00:00:00
All right, everybody. Welcome back. Number one podcast in the world. It's July Allin episode 280. Freeberg is on a
00:00:10
little vacay. We'll leave it at that. And uh yeah, bestie Brad is here. How you doing, Brad?
00:00:16
>> I'm doing great. I'm do vacay in maybe Idaho or somewhere. Jal, >> I know. Who knows? Who knows?
00:00:23
>> Who know? It could be anywhere. He could be anywhere. I mean, there's lots of
00:00:25
things. He could be in plenty of places. And uh looks like you are yeah somewhere
00:00:30
in the northeast. I'll leave it at that. You having a little uh vacay for yourself this week?
00:00:34
>> Very pat I'm in my flag room. Very patriotic room here. >> Very nice. >> You know where I work on the east coast
00:00:40
in the summertime >> and uh spent some time in DC this week >> and uh it's been a great week. Been a
00:00:47
great week celebrating America 250. >> Great. And you're going to be out of there for the by the by the second week
00:00:52
of August. Yes. So I have it August 10th through the 30th. I'm good. >> Exact. Exactly.
00:00:58
Jason B&B. >> Oh, absolutely. >> You You don't know the half of it, man. I am on a summer bender. I'm like,
00:01:06
"Where's your Where's your vacation?" >> By the way, where are you? Where are you
00:01:09
right now? >> I am in Paris. I did uh about eight interviews for at the Rays conference.
00:01:14
They'll be coming out uh in the all-in feed. And of course, tackling from the factory. Look at him. You're working in
00:01:20
the factory. Chimath Polyhapatia. It's going to be a hot software summer for Chimath. How's your hot software summer
00:01:27
gone? >> It's good. Selling enterprise software is hard, but it's good. >> Chamat's like, "Man, I was such a dick
00:01:34
to all my CEOs in the SAS period." And now you know, >> I went to Geneva. Shout out to Markov. I
00:01:41
went to Geneva. He works out of Europe, sees all his European customers, and he had a dinner in Geneva, which I joined.
00:01:46
And then me, Jensen, Brad Smith, Anthony Tan from Grab, and a bunch of other folks
00:01:54
were put on this UN Commission for AI >> that Mark is the co-chairman of. When you see Mark Beni off in action, man,
00:02:01
this guy is a master. >> Holy >> He is the empasario of empisarios. Yeah. >> You see how he's built such a ginormous
00:02:09
business. It's impressive. It's impressive. >> What is a commission by the United
00:02:14
Nations for AI? What is their what is their uh calling? >> Open source. No, but no, I mean it's
00:02:22
like the United Nations actually do anything. Do they actually It's so funny. Yeah. I mean, Anthropic
00:02:29
was there too. Some one of the co-founders, Tom Brown, I think was his name. >> Yeah,
00:02:33
>> that's good. >> Was the Anthropic guy running around saying, "It's the end of the world. It's
00:02:36
the end of the world." >> No, no, no. He was he was very awesome. Tom's awesome.
00:02:41
>> In fairness to him, he wears it on his sleeve, which is like, "Hey, we really believe we're doing the right
00:02:48
thing, >> right?" and just trust us and I think the future's open source for all these
00:02:54
countries. >> Well, we're going to get into that. That's on the docket for sure. But let's
00:02:59
start with the IPO update. You know, there's a trillion dollar IPO rush to the exits and you know, this was a big
00:03:06
topic of discussion, Brad, at the liquidity summit last month. And we'd never seen a trillion dollar IPO. We had
00:03:12
one this year already. SpaceX trading right about where it went public. So, it was priced, I guess, to perfection.
00:03:19
and theoretically going to see two more. Uh Brad has the inside information, so I'll try to get it at him. Open AAI and
00:03:25
Anthropic are slated to go out. Let's uh just go quickly over what happened with
00:03:31
SpaceX. It ran up to $200 a share. Uh it's been down a bit. It's at $150 a share. As I said, that's right at the
00:03:36
IPO price. So, it's trading at that two trillion market cap. Currently, seventh largest company in the world. And
00:03:44
Anthropic confidentially filed on June 1st. I I don't know why they call this confidential filing when it immediately
00:03:50
comes out. Uh but I guess the information is confidential. Poly market says 65% chance Anthropics IPO will
00:03:56
happen this year on light volume 360K. And uh two weeks ago, Gavin Baker, another bestie, said he thinks they're
00:04:06
going to end 2026 with over a hundred billion dollars in revenue and very profitable. He said a couple of us
00:04:15
guests on the program that he thinks it would trade at three trillion right now if it went public. Chimath, you made a
00:04:21
great call on the pod. You said, "Hey, good idea for Elon to get out first." What are the chances here, Chimoth, that
00:04:28
these other two get out this year or maybe in like, you know, say 9 months in the in the first quarter of next year?
00:04:34
We'll start there. >> Well, I think that these are all great businesses. I think the question is what
00:04:38
is the market clearing price? And I think that's more of a function of how much appetite
00:04:46
the markets have to absorb new issues and at what scale. That's number one. And I think that's mostly determined by
00:04:53
price. So I think anthropic and open AI are probably in two different places. The
00:04:59
last time we heard from OpenAI, their cash burn was still quite high just because of the diffuse nature of
00:05:05
their business and more reliance on consumer than enterprise. I think Brad mentioned it in one of the pods that
00:05:12
Anthropic may actually be accidentally profitable. I think he said something like that.
00:05:15
>> Yeah. >> Let me tell you something really interesting. I sat down with my CTO
00:05:19
today and I said, "How are we doing on token spend?" And he said the most incredible thing. He said, "Right now,
00:05:27
our token costs are doubling every 45 days." >> Okay. >> And I was like, "Gh." And he said,
00:05:35
"Yeah." And I said, 'Well, what is the downstream productivity? And he said, maybe 5% max.
00:05:42
>> Okay. >> And I said, okay, so my costs are doubling every 45 days. My upside is
00:05:49
essentially flat. And he said, basically, and I said, well, explain why that is. and he said, "Honestly, what
00:05:55
we're finding out is that you need to use a lot more tokens to get to this next iteration of improvement because we've
00:06:06
effectively already asmmptoted." And I said, "So, what should we do?" And he said, "Honestly, we have we have to
00:06:11
figure this out." And so, we're going to take a step back and try to figure out what to do. I don't know how many other
00:06:17
companies will actually go through this reckoning now, but the point is everybody in the next three or four
00:06:21
years will for sure go through it. So, I suspect that if you can get out now, you
00:06:26
should get out now before all of that starts to seep into the water table because I think that's probably what
00:06:35
allows you to get out at a huge price and and raise a huge amount of money. >> All right, Brad, you are uh well
00:06:40
invested and well known for being invested in these two uh next IPOs, so you probably have some good insights
00:06:48
since you talk to them on a regular basis. chances they get out in the next six to nine months. Both of them, you'd
00:06:55
say 100% chance, unless there's some outside event, you know, blockade of Taiwan, some black swan event that we're
00:07:02
not anticipating. What do you think the chances are they're public when we're sitting here and I'm skiing in Hokkaido?
00:07:09
>> Yeah, I think I think it's very high. But let me let me first say, you know, the SpaceX IPO where we were also
00:07:14
investors and we also bought in the IPO. I mean, it was textbook. It was a hugely
00:07:19
successful IPO. They raised $75 billion at 1.75 trillion. Okay, so it went out below where we are today. It's up 25%.
00:07:29
You know, and let's call it on 35 billion of forward revenue. So if you think about that revenue multiple, it's
00:07:34
trading at 2 trillion on roughly 35 billion of of forward revenue. It's an incredible achievement. I think it was
00:07:42
textbook. I think Anthropic and OpenAI were watching very closely because frankly we had not had an IPO of that
00:07:49
size and to Elon's credit and to the team's credit Brett and Gwen they really pioneered some really smart and
00:07:56
interesting things as part of that IPO. So, you know, you heard from Gavin Anthropics rumored to be, you know,
00:08:03
trending over a 100red billion in revenue compared to the 35, right? If they exit the year at 100,
00:08:11
that means their gap revenue next year could be well over a 100red. So, based on the SpaceX success, I think it would
00:08:18
be a blockbuster IPO. And I think SpaceX has shown them the way on things like the total raise, pricing, liquidity,
00:08:26
inclusion into the indexes, how to do the lock up. Like I think they've gone to school.
00:08:30
>> It was a staged release in terms of getting out of the lockup. It has to hit certain milestones and some of those are
00:08:37
time >> early inclusion in the index raise $75 billion like you know >> the early inclusion in the index. Let me
00:08:44
have you unpack that for a second cuz people said, "Hey, maybe this feels >> unfair that they should be forced to buy
00:08:51
it." What's your take on that? Is that just like >> haters going to hate or is there
00:08:56
something to that? I think there was legitimate concern, right? This >> is legitimate concern. Yeah,
00:09:02
>> the legitimate concern is that a company that had not been through the process of
00:09:05
being vetted post IPO, there's a lot of volatility. You've seen that chart Jason
00:09:10
that the the peak to trough draw down in the 6 months post IPO is 50%. We've seen
00:09:15
a pretty big draw down here from the peak to trough >> as well. So you don't want to jam it
00:09:21
into an index at the peak and then have a 30% draw down on top of people which often happens in IPOs cuz people get
00:09:27
excited it runs ahead of itself. But they didn't do that here. There was fear that that was going to happen. So both
00:09:33
the the exchanges and the indexes, they looked at this and they made some modifications because the the other side
00:09:39
of the argument is it's so damn big and important that it needs to be part of the index. Right.
00:09:44
>> Right. And so the reason the rules had previously existed is because most companies coming public were younger,
00:09:51
earlier, less tested, less revenues, less profitable, all the things weren't as important in the overall scheme of
00:09:57
things. So I think that they pioneered some really smart things. It's worked well. it's traded well and so I think
00:10:04
that that provides a bit of a blueprint for anthropic but just in in in terms of
00:10:09
the enthusiasm is an alttimeter is a fidelity as a tro an enthusiastic buyer of anthropic based
00:10:16
upon the things we know today around profitability and model improvement and revenue growth etc. Yes, everybody would
00:10:23
be pig piling in. everybody would be trying to get into the top of the book and you know uh the the last I heard you
00:10:31
know again rumored that they would like to get out this year on open AI everybody knows that anthropic kind of
00:10:37
passed open AI on a revenue trajectory but I will tell you open AAI's kind of got its swagger and mojo back it's
00:10:44
coming out you know just today with a whole new set of models we know GPT6 you know there's a lot of talk of that
00:10:50
coming out within the next 30 days a whole new generation of models I think their revenue has really ticked
00:10:56
back up. The most recent kind of rumors I see on Twitter is around $70 billion text the year. So just as a reminder 70
00:11:04
billion may not be over a hundred billion that's rumored and anthropic, but it's still twice uh you know where
00:11:10
where the revenue of SpaceX is at. So can they get out at over a trillion on that type of revenue growth being one of
00:11:16
the two frontier premier labs? I think the answer to that is yes. Um, I'm not sure there's a huge race between the two
00:11:23
of them to get out first. I think they'll both go out when it's when it's time. I think OpenAI has a little bit
00:11:29
more complexity just associated with the corporate restructuring that they have to go through, etc. So, I would be
00:11:36
surprised if they go out before Anthropic, but the fact of the matter is I don't know. But today, as I sit here
00:11:41
today, Altimter would be a buyer at scale and at size in both of those IPOs. at three trillion, are you a buyer or
00:11:50
are you a hey, you know, it's obviously going to trade up and down and I there's
00:11:54
no rush because you I think were the one who said on the pot or might have been at liquidity live when I asked you point
00:12:00
blank, hey, should retail get involved in SpaceX? What's your thoughts? And you were like, hey, listen, it's a 4% float,
00:12:05
5% float. It's going to trade up and down, but you know, a year from now, it might be trading at the same basic
00:12:11
price. It's it's going to be priced not to perfection, which it seems to have been, but you I think your position was
00:12:16
it's going to be priced reasonably. There'll be plenty of time to get in. You don't have to like, you know, panic
00:12:21
about getting your shares. Yeah. >> Yeah. I once a company's valued at over a trillion dollars, like the get-rich
00:12:26
quick schemes are over, >> right? Like that you and I share a deep passion, Jason. We got to get retail
00:12:33
investors. We got to get the citizens of the United States in on these value creating opportunities earlier, right?
