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All right, welcome to the show everybody. Number one podcast in the world and uh man going to be really
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exciting come September, September 7th Days at 9th, the All-In Summit in its fourth year this week. Um doing
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Freedberg's job for him because he's been a little bit busy. Lockdown is in uh looks like Jason, what are you
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in? Why are you doing this? Cut. Nick beep. Every year you pre-announce a bunch of
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people who don't show up. It's literally you literally pick people who don't. I got Elon to come three out of three
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years. I have gotten a couple of trillion dollars in market cap for your freeberg. Um and more to come. Don't
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worry about it. Don't worry about it. This year is going to be better than ever. Better than ever. Allin.com/summit.
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And lots of exciting news around the tequila boys. Freeird. Did you see MSN covered
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me sending a case of the tequila to Bezos? I didn't see that. What do we do now? [Music] Let your winners ride.
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[Music] We open source it to the fans and they've just gone crazy with it. We've uh been crushed with orders. Apologies if we're taking a little bit of time with customer support. Uh, but
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you can go to tequila.allin.com. Deliveries begin in late summer, right around the time I think of the uh, summit. Greenberg and I were in Las Vegas this past weekend. It was a blast
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as always. We had a really good time. We had 20 of our besties or so with us. No,
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great. Great time. It was great. Good time. I wish I could have been there, but I was on the Snake River doing a
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little invite. I was in What were you talking about? I was getting lobbyed like cancel your family trip whitewater
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rafting to come to Vegas. I was like yeah I don't remember inviting you free bird. Do you remember?
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Trust me people when you go to Vegas you want Jal. Jayl was a good time in Vegas but I didn't
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got a lot of invites but I Nick pull up the picture. I was on the Snake River there. I was doing my white water rafting trip and so if you're ever
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interested in um doing a fun trip with your family you can do these two three night occasions. Yeah. No, I'm not. You
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camp on the side. You eat mid food. Yeah. You don't shower for three days and you four days. But yeah, there's the
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view from the Snake River. It was absolutely stunning. And uh yeah, we Is that where is Snake
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River? Is that also where like Snake River Farms comes from? You know, the high quality meat? Yes, I'm sure it is.
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Uh Idaho border. Yeah, Idaho border. So that is Yeah, that's that's where Snake River
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Farms is. Not as good as Long Hill Wagu, but you know. Yeah. I mean, listen, these are that's like two elite steak
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producers. Get the Koulette, aka the pana. All right, listen. The uh BBB has passed the Senate. Let's get into this docket, but there was a bit of drama in the House after an allnight session and
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over 24 hours of deliberation. Senate passed the big beautiful bill on Tuesday. Friend of the pod JD Vance cast the tiebreaking vote after a 50/50 deadlock. Three Republicans voted no and uh Trump
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won over Senator Ron Johnson. On this very podcast, he said he would be a no unless more spending was cut. There were significant changes to the bill. We'll get into that in a minute. And so, it's
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got to pass the House again before Trump can sign into law. Lots of drama. Trump set the deadline for July 4th, which is
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Friday when you're listening to this. And it will, in all likelihood, get there. According to Poly Market, there
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is a 96% chance the bill will pass by Thursday and a 97% chance it'll pass by Friday, July 4th, Independence Day, the day we publish. So, it looks like it's pretty much a lock. Some uh big changes
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in the Senate. Biggest change, the 10-year AI regulation moratorium, which we're going to talk about for states was
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removed. Ted Cruz tried to negotiate cutting it to 5 years. Suggestion I made 10 years was a little bit too long for
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folks, but that didn't work. According to an NGO called National Conference of State Legislatores, over a thousand
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bills related to AI have been filed by state lawmakers in 2025. So expect a lot of state-by-state AI regulation. I think this is a good place to stop. We don't
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have Saxs here to talk about AI regulation, but he talked about it the last time. Fraberg, your thoughts on
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states. You know, we talked about state rights here in relation to abortion, guns, gun regulations, cannabis, many
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different, you know, debates over who should get to decide for the country. Where do you stand on this one? Should states have a voice in how AI is
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deployed in their, you know, borders, uh, within their borders, or should the federal government take this, and if so,
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for how many years? Because that seemed to be a sticking point. Look, I I'm a big believer in the
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construct of our federated republic in the United States where states can operate with as much kind of discretion
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as they choose to with the laws that they pass and how they intend to govern. There are however things that affect
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more than the state. We have interstate commerce. We have international commerce. We have the open internet. And
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we have a lot of other systems at play here that extend beyond the boundaries of a state. And the way that AI tools
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and AI systems and AI services and AI related jobs are being deployed and activated. I do think it's critical that we treat AI regulation at a national
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level, at a federal level. To date, there have been, I believe, 70 state laws or statutes passed thus far in the United States with, I think, over a thousand having been proposed to date,
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if the numbers are right. And having a patchwork of regulations on, for example, model development or telling software companies what software they can deploy would make it practically
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impossible for internet service providers like a Google or an OpenAI to service customers across state
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boundaries in a way that is actually going to meet the needs of the customer. This is a
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huge detriment to consumers and a huge detriment to the job market if we end up creating a patchwork of regulations on
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AI this early. One of the things that I would point out is that much of the early legislation like for example what
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we saw in California, if you read that legislation that did not get signed by Gavin Newsome in California, there was a
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definition on model parameters being a a boundary condition for whether or not something would go through a regulatory review process. That was such a naive assertion that early in the phase of AI
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technology development. And think about the implication was okay well everything is LLMs but there's other models like
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vision action models that are going to be used in robotics models that might be used in predicting and driving physical
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systems like in self-driving cars for example. So the way that the regulation gets written will often be done in a naive context in a limited fashion by regulators that
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don't fully understand the breadth of the technology that's coming our way. And I do think that it needs to be kind of leveled up and allowed to operate at
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a federal level. So I think it is absolutely critical not just for technology companies, not just for the
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industry, but for the opportunity for job creation, for improving the economy, for driving GDP and productivity growth
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that we get something passed that forces AI regulation to be done at a federal level. Even though I generally agree
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that states should be able to self-govern, this just has too much of a interstate and global interaction. That
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was the biggest disappointment for me in the negotiation that's gone on with this bill is that of all the things that I
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thought were going to be passed that I thought were maybe not ideal, getting this AI federal preeemption in that bill was probably the best thing, the top of the list for me in terms of critically
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important for the US economy. Yeah, Chimat, your thoughts here? Obviously, abortion is like an interesting one to look at because that went to the states in furtherance of Freeberg's,
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you know, position here. You have just many different rules and regulations between Texas, Oklahoma, whatever it is. Everybody's got a different view. It's chaotic and we don't have a singular
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point of view on it. Therefore, women in one state have very different rules than in another state. So, where did you fall
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on this one? Federal legislation or is it just going to take more time to figure this out? I mean, that that's
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another I guess angle here. Yeah, this is nothing like abortion. Okay. Abortion is an individual issue between a woman,
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her doctor, her partner, her god. And so a state being able to have rules and then allowing that woman to choose which state she can go to is quite
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reasonable because I think that it acknowledges that there's no oneizefits-all. So that is clearly a state issue. But the reality is that AI is of
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national security importance. It is the tip of the spear of our ability to have technological supremacy. That is how we have economic supremacy.
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And so not governing it at the federal level, I think, is a mistake. And it makes as much sense for states to legislate AI as it would make sense for
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states to have competitive armies. It doesn't make sense. There are certain things that are just so fundamentally primary to American supremacy and safety and security that
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it needs to be regulated at the federal level and I think AI needs to be at the top of that list. So I was disappointed
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that we weren't able to see the forest from the trees here. Now I'm sensitive to part of the reasons why
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many of the states have very specific issues around child safety that they mentioned in Tennessee. There was a lot
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about copyright ownership related to musicians and their content. I get all of that. Those are legitimate things
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that need to get ironed out, but I think that it could have been done in a federal framework. Not having it, I
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think the risk is that if you have 50 different sets of regulation, and it won't even just be 50, as Freebick said,
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it's going to be, you know, all kinds of pet organizations that pop up in all of these states. What happens? I think what
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it does is it slows down startups and smaller companies who won't have the economic heft to fight these regulations or to work with them or to figure it out and it'll advantage a handful of
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incumbents. And the problem with that is that our incumbents aren't yet mature and this industry is still developing. So I think this is um this is one of the unfortunate parts of what is otherwise a
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a pretty reasonable bill. Well, you uh can look at gambling, I guess, and cannabis legislation. These
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are things that Americans largely want to do, and they are fighting their way state by state. And at some point, we
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may have a federal regulation about online gambling, right? Uh right now, it's a patchwork. Same thing with
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cannabis, psychedelics, all a patchwork of different states. Why do you lump together things that are about
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individual rights with AI, which I I don't think is I don't think is about that. People might look at the rights of
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rights holders, cars, these AI things are going to hit people on an individual level. So I I think when you bring this
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up this topic, there are people who feel this is an individual sovereignty issue,
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right? But you know there are other issues of individual sovereignty like the ability to take drugs and there's still federal mandates that come through
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the FDA. You know, you're not allowed to short circuit or circumvent that framework at a state-by-st state level.
