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All right everybody, emergency podcast time. Episode 263 of All-In. We have Emil Michael, the under secretary of war
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for research and engineering working directly for Pete Hexa. We had to get this out to you on Thursday night
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because it is an emergency pod. One of my old besties. Emil Michael is here. Emil and I uh were part of team Uber
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back in the day. He was Travis's right-hand man. Some might say fixer. And Emil Michael is now the under
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secretary for war here in the United States, serving his country like our bestie David Sachs.
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Welcome to the program for the first time. Neil Michael, how you doing, brother?
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>> I'm doing good. Uh I hope it was more than a fixer, but you know, >> raising 20 billion fixer. I mean, you
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got it done. You got it done. The hardest. He would give you the hardest things. Yeah. Just
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>> That's right. Fair enough. >> If it was hard, and that's what a fixer
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is. >> An operational axe. That's what they call them. >> All right. Sure. Uh, in Brooklyn, we
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call them fixers. With us again, >> a rain maker. >> There's that, too. There's that, too.
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Making it happen. With us again. Chim Polyhapatia. How are you, brother? >> Great.
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>> Yeah. Look at that smile. What do you got going on? You got some pokers in the
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fire. >> Okay. >> I'm not going to say in the coming weeks, I think some news is going to
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drop. That's my prediction. I don't have any. >> Are you loving tweet mogging that's been
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going on this week? So good. So good. >> Oh my god. >> So good. >> He's looks maxing by default, but he's
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been mogging >> the Gooners. >> Yeah. So funny. What was your favorite?
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>> The one I sent you this morning that you said. What did you say? So funny.
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>> Are you collecting your losses? Tax harvesting. >> What did you say? Oh my god.
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>> Chimat said uh Oh my god. It was just like Yes, I did. Yes, I did. >> Yes, I did. Yes. Someone said something
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to Chabat. He's like dropped in. Why is everyone so mad at Jamoth? All he did
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was lose billions in retail investors money by proep one page spaxs. It's not
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like he then told them to enjoy their capital losses or anything. Give the man a break. Jama's response. Yes, I did.
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>> All right. Piling on is your sultan of science. Everybody's favorite. Had a
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great >> some great science that he brought to the show last week. Freedberg, how are
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you doing? >> Oh, yeah. I've been traveling this week back at home. >> All right. Sax is out today. He's very
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busy on Capitol Hill. We'll talk about what he's up to next week. >> Let's go. Come on. Let's go. Let's go.
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>> Let's go. Go, Jason. >> All right. The US and Israel launched a
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joint attack on Iran on Saturday. Today is day six of Operation Epic Fury. Iran Supreme Leader Ali Hameni
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was killed within hours of the operation. 40 senior officials have also been killed. Death toll so far. About a
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thousand people according to reports. Tragically, six US Army Reserve soldiers were killed following a drone strike on
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a base in Kuwait. A US submarine sank an Iranian ship off the coast of Sri Lanka.
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This is the first torpedo kill since World War II. Why were at war been a bit of a moving target in a debate. First
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explanation from Rubio. He said Israel was going to attack and the US had no choice but to participate. Later walked
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that back. Trump made it clear this is not a regime change effort, but we're
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doing this to stop terrorism and the development of ICBMs by obviously a pretty crazy group of individuals and
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obviously nuclear bombs which we blew up a couple weeks ago. Trump also mentioned
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the people of Iran should seize the moment quote and take their country back. Pegsth believe is sure boss meal
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said quote this is not a so-called regime change war but the regime sure did change and the world is better off
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for it so here's an interesting poly market right now US forces enter Iran this is boots on the ground by the end
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of March 40% chance by the end of the year 59% chance so the idea that we're
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not going to have boots on the ground the sharps on poly market believe we will will the Iranian regime fall by
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June 30th 39% chance according poly market and by the end of the year 51% chance so Emil I guess there are two
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questions people really want to know I'll leave off why we're doing this I
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think President Trump has been pretty clear now but how long is this going to take is the one question and are we
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going to have to have boots on the ground maybe what is success here >> um I think the the president tal talked
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about this is a weeks not months kind of operation and it's aimed at essentially
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disarming the the regime uh or the country from uh in such a way that they can't supply Hezbollah, Hamas, um Muslim
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Brotherhood, all the kind of terror groups that get sponsored by weapons and money from Iran, not to mention the
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nuclear bit. And that's why you see from the reporting they're going after the
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depots the the you know we went after nuclear sites before they're a prodigious drone maker. These like huge
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one-way attack drones that can go hund you know hundreds and hundreds of miles. Um lots of ballistic missiles uh that
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are aimed at every country in the Middle East as you've seen they've attacked
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them. So I think that's one. In terms of boots on the ground, there's no scenario where we
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have some protracted boots on the ground Afghanistan, Iraq 2 like scenario. >> Freeberg, your thoughts on this war.