00:12:40
The accredited investor laws are insane that we have in this country and keeps people from participating in these
00:12:46
things, but it is what it is, right? So, they're coming public at over a trillion
00:12:49
dollars. I still think there's a lot of meat on the bone on SpaceX, on Anthropic, on Open AI, but you're not
00:12:56
going to have things that are I don't expect that they're going to be priced in a way where you're going to get a 50
00:13:00
to 100% durable bounce out of the IPOs. If so, that would mean they were probably mispriced right into the IPO.
00:13:09
But I do think that these things can be compounders. They're going to compound at the rate they compound revenue. And I
00:13:14
think all of these companies are going to compound revenue at well over 30% for the next many years.
00:13:19
>> And 30% a year for just so people understand that this is high growth in public markets on very large revenue
00:13:26
numbers already. You know, growing 30% when you have 100 million revenue is one thing. Growing 30%, you know, when you
00:13:32
got a 10 billion or 100 billion, you know, this is this becomes a different uh task. So let's talk a little bit
00:13:38
about these two companies, Chimoth, and what the public's going to perceive them
00:13:43
as. Chat GPT seem to be the public brand, the consumer brand for, you know, large language models. It's
00:13:53
the AI for, you know, people who are doing their homework or mom and dad are trying to fix the dishwasher, whatever.
00:13:59
And then Claude took the lane of, hey, we're going to be the one for corporate. And it did seem like OpenAI got very
00:14:06
distracted with Sora and you know Disney relationship. We're going to make a puck
00:14:11
with Johnny I everything consumer. Then they realize oh wow the revenue seems to
00:14:16
be an enterprise first. Is that going to wind up being the the big mistake when we look at it? they
00:14:22
kind of gave the Google position, the high growth position to Claude and Anthropic and they took the Yahoo
00:14:28
position or do you think they'll catch up on the enterprise or maybe they should just go back to trying to be the
00:14:33
consumer version? What how how are these going to be positioned a year from now?
00:14:38
How's the public going to look at them? >> The problem with enterprise revenue is
00:14:42
at some point the person that's spending it has to see an ROI. I asked Fable five
00:14:49
high >> and props new model. Yeah, >> anthropics new model. I first asked it, what is the lift of the S&P 500 earnings
00:14:59
per share growth since 2024 from AI? And they answered, oh, it's 50%. So then I looked through it and I said, well, no,
00:15:07
you're including the money that Nvidia makes from selling chips to Amazon. So I said, okay. I asked a different
00:15:14
question, which is, then what was the EPS growth of the S&P 493? And the answer was 9%. And I said, "Okay, well
00:15:23
that's different." And I said, "Unpack that." And the overwhelming majority of that was
00:15:30
from pricing power sitting on top of inflation. And then the other 3% was from buybacks.
00:15:40
And so the answer as far as all publicly available data was that the actual ROI was somewhere between zero
00:15:49
and 2%. >> So I don't know. I mean I think that enterprise looks really good. The
00:15:55
problem is that very smart investors like Brad and Gavin and others at some point will start asking companies what's
00:16:02
your ROI? What's the actual EPS lift? And if the answer is, well, I don't really know or I'm not sure
00:16:11
and you know, you don't necessarily have the pricing power to continue to raise prices.
00:16:18
Enterprise is probably a little bit more brittle because there are fewer buyers and they're more demanding. Consumer on
00:16:26
the other hand then all of a sudden becomes an incredible safe harbor because you have tens of millions of
00:16:32
buyers and having those two orders of magnitude more buyers at a much smaller price point inoculates you from the
00:16:41
vicissitudes of an ROI discussion. >> So it all really depends on what the actual ROI is of this money being spent.
00:16:49
I think that we're in the phase of just being astonished, as Brad said, about the scale of the revenue growth.
00:16:56
>> Yeah. >> But at some point, you'd have to be an idiot not to ask, well, who is paying
00:17:02
you this? And can they sustain paying it to you? I just don't know what the answer to that question is. And at some
00:17:09
point, it may not be now, >> at some point, people will have to answer that question. and you're
00:17:16
spending million dollars a year on tokens >> and that million dollar a year is doubling and tripling and quadrupling.
00:17:22
At some point you're going to have to show an ROI that's >> above the risk-free rate of return
00:17:27
otherwise you're going to have um some angry investors on your hands >> and our discussion here for the last
00:17:32
couple of weeks on the pod has centered around that and the industry has responded on the place where all the CTO
00:17:40
CEOs and capital allocators hang out which is X.com formerly known as Twitter. Here's Pine, the CTO of Uber.
00:17:46
And so when you ask like how are they getting how are they getting the ROI out of
00:17:52
this? People are now bringing that conversation front and center and they're explaining it on X and he talked
00:17:58
remember Uber was also the one that ran through all their tokens in the first quarter. So then on the other side of
00:18:05
the business which is legal, operations, marketing, customer support, HR and procurement which he lists here. He says
00:18:11
in this you know today 99% of our engineers use AI tools. Okay great right it's everybody's you know doing vibe
00:18:17
coding and has coding assistance. Uh more than 70% of pull requests are attributed to local or cloud agents. Our
00:18:23
engineers have built 200 agentic skills. So how are bringing agentic AI beyond engineering and what they've decided to
00:18:29
do is essentially he talks about these agentic pods and this to me seems directionally how this should be done
00:18:36
which is you find engineers and you uh as as we uh talked about forward deployed engineers fancy way of saying
00:18:43
put an engineer put them into departments and have them work with the department heads who understand systems
00:18:48
thinking how their process is done and um he uh he says he's making basically long and short of it is they're making
00:18:56
massive massive progress on the operational side of the business. So Brad, you're pretty familiar with Uber
00:19:03
and have been a long supporter of that. This is a company that knows how to deploy technology pretty well and
00:19:08
they're an operations machine run by an operations machine. DAR, >> they should report the EPS gains
00:19:13
attributable to AI. >> Yeah. Well, I mean, and this first step seems like they're really being
00:19:19
thoughtful about this first. Hey, this token spend got out of control with the developers. we're going to need to pause
00:19:24
this and look at it. And then second, here's how it's going to lower cost and create more efficiency. So Brad,
00:19:28
>> let's talk about that side of it. Not just token maxing with the developers hitting the slot machine of like, okay,
00:19:34
let's see if this pull request and let's see if if this produces the right code or not to these departments in a more
00:19:40
strategic way. It's not just the person who works in HR, you know, using cloud code or perplexity or whatever and
00:19:48
trying to vibe code something. This is hey we're sending engineering in to work with your top systems architect and
00:19:53
we're going to you know try to find that ROI. Yeah. >> Yes. I you know first I would say
00:19:59
Chimath is right. The only question is on what time frame. There's no doubt that there there's a lot of money being
00:20:06
spent today that is in the experimental bucket right where I I think there probably isn't direct ROI Chimat to your
00:20:13
point but I think we're so early nobody cares. I think we're so early in terms of enterprise adoption. Remember the
00:20:20
total addressable market here is every single small, medium, large company on the planet. And so we've never seen
00:20:27
revenue growth like this because we've never seen a TAM like this. And if you look at the distribution of revenues
00:20:33
across these businesses, it's not like it's concentrated with four or five customers. There are millions of
00:20:38
customers independently economically making the decision that is rational for them every day that it makes sense like
00:20:44
Pine at Uber and of course they're trying to find things on both right now mostly the cost side cost takeouts to
00:20:52
justify the investments that they're making in you know in tokens but I think we're on the verge of breakthroughs in
00:21:00
intelligence that's going to dramatically change the revenue side of the equation for a lot of these
00:21:04
businesses breakthroughs in life sciences breakthroughs in in product innovation etc where they could not
00:21:11
divorce themselves from this even if they wanted to. For example, Jensen Hang has talked many times that all of his
00:21:19
design work all of his design work now at Nvidia is using AI to design the next generation chip. The machine is building
00:21:28
the machine. So you can't get rid of that even if you wanted to. and tiny intelligence advantages at the frontier
00:21:36
where he sits are required. Like there's no way I don't think that Jensen is going to use anything but the best
00:21:43
models that he can to build out those capabilities. So I just think that we're not going to see that in the next few
00:21:49
years. You're going to see it under the hood, of course, but that occurred at Snowflake. There was tons of
00:21:54
optimization that occurred at Snowflake, but the revenue continued unabated. their revenue growth continued under
00:21:59
beta because they further penetrate penetrated use cases f further penetrated the enterprise. So let me be
00:22:05
provocative here. If these guys end a year over a 100red billion, I think that they're on a revenue trajectory that
00:22:12
they could 3 to 5x again next year. We've never seen anything like this. Never. >> You're saying 100 to 300. 100.
00:22:21
And Jason, like you and I have talked about this. Our minds were blown. If a company could go from 100 million Yeah.
00:22:29
to 300 million, we're talking from a 100 billion to 300 billion. 200 billion of incremental revenue is incomprehensible
00:22:39
in the history of Silicon Valley. Okay. And just the fact that we're even the world in the history.
00:22:44
>> Yeah. In the history of the world. So the fact that we're even talking anywhere close to this tells us
00:22:49
something different is going on here. I think the thing that's different is that
00:22:54
intelligence is the largest TAM we've ever seen in the history of the world. These guys are penetrating it. So yes,
00:23:02
the super sophisticated companies, the 8090 and Chimath are helping optimize their token spend that are early
00:23:09
adopters. 100% that's occurring, but it's not really changing the trajectory that the Frontier Labs are on.
00:23:16
>> Yeah. And one of the interesting things about this technology that's really unique, we talk about intelligence on
00:23:22
demand. When you would make a piece of software or you had some technological innovation, it would typically acrue to,
00:23:29
I don't know, one group of people in an organization. You know, maybe two groups
00:23:32
of people, right? Excel comes out. Okay. Yeah, the accounting department's having
00:23:35
a field day with it, but it's not really affecting human resources or marketing.
00:23:38
Okay. Yeah, maybe it trickles down eventually. Every single person in every single organization is playing with
00:23:44
these tools. So if everybody's playing with it, everybody's trying to apply it all at the same time. It's kind of like,
00:23:51
you know, you got a thousand person organization. People are spending 200 a month. Okay. Yeah, Chimath, they double
00:23:56
it every, you know, x number of months. Okay. Yeah. Now they're spending $400 a month per person. Okay. They're spending
00:24:02
$5,000. Well, if the average salary is 100 150k at this organization, it's only an incremental 3, four% on top of their
00:24:08
salary. So the way I look at it is did it make that person three, four, five times more effective at their job? And I
00:24:15
think the answer is yes. So that's why there's so much token maxing going on. And it's also a bottom up type product.