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Yeah, that that actually is at the core of the cannabis debate is would they enforce the federal laws on cannabis and
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they haven't, right? So that was I'm talking about more as it relates to AI. Sure. You know, because AI means everything. I think
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that's what makes this issue very difficult. AI is going to affect everything, right? So probably the
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people who want to slow this down and have the states do it are saying let the states have their say on these granular
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issues. I'm not saying this is my position, but I think that's what I'm reading into their position. Hey, this is going to affect different states in
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different ways. Let them figure it out. Take some time and then we'll build towards a a framework nationally, which
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I think is what happened with the internet in section 230 as well. Although I don't know the entire history of it, we did come up with an idea that
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hey, the federal government makes it common carrier to, you know, anybody can post anything on a website and then, you
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know, you can request to take it down. That was federal legislation. those things could have been held also on a
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individual basis and then what would have happened for the internet you would have to have AOL or Geocities have a
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different patchwork like you're saying in regulations. So I'm guessing the states probably do want to have a say on
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self-driving that one specifically and I don't know if they're wrong. What do you think on self-driving? Should it be
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federal? I mean that's like an interesting lens to look at it through. I don't know the details well enough. It
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seems to me that self-driving touches both the states and the federal. Sure. Federal highways and local roads. Yeah. So, but just from first principles, you
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know, there's self-driving cars now in Palo Alto going up to the city from Whimo, you got Austin, you got three
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different providers. Should this should the city, the state have a say in that? Kind of feels like they should. Yeah.
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Sure. Yeah. So, I mean, I think that I don't I don't think a city has any idea how to regulate a model. No, that's
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where it's obvious. The other side like how would they ever even know? And another piece that's in flux and has
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been changing is energy policy, solar, EV credits, and uh maybe even disincentives, the $7,500 credit for buying cars, and
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then also a carbon credits and a fee of $250 for everybody who owns an EV every year. Freeberg, maybe you could talk a little bit about this part of the debate because we've been spending and hitting
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incredible goals as a country in getting more renewables, more energy online, but
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that comes at a cost, right? And so that is a big part of the debate here. And that obviously is something that impacts Elon, and we'll get to him in a moment, but that impacts Elon and Trump's
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relationship in a major way. The old school motivation and incentive for what people would call green energy or green tech was to decarbonize electricity production and develop and
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deploy at scale these new technologies at the time like wind and solar as an alternative to carbon based technologies that put carbon dioxide in the atmosphere like oil and coal and gas.
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So, the IRA, the Inflation Reduction Act, created tremendous government incentives for building solar and wind farms to create electricity in the
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United States. This proposal that's been going back and forth in this bill and some of the
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debate that's triggered many folks online to denounce the bill takes away those incentives, takes away those credits, takes away the EV tax credit starting in September, as an example.
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Why can't they do these in digestible chunks? It should be no more than 300 pages per bill, no more than x number of
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issues and break. Good conversation to have. Good conversation to have another time, but we should talk to people on
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Congress. But there's a very specific reason why because of the uh the log jam that happens with the filibuster. So, it
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makes it impossible to get things done in that traditional context. So what's happened in the last couple years is you end up with these massive massive mega
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bills where they jam everything into one bill that they can pass with 50 votes and then 51 votes they make these last
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minute changes and then it all gets dark there's there's no rigorous debate there's no transparency into what's going on and why and so the second argument away from the green stuff is
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the more modern stuff which I've made and I know Chimath agrees with me on this which is we have to increase electricity production in this country
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the current plan has been to move from 1 to two terowatts by 2040. Meanwhile, China's moving from 3 to 8. And China is
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adding an entire United States and electricity production capacity every 18 months right now. They are so far ahead
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of us. And ultimately, electricity production is what drops the price for things and increases jobs, increases
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GDP, increases your ability to make stuff. And so the more electricity production comes online, the more we
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will be able to be sufficient in an AI point. Now the secretary of energy uh secretary Wright gave an interview and he said we have more than enough capacity with uh gas, oil and coal and
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nuclear. And so his argument at this point is that we don't need to subsidize solar and wind where the government pays for these programs and private equity investors can make money on them. This
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is a big part of the argument he's making. I'm not making it. But he's saying this will drive traditional
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energy investments in traditional systems that we can scale up quickly to meet our energy production goals. Now, I
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will say from my point of view, I'm not a huge fan of being dependent on government subsidized energy at all. So, if the government is having to play a role in funding stuff, there's something
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really questionable in terms of our sustainability on that energy production source over time. Will it actually be
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able to make more of it? Because what you want is not just to make a bunch of energy in the next six years or 12
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years. You want to make sure that you've got an engine for creating new energy production on a continuous basis. So we
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climb nonlinearly the energy production curve. That's what we need to do. And I hope that one of the key outputs of this, which a lot of people are really unhappy about the the loss of the demand
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for solar and wind because of the loss of the government uh programs here. But what I'm hopeful for is it creates a
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natural market force for nuclear and that we actually see a better proliferation in nuclear which Secretary
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Wright has said and President Trump signed these EOS a couple weeks ago to reduce the regulatory burden on nuclear and increase the ability for nuclear to proliferate much more quickly than has
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been the case historically. So I while a lot of people are saying hey this is going to take away all this energy production capacity that's coming online
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in the next few years or supposed to. The counterargument is we're going to create a natural market force because
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the energy demand will still be there. So someone's going to show up and say, "Hey, I want to make electricity because there's so much demand for it." And
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maybe they say, "Hey, let's try this new nuclear dereg system and see if we can get it to work." And so I don't know,
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the jury is absolutely out. We have not seen this energy proliferation begin in this country. But I do think one of the potential benefits of removing those clean energy tax credits is that we
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actually see natural market forces drive demand for a more naturally sustainable, scalable energy production source. Your
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thoughts? I announced this a few weeks ago, but I dipped my toe into real estate. I've never done real estate
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before, but just outside of Phoenix, we're building a 1 gawatt data center. That's a $25 billion total investment
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cycle of which we'll be into it for 2 or 3 billion of equity when it's probably all said and done. What I can tell you is the reason why you can underwrite that deal or why I
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was able to underwrite the deal was it's located downstream of a nuclear reactor and so there's effectively infinite energy that we can tap but we still need gas and a bunch of other things. The problem is that, you know,
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if we put in an order right now, we can't get an A gas turbine viable and turned on until 2030. It's not a technology issue. It's purely a supply chain issue. So, I think what our
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energy policy needs to make sure we contemplate is that many of the things that we are debating are no longer
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issues of production, but they're issues of supply, transmission, and distribution. And as long as we can make
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sure that we allow energy to be made wherever and whenever possible and then stored however possible will be on the forward foot. The big risk is that if we
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don't have that ability and then all of a sudden we have these incredible achievements in technology in robotics
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and we don't have the electricity to power them. That's the big risk. As long as we can fix that, I still worry that
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with nuclear, the issue won't be the federal regulations. I think that it's good that the president cleaned it up.
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The real problem is going to be the local and state regulators and how quickly they're willing to turn these on. And the reality is that, you know,
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these are 10-year projects. And so even if you say go from today, the earliest these things can be turned on really in
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2032, 2033. That's far too late. And that's a lot of risk too, Chimath, because what if you get blocked at the
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last minute? This is where solar and other projects, you know, we're big as well. I'll tell you a story. In 2020, right before the pandemic,
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I I don't even know if I should say the name of the company, but I almost went after a coal company to buy it. And I
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had been obsessed with this company for a year. And it was cheap. It fell on hard times. It was like a billion two, a
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billion three. And my team went up in arms. They were like, "Oh my god, it's so dirty. you can't own a coal company
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and it was such a huge miss on my part. I should have just bought the bloody thing. Then we went into co then you
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know everything went upside down and lo and behold that company's like quintupled since then. So I'm a fan of
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all forms of energy production. I think the marginal cost of energy has to go to zero which means that any single way you
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can get your hands on electricity production is a winning trade over the next 20
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years in the United States. This is I was trying to wrap my head around people saying, "Oh, we shouldn't buy all these
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solar panels out of China because China is making them so cheaply and our trade imbalance, etc." And I was like, "Well,
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wait a second. What's more important? The trade imbalance and giving China some money for solar panels. We're
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getting more solar panels to Arizona, you know, to Utah." Look, let's take the subsidies off the table. Ultimately, you
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don't want any of these markets subsidized. The reality is it is faster and more efficient to put solar panels
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up and start generating electricity. It's just that it's like 17 months from start to finish. 17 months. So that's
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probably in my opinion the single most valuable underwriting feature of solar which is you put a dollar in, you can start generating revenue in 17 months from that dollar going in. That's very
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different than when you're putting a dollar in and you're not going to see it back for a decade plus. That's scary. And so you need to generate a rate of
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return that justifies a 10 or 15 year investment cycle. And that's hard to do because there's a lot of volatility in the world and things can go, you know, down as well as up. So I don't know. My my perspective
00:23:36
is get rid of all the subsidies at this point. Create a clean slate, but don't do anything to hinder the production of electricity because we need literally as much of it as we can get our hands on.