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Obviously, a lot of people voted for Trump in order to have the peace dividend that he was in his first term,
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absolutely the peace president. And now here we are. Eight countries have been bombed and we've had two leaders deposed
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and one of those two have been killed. Your thoughts, Freeberg? >> I think the president and the
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administration have probably the biggest meetings of the term coming up in China
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in April. My estimation based on the conversations and the comments made by the president
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before he came into office and since he's been in office is that finding a grand bargain or a deal with China is
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probably one of his top priorities. And if you think about the importance of that, is the US going to wade into a
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giant global conflict led by a US China rift or is the US going to find some grand bargain? I think he would probably
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have a preference for the grand bargain. And that being the case, I think you could look at the in the context of
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Maduro and the actions in Iran as creating maximal leverage going into those negotiations that
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>> the reason for that free bird >> 90% of the oil that comes out of Iran
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goes to China and there's been a long developing and developed relationship between Maduro's
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government and China and these are big economic drivers or support the economic driving in China. So creating leverage
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by having significant influence or damage or destruction to those supply chains for China gives the United States
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footing to be able to negotiate a better deal for America. I would imagine that the president's intention here isn't to
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go and decide who should be in charge and drive regime change and end in a multi-year conflict with Iran. But
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ultimately, if there's some transaction with China that gets everyone out of
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this and puts the US on a strong footing where American businesses can sell into
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China, which is very challenging as everyone knows today. And there's parity, regulatory par, economic and
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trade parity between the US and China. there's a point of view on what happens
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with Taiwan and availability of key technologies like semiconductors. I think it could be a win-win and I think
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that a deal with China could be the crowning achievement of this administration particularly going into
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the midterms. So the timing is right and I think that's probably a core part of
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the motivation here. Chimath, your thoughts on this action and why we're doing it. You've heard obviously the
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president has his position. We're not doing regime change. It's a secondary
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effect obviously, but we want to stop those ICBMs and nuclear bombs from being developed and we want to stop terrorism.
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Additionally, Freeberg says, "Hey, we're framing this great, you know, discussion
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we're going to have with she and China and oil is part of that." Where where do
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you think you stand on all this? >> I'll build on both what Emil said and
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what Freeberg said. I don't think this is about regime change and I don't think
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it's about a local regional conflict. I think if you take a step back and zoom
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out, the most important thing that we did in the last 3 months was by taking out Maduro and by taking out the Iranian
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leadership, we have created enormous leverage as Freedberg said with China. Now, why is that important?
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Because I think all of this centers around that geopolitical discussion. Last night, something important
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happened, which is that the official Chinese bureaucracy posted what their GDP targets were, and it was shocking to
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anybody reading it because what we saw was that they guided to a range of 4.5 to 5%.
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which if you look at the historical context of that growth is the lowest that it has ever been in about 30 years.
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So three decades. So before they entered the WTO and the question that one should ask
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yourself is when a country that's growing at 8 9 and 10% start to grow at half that rate yet have double the
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number of people and double the GDP what happens? you already have incredibly high domestic unemployment, especially
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youth unemployment. Does it become more or less chaotic? And I think the historical artifacts of
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every other country would show that it will become more chaotic. If you have that as a starting point, what is it in
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China's best interest to do? And I think it becomes obvious that the right thing
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to do would be to invade Taiwan. Why? because you start to create a sinkhole that occupies your people, that occupies
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resources, that can get domestic production up and running, that can start to generate a war machine. And you
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see the economic impact of war machines in any country during any conflict. And if I had to guess, just to build on
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what Emil said, the president saw that and I think what they did can be summarized in this chart which I sent to
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Nick. So if your goal is to prevent war with China, which is a massive global conflict, which could be nuclear, which
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could be cataclysmic, how would you do it? And this chart paints one way to do it. If you look at
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the conditions inside of the Chinese economy, the most interesting takeaway is that
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they are enormously dependent on imported oil. So about 20% of their economy, but it's not 20% of
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their economy because it's 100% of these critical things that create GDP, logistics, transportation, aviation,
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feed stock inputs. And of that 19% about a fifth of it comes exclusively from Iran and Venezuela. And now all of
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that is off the table. So if you take that and then you see what Steve Whitoff and Jared Kushner and
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Josh Greenbond have been doing, which is trying to get a deal done in Russia, and
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you put all of these things together, because by the way, if you add Russia into that mix, it's about 40% of China's
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oil, not only do you red dollarize, not only do you stop the funneling of all of
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these illicit oil funds to creating chaos all around the world, but you hem in China going into a massive moment at
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the end of March, beginning of April, where as Freeberg said really astutely, there is the potential for a grand
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bargain and I think that secures global safety in that that is a huge thing for America.