00:24:22
You can just get into this product for 20 bucks a month and you know no CIO or CTO is like oh no you can't spend 20
00:24:28
bucks a month at your corporate card for this technology. So it when a bottomup technology hits everybody at the same
00:24:35
time that's what would explain this revenue ramp that we're all having a hard time adjusting to. It applies to
00:24:41
every single person like who is it impacted by the technology is my question to you Chimoth like in what
00:24:47
organization you're working with with 8090 is there a department that says yeah the intelligence on demand not for
00:24:53
us we don't need it >> well it's less it's less about being dismissive that way it's more that
00:24:57
regulators and other people won't necessarily allow to use it the way you want >> okay so finance HIPPA yeah there's HR
00:25:05
data you're not allowed to to to put that to work just yet what I'm finding is once you start using this and getting
00:25:12
some gains it's very addictive and we were sitting here Brad I don't know maybe in January and I got that open
00:25:19
claw bug >> and then you know I started playing with this Hermes Hermes agent which is not a
00:25:24
French company by the way they just use you know French names is Nuvo research or whatever it is I started playing with
00:25:30
that it's a very peculiar piece of software but it's very open piece of software so I went to open router I got
00:25:36
my own keys I've been playing with GLM Then uh I talked a little bit about BitSensor on the program known as Tao,
00:25:42
dollar sign TAO. It's a it's a crypto project. Somebody who is creating a subnet that is putting GLM 5.2 and other
00:25:50
models available at really cheap prices. So I all of a sudden experienced because
00:25:55
they gave me an API key having my token cost go down 95%. And when you have unlimited tokens as an
00:26:04
exercise, which is going to come to everybody, eventually everybody's going to learn how to drop the price by 95%.
00:26:10
And it's going to happen as well because people like rock with inference. This is
00:26:13
all inference, right? This is what people are using. They're they they're they're using
00:26:18
inference to do this. Well, inference is being impacted like three or four different ways. The software is getting
00:26:24
better. Open source at the same time. you're going to have distributed networks like Tao and uh you're going to
00:26:30
have better you know chipsets from Grock and Cerebras etc. All that's happening at the same time once I got down to 95%
00:26:39
cheaper I started setting my agents instead of doing daily runs to doing hourly runs then I took my agents from
00:26:46
doing one task and I broke them up into three agents and have them doing three different things on the hour. And when
00:26:52
you start doing hourly tasks and then you wake up in the morning and like 14 jobs have been done, you're like, "Wait
00:26:58
a second. This is completely different." As one example, I have it has all the all-in episodes, all the This Week in
00:27:04
startups episodes, and we set these crown jobs to go find what the new trends are in technology. I have a trend
00:27:12
spotting agent running every hour, >> informing me of the top three or four trends, and I just give it words. Really
00:27:19
does change your thinking. when costs go down, what do you think the tokens are going to cost, Brad? And you know, next
00:27:24
year, >> yeah, we've se we we we've seen 90% reductions in the price to tokens for
00:27:30
each of the last two and a half years. We've talked a lot about Jeban's paradox, which I think you you're
00:27:36
referencing here, which is you're going to use a hell of a lot more when it happens. I think the central debate
00:27:41
right now in AI is the one that Chimath keeps pointing us back in the direction of which is for 18 months since the
00:27:50
deepseek moment right when the deepseek moment happened the markets fell 40%. And there was a reason for that. Many
00:27:57
started arguing that the frontier models were screwed, that open- source was going to kill them, that they were
00:28:05
closing the intelligence gap, that model routing was going to make it easier easier to route these tasks to cheap
00:28:11
tokens. But despite all of those arguments, and now we're 18 months into this, and I had this back and forth with
00:28:16
Gurley a lot. I love open source. I want all the competition in the world. Let's
00:28:20
be very clear. But despite all of those arguments, the facts in the field are just the opposite. The share of economic
00:28:28
value, right? There's this quote, there's this tweet this week from Jesse Zang that we ought to pull up here. You
00:28:33
know, the economic value, the share of wallet is actually increasing to the Frontier Labs while the share of tokens,
00:28:41
these commodity tokens is obviously going up, you know, to the other guys. And I had a little back and forth this
00:28:48
week with Nikesh on this kind of trying to sus out why is that the case, right? Because what people would have thought
00:28:54
is, oh, cheaper, pretty damn good. 90% is good enough to do all these tasks that you're talking about, Jason. So,
00:29:01
nobody's going to use the anthropics and the open AIs of the world. But despite that, it looks like their share of
00:29:06
wallet has gone up. >> I think it's not that. I think it's more that when the iPhone was a novelty,
00:29:12
everybody would keep upgrading because you expected that the new price was worth it. And then at some point there's
00:29:18
a moment and you can debate when it happened where people said, you know what, I'm just going to keep the old
00:29:23
phone cuz it's good enough and I just don't see the difference. And I think that there's going to be a moment like
00:29:29
that. Like when I use Fable 5, the problem is that it's nerfed on a bunch of things that I would normally
00:29:36
research. You know, I was with somebody this weekend and he was telling me about
00:29:39
some health thing and I put it into Fable and I was like, it won't answer you. I'm like, okay. So, I think that
00:29:45
everybody will get to a point, they'll get to it at different times where they just say, you know what, like it
00:29:52
shouldn't really matter what model I'm using. If I get an answer that I think is reasonable and I can kind of go about
00:29:57
my day separately. I think when the corporate CFO gets involved, it'll be an entirely different conversation
00:30:03
altogether. I think that what I can tell you after this UN commission that I joined with Ben off and Jensen and Brad
00:30:10
Smith, there is not a single country in the world that is not trying to figure out its own sovereign AI strategy. And I
00:30:16
don't think they believe using a closed source American model is the answer. And
00:30:20
so, you know, we I think we have to keep in mind there's trends. One is just geographic penetration of humans and
00:30:27
there are still many many many more people that don't use it than do which is an upside and an opportunity for
00:30:33
everybody. >> Mhm. >> And then the second is there is going to be the experimentation as you said that
00:30:39
needs to transition to ongoing repeatable usage and then the third is that all of that
00:30:45
then needs to plug into the existing regulatory infrastructure that we use as societies to run the world. And I think
00:30:52
when you put all of these things together, it's not clear to me who wins except that you're going to have a lot
00:30:58
of diversity of choice. Certain countries, I can tell you after this week, >> have no desire to subjugate themselves
00:31:07
to any technical risk and so they're willing to spend the money to have their own. Now we can argue and debate whether
00:31:12
that country has any chance but they would rather take an open source model like Nvidia's actually and stand up
00:31:18
their own stack soup to nuts for their own people and their own companies inside of their own country
00:31:24
>> and if the models are 99% as good or 95% as good there's going to be a claim that
00:31:29
some countries make which is it's just good enough. >> That's the question. That's the
00:31:33
question. And then separately there are companies who will not have the earnings
00:31:38
growth to justify this without going on some long protracted carveout of cost. And most companies, you know this,
00:31:47
they just don't do it. They don't have the nerve to do it. They're not capable of it. You know, you wrote that famous
00:31:55
essay to Zuck. He was pressured into finally doing it. Absent to very few companies, most people just allow the
00:32:02
problems to compound. So, I just don't see a world where when you get clobbered over the head,
00:32:10
you don't look at other ways of just displacing cost. And if it's like Coke Pepsi kind of a thing and Pepsi is 1/
00:32:16
1,000th the cost of Coke, I don't know. I just think it's a it's a risk that I think has to be managed in the
00:32:21
perception of the market participants and the underwriters. To add to that, uh, Brad, just open source is very hard
00:32:30
to implement when compared to just firing up Claude and having Claude already approved in your organization.
00:32:36
The number of steps it took me in order to, and I I'm pretty familiar with technology. It took me hours to
00:32:43
configure my new setup to get onto this bid sensor network to get open router going. And to your point, Jimoth, it
00:32:49
does dynamically route now. So, I'm dynamically routing and I'm, you know, GLM 5.2 too. And then if I fall back to
00:32:55
Claude, but which Claude am I going to fall back to? And here's another piece of evidence to your point, Schmoth.
00:33:00
There are some organizations that just aren't capable of this. They don't have the the team that, you know, does this
00:33:05
naturally. We just talked about the CTO of Uber. Now, let's talk about another CTO. Andy Fang is the CTO of Door Dash.
00:33:13
Shout out to Stanley. And so he, as you can see here in this uh tweet, I a lot of people listening to All-In over the
00:33:20
last couple weeks are coming out and as I said explaining what they're doing to address this exact issue. He says, "Hey,
00:33:25
with our internal coding benchmarks, we're able to confidently in introduce openweight models into our AI code
00:33:31
review without degrading code quality. Have the frontier model fable from anthropic to do the hardest work,
00:33:38
delegate lower level work to Kimmy 2.6 and they are now releasing their benchmark." So another group releasing
00:33:44
their benchmarks and saying hey we know this is an issue the CTO has been charged to your point Chimath again CFO
00:33:51
says hey make sure this is profitable we get the ROI they put that on the CTO here's another CTO from another leading
00:33:58
tech organization that knows how to implement this yeah >> the really interesting thing we have to
00:34:03
forecast right now is what happens in an earnings miss and I think what happens in a in a
00:34:09
moment where for whatever reason maybe there's just an externality that there are a series of earnings misses.
00:34:16
>> Where are people going to look? And I just think that people find it very difficult to lay off other people. I
00:34:22
think it's much much easier to cut other costs. And I think that the more successful these companies get in a very
00:34:30
quick amount of time without really proving the ROI, I just think the bigger the risk is. It's complicated. the game
00:34:36
on the field when you're working with these enterprises and just trying to explain it to them is I think that
00:34:40
they're they're getting smarter quickly is what I would say. >> I would just say I I I think that
00:34:45
Chimath's absolutely right about the sovereign uh stacks that are going to get built around the world. This is not
00:34:51
either or. We are going to have open source and we are going to have frontier intelligence. Um, the preponderance of
00:34:58
the tokens today are already shifting toward cheaper, lower uh uh uh lagging models out of open AAI or lagging models
00:35:06
out of anthropic or or the other frontier labs that are out there. Obviously, we you know, we talk about
00:35:11
those two. SpaceX has released an incredible model, you know, in the last two days. Meta's out with, you know, a
00:35:19
terrific model today. So, Gemini is still in the hunt. So, there are lots of choice. The meta thing was really
00:35:26
intense because I thought okay you know we talked about the game theory which was Mark should scorch the earth with
00:35:34
open source. I think they flubbed that play >> but then I think he is now said he's
00:35:39
going to create a price war and so if you look at the tweet or the quote there was a post Jason I don't know Nick if
00:35:44
you can find it >> I got it >> announcing it he was basically like hey guys I'm going to give you the same
00:35:50
quality at like 1/100th of the cost. Now again, >> there's a lot between here and there.
00:35:56
There's a lot of enterprise distribution that's required and you know this there's been a couple of misfires
00:36:00
before, but I thought it was interesting that the vector of challenge was on cost.
00:36:05
>> Yeah. Here's the Mark Zuckerberg tweet. Just sorry I queued up for you there,
00:36:08
Brad. And he's at D, that was his old handle back when he was in college, fd. And he's done more tweets today over
00:36:17
this Muse Spark announcement than he's done in his history. So he's getting into the X.com conversation. Quote,
00:36:23
"Today we're releasing new Spark 1.1, a strong agentic encoding model at a very low price. It's available through our
00:36:29
new meta model API and in meta AI." So he's coming out saying, "Hey, we got the strongest agentic tool here. Please come
00:36:36
use it." He also wants to have his own essentially, you know, he he wants to jump into not
00:36:44
the hosting space, but he wants to provide tokens as well. So again, I think we're going to have a tremendous
00:36:50
amount of selection. The competition is great for America, but I think if you look at the things people are doing, let
00:36:57
me give you an example. The premium workload, Jason, you talked about summarizing a document may take 20,000
00:37:03
cheap tokens to do. Of course, shoot that to a lagging model or an open source model, but if you're talking
00:37:09
about replacing a software engineer for 2 hours, that may take 2 million expensive tokens. And the consequence of
00:37:15
using something that's 95% as good is really high, right? Because you have a longunning task and if the task breaks
00:37:24
early or it breaks in the middle or breaks at the end, there's a huge cost to that. So
00:37:29
>> you still burn the tokens, right? You and back to this analogy I was using, they're pulling the slot machine and you
00:37:34
lose >> and the time and the compute. So if an AI agent is replacing a $200 an hour
00:37:41
consultant, right? Take that as an example. So, three consulting firms, they're competing. They need the
00:37:47
smartest consultant. It they're charging 200 bucks an hour. The difference between spending three bucks on a cheap
00:37:54
model or 15 bucks on an expensive model to replace a $200 an hour consultant, it's just irrelevance. That inference
00:38:02
cost difference is irrelevance if you're getting something that's bulletproof for
00:38:06
15 bucks. And so, I think that's what we're seeing play out. The best evidence for all of this is just revenue growth,
00:38:13
>> right? We can sit here and speculate all day long as to revenue, not from Anthropic and Open AAI, but from their
00:38:18
customers. >> I'm no I'm talking about what is anthropic revenue growth compared to
00:38:22
OpenAI compared to the open source models. Millions of independent actors are choosing every single day. The open
00:38:29
source companies are growing, right? But they're growing selling something that is really, really cheap. And there's a
00:38:36
there there's room in every single market for premium products, for mid-tier products, and for commodity
00:38:42
products. And I think we see a lot of this token growth. People are speculating that the that the
00:38:49
intelligence gap between that commodity stuff and the frontier stuff is going to
00:38:54
collapse to the point that people won't pay for the frontier stuff. There is no evidence of that on the field today. It
00:38:59
may develop over the course of the next couple years, but it's not on the field today.