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And then we need to find a way of storing it in a safe way and then we're off to the races. And the battery
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technology freeberg is just keeps making great incremental process pro progress in terms of cost you know just going down what 15%. Jason I have a question for you. Yeah. How many days a year do
00:24:06
you think California is in an energy deficit? How many days a year is California in an energy deficit? Doesn't have enough energy. It would be
00:24:16
during the summer months. You know where electricity prices go crazy where they have to find all kinds of ways of
00:24:22
generating massive amounts of base load. How many like a third of the time 100? Five. That's it. Wow. So we've really made progress. We you know in California
00:24:33
our grid is on average about between 45 and 50% utilized. This is for PG& I don't know what it's like for SoCal Edison. Yeah. Down south. The point I'm trying to make is that in normal market
00:24:45
conditions for residential, we have tremendous amounts of power and for most needs, we have tremendous supply.
00:24:52
So things can be pretty good. The problem is all of the stuff downstream from the making of it. And if we don't
00:24:59
clean that up, we're going to create these artificial constraints that will come back to bite us when we really need the power to do something very exciting.
00:25:06
Yeah. All right. Uh, let's move on to Elon and Trump's relationship. Everybody wants to hear our take on what's going on between Elon and Trump in relation to this bill. We took a pass on it last
00:25:18
time, uh, but we'll take a swing at it now. Uh, obviously there's been a bit of back and forth between, uh, two of our
00:25:26
friends, friends of the show, both Elon and uh, Trump are Are you friends with Trump, Jacob? Well, I'm I'm speaking on behalf of the show. Um, I have never met Trump in person, but I did interview him
00:25:38
on behalf of me and sex. But on behalf of the show, listen, you guys are all team Trump
00:25:45
and sex. Yeah. Well, you're team Trump, too. Elon has I'm not I'm not I've never met the guy. You've never met in the
00:25:52
White House. You took pictures in the White House. Never met the guy. Never met him. Never met in person. Okay. Spent time in the White House, but
00:25:57
didn't meet him. Okay, no problem. Yeah. Anyway, Elon has come out hard against this bill. He tweeted, "It is obvious
00:26:04
with the insane spending of this bill, which increases the debt ceiling by a record $5 trillion, that we live in a
00:26:10
one party country, the Porky Pig Party. Time for a new political party that actually cares about the people." This
00:26:16
escalated a bit, but this isn't as bad as the first time around. When um asked if he would deport Elon, Trump said, "I
00:26:23
don't know. We'll have to take a look." And said he might stick Doge on Elon since he gets a lot of subsidies.
00:26:30
Freeberg, we skipped talking about it because it was uh I think a bit chaotic last time, but this time I think maybe
00:26:37
we'll chime in a bit. Things aren't as hot right now and the bill is going to get through. So, let's take a swing at
00:26:42
it. What are your thoughts, Freeberg, on the kfluffle, the Donny Brook, the bruhaha between Elon and President
00:26:50
Trump? There's a lot of people that are making accurate declarations that federal spending needs to be reduced, the deficit needs to be shrunk. we are in a debt death spiral and they are
00:27:01
absolutely correct. So I don't think that Elon is off the reservation when he makes those comments and he's talked about this continuously and he dedicated months of his life to operating Doge and
00:27:16
trying to bring to light some of the extraordinary operating inefficiencies in the federal government that should be
00:27:22
addressed. And I think you know we'll see what happens. jury still out. For those actions to get permanent, they I
00:27:30
believe need to mandate them in a appropriations bill. And the White House has publicly declared that they are
00:27:36
going to move forward with an appropriations bill to try and cement some of the Doge actions. So I'm
00:27:42
hopeful, but I think Elon's right with respect to the spending. I will provide the voice I have heard publicly stated from the alternative view from the White House, which is this is not the bill to
00:27:55
do that because it mostly focuses on these mandatory spending programs and they are addressing cost savings to some
00:28:02
degree in these mandatory spending programs while keeping the tax rates where they are or reducing tax rates in
00:28:09
some cases which the expectation is will stimulate GDP growth. So the White House
00:28:15
view is also a view that you could look at and say economically I could see a path here that does make sense. You're reducing spending only on mandatory programs. You're going to come back with an appropriations bill to address
00:28:27
discretionary spending. And then the final kind of action that the White House might take which we've heard about
00:28:32
separately is empoundment that at the end of the fiscal year they may come back and say all the money that we saved
00:28:37
by not spending it we can actually recover through empoundment. And the CBO has not accounted for tariff revenue. And just looking at the recent deal done
00:28:50
with Vietnam, Vietnam's about $130 billion a year of uh imports to the United States. And they did a deal that
00:28:58
they announced two days ago with a 20% tariff on Vietnam, which you know, if Vietnam's import volume does not
00:29:04
increase, is about 26 billion a year of incremental revenue for the federal government. So there's an argument that
00:29:12
Bessant and Lutnik and others are making that you guys have failed to recognize that we've got a few other things we
00:29:18
have up our sleeve that we're going to do. We're going to do empoundment. We're going to do this appropriations bill. We've got more revenue coming in. Net
00:29:25
net, we will get the deficit down to where we need to be. In fact, Scott Besson was on TV saying over and over,
00:29:30
"We're going to get the deficit below 3% of GDP," which is the key target here. But the immediate reaction to this bill, I think that Elon is having is the same that I've had and it is the same that
00:29:41
Senator Johnson had and is the same that many others have had, which is what the f are we doing? We are in a fiscal
00:29:46
emergency in this country and we're not addressing it. So, I think both points of view can be valid and both sides can
00:29:53
have a good kind of argument for why the bill should be passed and why the bill shouldn't be passed. The White House has
00:30:00
declared that this is the only way they're going to get some of the programs done that they believe they need to get done for national security
00:30:06
like the ICE border stuff. And these are things that they believe they need to get done. But a lot of folks are looking
00:30:12
at the numbers and saying this just isn't enough and you're now increasing the deficit by cutting taxes. One of the
00:30:18
things the CBO does not do though is they don't have a strong model and there's a ton of economic debate on this
00:30:24
point which is how did tax cuts stimulate GDP growth and job creation and income growth for people with jobs.
00:30:31
The one argument is when you cut taxes more dollars flow into the economy more jobs are created. More businesses are created but GDP grows. Income for other people grows. The alternative argument
00:30:44
is it's a tax cut for the rich. What are you doing? they're going to put that money in their pocket. It's only going to benefit themselves. So that's I think
00:30:50
a key crux in the argument that you'll never get to a resolution on. The one side will use that one argument and the other side will use the other argument. So look, I mean with respect to Elon and
00:31:02
Trump, I will say one thing very importantly. I don't think MAGA can exist successfully without the tech
00:31:08
alignment. I don't think tech can exist without MAGA because of the government alignment and the importance of the
00:31:15
government allowing these new technologies like AI to come to market and to proliferate. I don't think that
00:31:21
these two can exist in isolation and in conflict with one another. Elon is the deacto king of tech. He is the person that is saying look if I'm in conflict with Trump tech is in conflict with
00:31:32
Trump or that at least that is the perception on the MAGA side. And I think that that is very risky for both sides
00:31:40
to allow a conflict to kind of endure. And I do think that both sides have heads that are going to be cooler that
00:31:46
will prevail here. And I do think that these two are going to recognize the importance of being codependent, if you
00:31:53
will in being able to progress their respective agendas. Chimath, your thoughts on the Kurfluffle
00:32:00
seem to be winding down and maybe reaching some sort of endgame. It feels like we're in some sort of an endgame here. And if there is one, what is it?
00:32:11
I mean, I think it's just important to recognize that on the one side you have the most powerful person in the world and on the other side you have the most important powerful entrepreneur and
00:32:23
richest man in the world. And when you have people that are that accomplished, it's not as if you're going to get along 100% of the time. So I think a lot of the breathlessness around all of this
00:32:36
stuff is overblown. I think the reality is that when push comes to shove, I think that they agree on more things than they probably disagree.