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>> Emil, how much does this have to do with China? I think you know my instinct is and I'm
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not speaking for the administration on this is that's a second order benefit to
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some of these things like the um you know and you said eight eight conflicts there have not been eight conflicts
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there is like we inherited Gaza we inherited Russia Ukraine um Venezuela was its own operation and then you could
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sort of attach to it the drug boats that were coming out of that as like one big
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operation um and then the Houthies was just Biden was ignoring the Houthies. They were
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just shooting at our ships. So that was like very limited in terms of like stop shooting our ships. We need freedom of
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the seas and that wasn't sort of a, you know, so that's something any president
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should be doing generally. I think um Iran being the one, you know, material conflict outside of Venezuela. So it's
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not it's not that many. And and how long did Venezuela last? It was one raid.
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one. >> I guess that's a really important >> few hours. This is this is an important
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note I think for you Emil to sort of uh >> I've explained to us there's a new
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>> approach here with regard to the these actions which is no boots on the ground
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and we seem to uh and and you of course have better information than anybody else does. I don't think anybody would
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have known Venezuela would have gone as well as it did and so far and listen we got a long way to go with Iran. This has
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gone very well as as well. So explain to us what you know and what you the president and HGV know that we don't
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that makes these two operations go so smoothly. What what is it then? There's
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obviously some new technology here in in the case of what happened in Venezuela.
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>> Yeah. Bes besides the discombobulator, what we've got is a very well-trained
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military. Like the the global war and terror was disaster in so many respects, but the people now who are fighting that
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are generals now. And so they've learned a lot of lessons. And you compare that
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to the Chinese military. They don't have a lot of experience. In fact, the the
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decapitation they did in the Chinese military, the one guy they took out was the one guy who had experience in
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Vietnam. So, they don't have conflict experience, and that matters because you
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understand going in what are the things that could go wrong. Um, and then you you have incredible technology, space,
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air, land, sea, cyber, um, all kinds of effects that you could bring together. And so you imagine uh a hundred guys
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goes into the most fortified compound in Venezuela where the president is, you know, take him and his wife out safely
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and are out with no KAS. >> Incredible. >> I mean, it's just incredible, right? So
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stunning. >> Yeah. So, and they they these things these war games have been on the on the
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shelf for a long time. Every every scenario has been planned for years ahead of time. Midnight hammer in Iran
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was planned years ahead of time in terms of how would you do it if you were going
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to do it. >> Um, and then you keep refreshing the tactics, tactics, techniques, and
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procedures and you're updating them. So, we have a very sophisticated way of of
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doing these things to minimize loss of life and maximize success. >> Can I ask a question? I don't want to I
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don't want to derail this conversation, but is the discombobulator real? Like,
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what can you say about the discombobul? >> I completely I was like obsessed with
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this when I saw it on X. I was like, "What is this thing?" I mean, I need it
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in my house. Like, I just want to push a button of all these my kids. >> And that's just for when Helm Youth
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shows up. >> Oh my god. >> Not meant for your kids or if they're
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behaving badly. No, it's can't talk about it. >> Emil, do you think we would have been
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able to pull off that mission as successfully as we did 5 years ago, 10 years ago? Has the technology improved
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that quickly that this is not something that's been possible historically? And
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how does that change the the pacing and the face of war for the next couple of years? I'd say no. It wasn't only a
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technology maturation from five years ago. It's the uh rules of engagement. The rules of engagement that we used to
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have uh there was some I mean if you read about them some of them were insane like if in Afghanistan if the guy had a
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small gun you had to have a small gun and you know there was this parody in weird ways.