00:39:03
>> Yeah. Yeah. And just to give people an idea, we we keep mentioning what sovereigns are doing. To give you the
00:39:08
specifics on that, the UAE very famously has their own uh Abu Dhabi Technology Innovation
00:39:14
Institute shipping Falcon. You probably have heard about that. The Saudis have Humane and they're doing their own
00:39:20
models that are Arabic LLMs. And then this week, Japan is investing$6 billion dollars in a consortium. It's called the
00:39:28
Neoterra Neoter. Neo T r a consortium and they're doing that and skipping ahead to
00:39:35
physical AI i.e. robotics. Okay. Joining the conversation here, the one, the only
00:39:41
Saxy Pooh Sax bringing you into the discussion talking a little bit here about the debate that we started here on
00:39:48
the podcast getting ROI from tokens. Where are the tokens going to acrue to open source versus the frontier models?
00:39:57
Bunch of CTO's chiming in on X this week in the last couple days. is in fact talking about how they're managing
00:40:03
intelligent routing first to open source models then falling back to Fable and the Frontier models. How do you think
00:40:11
this is playing out? And if you're an investor in the space, how do you think about the frontier models and their
00:40:18
growth when you have uh you know CFOs coming in and saying hey justify this cost and do you have a cheaper solution
00:40:25
and what is that cheaper solution? Well, look, I think that enterprise CTO's would like to shift their token
00:40:33
consumption to cheaper models for the obvious reason that that would be more efficient and they are seeing their
00:40:41
compute cost or their token cost is skyrocketing right now. So, everyone's trying to figure out how do we put the
00:40:46
brakes on this or at least control it, you know, make sure we're getting ROI. You also have the AI sovereignty issue
00:40:52
that we discussed last week that Alex Karp talked about where they're worried about giving up the secret sauce or the
00:40:59
alpha in their business to a frontier lab that may one day be competing with them. So there's no question that
00:41:05
enterprises would like to diversify. They would like to get off of these frontier models when they can. The
00:41:12
problem is I think in most cases they don't have the technical ability to do it. I mean Coinbase figured out how to
00:41:18
do it. Door Dash figured out how to do it, which is to say they built a token routing system, a layer of middleware
00:41:24
that allows them to sort of send frontier task to frontier models and non-frontier task to more mundane
00:41:30
models. But I don't think your average enterprise has the technical capability to do that. So I think this is a case of
00:41:38
the spirit is willing but the flesh is weak. I mean they are willing they would like to diversify off of these closed
00:41:46
models but they are unable to do it and so this is why the share of wallet of closed models it actually increased. I
00:41:55
think that opensource went from 19% last year to 11% this year. So open source as
00:42:01
a share of enterprise spending is actually decreasing. Now I don't think that means that usage is decreasing. I
00:42:07
think usage is skyrocketing in both these categories. It also may be the case that because the whole point of
00:42:14
using an open model is you just pay for the compute cost. You don't have to pay a lab. So it may be the case that it's
00:42:20
hard to measure that usage in terms of spend. But nonetheless, I mean anyone who's saying that these closed models
00:42:29
are gonna lose or are somehow losing, you're just not seeing it in the data. Like Brad's saying the revenue is
00:42:36
skyrocketing and I think the most you can say is that enterprises that are technically capable would like to
00:42:43
gravitate towards hybrid architectures but at the same time it takes technical expertise and it is just phenomenally
00:42:51
convenient whether you're a developer or an enterprise just to go with the frontier labs and that's why their
00:42:57
revenue is skyrocketing. >> It is the easiest choice. It's the most refined Yeah. most refined product's
00:43:02
there's Yeah. And there's one other thing here as well and this was discussed in a really interesting blog
00:43:07
post by the founder of Decagon which is enabling AI powered customer support for
00:43:14
enterprises and what the founder said is look open models are great when you know
00:43:20
exactly what you're trying to do why they're smaller cheaper models but you have to do post training you have to
00:43:26
have the data set and you have to know exactly what you're going to use them for. Totally. But if you don't know
00:43:31
exactly what you're going to use them for, you want the most powerful general intelligence that you can get. Right? So
00:43:36
what he said is that for mature use cases, yeah, you want to go open, but for immature use cases, which are all
00:43:44
the new things people are discovering right now, you're just going to want to use the most capable general model that
00:43:49
you can. And then once you figure out what the workflow is and what the workload is going to be and exactly what
00:43:55
you're trying to accomplish, then you can use a small highly trained model. And I think he said
00:44:00
>> optimize in the post to get the game >> for customer support. Your model doesn't
00:44:05
need to know physics, you know, for example, >> and so you don't need that capability,
00:44:10
but enterprise are still trying to figure out exactly what all these workflows are going to do. So I think
00:44:16
that's another factor which is to say that you know it depends on the use case and how mature that use case is and you
00:44:24
really want the most powerful frontier models that you can at the discovery of all the potential for the technology.
00:44:32
>> Yeah. >> And then let me just wrap up then there's one other interesting post that
00:44:35
I saw was by Nesh Aurora who also said that what he's seeing is yeah enterprises would like to diversify.
00:44:42
They would like what he called model fungeibility. They would love to commoditize these models, right? And
00:44:48
just hot swap them. >> Yeah. Headless is the term being used, right? Yeah. >> Yeah. That'd be ideal for enterprises is
00:44:54
you sort of swap out the model for the cheapest one that gets your task done. But then what do you do about memory?
00:44:59
What do you do about context? What do you do about history? And what he said is no one's really figured out a way to
00:45:04
abstract that stuff away from the model yet. And again, this goes to the technical challenge of creating this
00:45:09
middleware layer that would do the most efficient token routing. It's well, you know, it doesn't work unless you can
00:45:17
make all of that context and memory and history fully portable to the cheaper model that you want to basically hot
00:45:24
swap to, >> which means you have to have some technical ability sachs. And the people
00:45:28
with technical ability, the tip of the spear, the 1% of people deploying this technology are starting to figure that
00:45:34
out. Here's another proof point and some more evidence. This is Ali the founder uh of data bricks I think a company
00:45:40
you're very familiar with Brad and what he realized when you start taking apart the harness and you start looking at the
00:45:48
skills you look at the memory and all this acruant that you put around your tasks he said we find that the same
00:45:56
model using the same model not using open source versus open AI or or claude we found that for the same model the
00:46:04
choice of harness can significantly save costs by about 2x. So they found with GLM 5.2 that this performs extremely
00:46:13
well and that their tasks literally are getting cut in half using the same model
00:46:18
but with a different harness. And that rings true to me. I once you've built one of these agents and I was talking
00:46:24
about one earlier I'm running every hour on the hour to find trends. I asked it to please start optimizing it. And when
00:46:33
I optimized it, it was like 80% less token use. And now in these apps, you can go to your analytic stacks and you
00:46:40
can actually see your token use by hour, by job, and across which models you're using. This is really sophisticated and
00:46:47
hard for for a consumer to do of the technology, but it's definitely a trend. >> So with that harness that he was using,
00:46:53
is that something they built in house? >> Yes, I think it's um >> Yeah. >> Okay, got it. So they they basically
00:46:59
creat >> Yeah. in front of these and that it can multiplex different harnesses and models
00:47:06
for different tasks. So he's not only routing to the right LLM, he's routing to the right harness and people don't
00:47:13
even know what skills are. People don't even know what the memory is at this point there. That's all abstracted into
00:47:19
the claw product or the perplexity product etc. Yeah, there'll be a massive business. There already is. All these
00:47:25
inference clouds, you know, the base 10s of the world, the fireworks of the world, every single hyperscaler in the
00:47:30
world is going to do this. They're all going to provide, you know, tools that allow you to achieve some level of model
00:47:36
fungeibility. The big question is at the end of the day, we're going to have it's
00:47:39
going to be very heterogeneous, but what is the mix between these two? I again think the TAM is so damn big here that
00:47:46
you're going to have huge open-source use cases, sovereign use cases, etc. You're going to have plenty of room for
00:47:52
the frontier labs. I Let me throw something out. I'd like to get your opinion on. you know to a certain extent
00:47:58
there's this implied assumption in the world that uh there's going to be this convergence of intelligence right and if
00:48:04
you look at the benchmarks today seems like everybody you know on the benchmarks they are converging but yet
00:48:11
if you look at the revenue distribution it's not converging at all one of the questions I have will the model router
00:48:16
itself be smart enough to overcome David the inherent intelligence advantages of
00:48:22
the generalized of the frontier labs the non One consensus argument might be that
00:48:28
intelligence is not converging at all that c super intelligence becomes fully self uh uh uh you know recursive and as
00:48:36
it becomes recursive you actually extend the lead because the smarter your model
00:48:41
gets the more revenue you get the more compute you can buy the more compute you can buy the better the model is that you
00:48:47
can build so I think there's a chance that over the course of the next 2 to 3 years as we take on much more complex
00:48:54
agentic tasks asks that the distance between the frontier and everybody else doesn't converge. It actually extends.
00:49:01
We shall see. But, you know, I think there's this implicit assumption in all the arguments today that everything's
00:49:08
converging. I'm not I'm not sure that we've really run that to ground. Another piece of evidence to put in uh to this
00:49:13
mix. I interviewed Anton, the CEO of Lovable. Lovable is an app that or a service that allows you to vibe code,
00:49:21
you know, different pieces of software. They've got a really interesting take on
00:49:24
that. They went from 100 to 600 million in revenue over the last two years. They
00:49:28
went from zero to 350 in the first two years of the company. Products been out I think roughly for like 30 months. Then
00:49:34
I also spoke to uh the CEO of 11 Labs, Matti. And I asked both of them point blank, are you guys uh you know your
00:49:43
major customers of you know the the Frontier models? Yes. They're spending tens of millions of dollars with those
00:49:49
frontier models. I asked them, hey, are you concerned about data leakage and them compete, you know, releasing
00:49:54
competing products? 11 Labs is doing voice and obviously Claude code, you know, is an obvious competitor to
00:50:00
lovable. Are you going to make your own models? Both of them said that they're working essentially on their own models.