00:32:47
And I think when everybody realizes that the alternative is essentially some insane form of socialism and redistribution,
00:33:02
I think the alliance will hold and that they'll find some common ground. Jason, what do you think? Well, I think you're right. These two individuals are used to speaking their
00:33:13
mind and they're both really good at social media and then there's no better media cycle than covering the two of
00:33:20
them battling it out and trading barbs. But I think what Elon did this cycle was
00:33:26
really interesting. He started a preference stack for Trump and that cascade, preference
00:33:34
cascade, preference stack, however you want to phrase it, you know, I think played a large role, if not the role in
00:33:40
getting Trump elected. People can debate that. I don't know that you can perfectly know what that $250 million
00:33:46
and all that effort he put in, you know, what that did in terms of Trump's chances. Trump probably would have won
00:33:52
anyway versus Kamla, but maybe not. Putting that aside, the platform Elon has refined during this political cycle
00:34:00
is one that resonates and I think it's a really good idea for him to maybe if he's going to be involved in politics,
00:34:06
pull that string and just crisply define it. And I was thinking about it over the
00:34:12
last couple days and I think it hits into four basic groups. Balance budget and government efficiency. That's kind of one. fiscal responsibility, sustainable energy, which obviously he's
00:34:24
been passionate about, and he's the leader in solar, batteries, EVs, and then manufacturing in the United States,
00:34:29
which he also is the leader in, and pronatalism, and just, you know, the uh the population crisis. He he really cares about those four issues. So what I think he should do is take that America
00:34:40
pack and instead of making it like just pro MAGA, he should just clearly define what it is that he believes. Small set
00:34:46
of issues and then he should go and back the people who are running to to be in Congress and senators and just say, "Hey, here is what I would like you to be in favor of." And do what Norquist
00:34:59
did with his no new taxes pledge. Do some sort of pledge like that. I don't know if it needs to be a new party, but
00:35:05
just really crisply define what matters to him. If he's going to be involved in politics, then get people to agree on
00:35:11
it. And if he wants to give them donations, as is his right, as is his pack's right, to raise money, he could
00:35:17
represent, I think, a very world positive view. Sustainable energy, just incredible execution, and a really
00:35:23
efficient government. He should technical excellence, technical excellence, excellence at large. And
00:35:29
America, just go for it. and and and it doesn't have to be personal against Trump. One of the big problems with
00:35:34
Trump is he he has a bunch of sick offense around him and the more you kind of appease him and just blindly follow him, I think the closer you the perception is that's the closer you get
00:35:45
to him. I don't know that that's true. I think he likes debating stuff. So, I think he should embrace the people who
00:35:51
debate it with him and then those people should just crisply say, "Here's what I stand for and I'm putting my money behind it. I hope we're in alignment,
00:35:58
but I'm going to stay in my lane and I'm going to prioritize what matters to me. And Elon's priorities are exceptionally
00:36:04
sharp and well-defined, and he should pursue them. Yeah. Jury's out on where this ends up and the broader picture.
00:36:12
You guys will get annoyed because I've talked about Ray Dalio so much, but I think he's done an amazing job in the last 5 years basically explaining
00:36:24
everything we've seen from global conflict to the internal conflict, the rise of socialism in the US and the
00:36:29
relationship to the debt and deficit cycle. He just posted on Twitter yesterday that he went to DC to discuss
00:36:36
the budget deficit with senior people on both sides of the aisle. and he said, "It's clear to me that we are unlikely
00:36:41
to change the debt trajectory we're on and avoid the painful consequences." And he talked a lot about this concept of
00:36:46
absolutist politics. And this is the same reaction I've had every time I've gone to DC and we've met with members of
00:36:52
Congress. And if you guys remember from the beginning, I said Doge isn't going to be it. As much as Elon can identify
00:36:58
and resolve to a better way of operating the federal government's agencies, you cannot change the spending without a
00:37:04
change in statute from Congress. You have to get Congress to act. And every time I met with members of Congress,
00:37:09
their incentive is to keep the money flowing to their districts. That's what they focus on. And every year their
00:37:15
districts want more in different contexts, in different forms, through different programs. And that's what
00:37:20
their job is. Their job is to go to DC to represent their state's interest or their local district's interests and say
00:37:25
we need to make sure that we're taken care of as the money flows. And as a result, everything keeps getting bigger and bigger and spiraling away. At the
00:37:32
end of the day, the way we economically save America, if we even have a shot without money printing, which a lot of
00:37:38
people like Bology and Dalio and others are now indicating is what's going to happen is we're going to end up inflating away or printing away all of
00:37:44
the debt that we've taken on, is to get to a 33, which Bessant has highlighted is also his goal. 3% federal deficit to
00:37:52
GDP, 3% GDP growth, and 3% inflation. And just to give you a sense of where those numbers sit today, the current estimate is 6% deficit to GDP, 2.4%
00:38:03
inflation. So we've actually got a little bit of room to run on inflation. And GDP growth this year of 1.4%.
00:38:10
So will the tax cuts in this bill increase GDP growth? Will AI increase GDP growth? The jury is out. Will the tariff revenue reduce the deficit more
00:38:21
than the CPO is estimating? And the increased GDP growth reduce the deficit? The jury is still out. And what will
00:38:27
happen with inflation? And if the Fed cuts rates, you're going to see inflation climb a little bit more. Maybe
00:38:32
the tariffs effect on inflation will still come through. Some folks have said that hasn't hit yet, but it will come
00:38:38
later this year. Will we exceed 3%. Inflation TBD. So, the jury is still very much out on whether these actions that are being taken, which Bessant has declared is going to get us to that 333
00:38:50
number. But then a lot of folks who are looking at this with a cold stare with like no political influence with no
00:38:57
political intention not representing a party not representing an administration like Ray
00:39:03
Dalio are saying what the there is no way we're going to get there. Bology I think you know pointed out in his tweet his point is actually a very good point which is our debt is not just the
00:39:14
federal debt but there's other debt that we're not even accounting for. consumer debt. I've said this in the past.
00:39:20
There's there's actually corporate debt. Yeah. The business debt, consumer debt. There's also state and local debt. And
00:39:28
then the one key number that we never talk about is the unaccounted for liabilities in public pension funds,
00:39:34
which is on the order of trillions of dollars more. So when you add all of this up, someone's going to pay the bills on all that debt or we're going to
00:39:40
have to inflate away that debt by printing money. And at some point, the trains left the station. A lot of people
00:39:46
are saying, "We're done. there's no way out of this. So, you know, the Elon Trump battle is like an interesting kind
00:39:52
of side kurfuffle, but it's not really the big story here. The big story is the trains left the station. You know, I
00:39:57
think if we're if we look at this as the first year that tech really got actively
00:40:03
involved in politics. Obviously, Peter Teal has been at this for a little bit longer in his support of JD Vance, the
00:40:09
vice president. I'm looking at this as like maybe this is year one that Gen X is truly engaged in making a difference
00:40:17
in Washington and setting an agenda. That agenda, you know, has 25 years ahead of it if everybody remains this engaged, whether it's people like Sachs or TL or Elon or countless other people.
00:40:30
You know, what is JD Vance's position on this when he runs for president in four
00:40:35
years? What will these other individuals Dean Phillips who've had on the program if he decides to run? I think this is,
00:40:42
you know, we're maybe 5% into the impact this could be having and already Adam and Freeberg, I always give you a lot of credit for this. Two years ago when you said you started bringing this up incessantly on the program and to the
00:40:53
point at which it was during it was during co I started doing this. Yeah. It was three years ago and um you know like
00:41:00
Yeah. I mean you're to your you're admitting you've been annoying for three or four years. I think actually it's
00:41:06
it's the it's the sand that might make the uh pearl and the oyster. We need to address this. It's become a top issue of
00:41:13
our time. That's actually success. The fact that this issue is now the issue of our time, our budget, our fiscal
00:41:21
responsibility, austerity, that's actually a really good thing. And yeah, maybe it doesn't get manifested in this
00:41:27
bill, but maybe it will get manifested in JD Vance's, you know, presidential run or Dean Phillips or the both of them
00:41:33
will be discussing it in three and a half years or three years when they're on the presidential trail. So that could
00:41:39
be actually the early sign of success for this. I'm an optimist. Good luck. Cap that it's over. Yeah. I mean, we sit
00:41:49
here and we parked on this topic dozens of times. We keep talking about, oh, we need to do this, we need to do that. But
00:41:55
at at the end of the day, when the bills get passed, when Congress takes action,
00:42:00
you get to see where their head's really at. And I do think that this bill has indicated that the administration has a set of incentives, which is they want to get the actions done that they promised
00:42:12
they would on the campaign trail, and then Congress has a lot of incentives to keep the money flowing. And I think
00:42:17
we've seen that in this negotiation to get this bill done. And I'm not faulting anyone for it. Congress is looking out
00:42:23
for the interests of the people that they represent and the White House is looking out for the people that voted for them and they said this is what
00:42:29
we're going to do and we have a mandate and now they're getting it done. And that's just the way it is. But this is the key part of the whole storyline
00:42:36
which is at some point once the spending levels get too high and the country the individuals and the businesses become
00:42:42
too dependent on that spending y which is effectively what happens at the end of every empire. You can't back out. you
00:42:49
can't stop spending and everyone just votes themselves the dollars. So, it's a it's a scary moment and I've said it
00:42:55
before, I do think that the GDP growth is the one path that's left to resolve this. I don't think we're going to just
00:43:00
cut spending. And so, we need to kind of be really thoughtful about making sure we don't hamper GDP growth, particularly
00:43:06
