:32:02
actually as small as 80 feet then it's not going to be that significant even if it does get close to habited area so
01:32:08
yeah I'm not losing sleep over over there did you come across in your research I feel like this is a real boys
01:32:13
are monitoring the situation moment did you come across the tunguska event research so that one Inc yeah so uh I
01:32:22
don't you want to talk about it go ahead yeah Ju Just um no one knows this in 1908 an asteroid hit the earth it hit an
01:32:28
relatively uninhabited part of Russia it was a first off the asteroid did not hit
01:32:33
the Earth because it got so hot on re-entry there was an air burst and it was a thousand harashima in size the
01:32:41
explosion yeah they have here the 60 meter asteroid and they have the megat tonage somewhere wow it's the yeah
01:32:47
largest impact event in recorded history obviously there was you know stuff before recorded history it flattened 80
01:32:53
million trees weirdly basically no one was killed because he was so uninhabited but this
01:32:59
is quite comparable to the one that NASA is talking about that's right it's about
01:33:03
the same size y exactly and I think you could take a little bit of reassurance maybe that we have had similar size
01:33:09
asteroids hit before and there is some existence proof that despite the giant explosion you know it doesn't show up in
01:33:16
the climactic data for 198 Tusa asteroid was at like 160 200t so if if this asteroid is in that range and it the
01:33:24
Earth you have this kind of explosion in the air if it gets above I think 250 roughly
01:33:30
is where they think that it doesn't burn up fully in the air and it actually will
01:33:33
strike the Earth but yeah that's um there you go this is roughly what we saw happen what we think the size will be
01:33:39
right if it hits is there a counter measure I don't mean to get all sci-fi here great question yeah but is there a
01:33:46
countermeasure possible and like if this thing was coming let's say in five years size yeah relative to the Earth
01:33:54
this is like tens of thousands of kilometers an hour right it's it's a it's a very fast moving object it's
01:34:01
pretty small right 160 ft so you've now got to figure out the exact trajectory get it perfectly right get a launch off
01:34:09
of the earth and intercept this thing at the exact moment that you need to to push it off course or detonate something
01:34:16
near buy it to to redirect it so technically very complicated very hard to pull off but this is exactly why we
01:34:22
have this planetary defense funding at Nasa which is to track these objects and this is another example by
01:34:29
the way where I would say AI can play an important role and I'd love Patrick and
01:34:33
John to aine on this but I have a thesis that like AI more than anything unlocks
01:34:38
deeply complicated project for humans that would otherwise be kind of infeasible in the pre AI era I think in
01:34:43
the post a era we're going to be like oh here's all these projects that we do that are like oh you know we we on a
01:34:48
daily basis we mine to the Center of the Earth and we get cool like Rare Earth minerals from like 500 miles down and we
01:34:54
go to space and colonize the moon and all these crazy things because AI unlocks these large scale projects that
01:35:00
would require millions of people to do things in a coordinated way and AI can be very smart in this way but I think AI
01:35:05
could play a role also in these planetary Defense Initiative Concepts jcal in the future where you can
01:35:10
actually build an a complete project model in software on how you would actually address this problem and then
01:35:17
you know go execute it with Automation and but yeah there's a planetary defense function at Nasa they track these
01:35:22
objects and they're funded to do it so we hope that NASA continues to get funding to do this work very important
01:35:27
and guys it just came through that NASA just dropped the probability of a impact
01:35:32
event to about a one-third of 1% so it's gotten even smaller which is we can all
01:35:37
go to sleep comfortably tonight all right all right now everybody's been waiting for Patrick John you founded the
01:35:44
company in 2010 it's uh 15 years later the entire LP industrial complex and venture capitalist everywhere I'm sure
01:35:52
some employees are wondering when will stripe go public and under what circumstances and what's the hold up
01:35:59
here why aren't you public already yeah look um I think people sometimes hold us out to be dogmatic or
01:36:09
something on this topic whereas we feel like so many other people out there in the world are dogmatic and we just Tred
01:36:17
to be pragmatic H us you know Keith was on the show and he was saying you know he believes companies should go public
01:36:22