00:50:06
Those are major customers of the Frontier Labs who they want to get off of the Frontier models and they want to
00:50:12
have their own proprietary model. The the ability to create verticalized models is getting easier and easier
00:50:17
every six months or so. So that's going to be another trend to look for is these
00:50:21
verticalized models for voice, verticalized models for building code. And uh we're going to see uh people stop
00:50:29
using the Frontier Labs and these are major major eight and nine figure customers. I think they're going to just
00:50:35
run for the hills and only use the Frontier models. >> But Jason, the counterpoint there is 11
00:50:42
Labs. I love Maddie. >> Yeah. >> Do you really think he's going to use an inferior model? He's got to be have the
00:50:48
best voice voice agent in the world. And if the best voice agent in the world is
00:50:52
given to him by using the Frontier Labs, can he afford in a competitive marketplace to say, "I'm going to use
00:50:58
the cheaper version, the thing that I built for myself, even though it's not as good as the other thing." If he
00:51:04
builds something better, I totally agree with you, which is what he believes he's
00:51:07
doing. He believes he's making a better version. Yeah. So that's the question that I just, you know, put on the table
00:51:13
whether or not you're going to see this convergence, whether it in fact is that easy. I don't think it's that easy, but
00:51:18
we shall see. >> Okay. >> It may come down to how discreet and sort of predictive the use is. So like
00:51:25
Decagon, the customer support AI company, they said that 90% of their usage now is being sent to open models,
00:51:33
but those are open models that they've had the opportunity to post train on and do a huge amount of customization based
00:51:41
on all of their learnings and all of the data that they've gotten. So again, it comes back to maturity of the use case.
00:51:48
If you know exactly what you're trying to do, it's probably easier. But, you know, I don't think that's most
00:51:54
enterprises, though. And maybe there's going to be a pattern where, you know, all the immature use cases, which is to
00:52:01
say, all the things you're figuring out, you're just going to want to use the most powerful model possible. And then
00:52:06
once it gets really well defined, maybe you start moving some of those workloads
00:52:11
to post-trained open models, >> purpose-built models. Yeah. >> Yeah. Purpose-built. Yeah, it could be
00:52:16
something like that. >> That's kind of what's happening with the people who are the tip of the spear.
00:52:20
They're working on the routing of the jobs. They're working on the harness and they want to be independent and have
00:52:25
that AI sovereignty we talked about last week. Speaking >> well, but just to take on Brad's point
00:52:30
for a second, I actually agree with what I think you're saying, Brad, which is the market today seems to be pushing
00:52:37
towards duopoly or it has become a duopoly. Certainly measured in terms of revenue. If you're to look at market
00:52:44
share based on token revenue, there's only two companies making meaningful revenue. Anthropics at what 60some
00:52:50
billion ARR open AAI at 40ome billion ARR. I don't know if anybody else even registers and it may be the case that
00:53:00
the more tokens that Anthropic and OpenAI produce, I mean we got to remember every token that
00:53:06
they're serving up is on behalf of a use case, right? So they themselves are learning from that and they're getting
00:53:12
better at then providing whatever offering that is and so who knows like the gap may be growing. A year ago it
00:53:20
seemed like we had five major labs you know now it seems like there's a top two and then everybody else. So I mean look
00:53:26
I could see AI easily becoming another tech market that becomes a duopoly >> which which by the way is the trend. The
00:53:34
historical trend is like monopoly or duopoly in most tech categories for better or worse.
00:53:40
>> Yeah. In this case though, however, we're using revenue as the metric to determine the winner. Keep in mind when
00:53:46
you're doing open source, those are dark tokens. Those don't come up as revenue.
00:53:51
So, we don't know the utilization that's occurring at Door Dash when they're using an open- source model. We do know
00:53:57
their fable and their anthropic spend, right? And because we see that in the anthropic revenue ramp, the more they
00:54:03
deploy these things on their own hardware, using commoditized hardware, using the NeoClouds, you don't see that.
00:54:09
It doesn't come up as revenue. It comes up as free. The only thing you're paying
00:54:12
for there is the hosting cost, you know, and that's that will come up on Nvidia's
00:54:17
balance sheet. So the gains you'll see there will be Cerebrris, Neoclouds, Caruso Cloud, etc. So keep
00:54:24
just keep that in mind when we're having this discussion. Let's talk a little bit
00:54:28
back to sovereignty here. The CCP said that they might or there's a report out according to Reuters. Reuters
00:54:35
generally does a good job of this. They dropped a couple of anonymously sourced reports about AI in China. And these
00:54:41
were published about 15 minutes apart the big scoop that CCP officials, Chinese Communist Party, are reportedly
00:54:48
considering restricting overseas access to China's top models. So two Chinese regulators met with Alibaba, Bite Dance
00:54:54
and Z.AI. They are the ones who are doing GLM 5.2 that we keep referencing. They're discussing limiting access to
00:54:59
the top open and closed models outside of China. Why are they doing this? Well, they're they're making uh any theft or
00:55:06
leaks of AI research a national security offense and they want to control who can
00:55:12
fund Chinese AI AI labs. And we saw this with Manis which was a Chinese company tried to go to Singapore. the CCP pulled
00:55:21
those employees from Singapore back to China. And so here is their main concern. The quote is that they're
00:55:29
concerned about Mythos. Chinese authorities are deeply worried about the potential for Mythos to exploit software
00:55:34
vulnerabilities and that Washington might deploy a model against Chinese interest. Saxs, last week I proposed the
00:55:40
reverse to you in your previous position as Zar of AI. Do you think the United States should be banning those models?
00:55:46
Now we have the opposite. China saying potentially according to these reports allegedly that they might restrict them.
00:55:52
So explain the game on the field here. If you're going to look into what China's thinking, why would they want us
00:55:58
to not have those open source models and and how is this chessboard development?
00:56:03
>> Well, last week I explained why it would be harmful to the US to ban open models.
00:56:09
So if you're China and you want to harm the US, maybe you would want to. I mean,
00:56:12
it does kind of make sense >> because our our companies are benefiting a lot from all this R&D that they're
00:56:19
doing. Now, at the end of the day, I think the story is probably a little bit overstated. I think there are a few
00:56:26
Chinese models that were open source that have gone closed source, but I don't think they're all I'd be
00:56:31
surprised, let's put it that way, if they all went closed. So, for example, the number one model in China, as I
00:56:38
understand it, is bite dances model, which is already closed. That's kind of like their chat GPT equivalent and it's
00:56:46
always been closed. Then you've got Alibaba's Quen, which was open and now I think is going closed, and ZepO, which
00:56:56
has GLM 5.2, too, which we've talked about a couple weeks ago because it seemed to be catching up to what was
00:57:02
then commercially available as the American frontier at certain tasks. They I think are going closed too after
00:57:09
having been open. And so this is I think the tactic is you stay open until you catch the frontier or you get close to
00:57:16
it and then there's a really compelling incentive to go close because you want to capture all the value for yourself
00:57:22
>> which by the way is exactly what Sam Alman did famously at OpenAI. Not only did they go from a nonprofit to a
00:57:28
for-profit, they went from open models to closed models. So, it's exactly paralleling what Sam realized 3 years
00:57:36
ago. Yeah. >> I mean, in a way, that was what I think Meta's original strategy was was that
00:57:42
Llama was going to be open, but then they actually they've sort of backed away from open a little bit. But this is
00:57:47
kind of an obvious strategy, right? is is that if you want to catch up, you go open. Because by the way, you're not
00:57:53
going to make any meaningful revenue on on closed anyway because you're not close enough to the frontier. So why
00:57:57
would anyone buy your product, but if you go open, you get the developer community on your side. So
00:58:03
>> and you get utilization, more people use it, which in AI gives you reinforcement
00:58:07
learning. Yeah. Sex. >> Well, having having spent some time in DC this week, I and and and talking with
00:58:13
both the White House and Treasury, etc. on this topic. What I can tell you is while there may be some, you know,
00:58:19
debates about regulation of US models, the one thing there's absolute agreement on is doing everything to stay ahead of
00:58:27
China. And, you know, and and the president all the way up to the president very interested how far are we
00:58:33
ahead of China? What are the things we need to do to stay ahead of China? It is a unifying force in Washington. And the
00:58:39
idea that we were going to kind of take our frontier labs off the field, off the
00:58:43
playing field while letting Chinese open source models run free, you know, and on
00:58:48
top of that distilling our models. I will tell you GL GLM 5.2 has watermarks from mythos all over it, right? So we
00:58:55
know they were distilling, etc. And I think the US government's going to take steps against distillation, which they
00:59:01
should do. So I think that you know China doing this in some ways I don't think it hurts the United States. The
00:59:08
United States can spin up open source models. We've got Reflection spinning one up. Obviously we got the good work
00:59:13
going on at Nvidia with their open source models. The labs I've talked to a couple of the frontier labs about open
00:59:19
source models. I said why aren't you guys making open source models? They're like there's not a lot of demand for it.
00:59:24
If there was a lot of demand for it we'd make it. And so I think the US is in a good position. And I think this is
00:59:29
probably more chess playing by China than actual threats because it would hurt them a lot more than it would uh
00:59:35
hurt us. >> Yeah. And then to just back up your point, Saxs, about when you're behind,
00:59:40
go open and then once you catch up, start tighten things up. That's exactly what they did with Android, right?
00:59:46
Google released Android. At a certain point, they were like, in order to use Android in the license, you have to
00:59:51
include Google Search, you got to use Google Drive, you got to use Chrome. and they started tightening it up. So, it's
00:59:56
not really an open- source project at this point. >> Just, by the way, I think the absolute
01:00:01
best thing that could happen >> for America in terms of winning the AI race against China is if China somehow
01:00:08
sprouted their own doomer community. >> Yes, >> we need uh like a Chinese yud over
01:00:14
there. >> We got to get their poom up. We got to get their poom up. >> Exactly. We need a lot more people over
01:00:19
there freaking out about, you know, job loss or RSI or whatever. >> Yeah. >> That'd be the best thing that could ever
01:00:26
happen to us is if they start cracking down on their labs in the same way that the doomers want to do over here.
01:00:32
>> Yeah. >> Brad, let me just say just one comment. I mean, look, I I agree with you that
01:00:37
>> from the president on down, everyone wants to win the AI race. And in fact, that was, you know, in the big AI policy
01:00:42
speech the president gave about one year ago. That was the whole thrust of the speech was declaring that we were in an
01:00:49
AI race and America had to win it. I think the big risk is more that and this would not be at like the top level. You
01:00:57
know, I think if the president could make every single decision, it'd be perfect. The issue is at a lower level
01:01:02
in the bureaucracy, do people somehow do things that are counterproductive? Maybe
01:01:07
they think it's going to help us in the race against China, but they end up doing something that's hamfisted, they
01:01:13
just like ban something or without, you know, really truly understand all the implications of it. So, I think there's
01:01:19
no question that the administration wants to win the AI race. The president definitely does and at the top levels
01:01:26
they will all make smart decisions. The question is whether at lower levels of the bureaucracy, you can get mistakes
01:01:31
being made. And then you have the influence of Congress, whatever they want to do. Those guys, they're more
01:01:37
responsive, I think, in a way to like the doomer community that's creating a lot of political pressure right now.
01:01:44
>> Well, and the throttle, you know, paradoxically, to all of this might not be the software, might not be the chips,
01:01:50
it might be energy. Yeah, Chimath. I mean, when you look at your data center projects and the other ones that are
01:01:54
going out there, if we need more tokens, if people need more inference, we have a
01:01:58
gating factor in the United States, which is which is energy. There's a an analysis that my team put together which
01:02:04
I think is quite staggering. If you just look at the load growth that's expected
01:02:09
between now and 2050, we are about three entire California's worth of energy short. And that's just
01:02:18
assuming regular consumption of devices and cars and fridges and televisions and
01:02:23
computers. So yeah, we have a we have an enormous problem in the United States with
01:02:29
respect to electrons. >> Yeah. And if you put Taiwan into the mix here where the chips are coming out of,
01:02:36
I had a really big wakeup call and there was a Wall Street Journal article about
01:02:41
this. The amount of LNG, which is what Taiwan runs on, is like they have two or three weeks of it. China decides to
01:02:48
blockade Taiwan, they're going to run out of energy immediately. So this is energy both in China and Taiwan and in
01:02:56
the United States. It's all dependent on that. We have to get nuclear running, more solar running, more batteries, more
01:03:03
of everything. And uh that is obviously a regulatory challenge here in the United States. All right, let's talk
01:03:10
about your time in DC. Brad Gersonner went to DC, everybody. And uh huge huge congrats, Brad. you've been uh
01:03:19
harping on about this um you know uh accounts now called Trump accounts, the Invest America accounts and um tell us
01:03:28
what happened in DC this week cuz I think you finally have the number one app in the world Trump accounts is the
01:03:35
number one app in the world. Congratulations and a bunch of announcements. So what what what's the
01:03:40
contours of the announcement and uh maybe you could take us behind the scenes. There it is. Trump accounts, the
01:03:46
official app number one in top downloads. Your kids can invest in the future. >> This has been, you know, a four-year
01:03:53
mission in the making thanks to you guys. You were early supporters, backers. We talked about it on here.