as it relates to AI, which is going to unlock a lot of new industry, a lot of new growth, a lot of new opportunity for jobs. And uh this is why I worry a lot
00:43:14
about this patchwork of regulation in states making it really difficult for AI to you only need five more people like
00:43:19
Rand Paul and Tillis right if you get a couple more of those chimoth this could be a completely different discussion if
00:43:26
you want to pivot to the next topic I mean one way to look at this is how the dollar is trading so the US dollar is
00:43:31
now down 11% this year and that's against every single major currency here it is so the dollar was down over 10% through the first half of 2025. This is
00:43:42
the worst start in over 50 years. Uh take a look at this chart and you can see it. It's kind of shocking. Keep in
00:43:49
mind the dollar jumped 7% after Trump was elected. It kind of peaked in mid January. So if you take the pre-election
00:43:55
dollar index number 103, it's down 6% since then. Not record-breaking, but significant. And obviously economists
00:44:03
are saying tariffs and global trade are a big piece of this. And as we just discussed and we'll
00:44:10
keep discussing the US debt load at $37 trillion. It's more expensive for Americans to
00:44:17
travel abroad and it's less attractive maybe to invest in the US. Let me just follow up on the point I just made. But this is where where the the you know the what do they say? The chicken comes to
00:44:27
roost. Chickens come home to roost. Yeah. The chickens have come home to the rubber meets the road. Yeah. This is
00:44:32
where you start to see the inflationary effects of the spending and the spiraling debt is things get more
00:44:38
expensive and your earning power doesn't increase commensurate with the higher expenses. So, so what will happen is
00:44:44
you'll see here the US today imports four to5 trillion a year. So that's 4 to5 trillion that US consumers and
00:44:51
businesses are buying from abroad and then we import into the US and use those products and services. So the cost of
00:44:58
all that just went up by 11%. as the dollar declined in value against the average of all these currencies. And
00:45:04
that's outside of increase in prices that may arise because of the tariff effect where folks may say, "Hey, let's charge more for tariffs." Whether it's
00:45:10
the cost of tariffs or the cost of the debt, the dollars that you have to spend now just went up by 11% to buy the same
00:45:16
thing. And if that compounds and that continues and your earnings are not growing and your assets are not growing commensurate with that, that's where dollar devaluation happens and where asset devaluation, income devaluation,
00:45:27
and that's where again we open up the door to a thing like socialism where people are like it's now twice as
00:45:33
expensive to buy my groceries. It's twice as expensive to pay my rent and I'm not making any more money. Man, I
00:45:38
need a solution. We got to get together and get the government to make everything free. And that's why I'm so convinced that there's a rise in
00:45:44
socialism in this country. Because in this sort of an inflationary environment like we're seeing so far this year, you don't see it in the dollar inflation
00:45:50
numbers. You see it in the dollar currency numbers. You're going to say, "Man, I I need an alternative." That's
00:45:56
why the paradox to that is free stuff is not free. It means increased spending, which means you're stalling the plane even more. So, exactly. Any thoughts here on the dollar? I think the dollar
00:46:09
has devalued 50% in the last 35 or 40 years. So, I think it's somewhat useful to look at any single couple of months in time. But
00:46:23
this has been a one-way trade for a very long time. And it's probably important to
00:46:28
understand why that is. And I think it generally has to do with the fact that the United States finances a lot of growth and that has been the right
00:46:42
decision. So unless you see a complete collapse in the currency, I suspect that this decay
00:46:50
continues to happen. So the question is, is it a bad thing? And the answer is it depends because if asset prices increase
00:46:58
faster than the dollar devalues, you're still ahead. You may not be ahead as much, but you're still ahead. And if you
00:47:06
look at asset prices in the United States relative to asset prices any place else in the world, it is the
00:47:11
flight to quality, which is to say that it is the thing that everybody wants to own. And you see that in the equity
00:47:19
markets, you see it in real estate, you see it in hard assets. So, I don't know.
00:47:24
I think that it's part of the fact that until we run surpluses and or completely
00:47:31
eliminate the debt, there will always be a reason to be somewhat short the dollar. But the reality is that a lot of people still want to own these assets more than they want to own any other
00:47:42
asset. And those assets are dollar denominated. And so as long as that continues to hold
00:47:49
in the push and pull, it'll be a slow bleed, but it's probably manageable. And that's just sort of like the mathematical trend of it all. So I don't know, unless there's some like cataclysmic collapse in asset prices, I
00:48:03
think that this is just a thing that you have to deal with. It's sort of like the carry of it all. And it happens. There's
00:48:10
all kinds of other trades where you sort of pay a carry, and that's okay. Is there a relationship you can explain to
00:48:15
the audience between the stock market ripping and the dollar devaluing? Well, I think the reality is that, you know,
00:48:22
if you think about a country that all of a sudden has to pay a tariff. So, let's take the Vietnamese example that Freeberg said. Let's just say that they had to prepay one year of
00:48:34
it just to make the math simple so you can understand. They have to come up with 23 odd billion dollars I think is
00:48:40
what Freeberg the number that you said or something like that. So yeah, like 26 billion on 130. Yeah. How do you do
00:48:45
that? Well, the first thing that you're going to do is you're going to sell dollar denominated assets that you already own and you're going to generate
00:48:52
those US dollars and then you're going to send it to the United States Treasury. So you may be selling bonds.
00:48:58
So you would think, okay, well that's not really good for asset prices. Okay. But then what you quickly realize is that all of that is far outweighed by
00:49:09
the fact that all the rest of the stuff that you own, whether it's gold denominated or whether it's in local currency denominated, you want to
00:49:15
actually go and buy these dollars because you want assets that are safe in turbulence and volatility. And so would
00:49:22
you rather belong the Vietnamese dong or the Vietnamese equity markets? To a degree, yes. But if you have obligations that the Vietnamese government needs to fund, their central bank is probably
00:49:34
deciding that they need to be long US bonds and fixed income. And other people who hold assets in that country are probably going to be, you know, on a weighted basis adding exposure to the
00:49:46
United States while all of this stuff is happening. Why? Because you're seeing the balance sheet of of America
00:49:53
burgeoning and growing. 23 billion from Vietnam, tens of billions over here, tens of billions over there. It all adds
00:49:59
up. So again, I I think that this is like a very complicated multivariate problem, but the net takeaway is that
00:50:07
the dollar devaluation is not something that's new. It is a phenomenon that has existed through market cycles for 50
00:50:14
plus years. It's a decay that has happened and will continue to happen. So I think the way that I think about it is there's a drag, but can the drag be
00:50:25
overcome by the increase in asset values of the hard assets that are dollar denominated? And the answer is yes and meaningfully so. And so as long as that's the case, I think you're going to
00:50:36
continue to have a bid for equities. If all of a sudden the MAG7 decided to delist and not be American companies and all of a sudden showed up in the CAC 50
00:50:46
in France, yeah, we'd be in big trouble. But I don't think that's going to happen. And so as long as you know
00:50:52
there's American ingenuity and American supremacy, again, which goes back to the other thing, which is we can't kill
00:50:58
these golden geese, nor should we kill the emerging and growing golden goose, which is AI. And as long as those things
00:51:05
are the same, there will be a constant bid for American assets. And that will keep the enterprise of America going for
00:51:12
far longer than most people would guess. up to a point, but pull up pull up this chart that I said. This is the Yeah, I
00:51:19
think that this is why Buffett sort of speaks about this in these extremely long arcs that you're always ultimately
00:51:27
going to be on the wrong side of the trade betting against the United States. And it's probably important to then say,
00:51:33
well, what would a boundary condition be? I don't think the boundary condition is the dollar. I actually don't think
00:51:39
the boundary condition is the debt. I think the boundary condition is if something were to happen with the
00:51:45
quality of the human capital inside of the United States and its inability to innovate, then we're probably in
00:51:52
trouble. But even that story will take 50 to 100 years to play out. I just think for most of our lifetimes,
00:52:00
this is a safe trade because it's a winning trade. Free. Well, I mean, it's winning if you
00:52:07
can put up with the currency dropping 11% in six months. And if you pull up this chart and and I get it, Jimoth, I I
00:52:15
agree. But I mean, look, businesses are booming in India. Businesses are booming in China. Businesses are booming in
00:52:21
other countries now in the way that businesses used to boom strictly in the US. There are other markets that seem to
00:52:26
be having their day. And you can see this number, which I think is a really striking number. In the last 10 years,
00:52:33
US treasuries held by foreign holders has declined from 34%. This is a good%. I mean, it's good in one context. You're But my point is people, foreign countries and foreign businesses and foreign investors aren't holding US
00:52:47
treasuries as much as nothing bad. There's nothing bad about this chart. This is only a good thing. This chart
00:52:52
shows that people don't want to hold US treasuries. No, this chart shows that foreign governments and central banks
00:52:58
have less and less influence on the direction of American fiscal and monetary policy. Better. That's better.
00:53:03
So, who's going to buy our debt? It turns out that when you're the largest economy and you're growing,
00:53:09
there's a lot of internal people that that will do it, right? So, I mean, that's a key point
00:53:14
here, which is means that the debt's going to get more expensive if there's a smaller market. That's not necessarily true either. Okay. Well, one thing's
00:53:20
true is that we're investing a lot of money and there's a lot of dry powder. the amount of money being invested into
00:53:26
data centers and AI and the amount of cash that's moving into investment specifically in our borders that has to
00:53:33
be accreative, right? Yeah. The amount of cash in money market funds probably exceeds the sum total of all of the equity markets around the world. That's
00:53:40
insane. Well, and it's like and now people are talking about building 10, 20, 30 billion worth of data centers
00:53:47
and, you know, nuclear power plants again. So, there's something going on here with American exceptionalism.