as quickly as possible I don't know maybe that's the right thing for some companies but uh in at least Stripes
01:36:28
case that that hasn't been the case I also think the environment has changed quite a bit where it used to be the case
01:36:35
to that to do any return of capital to shareholders you know or if you needed any kind of large sums of money you
01:36:41
needed the public markets that's obviously not true today where uh the you know stable private markets exist
01:36:47
but we look and we say is strip better off at the moment as a private or a public company and you know up to this
01:36:53
point we have determined private that could change at some point but it's kind of no Dogma from our point the last
01:37:00
thing I'll just say is you know I think Keith made the argument people generally
01:37:03
make the argument that it is critical for discipline to be public and public companies run in a more disciplined
01:37:10
fashion and I think that's hogwash like if you need a 25-year-old Fidelity analyst asking you to double click on
01:37:16
your capex blah blah blah blah to run the company with discipline something is horribly wrong at the company and you
01:37:22
need new management and so that argument has never really resonated with me basically what
01:37:28
you guys are saying is for your intellectual perspective you get a lot more return on the time you spend
01:37:35
talking with the private investors you have and your team and then and customers and customers and it would
01:37:42
just be delive and you would have your outcomes quite honestly if you had to talk to these other folks who are
01:37:48
talking to you and 50 other companies don't really know much of anything maybe very surface level and then may actually
01:37:54
distract you and force you to make decisions you don't want to make we're not even that negative not that negative
01:38:00
I was going to say but but it's um there's no spiritual status associated with being public like why be public it
01:38:06
is a cheaper source of deeper and more liquid capital and so if you want cheaper and uh and more liquid Capital
01:38:12
then you know by all means go with it but you know it's it's not it's not more moral and and I think you know again
01:38:19
it's it's just helpful to sort of get away from uh from that kind of framing I also think it's noteworthy if you look
01:38:23
at Financial Services in particular and we're kind of a company at the intersection of financial services and
01:38:27
Technology being private for a long time is is the norm so you know Bloomberg is
01:38:31
a private company Fidel is a private company vanguard's a private company Jane Street's private company um gold
01:38:37
citel secur Citadel Citadel yeah Goldman waited 130 years to go public JB Morgan
01:38:42
waited 70 years to go public Visa waited Visa waited 50 years to go public and you know again those are all kind of
01:38:49
different times in history so that's saying you can draw def them but I but well I I think the thing in financial
01:38:55
services where there's always a tendency uniquely here to be kind of procyclical
01:39:00
and I think you need to be kind of particularly careful as a public financial services company to avoid some
01:39:06
of those Temptations and some of those Tendencies and so you know I think that that that's a unique Dynamic that
01:39:11
applies uh in our space and uh and then you know Financial Services generally if
01:39:17
you look at companies like SpaceX they're able to provide this yearly liquidity which actually is probably
01:39:21
better because it Smooths out a lot of all and then people can get back to work and just kind of are you guys profit by
01:39:27
the way we are profitable yeah I'm profitable like a fully loaded Gap net income basis not like a community
01:39:34
adjusted e but a stuff but shout out Adam Newman come on the prod anytime you gotta wear
01:39:41
shoes yeah I do think we think as it comes you know pertains to people joining the business and being
01:39:50
compensated you know everyone loves the idea of an IPO pop but if you look at a bunch of the other fintech companies you
01:39:57
know Square really great company 70% off its 2021 Peak PayPal 80% off their 2021
01:40:03
Peak if you're an employee and you join those companies in 2021 it's not a great
01:40:08
feeling and so again I think the um the the lack of Val you know the the good and the bad is you are Nas priced every
01:40:15
single day by the markers but it's not only a bad thing the framework you know if I'm trying to predict our actions
01:40:21
like the framework we use is is kind of two things one I I think you know what matters is less kind of the returns in a
01:40:26
given year and more duration and so the question is you know what enables the best compounding on sort of a 10-e Time
01:40:31