01:03:59
And, you know, founders are crazy. And you guys probably looked at what I was working on and and and thought, you're
01:04:06
nuts. You're wasting your time on this. And so, you know, when it got signed into law last year, that's a huge moment
01:04:13
in a founder journey that it's like getting your first round of funding maybe like, okay, we actually this thing
01:04:18
is going to happen. But on July 4th of this year, the app went live, right? So that means millions of accounts got
01:04:24
created, the accounts got funded. And to celebrate that and to really kind of take the next step forward,
01:04:31
you know, we designed a joint bell ringing first in history between the NYSE and NASDAQ from the Oval Office.
01:04:37
That was incredible. We had hundreds CEOs there, kids there, families that were impacted.
01:04:44
And the president really, you know, kind of laid out that this is much bigger than just a program to give a few people
01:04:52
some accounts. This is really about making every child a capitalist. In fact, the president suggested that we're
01:05:00
going to autocreate uh accounts for all 50 million kids or upwards of 70 million
01:05:05
kids under the age of 18. So he called on us to get the accounts open faster for more people to have more impact to
01:05:12
make sure no child is left behind. >> Brad, just slow down because a lot of people don't even know what a Trump
01:05:17
account is. Just explain the what it is and then you should contrast it to like a 529 account and some of these other
01:05:24
things. >> Great. So, as you guys know, the idea was very simple. $1,000 for every child at birth that could compound
01:05:35
for their life in a privatelyowned investment account. So you're born, you get a social security number and you get
01:05:41
an investment account. And if you do that, you start with $1,000 and somebody matches that and you save 10 bucks a
01:05:48
week, that's $50,000 at age 18. And the idea >> and that's invested in the S&P 500.
01:05:54
>> S&P 500. So when these accounts are created, all that money goes into the S&P 500.
01:06:02
There's no cost. It's a free account for the lifetime of the recipient. And that
01:06:07
was packaged into the Invest America Act, which was passed into law a year ago as part of the reconciliation bill.
01:06:13
So that's what actually occurred on July 4th of this year. All those accounts were created for all of these kids.
01:06:20
That's the reason the Trump account app is number one in the app store because parents started hearing about this and
01:06:25
saying, "Whoa, I need to go download and get this set up for my child." We had over a million and a half counts created
01:06:32
in the first 24 hours after the launch of this. We had over a billion dollars of deposits. So, I was contributing
01:06:40
money into the accounts of my nieces, my nephews, my kids, friends, kids. Every account h app has a QR code. Jason, so
01:06:50
somebody can just send you the QR code for your kid. You double you Apple Pay on your phone, double click and you send
01:06:57
them 25 or 50 bucks. So that is kind of the the most essential part of it. But we also had a bunch of announcements
01:07:06
around philanthrop when you're 18, 19, 20 years old and start putting it towards school or you
01:07:12
can roll it into your IRA, >> Roth IRA, I guess your your your retirement account. Obviously, Michael
01:07:19
and Susan Dell were the were the anchors here. Over $6 billion, $250 for each of
01:07:25
25 million children, primarily lower and middle inome kids. SpaceX's president, Gwen Shotwell, she joined the party, put
01:07:32
$350 million in her SpaceX shares, uh, and for children of lower income communities. So, with this, there's a
01:07:39
device or some way to do it. So, you can target specific communities by geo uh, or by, I guess, their net worth. Um,
01:07:47
>> no, it's it's just zip code and age. Zip code and age. >> Zip code and age. Okay. And then Micron
01:07:51
put in 250 million up to a,000 per employee. So that seems to be a really interesting way to do this. Like you can
01:07:57
do an employee I'm sorry, an employer contribution. >> And Brad Brad did it for all kids in
01:08:02
Indiana, I think. Right. >> Correct. All kids. >> Brad, this is a big number here. I This
01:08:07
is a big announcement. Brad, the guy who complains when we make him buy in for 10K after 10 p.m. at the
01:08:15
poker game and who like rage quits the game when he loses $6,000. Somehow Brad dropped $100 million.
01:08:26
I mean, oh my god. Let's get a round of applause and a golf clap. Brad, this is I mean, I I've never heard of you doing
01:08:33
any philanthropy. Like, sometimes you show up with a bottle of wine to the game, but this is a big number. This is
01:08:37
a big decision for you, huh? Well, I think this will become the largest direct philanthropic platform in
01:08:44
the history of the country. We told the president, we think we can raise a hundred billion dollars in the first 12
01:08:50
months. And so the scale of the philanthropy, the nature of the philanthropy directly to America's kids
01:08:56
without a charitable middleman that's directing who gets what and and how it's distributed. So you think about the
01:09:04
people who now are, you know, we're 10 billion or a h 100red billion. How do they give that money away at scale
01:09:12
effectively? Now we have a platform they can do that with. It goes directly into
01:09:16
the accounts. The money can't be taken out until the kids are 18. for >> there was a bunch of noise about how
01:09:23
some people won't do it because it's called Trump accounts and that some people said, you know,
01:09:29
this is going to create this weird class divide by people who had TDS and refused to give their kids
01:09:37
because I think your website or something said something like 13 million bucks by the time they're 50. And you
01:09:43
know, I tweeted something to the effect of that is an irresponsible amount of money to not give a kid because you
01:09:49
don't like the fact that it's called a Trump account. It's it's it's patently insane.
01:09:54
>> If you go on Blue Sky, which is like the open- source uh lib TDS um social network, people are like just put one,
01:10:02
you know, y'all trust those Trump accounts. I sure as hell don't. And so there's a bunch of people.
01:10:07
>> Speak to that. Yeah, speak to that for one second. Mike. >> So, I would say this, you know, it was
01:10:11
the enabling legislation is the Invest America Act. Um, a lot of people, a lot of Democrats call them Invest America
01:10:18
accounts. They're officially Trump accounts. And the facts on the ground are that parents aren't listening to
01:10:24
that noise. The parents who are signing up for this are across the income spectrum, across the economic spectrum.
01:10:31
They're across the political spectrum. They know and understand that their first responsibility is making sure
01:10:37
their kids have a connection to the American dream, have savings for their life. But yes, they are called Trump
01:10:44
accounts. And I I've I've read some of that blowback. But the president himself, let me just make this case very
01:10:50
strongly. There's nobody who I've talked to about this over the last two years who cares more about every child getting
01:10:59
an account than the president himself. In fact, that occupied a lot of a lot of our conversation over lunch. He said,
01:11:08
"How do we get more people autoenrolled in this faster? I want every kid to have
01:11:13
the shot to have this. I don't want anybody being left out and left behind because their parents are too busy
01:11:18
working two jobs or because their parents may have an issue with it being called a Trump account." So, the
01:11:24
president is pushing us very hard and the Treasury Secretary, he gave you instructions. He gave you an
01:11:31
order that he wants you to autocreate the accounts. This is a brilliant move. He know we know the social security
01:11:37
numbers of people who are under 18. He told you get to work and automatically create the accounts. Are you going to do
01:11:44
what the President Trump has commanded you to do, Brad? Are you going to autocreate them, Brad, or are you going
01:11:48
to disobey the president? >> We we we our intention is to get all 50 to 70 million accounts created over the
01:11:56
course of the next 90 days using all of this data. But you know, listen, we got to work through Treasury, the White
01:12:04
House, Social Security, etc. They're definitely >> You also got to get through Elizabeth
01:12:08
Warren and Bernie Sanders and Roan who are going to try to stop you. Are they going to try to stop you from doing
01:12:12
this? Are they giving you blowback because they don't want to give Trump the win, which is totally but
01:12:17
>> No, listen. I I I I'll give credit where credit is due. You know, Cy Booker's
01:12:21
come out and supported these. And Gavin Newsome, Governor Wes Moore, you know, John Federman, Senator from
01:12:27
Pennsylvania. So there are plenty of Democrats who are able to get over that hurdle. But you bring up a good point
01:12:33
and I said this on CNBC yesterday. On the one hand, you have Bernie and Mandami. They want to take and tax all
01:12:42
these corporations. They want to control all that money in Washington and decide
01:12:46
who gets it. Right? It's a very dependent on Washington model. On the other side, you have the president in
01:12:55
this administration and frankly a lot of Democrats who are more in the orthodoxy,
01:13:00
closer to the center, who say, "No, let's set up a private account for every kid in America. Let's fund them. Let's
01:13:06
not make them dependent. Let's make them independent of the government to build wealth on their own, financial literacy
01:13:13
on their own, more likely to graduate from high school, start a business, buy a home." Those are two very different
01:13:19
worldviews for America. And I think the antidote to more socialism is more capitalism. And as I told the president,
01:13:26
this is more capitalism. >> Saxs, if this succeeds, and Brad does as he's been instructed by the president,
01:13:33
we're going to go from 50% of people owning equities in the country to as much as 70 maybe even 75% of the country
01:13:41
having access and for the first time being part of equity nation. What's your thoughts on this, Sachs? Look, I think
01:13:48
that's a great thing and I think that this is a tremendous new philanthropic platform and that's really important
01:13:55
especially in this time of growing anger and backlash and populism against billionaires and people questioning
01:14:02
whether the system is rigged and whether they can be successful in America, whether they will be able to be part of
01:14:08
it. This is a really important antidote to that. But I almost think that the philanthropic aspect maybe has gotten
01:14:15
almost too too much attention because people are naturally attracted to the freebies and the part that I think
01:14:21
hasn't gotten enough attention or all the the comments I saw on CPA Twitter, you know, where all these accountants
01:14:28
were talking about what an unbelievable I guess you could say estate planning strategy this is or basically
01:14:35
>> less advantaged. Yeah. like a wealth management technique, whatever you want to call it, like planning for the
01:14:40
future. And there's never been anything like this before. They were basically saying this is like in the top three,
01:14:46
you know, there's certain things that you just have to do, like if your employer offers a matching 401k, you
01:14:50
have to do it because otherwise it's just you're losing out on free money and if you don't do a health savings account
01:14:56
or you don't max out your Roth IRA, there's just certain things you have to do because they're so tax advantaged or
01:15:02
you're getting free money, right? And in this case, you're getting both. There is
01:15:06
the opportunity for, frankly, the free money for your kids, right? But also, the tax advantage is huge. So, let's
01:15:13
just go through this, and Brad, correct me if I get any of this wrong. So, you can donate up to $5,000 a year to your
01:15:21
kid as long as they're under 18. And it's not just you, it's any friends and family or others can contribute as well,
01:15:28
which is new. And then they get taxfree compounding till they're 18. And your employer can contribute up to $2,500
01:15:36
taxfree. So at a minimum, you should go to your employer and say, "Sign up for this and if you have to take $2,500 out
01:15:44
of my salary and make it a donation to my kid's Trump account because then that's a huge tax savings, right?