00:53:52
Speaking of American exceptionalism, Harvard is uh still battling it out with Trump and their $50 billion endowment is uh being questioned
00:54:04
and it actually relates in many ways to what we're seeing in private companies tech and VC. It's going to take a little
00:54:10
bit of a securous route to get there. Since Trump has been inaugurated, Harvard borrowed 1.2 billion due to
00:54:17
uncertainty around their federal funding. Remember, Trump administration canceled over $2 billion worth of research grants to Harvard. Earlier this
00:54:23
week, the administration formally accused Harvard of tolerating anti-semitism on campus. The White House
00:54:29
said it will file a civil rights lawsuit via the DOJ ASAP unless Harvard comes into compliance and does a deal with Trump. Here's what they're looking for. Trump White House cancelling DEI
00:54:40
initiatives, third party oversight of admissions, mandatory actions to combat anti-semitism. Harvard has declined to
00:54:47
do a deal so far. And uh you right might remember House Representative Elise Stefonic. She asked the FCC two weeks ago to investigate Harvard's financial disclosures. So she got into the
00:55:00
disclosures when they set up that $1 whatever billion dollar line of uh credit and loan. They did a bond deal. I think they issued like $750 million of bonds. Yeah. So those 750 million bond
00:55:13
offering on April 9th was sent out and 6 days later they sent out a supplemental
00:55:19
disclosure with more information about the White House civil rights investigation which he claims Jason dire
00:55:25
financial picture Harvard's cooked and I think this is really good for America explain it turns out and there's been a
00:55:32
lot of people that's posted about this on X but there continues to be rampant Title 9 violations with respect to
00:55:40
admissions I think creme Nick, you can probably find it. I think he published one that Colia was
00:55:47
continuing to discriminate against Asian students. Harvard's original case was against Asian students. There was a
00:55:54
bunch of woke stuff at other Ivy League schools like UPEN. There's all this rampant anti-semitism. It all needs to
00:56:01
get fixed. And so I think that if you get a deal done, Harvard will have to capitulate. I think President Trump holds all the leverage in all the cards and there's nothing mathematically that
00:56:14
Harvard can do. They can stall for probably another year and a half, but at some point they will not have the budget
00:56:20
to sustain themselves and they're going to get into a huge world of hurt. What they will have to do in order to finance their budget in probably 18 months is start to actively sell their private
00:56:33
equity portfolio which by the way from 2019 to this year almost doubled from 20 to 40%. So an insane asset allocation frankly an asset misallocation at the
00:56:46
top of the market to the most illquid asset class. And when people sniff this out, what they're going to do is Harvard
00:56:53
was able to sell a billion dollars recently of private equity stuff in managers that they didn't want to
00:57:00
support anymore at a 7% discount. There is no smart money on the street that's going to look at any private equity portfolio from Harvard without asking for 20 25 30 35 40% discount
00:57:11
because your back will be totally against the wall. And if you don't ask for that, you're just a bad businessman.
00:57:18
So, if you put all of these things together, they're going to need to reestablish federal funding. But in
00:57:23
order to do it, I think the president's been very, very clear. And for whatever reason, they've refused to want to
00:57:29
address these issues. But the Ivy League, there's just something fundamentally broken. Well, and
00:57:34
Freeberg, the Wall Street Journal, reported on Wednesday that Harvard would face a
00:57:40
billion dollar budget shortfall every year if Trump followed through on his funding cuts and tax hikes. He was also
00:57:47
uh saber rattling that he would get rid of their nonprofit status or maybe change how the endowments worked. A lot of uh tools I think that he could deploy
00:57:57
here and uh excise tax by the way in the BBB that taxes foundation assets. I don't know what the final language was but there is a there was a version that
00:58:09
I saw where excise tax on foundations was upwards of 8% a year. I don't know if that was the final version, but
00:58:15
that's an enormous amount. Let's just say it's half that. Let's just say it's 4%. But if you're paying 4% tax on your
00:58:20
endowment every year, it all of a sudden starts to add up, that's like, you know, for Harvard, like 2.5 extra billion
00:58:27
dollars a year that they have to pay. And uh Freeberg reportedly Harvard is at the table and in discussions with the White House after a couple of months of defiance. What's your take on this? Is
00:58:40
this an important priority for America and for the Trump administration? Is it a sideshow? What are your thoughts on the larger ramifications of this? Let me just suspend the brand and history and
00:58:52
legacy of Harvard for a second. Sure. And just talk about these call them prestigious higher education institutions. What are the two primary functions of these institutions? The
00:59:04
first is to educate students and the second is to conduct research or to create facilities for research. Remember
00:59:10
these institutions do not direct research. They recruit and enable researchers who apply for grants to get funding to do their research and then
00:59:21
they educate kids. I think the internet was the first leg on the stool to break higher education. The internet democratized access to information and knowledge. You can watch
00:59:33
MIT graduate courses. All of the core kind of educational content that is delivered in prestigious higher education institutions has been
00:59:44
largely democratized and is broadly available for free on the internet. That's an incredible transition that's
00:59:49
happened for humanity, for society, for the world. AI is the next leg of the stool to break. And I think that AI may actually break education. It may break higher education and then eventually it
01:00:02
may make its way all the way down to childhood. In terms of rethinking from first principles, how do we educate? How
01:00:09
is an individual getting educated and what are the other benefits they get from an educational system besides just
01:00:15
core domain knowledge? There's also socialization and experience with project-based work. But I think that AI
01:00:21
fundamentally rewrites the ability for an individual to get a good quality education. And we could see kids in
01:00:27
Africa and kids in South Asia getting the equivalent of a Harvard graduate school degree at a cost of zero through
01:00:34
personalized tutoring enabled through AI and the ubiquitous access to knowledge and information. So that core function
01:00:40
of the university I think is broken and they're now starting to reconcile what that actually means for the long-term viability of all of these higher
01:00:50
educational institutions in the United States. The research function I think is also being rewritten around the world in
01:00:57
Europe and in China and in Asia. There are independent research institutions that get research funding that can show
01:01:04
up and say, "Hey, this institution is just being used to run research. It doesn't necessarily need to be within an
01:01:10
educational framework. It can be an independent research institution that focuses on either a topic or a domain.
01:01:16
So, I do think we're going to see more and more independent research funding happening with the grants that come out
01:01:22
from the federal government, from nonprofits, from endowments and foundations that fund research. So, I
01:01:28
think that there's a real reckoning underway. It's almost like these guys have created a monopoly. They've accumulated this capital which allows
01:01:34
them to build these great buildings, attract these great researchers, and then get the research funding to fund those researchers and then use that to
01:01:41
raise more capital in their endowment and build the next building and keep this thing growing. And I think that that's breaking. I have one question for
01:01:47
you. I like where you're going with this, but there's one hole that I would like you to address, which is I don't
01:01:53
think any of that is nearly as valuable to most of the kids applying or the parents forcing the kids to apply as it is brand and then the cycle that employers put back. So that how do you
01:02:08
fix that loop? Yeah. Well, I get it. like you can YouTube your way to something and you
01:02:14
can AI your way to something but at the end of the day Goldman Sachs loves to recruit from Harvard and that's a really
01:02:22
big deal because that's a wonderful company. I think the Teal Fellows program has highlighted that you don't
01:02:29
get exceptional performance by exclusively going to people that have higher education degrees from prestigious institutions. The Teal
01:02:36
Fellows program, which for those who don't know, offered significant funding uh to kids that are coming out of high
01:02:42
school, 18-y olds. And I think the Teal Fellows, Jason, you probably know better than I do what they've created, right? Like, yeah, a lot of startups and No,
01:02:49
but like amazing startups like But how do you deal with 500 million kids graduating a year globally with no with
01:02:56
no brand differentiation? I think that's an important question. So, how did Teal Fellows do it? And how do you hire
01:03:02
Chimoth? You just did a program for 8090 to to find people, right? Yeah. Well, yeah. I mean, we we did a coding challenge. I guess I I guess what I'm saying is
01:03:14
though that Well, so what's the alternative to that coding challenge? I mean, yeah. No, no. The best way to determine Fredber to answer your
01:03:19
question, the best way to determine if a person can do a job if you don't want to outsource it to a a logo like Harvard or
01:03:26
Stanford, which are have worked in the past, is to watch them do the job. That is the number one day to do it. And the
01:03:32
way to do that is to hire them for projects and or do internships. And that means you have to invest in what's
01:03:37
called professional development. And that slows companies down. So the hack is to just pick a logo. But I for
01:03:44
example in our venture firm created a training program for associates and we invested in that and we hire three at a
01:03:51
time and two of them make it on typically sometimes just one who hit our notes and the other ones move on. Uh and
01:03:57
so I I think you have to invest in your own professional development in your organization and the organizations that
01:04:03
do that then succeed and have a massive competitive advantage because they have their own training program and way to
01:04:10
evaluate talent. That's one way. Doing a a codathon and scoring people is another
01:04:15
way. Having an AI interviewer is another way. So you can interview 10,000 kids instead of interview the 50 that you
01:04:21
chose out of Harvard because Harvard is your first filter. So the real question, Chimath, is like what are the mechanisms
01:04:27
by which employers are going to create new filtering systems? And I think that there's a lot that we just we just kind
01:04:32
of went through three examples, but I don't know if the brand holds over time. Well, here's the thing that what you're saying doesn't address. There are just a
01:04:40
lot of kids that aren't ready to bloom when they're 18 or 19 or 20 or 21. And I'm not sure that, you know, I'll just take myself as an example. I was a
01:04:52
marginal performer in university, but I had co-op. I did well in co-op jobs. Those co-op jobs were because these employers only wanted to recruit from the University of Wateroo. Now, if
01:05:05
I had to compete with 50,000 kids, I'm pretty sure I would not have gotten it cuz I was a bit of a layout. But then,
01:05:12
you know, when I got into the professional working world after a couple of years, everything just kind of clicked. So I think the the problem that
01:05:20
we'll have is in the absence of brand it's just going to be very difficult to differentiate oneself and filter people
01:05:26
and I think that what Jason says becomes the huge problem which is then the burden of professional development for
01:05:33
all these young kids is extremely heavy. So I think that the idea of all of this
01:05:38
tooling is good and it's necessary but I think it's insufficient. there's something else that we need because I
01:05:45
think that being able to differentiate yourself in a coding challenge is not the future either. It's for a very very
01:05:50
narrow class of person. Look, project based work, social adjustment there there there are clearly other really
01:05:57
important skills and development cycles that are needed for people. It's not just dumping knowledge into your brain.