Horizon and you know what's best for shareholders uh as you really take kind of the the longer term perspective and
01:40:35
then just what's best for customers and you know what you know helps you build the best products and you chat you kind
01:40:39
of said it where you know at least at this juncture with the business growing at this rate we want to spend the
01:40:44
marginal hour with h with some customer and and I think you guys have gotten this sense like this is our life's work
01:40:49
you know we're not going anywhere we'll be very happily running stripe in 10 years time in years time and there's so
01:40:54
much going on in this space where we spent a bunch of time talking about stable coins talking about AI everything
01:40:59
like that and it's hard enough to stay ahead in the world of business you know without all these distractions like you
01:41:05
said and so it's just a question of how do you set yourself up to win and do right by a new one in a the world's
01:41:11
pretty competitive I think if you had to Steelman the bill Gurley point of view there are very few Founders that
01:41:17
are probably as Steely eyed as you guys and so what I think a lot of Bo members in most other situations that are not
01:41:25
stripe deal with is what is a good forcing function to keep these folks on track focused and focused and thinking
01:41:34
in a multi-decade kind of way and they found that the public markets I think do that more than anything else that's
01:41:40
probably the most compelling for the folks that would otherwise maybe get distracted but then for guys like you
01:41:45
that can frankly just do it it's it's great all right impressive it's really impressive congratulations well
01:41:51
appreciate you guys coming on the program come back anytime you were awesome today and listen let's recap
01:41:57
what have we learned people got to put some pants on and get back to work constraint makes
01:42:02
for great art Stripes going public in 2050 chamath lost five billion not investing uh the coulson's read a lot of
01:42:10
books but I'm still kicking live and kicking bro he's still in the arena got a lot of chips still to fire so see what
01:42:16
happen to fire fire fire South American president shouldn't have their own meme coins and life finds a way we are and
01:42:26
and you pronounce a kison obviously as aison because you know we're down the road and carry and we go and get some
01:42:32
eggs and bakey sometimes okay coming to South by Southwest brought to you by the
01:42:38
co cison brothers and stripe a Allin is headed to the South by Southwest they're
01:42:44
not sponsoring it I'm joking Allin is headed to South by Southwest on March 13th me and freeberg are going to sit
01:42:49
down and do our interviews two besties on the future of Med media and building businesses in this new media ecosystem
01:42:57
we're going to have a casual party food drinks the whole thing event is going to
01:43:00
be uh pretty intimate couple hundred seats when are you guys do this March 13 you opt it out me and freeberg want to
01:43:08
do it oh Thursday no K doker and uh it's by application only with a small $30 registration fee of which stripe will
01:43:18
take $19 go to allin.com events to apply I'm not B about it and programming note
01:43:26
the besties are on a tear we were on Megan Kelly last week and next week our bestie fredberg is representing us on
01:43:34
Celebrity Jeopardy we can't say what happened get the clips ready get the clips get the clips ready we are going
01:43:41
to do a recap of every single question when when do you when do you when ises it air on Monday next week I think I
01:43:47
don't know Wednesday at 900 p.m. Wednesday Wednesday at 9M perfect before the taping yum yum H yeah perfect
01:43:55
perfect there he is between Anna Navaro she's from The View right well she's pretty angry I've seen clips of
01:44:03
her she's I should have gotten some counsel ahead of signing up for Celebrity Jeopardy on the lack of upside
01:44:09
in doing this and you will see why we'll talk next week oh no bye oh no you lost
01:44:14
not good you lost view you didn't lose to the view did you look guys I'm just telling you
01:44:23
got 160 IQ The View put together doesn't have 160 IQ let me just tell you well we'll talk about it
01:44:30
afterwards don't tell me they got you on pop culture you're pretty good on pop culture oh no no comment okay love you
01:44:37
guys I got to go love you bye bye see you next time bye boys let your winners ride and instead we open source it to
01:44:50
the fans and they've just gone crazy with it Love You Queen [Music] of Besties that's my dog taking your
01:45:09
driveway oh man myit we should all just get a room and just have one big huge orgy cuz they're
01:45:15
all just useless it's like this like sexual tension that they just need to release somehow
01:45:25
P we need to get merch [Music] our I'm going in