01:15:50
Neither side has to pay tax on it." So, you know, like Brad said, this is basically like an IRA. You get taxfree
01:15:57
compounding. Then when the kid turns 18, they can get access to it and they can do a a rollover into an IRA or into a
01:16:05
Roth IRA, which is even better because when the Roth IRA matures, you don't pay tax on the money that gets distributed
01:16:12
out of it. Where whereas with a traditional IRA, all the taxes get deferred until the end. The difference
01:16:18
is that when you do a IRA to a Roth IRA conversion, you're supposed to pay taxes
01:16:23
at that point. And I saw one really clever CPA say that well the best way to do this is wait till your kid is
01:16:30
actually not a dependent anymore. Like so maybe they're in college or they just graduated from college and they're in
01:16:36
like the 0% tax bracket because they're not making any money and then do the conversion. And so you'll be able to
01:16:41
convert the Trump account very cheaply into a Roth IRA and now they're going to have $2 to $300,000 potentially in that
01:16:50
account that they can then do tax-free investing for the rest of their life or they could potentially start a company
01:16:56
with that. Other things you can do with an IRA is you can use part of the money on a down payment for the first home
01:17:03
purchase or if you get into a health emergency, you can use money for that. So, there's all these things. You're
01:17:08
allowed to distribute money out of an IRA without incurring a penalty. But generally speaking, the point of an IRA
01:17:13
is to save for retirement. And this is where I think it gets really amazing is because if you start with $200 to
01:17:20
$300,000 at age 18, you'll be at $10 million plus by age 60 if you just let it compound. I mean, there there's
01:17:30
ranges. >> Nepo babies we're creating here. We're going to have a lot of rich kids with
01:17:33
trust funds. >> Yeah. So this is like this is all you have to do to make sure that your kid is
01:17:38
protected for retirement is if you and your family and your friends and your employer can just contribute to their
01:17:44
Trump accounts. >> Like that that's like that's way better than social security.
01:17:50
>> Brad, I have an idea. I have to go sell some enterprise software so I have to
01:17:53
leave. But I'm I'm really proud of you. I think this is incredible. You should convince OpenAI and Anthropic to give
01:18:01
the equity of those companies if this is going to be as big as you say 100 billion, 300 billion, zillion, trillion,
01:18:08
put it into the uh accounts of every kid. >> Can you just explain how that works
01:18:13
against the $5,000 limit? >> I got to go. Love you guys. See you later. All right. Good luck on the sales
01:18:17
call. >> Yeah. Always be closing. Chimath. Always be Chimath closing. APC. >> Chamath always be closing. You know,
01:18:24
again, David and Jamant, as we build out the platform at scale, so imagine now you have 50 million accounts that are
01:18:32
opened, we do we I I've said on CNBC, you know, I've obviously talked with Daario and
01:18:39
Sam and Elon and others about making those donations. I I don't like this idea of shaking down our companies,
01:18:45
taking their shares, and then putting them in some government slush fund that perhaps Bernie or AOC or somebody's
01:18:50
going to control in the future. I've said I it's got to be voluntary and number two it should go into citizen
01:18:56
accounts right privately held in citizen accounts at Capound for their life and so you asked the question David how does
01:19:02
it happen given the limits that you have you know the $5,000 per child that's why
01:19:07
you have to have so you know 50 million accounts opened right because then you can take uh dollars in at scale but we
01:19:16
can also set up a poolled account David where it can be distributed over time so
01:19:21
you distribute it to all the kids subject to the limits that you have today and then any remainder you can
01:19:26
distribute to the 3 and a half million kids that are going to be born next year or the 3 and a half million kids born
01:19:31
the year after that or the three and a half million kids born after that. We are on a trajectory now that we're going
01:19:36
to have over a 100red million of these counts set up over the next decade. Okay? So we could have 70 million today
01:19:44
and then you're going to add 3.7 million a year. So you're going to be at a 100 million private individual accounts that
01:19:52
are compounding for people's lives that anybody can donate money into that the people themselves. I think one of the
01:19:59
things that gets lost is moms and dads or somebody working their summer job put in 10 bucks, put in a hundred bucks, put
01:20:05
it, you know, into these accounts. They get to see it on their phone. You know, this is when we started this, my sons
01:20:12
and I designed this app and it's basically what we ended up with. It's a, you know, Joe and
01:20:18
>> shout out to Vlad at Robin Hood helped you with it. Yeah, >> Vlad and and Joe have implemented a more
01:20:23
elegant version of this, but every kid owns a little bit of Nvidia, a little bit of Microsoft, a little bit of Apple.
01:20:28
Imagining opening up that account, David, in middle school or high school to the money page, and now you're
01:20:34
getting excited that you're seeing, oh man, I'm in the game. I have ownership. And while you reference what it could be
01:20:41
for families who can contribute $5,000, obviously Michael Dell and I and Gwen and everybody else, we're focused on the
01:20:49
50% of Americans who feel left out and left behind who would otherwise have zero. If you do the math on this over
01:20:57
the course of the next 15 years, you could have somewhere between two and four trillion dollars added to the
01:21:04
accounts of families and kids who would have otherwise had zero. We talk a lot. Go ahead.
01:21:11
>> We we we talk a lot. >> See, the philanthropy piece is it it basically the way the the philanthropic
01:21:16
aspect works is that other people philanthropists can contribute towards that $5,000 per kid, right? Is that
01:21:23
>> So, you know, when Gwen Shotwell contributes 2 million shares of SpaceX to 2 million kids, each kid's getting a
01:21:31
share of stock >> 150 bucks. So now >> that's counting against their $5,000 limit.
01:21:38
So that's what makes it compelling is okay look every every family that can afford to do the 5,000 should because
01:21:44
it's just like so compelling from a tax and saving standpoint but then even for families who can't
01:21:52
>> there are going to be beneficiaries of philanthropists who just want to give this type of direct giving and it seems
01:21:57
to me this is so much more efficient and so much better than the whole NGO industrial complex where
01:22:04
>> absolutely where they take% for their offices than their salaries. >> Yeah, they're just drifting.
01:22:09
>> Yeah. >> One of the numbers I saw was kind of amazing is again, it just goes back to
01:22:12
the power of compounding is that if a Trump account had been maxed out and you have the standard market rate of return
01:22:21
that we've had for say the past 30 years, then by age 28, that kid will be a millionaire.
01:22:26
>> Incredible. >> That's right. That's right. All the numbers you hear me quote, the $50,000
01:22:30
and the $200,000, it doesn't assume maxing, you know. That just assumes people are adding $50 a month because
01:22:37
I've been focused as Michael and others have really on the families who who don't have the capacity to save today.
01:22:44
We're getting all of them into the game. And the president directed us. He said,
01:22:48
"Listen, we have 529 accounts that already help the top 10%." That's not who we're focused on. This is about the
01:22:55
main street agenda. This is about all the families that he ran for that feel left out and left behind and we're
01:23:01
reconnecting them to the American dream through uh universal ownership. They all
01:23:07
have their own account. They all have a private account on their phone. Um it's a gamecher for the country. It's the
01:23:12
largest change to our social contract since 1935 and social security. And importantly, I think it couldn't come at
01:23:19
a better time. You know, we have this we have this fight for >> just every employer should be signed up
01:23:24
to be, you know, employer that can contribute because again you could take that $2,500
01:23:31
and hopefully look it's additive and that it's not just a substitute but even if it's just a substitute and JCAL your
01:23:38
employer takes $2500 bucks out of your salary and puts it in your kids Trump account then you it's reducing your
01:23:44
taxable income so it's a no-brainer >> if you're a profitable company your employees are going to love you yeah
01:23:50
>> yeah but I think every employee is going to want to and every employer should do
01:23:55
it because it's the tax savings for both, right? So, >> the tax savings here is huge.
01:24:02
>> Yeah. So, just off of the mechanics of it, I just want to maybe level up here
01:24:05
for a second. >> Yeah. I have been often critical. I call balls and strikes and I can tell you in detail the things
01:24:14
that I have a problem with this administration and their actions they've done and I have done it here on the pod.
01:24:19
I want to address the people who are negging this and specifically negging it because it has the name Trump accounts
01:24:24
on it which I told you at the poker game call them Trump accounts. I don't know if that was like an obvious thing or I
01:24:30
was the person who told you to do it. I'm not taking any credit here but I remember that conversation where I was
01:24:34
like just call him Trump accounts. Like if whatever criticism you have of Trump,
01:24:38
however valid you may feel it is. This has nothing to do with Donald Trump and how you feel about him. Put your TDS on
01:24:46
the side. Put your valid criticisms on the side. In this country, we have a K-shaped recovery going on. We have
01:24:53
immense tension between the halves and the have nots. We to the point at which people actually believe that socialism
01:25:00
and communism is a better operating system than the best operating system humanity has ever created, which is
01:25:06
called democracy plus capitalism, right? And kids love love capitalism. They love
01:25:12
building businesses. But we are in an existential moment right now. If these kids believe, young kids, and there's a
01:25:18
couple of generations of them right now who do not believe in America anymore, while we're sitting here on the 250 50th
01:25:25
anniversary of this amazing experiment known as America, this is the most American thing you can do. So, put aside
01:25:31
your TDS, put aside your valid criticisms and embrace this and give the flowers to Brad, to the people donating
01:25:39
like Michael and Susan Dell and Gwen. This is beautiful. This is the most beautiful
01:25:47
gift I've ever seen to a country and this could be something that's a unifying principle that brings us back
01:25:55
together as a country that everybody gets to participate in capitalism and this is the number one way to do it
01:26:03
which is to let kids on their smartphone instead of saying you know what mandami
01:26:07
is right I should get a free bus ride I should get a free I should get free pizza and we should take Ken Griffin's
01:26:13
and and sees his, you know, penthouse and pay out of ter. all that, you know, and we have we have CEOs getting
01:26:19
shot and and their homes firebombed. Well, you know what? If you're one of those CEOs, you've done incredibly well.
01:26:25
There was something called the giving pledge where they pushed, you know, affluent people at the TED conference
01:26:31
for decades, Bill Gates and everybody, Warren Buffett, everybody was pushing for this. This is like the perfect
01:26:38
version of the giving pledge because you're not just saying, "I'm giving away my wealth by the time I die." You're
01:26:43
very strategically saying every single person in America gets to be part of the best part of America which is
01:26:48
entrepreneurship and everybody will be part of the equity nation. And my final point is one of the happiest countries
01:26:56
in the world is Australia. If you've ever gone to Australia, everybody feels safe. And we have a a large number of
01:27:03
people in this country who do not feel safe. And the reason they don't feel safe is because they don't think their
01:27:08
kids are safe. to the point at which people do not want to have kids in this country because they feel the system is
01:27:14
just too hard. This could change that if people feel, hey, kids have a shot and I
01:27:20
don't have to worry about my kids. I I worry about my kids and I'm affluent. I can't imagine being a single parent and
01:27:27
what anxiety you must have as a single mother or father and you're and you're making minimum wage and you're behind,
01:27:33
you know, the eightball for your entire life and now your kids are set. That's all people want. That's the only thing a
01:27:40
parent wants is to make sure their kids have a better future. That was the promise of this country and somehow it
01:27:45
went off the rails for the last two generations. This puts it back on the rails. This is super annuation funds in
01:27:50
Australia. In Australia, people are extremely happy. The reason they're happy is they're forced to put 14K a
01:27:56
year or whatever it is 12 or 14% I think of their income into essentially a 401k
01:28:00
that they get to direct to a certain extent. It's forced savings. This does the same thing
01:28:07
>> at at a a very basic level. This could replace social security. This replaces
01:28:11
the giving pledge. And I just want to say Brad, you know, a lot of my friends got involved in politics. Some of them
01:28:18
on this very program, a lot of people. It's very divisive. You threaded the needle here. It was a master class in
01:28:25
balancing these two crazy parties and and the divisiveness in this country. I just want to give you
01:28:32
as your friend your flowers. This is just absolutely outstanding what you did and and you have been incredibly humble
01:28:39
in your approach to this. This would not have happened without you, Brad. This is
01:28:43
this is your legacy of everything you've done in your life. Lots of success and I've seen it up close and personal. This
01:28:49
is a million times x everything you've done in your whole life. You'll be remembered for this. This is
01:28:57
architecture. >> Should be as big as social security. I mean, it's a new platform. It's like an
01:29:01
entire new >> It's not because it's philanthropy, but it's also >> retirement savings. I mean, right? And
01:29:08
everything in between >> and this is not static. We This is dynamic. >> We can add to this. There could be other
01:29:13
features. >> I'm seeing a lot of people in the comments say, "Why stop at age 18? Why
01:29:18
can't you I mean, you have the Trump >> account roll over into a IRA or Roth IRA
01:29:24
after age 18, but why can't you keep it going and then people can keep that $5,000 contribution going? And you know,
01:29:32
it doesn't mean we take away >> exactly >> retirement benefits that are owed to current social security recipients,
01:29:39
>> but sunset it. But at a certain point, you could just say that, hey, the next
01:29:42
generation is going to be on this platform rather than the old one, and it would be a lot better.