01:06:03
This isn't like the matrix where you can just turn on the knowledge and and gain it. And so I do agree. I think that
01:06:08
there are other systems by which that will happen and those systems will will will output filters. I'm just not sure
01:06:14
it's the same system that we've used for the last 250 years. It's not I think that's the the really interesting part
01:06:19
of the discussion we've got to Freeberg is that we had an incredible system of a
01:06:25
series of layered I you know iconography that indicated hey you get 10 people from this group 100 from this group and you slot them in and hey your company's going to operate and then parents don't
01:06:37
have to worry the students don't have to worry nor do the companies in this new world the companies have an opportunity
01:06:44
by creating professional development and you know what the people who couldn't get into Harvard because they didn't have the connections, they weren't
01:06:49
legacy or they didn't have the wherewithal to pay for SAT tutors or whatever that it took to hack
01:06:55
your way in and have a legacy family member or whatever racist policies they had and didn't let Asian people in
01:07:01
because they didn't have the right personalities. All that nonsense goes away and that actually benefits their
01:07:06
grades were their grades were too good. Right. Exactly. Their performance was too high. In all fairness, you did
01:07:14
wrong. It's like the dumb It's like the dumbest thing I've ever heard. But here's the good news, anybody can build
01:07:19
a project in the world and refine their skills right now based on all the information that's on the internet. And
01:07:25
you and I, Chimath, are part of that group of people. We made our own luck. We made our own projects. We had some
01:07:31
level of grit and and autonomy and self-reliance to do that. Uh and I you know the feedback I got from our
01:07:39
previous discussion about this is everybody talking about how poor people as a group can never ever strive and
01:07:46
never build anything. The truth is it's the easiest it's ever been to build a company to build a project and to be
01:07:54
independent as a creator of a product or service in the world. It's the easiest it's ever been. It requires the least capital and the least amount of time. So, we're selling a narrative to people
01:08:05
that they're helpless when in fact they are super super empowered. The only thing you can't do is put yourself into $200,000 in debt because you'll never get out of it. Mhm.
01:08:17
I actually think this is a huge beautiful opportunity to reset the system. But it it's not going to be like
01:08:23
going to, you know, a supermarket and picking the brands you want and then filling positions. You're going to have
01:08:28
to be self-reliant for all the students out there. And that's what Peter Teal got right. You got to give a shout out to Peter Teal here. I think Freeberg he
01:08:36
when he did the teal fellowship the way they picked people was their they had a mission to accomplish something in the
01:08:41
world and they were making progress towards it. That's actually the criteria they used. Did you have enough inner
01:08:48
resolve to actually pick a mission and did you actually do anything to steer yourself towards it? And when you make
01:08:54
it a competitive, you know, sort of program like that, they just picked the people who picked the most interesting
01:09:00
missions and had made the most progress. But there's definitely going to be a hole left in society if these degrees do not correlate with performance and
01:09:12
reality. All right. On Tuesday, Grammarly, I'm a huge fan of that product, acquired Superhuman. Uh that's
01:09:19
that amazing superfast AI email tool from Raul of which I was the first investor in. Uh superhuman had raised
01:09:26
114 million was valued at $825 million during peak zerp according to Reuters. Superhum has annual revenue of $35 million and Grammarly seems to be
01:09:37
building a little bit of a suite of AI workplace tools. They bought KOD was not an investor in but I am a huge fan of that product as well. It's similar to notion, another product I'm a huge fan
01:09:48
of. They bought KOD back in December. And then on top of that, Figma filed their S1 Q1 revenues, 228 million. Remember, they were going to get bought by Adobe before before it got stopped.
01:09:59
And uh they have 13 million monthly active users, a billion and a half in cash, no debt, and uh turns out CEO
01:10:07
Dylan Field has 75% voting power. So he's in founder mode. Very nice. And also a teal fellow. really interesting cat. I've had him on uh my other pod. Figma is going to try to raise 1.5
01:10:18
billion in their IPO. That would match Coreweave. That was the biggest tech IPO of the year so far. And we are on a
01:10:24
heater. Circle went public that was up 7x uh from its IPO peak. And Chime went public slightly higher than its IPO price. You had E Toro. Uh Hinge Health also went public. Wealthfront which I
01:10:37
was an angel investor in. They just filed to go public. Yum yum. and uh bunch of M&A transactions. We talked
01:10:44
about Door Dash made two purchases. Sam Alman bought two companies at OpenAI and uh tons of M&A happening at the same time. According to Poly Market, 52%
01:10:55
chance of a rate cut in September, 46% chance of no change. So, we're definitely not getting an increase according to the sharp money. And I think Pal said he would have cut if there weren't the tariff,
01:11:09
you know, curveball thrown into the system, which is, I think, what most of us thought. And Chimath, you talked
01:11:15
about all this sideline cash sitting there in money market accounts. Markets at an all-time high. Uber blew past 88,
01:11:22
so I should be retired right now. What are your thoughts on M&A IPOs? Feels like, man, we've got a really frisky hot market right now. Does
01:11:33
it make you nervous or does it feel like this is where we should have been all along and that Biden maybe was putting a
01:11:41
headwind against all this? Yeah. So, here's the crux of the issue. I think this is the intersection of a lot of really interesting things happening
01:11:48
right now. You have Meta giving individual human beings 300 to$500 million packages like their NBA first team allstars.
01:11:59
Open AAI, their revenue numbers just leaked. They're forecasting 13 billion in 25 2025, spiking to 125 billion in
01:12:10
2029. You have Anthropic, their revenue by 2027 is forecasted to be about 35 billion. So what does all of this tell you?
01:12:26
To be honest, it's telling me that the state of software is a little unclear. Meaning, I actually believe the open AI and
01:12:37
anthropic numbers. I understand why Facebook is now spending as if there's an existential risk. And I think the
01:12:43
existential risk is that these models could be so foundational to how social experiences and work are done that it starts to absorb a lot of other stuff.
01:12:55
So the question is how do other tools fit into a workflow when these things become so central to how people both enjoy their free time as well as spend
01:13:08
their productive time. And I think when you look at that, you look at Figma, what I would say is
01:13:14
on the surface in the absence of these AI businesses, I would say, man, what a gang busters business. Growing by 40
01:13:20
something% a year at this scale. They're adjusted. I think operating margins are 18%. I don't like adjusted because it's
01:13:27
adjusted for stockbased comp. I don't know what it is when you add that back in. But the point is it's a phenomenal
01:13:32
business. The question that I think the institutional investor will have is what am I buying?
01:13:39
And does this revenue growth sit adjacent to core model revenue growth? Because the big question that we have yet to answer and this is not a Figma specific
01:13:52
issue. It is an industry-wide issue is how much do these foundational models absorb into what they do for what you
01:14:00
pay them? And I don't think we know the answer to that yet. So if all of these things just become excellent coding
01:14:06
tools, then all of this highle software is free and clear, right? It's it's it's
01:14:12
in the safe zone. But I think the problem is we don't know that that's the case, you know? And so I think in the
01:14:18
IPO, what you're probably going to see is people approach this company the same way that they approach all non-core AI IPOs, which is that it's a business that you
01:14:31
love to own for a year or two, but if there's a depression in valuation, it's because people cannot underwrite years three, four, and five. M uh Freeberg, do
01:14:42
you believe that the Star Trek communicator just doubleclick on your pendant, ask the computer to do something means there's one piece of software in the world that does
01:14:53
everything and all this long tale of business software just goes away? And if so, on what timeline? No. Okay. Yeah. I mean, this speaks to
01:15:05
revenue quality, revenue stability. I think you used the term how brittle is it Chimath? What are your thoughts on
01:15:12
Chimath's angle here of that unknown? Where would you fall either way? Are we going to have a suite of products or does it Yeah, I mean more narrow. Well,
01:15:23
it depends for what application. I think Figma's done a classic like land and expand in terms of who they initially go
01:15:30
after and then what the suite of tools that they offer does. By expanding that, they now can offer a bunch of different people within an organization a set of tools to help them all collaboratively
01:15:43
develop products and services. And you can see that in some of the numbers. Revenue growth is on the order of 40
01:15:48
some odd percent. They ran a 43% operating cash flow margin in Q1. So in Q1 of this year, Figma generated $95 million of free cash flow. They've got
01:16:00
net revenue retention of like 130%. So this land and expand is proven out and there's real durability it looks like to this business for now. But to Chimat's point like what does three to four years
01:16:10
from now look like? Does this get absorbed into chat GPT? You could say that about any software at any point in time. I think the thing that makes this
01:16:17
AI era different is that that transformative shift can happen overnight where suddenly someone else
01:16:23
launches a service it completely obvious because of what AI can do. But I think Figma's done a great job staying ahead
01:16:28
of the curve. the free money I think trade instead of having to bet up or down Jason on AI, I would if I could get
01:16:35
like $50 or $100 million of Figma, I would probably long it and I would short an equivalent quantum of Adobe and I
01:16:42
would just book the spread. And I think you make a ton of money that way. That's a safer trade because, you know, even if
01:16:48
the AI model thing comes around the corner, we don't see it, the person who's going to take a retrade on
01:16:53
valuation faster than Figma will be Adobe. And so you'll be hedged and you'll probably make money that way. We
01:16:59
look at something in terms of not just the quality of revenue in our investment firm. We look at the durability of it.
01:17:05
Like can this exist two, three, four years from now and is the value acrewing so much to the user that the amount they're paying they just never think I
01:17:16
should swap this out. I should replace it. Right? And and the revenue durability of your iPhone is a good example of it. Despite people not
01:17:24
renewing your your phone every year, you still can't think. There's no better option than an iPhone right now. Even my
01:17:30
Google Pixel 9 fold, as great as it is, it just feels like that revenue is still durable. I wonder when it becomes less
01:17:37
durable. Can I push back on this? I think that the I think the question that it brings up is not whether the
01:17:42
individual person can whip out a card and pay for it in four years. It's whether that individual person actually
01:17:48
exists. And so the with that amount of money to spend. No, no, no, no, no. Meaning like
01:17:55
we don't know what the layoff cycle and the pattern of layoffs inside of companies may be with AI. Meaning if we
01:18:03
all become more generalized skilled workers and there may be many many many more companies then the odds are more likely that you
01:18:16
provision highly skilled vertically specific work to a set of agents. Yes. If that's true, then the tools that created incredible durability
01:18:28
when the organizational chart of a company supported vertical specialization won't exist when instead you'd have horizontal
01:18:39
capabilities that you work across. An example, I think that that's the big question that AI will will bring to bear. And again, it's not going to be overnight, but that's where people will
01:18:52
frontr run those trades and the market specifically if they sniff this out. We'll want to price that 24 and 36 months forward and say this is what the end state looks like. A way to sort of
01:19:05
for people to understand that is imagine you outsource HR and you don't have a sixperson HR company like you talked
01:19:11
about two years ago and then you don't need HR software, right? So your point each group has a set of SAS software and tools it uses. If that group goes away
01:19:21
because it's just abstracted into the AI machine outsourced it there's nobody to
01:19:27
buy it in the organization. There's nobody going to the CFO saying I need this HR software. I need this project management software. I think it's a
01:19:32
really interesting point and the way as you for a founder Freeberg to avoid this is to have you know a product that
01:19:40
services many different needs for those customers or that organization. I think that's why I like these tools like KOD
01:19:45
and notion is they kind of infect many different departments in the organization. Right? This has been an
01:19:51
amazing summer episode of the All-In podcast. We weren't going to do it this week, but we said, you know what, we
01:19:57
wanted to talk about a couple of issues for we wanted to see each other and uh it's the slowest news week of the year,
01:20:04
but we wanted to get together and hash out some of these issues. Anybody got big plans for the weekend and any uh
01:20:09
recommendations for people? I did some books to read. You guys got any shows or books you're reading right now? Any any
01:20:15
albums you're listening to? Any things you're obsessed with? I'm reading uh Modern Poker Theory by Michael Asavvito.
01:20:21
Oh, really? This goes into GTO and that kind of stuff. Yeah, fabulous book. Any What's your big takeaway thus far? Do you have something that's you you wrote a note about or you highlighted? No, I
01:20:32
mean like I'm I'm I'm just tuning up my game. Always tuning up my game. Oh, you're doing a little tuni tune. Well, I
01:20:38
mean, I I hope is that because we have something going on in November. You want to do Well, we can't talk about that. Well, I don't know if this if this poker thing happens, maybe we can't play
01:20:49
poker anymore in America. I don't know. Oh, yeah. The big We didn't mention this, but the big bill says I don't
01:20:55
know. Maybe you can't be gambling. We need We didn't talk about it, but man, that's a reason to get up in arms about
01:21:02
this bill. If it gets rid of the poker ledger, what do we do with the ledge? No, the ledger. And the ledger will
01:21:07
survive. Actually, actually, this reinforces the value of the ledger because you'll just run the ledger infinitely. You may have to have an
01:21:12
infinite ledge. Never settle. Never settle. I was thinking my proposal for the ledge was if you're under a 100red
01:21:18
dimes, you roll. If you're over a 100 dimes, you clear, you know, like each year at the end of the year because it's
01:21:24
just not worth the You know what I'm saying? It's not worth the the tax implications. Well, we may have to
01:21:30
create like an offshore blocker, fund it with stable coins. I mean, the whole thing is going to really complicated.
01:21:36
Our lawyers and accountants are going to have a field day with this just so we can flip coins and play bomb pots.
01:21:42
Freeberg, you watching any shows or movies? Maybe you could um maybe you could give us one of your great deep
01:21:50
pulls for a science fiction film that people should watch this weekend if they want to get some joy. Maybe Silent
01:21:55
Running. You like Silent Running? Run. Logan's Run. Silent Running. Those are good cho7. Yeah. and and I think I watched the Bob Dylan flick on the flight to Italy. Oh,
01:22:07
shout out to Timothy Shalame. What a great film. I mean, he Okay, I have to be I have to be honest with you. I was
01:22:14
not a super fan of Bob Dylan's music before. Yeah. But then I was like, wow, the body of work is really impressive. Let me give you two and sorry and Joan
01:22:27
Bayz and their their music together. Incredible. I mean, let me give you I was a little short on Joan Bayas too and I was like this was a mistake. I'm just going to give you three albums to listen to. Blood on the tracks. I want you to
01:22:38
listen to Blood on the Tracks. Then I want you to listen to uh Infidels another which is like his best of the8s. Infidels and Blood on the Tracks. Those
01:22:49
are two in and Empire Burlesque a third one. Empire Burlesque and Infidels from the 80s. This is Dylan at the like
01:22:56
really interesting height of creativity. And then blood on the tracks post his 60s7s folk rock stuff and that transition. People consider blood on the tracks the seminal album. I will also
01:23:08
give you a deep pull of street legal with an incredible track changing of the guard. This you'll love Chimath because
01:23:14
you also like the war on drugs. War on drugs very influenced by that era. So you got blood on the track street legal
01:23:20
infidels and empire burles. Those are Jal's Dylan choices. I hate drugs. War on drugs. Dylan do drugs? I mean, it was famous that he I think he was on speed
01:23:31
for a little bit in the 70s reportedly and that's where he had a lot of productive days. Um, but I think he uh
01:23:38
introduced the Beatles to LSD was the rumor. Freeberg, your thoughts on my Dylan selections or do you have one of
01:23:44
your own? I'll leave it to you, Jal. You got any uh movies or something? I did recently rewatch The Arrival by Denny Villain Nov. How do you pronounce his last name? Villain. Vill. Oh, he's
01:23:58
doing the new Bond. That's going to be the new Bond. All right, everybody. We will see you next time on the world's
01:24:04
number one podcast. Saxy Poo will be back. Love you, besties. Love you, boys. We'll let your winners ride. Rainman David
01:24:19
and we open sourced it to the fans and they've just gone crazy with it. Love you, queen of kin.
01:24:27
[Music] Besties are gone. That is my dog taking your driveways. Oh man, my appetiter will meet. You should all just get a room and just have one big huge orgy cuz they're all just
01:24:45
useless. It's like this like sexual tension that they just need to release somehow.
01:24:52
beak. Wet your feet. Your feet. We need to get merch. [Music] I'm going all in.