01:29:48
>> A lot more efficient than government not running it, right, Sax? >> Yeah. >> We don't want the government running
01:29:53
this. >> Let me ask you a question about this, Brad, because I I do see one thing that
01:29:56
people say, which is what if your kid turns 18 and then they just want to blow the money,
01:30:02
>> you know? How do you trust? How do you trust that they're going to put it to good use, you know, as opposed to
01:30:09
>> I don't know, you know, >> yolo >> yolo and whatever. >> As you know, these things are always
01:30:15
political trade-offs and balances. And I wanted them to have to compound until they were 30, right? Because I figured
01:30:21
by 30, you were a little bit more, you know, uh uh mentally uh developed on on financial issues. But, you know, the
01:30:29
argument ultimately came, you're old enough to vote, you're old enough to fight a war. if I if by 18 we don't
01:30:34
allow you to have control of your own money. So that's where a political, you know, uh consensus was built, David. But
01:30:40
the other thing, remember, is they can only take up to 25% out to buy a home, start a business, go to college. The
01:30:46
rest rolls into an IRA, and there are built-in penalties for early withdrawal in an IRA. So they're disincentives for
01:30:52
people to pull out. But let's be clear, we have to do a much better job in our education, our public education system,
01:31:00
leveraging this as the platform. You know, if a kid doesn't have any money, it's hard to get excited about learning
01:31:05
about money. But if a kid's in the game and has 12,000 bucks in the seventh grade, now you got my attention. I own a
01:31:12
little bit of Nike. I own a little bit of Apple. I own a little bit of Nvidia. Let's talk about that. How did it get
01:31:17
there? How did it compound? If I added 50 bucks a month, what does it turn into? All of these things will now be
01:31:24
present on every child's phone in America. 37 states require financial literacy. Every state should build this
01:31:31
into the curriculum. We're working with a lot of states on that. You know, we haven't talked about that. We have about
01:31:36
25 states who are going to add money into the accounts of the kids in their states. So, you got
01:31:43
>> states are going to do it. >> States state action. Oklahoma, West Virginia, you know, Indiana, etc. So
01:31:50
that's also sweeping the country where the states are looking at programs they already have where they're spending
01:31:57
money for kids that are ineffective and they're saying instead of continuing to spend money on these things that
01:32:03
aren't working, why not just block grant the money directly to the kids >> because we
01:32:10
give the kids the money more likely to graduate, more likely to, you know, to buy a home, start a business, etc. So, I
01:32:17
think that we're, as I said in in the oval, this is day one, and I am fully committed to the next decade, as is my
01:32:27
partner in crime on this, Michael and Susan Dell. I appreciate your guys's comments on on on the legacy of this. It
01:32:34
has been the most profound work and kind of honor of my life. and standing in the
01:32:39
Oval Office with my two sons who are really my two co-founders on this. We draft, you know, we made the sketch of
01:32:46
this at our kitchen table in at the in the fall of 2020. That's where the conversation started. Lincoln's been
01:32:52
with me in every single meeting with every congressman, senator, president, former president, etc. The president
01:32:58
shouted him out uh you know, again when we were there. That journey as a father with my kids
01:33:04
>> has been like the payback has been really extraordinary. Other thing that's notable here and again like you got to
01:33:10
call balls and strikes and give credit where credit is due. Joe Jebia joined this administration. A lot of people in
01:33:15
the tech industry are like oh you know oh you joined the Trump administration whatever you know. Okay there's some
01:33:20
criticism. He's an incredible worldass designer. I was talking to producer Nick our producer here also happens to show
01:33:28
the same last name as me. He signed up for this right? He's doing well but you know his his wife signed up for it. The
01:33:33
software is fantastic. Let's pause for a second. The American government has made
01:33:39
exceptional software and this all got done in Trump's first 18 months, immense credit for this. This is like of all
01:33:47
the, you know, challenges this presidency has had and the Iran war and other issues. We made great software.
01:33:54
The American government because of Joe Jebia makes kickass software. Like just also major shout out to him and you know
01:34:01
he could be doing whatever he wants. He's, you know, he's done incredibly well as the co-founder of Airbnb and
01:34:05
he's doing this like that. That's a real patriotic thing to do. I I I'm just over
01:34:10
the moon with this. I think it's fantastic. >> The dream team you had like Michael
01:34:15
Dell, myself, Vlad Tennv, Joe Gabia, >> the Treasury Secretary, Luke Pettit at the Treasury talking basically every day
01:34:24
for the last year. And our objective was not we want to build the best thing that
01:34:28
that the government's ever launched. We wanted to build one of the best consumer
01:34:32
products period that's ever been launched. Mission accomplished >> and there's any Silicon Valley consumer
01:34:38
company would be thrilled with the numbers that we're seeing, the ratings that we're seeing, the engagement that
01:34:44
we're seeing. So, >> you know, it's been fun doing it with that incredible team. And, you know,
01:34:50
everybody's in this for the right mission as well. And so, I agree with you, Jason. It's rare that government
01:34:55
recruits or embraces uh you know, that that that mission. And I think the tent's getting a heck of a lot bigger.
01:35:03
It is bipartisan. It's bipartisan in support. You know, this is important. What Governor uh uh
01:35:09
Moore from Maryland said yesterday. He said, "Republicans and Democrats have been trying to do something that looks
01:35:17
like this, feels like this for 40 years. This guy got it done. Give him credit. This is great for America, great for our
01:35:25
kids, and especially on the 250th anniversary. You know, you're standing in the Oval Office looking at the
01:35:31
original Declaration of Independence and you realize what people laid down for this experiment and then I I read this
01:35:38
chatter in my feeds about Mandami and others literally wanting to set this great experiment on fire.
01:35:46
>> Yeah. >> Right. Wanting to burn the place down because they they think they have a
01:35:51
better formula. No, the answer is evolving and doubling down on the formula that has worked for 250 years.
01:35:59
And rather than making all these kids socialists, we get them all into the game of capitalism, they become owners,
01:36:05
owners and shareholders in America. So that's what we got accomplished and uh >> appreciate the chance to talk about it.
01:36:12
>> Listen, incredible Brad and um you know, just amazing to watch you do it. And if
01:36:18
you if you if you if you really think about it, the tech industry I needs to win and capitalists and creators and the
01:36:27
makers, the people who build stuff. This is our chance to say here's an example of something that helps the people at
01:36:35
the bottom, right? And I talked a bunch about um the minimum wage here. We got a
01:36:40
$7 minimum wage. Like we we need to address that as well. These are the things that if we address what people
01:36:46
are scared about, what people who are who don't have what we all have here, uh if we have empathy for those people and
01:36:53
we actually care about them and we give them a path to believe in the American dream, they will take that path
01:37:00
>> we have to give them a better path than these socialist lunatics. And this is so
01:37:05
much of a better path. Let's do it again. Let's do another one of these things. Let's keep growing this spirit
01:37:10
of getting everybody in the country to have equity uh in these great companies. That's that's why the entire world is
01:37:17
trying to replicate what we do here. Every single country I go to wants to recreate Silicon Valley.
01:37:22
>> We're not we're not stopping here. And um David to your point where you know whether it's the AI companies uh or
01:37:30
frankly whether it's the Intel shares or whether it's the Tik Tok fee I now have
01:37:35
a a place where all of those wins achieved by this administration can go they ought to go directly to all the
01:37:41
citizens you know the country into their accounts and compound for a lifetime. And then as far as people over the age
01:37:47
of 18 there's certainly a lot of talk about that as well. um not again as social security is a sacred promise by
01:37:55
both parties. Nobody's going to change that. But there's a huge opportunity to have a supplement here. Why shouldn't
01:38:01
people, you know, between 20 and 30 or 20 and 40 also have a Trump account that they can begin on a supplemental basis
01:38:08
adding dollars that they own and control? Remember the big difference between this and social security. Social
01:38:14
Security takes 12.4% 4% of my W2 income and puts it into something akin to the black hole of government. I don't own
01:38:21
it. I don't control it. If I ask a room of 3,000 people how much they've contributed, they have no idea. If I
01:38:28
die, I don't have title. It doesn't pass to my heirs, etc. So, it's really not mine. But if we created a supplemental
01:38:34
IRA, it doesn't even require new legislation, I don't think. It's just expanding the age. These these are IAS
01:38:41
after the age of 18, right? then people could start building supplemental wealth
01:38:46
and participate in these gains. And so there's a lot of conversations going on about that as well. And and so we're not
01:38:53
done, but uh it was a hell of a milestone on the 250th birthday of America to ring the bell in the oval and
01:39:00
to to watch all these kids get their accounts lit up. It was pretty special. What I think is really cool about the
01:39:05
Trump accounts, I'm I think it's an amazing philanthropic platform, but in addition to that, it's an amazing
01:39:12
platform for middle class family planning. That's the point I'm trying to make is all the CPAs that I'm seeing
01:39:18
talking about this are saying this is like one of the greatest things ever. And if I could only tell my clients to
01:39:24
do one thing, this would be the one thing. >> Finally, something for the middle class,
01:39:28
right? This is what people have been asking for. Hey, let's get something for the middle class. Let's get something
01:39:32
for the, you know, >> Yeah. And I I think the market gap, bra, correct me if I'm wrong, but basically
01:39:36
the the market gap that was created here is that you can't get an IRA, which is basically a tax advantage uh savings
01:39:44
account until you have your first job, right? And get earnings, >> which would be for most people at age 22
01:39:51
plus. So for that first 22 years, >> you're not your kids can't have an IRA, right?
01:39:56
>> Correct. And you're effectively giving every child at birth correct IRA. >> You know, it's a Trump account has
01:40:04
certain rules. It's actually it's better than an IRA. >> Better than an IRA. >> It's better than an IRA because with an
01:40:09
with an IRA, your employer can't contribute 2500 bucks taxfree, can they? I mean,
01:40:15
>> I don't think so. and philanthropists can't contribute to it and moms and dads
01:40:20
and but the most important thing you know like I I I say this you know Buffett's like the secret is to find a
01:40:26
really small snowball on a really long hill okay but the size of the hill in this country we've cut off the the first
01:40:34
third of the hill forever nobody saves anything until they're 25 >> okay the easiest compounding in the
01:40:41
world the the easiest compounding in the world is between zero and 5. All right.
01:40:47
Listen, this has been amazing. >> Yeah. Because their dependence, frankly, they're still on mom and dad.
01:40:52
>> Exactly. So, you you you pick up the first third of life. >> Incredible, right? In in compounding.
01:40:57
And so, it's a >> it's really remarkable. Let's go. Uh I mean, amazing job. All right. We'll see
01:41:04
you all next time. Bye-bye. >> We'll let your winners ride. We open sourced it to the fans and
01:41:16
they've just gone crazy with it. >> Love you. Queen of >> your besties are gone.
01:41:29
>> That is my dog taking notice your driveways. >> Oh man, myasher will meet me. We should
01:41:37
all just get a room and just have one big huge orgy cuz they're all useless. It's like this like sexual tension that
01:41:42
they just need to release something else. >> Your feet. >> We need to get merch.
01:41:52
>> I'm going all in. I'm going all in.