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>> And when you're like well but is the objective to have like a fair fight or
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an unfair fight? Um, well, if you're on our side, you want it to be unfair. So,
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the rules of engagement were relaxed to be >> Who writes those, Emil? Who sits in an
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office and says you can't shoot back if a combatant is shooting at you if you
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aren't matched gun forgun? >> Yeah. I mean, who writes that crazy policies that are written into military
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department? And that's why when Secretary Hicks talks about um this kind of thing and what was happening with him
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when he was in Afghanistan, if you ever read his book in Iraq, he's like the
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rules of engagement were so punishing that we were we were at risk all the time cuz you had to have like a legal
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understanding of what was happening in every minute in the battlefield as opposed to well your job is to you know
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take out these guys and protect these guys. Here's your munitions. here's like
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the the the red lines and then like in the middle of that go use your judgment your commanding officer use your
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judgment on how to win and we kind of gotten back to that use your judgment push responsibility field still have
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your red lines but other than that the objective is the objective it's more of
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a colon Powell approach it's like go all in have a clear objective come out use
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overwhelming force and we were not doing that for the last four years >> and then going back to the the face of
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war going forward forward. My understanding is that there have been more drones deployed by the United
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States this past week than we've done in the history of military activity. Is
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that right? And like how does that really change things going forward here? >> It it changes it big. Well, so so the
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Predator drone was the first big drone program like 1015 years ago. It was this big honken drone. Um and then if you
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remember Obama would take out some of these al-Qaeda leaders with drones on their balcony and things like that. Uh I
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think we uh President Trump took out Sulammani with a drone near his car. That was the beginning. And then Iraq uh
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sorry the Russia uh Ukraine war happened where it's like drone on drone. 70% of
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the the casualties are for drone but because of drones. So um drone on drone warfare, robot on robot warfare, those
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things are the future for sure, >> right? And that's why companies like
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Ander are companies like Anderoll is because they're making unmanned systems.
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A and this has been something you've specifically been very focused on and you tweeted today a little bit about a
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competition. We'll play a little video here. And this Lucas lowcost unmanned
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combat attack systems. >> It used to take a lot of time. It certainly wasn't startup time to get new
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product into the channel for our military to use. Explain what program you're running here. Feels like the
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DARPA self-driving challenge all over again and what these drones cost. I know there's a company making them for I
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think $35,000. Am I correct? >> I mean the the small drones like I'm holding right there and that are way
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cheaper than that. The Lucas oneway attack drone which can go 5 6 700 miles at the speed of an airplane
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>> carry a big warhead. Those are like 50 $80,000 depending on what kind of equipment you
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put on you put on it. But the we've have a drone dominance program and the real
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and we basically have to build an arsenal for for drones. Now are we likely to have a territorial conflict
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like Russia Ukraine with Canada and Mexico? No. But but we do want to take out drug drones at the border and we
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want but long one-way attack drones are important for you know any kind of major
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conflict like you're seeing in Iran. but also to protect military bases for America 250 World Cup uh Olympics in 28
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like there's other there's a lot more uses of drones for surveillance not just
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for you know for combat >> there you're showing drones that are sort of human operated but how much of
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this should basically be AI so that it's just some computer vision and again back
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to what you said before a model understands the rules and the red lines but otherwise is be on task and
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accomplish your mission. How much of it is one versus the other? >> I mean, it I believe that a
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sophisticated drone war is going to be drone swarms controlled by AI to some degree or another, right? To what degree
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the control matters? Like for example, drones have decoys. They could spit out, you know, they could dazzle. They could
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put out things. So, how do you discriminate what's a drone and how to hit it? You know, you could use AI for
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that because it's learned, you know, how to do automatic target recognition, for
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example. Um, and then also could it identify a person and that and and does that make it safer? So, it's going after
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actually someone you want to get and not someone you don't want to get. Um, so
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there's a lot of uses for AI at the edge, if you will. Um, in the future here, the the Ukrainians and Russians do
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something called like a kill box where they lose comms because it's jammed for
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this drone and then it just starts going in a box and looking for, you know, a the person they're trying to get and
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they're trying they're starting to use AI to do that. >> Wow. >> And China has this uh ability already
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probably times some magnitude. Yeah. They have drone swarms because they can they can force the companies that make
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them, not just DJI, to interoperate. So interoperating drones called heterogeneous autonomy, right? You take
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different kinds of drones and how they communicate with one another and then make sure they're not going after the
00:22:16
same target is like a pretty complex thing that they're definitely working on.
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>> And let's talk uh about the fidelity of these. Obviously, AI is a new
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technology. They it can make mistakes. Anybody who uses it on a day-to-day basis might experience a hallucination.
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How confident are you in the AI Ukraine and Russia conflict? They obviously are not going to be as thoughtful maybe as
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we are in putting this together. They're in a hot war right now. But we as the
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United States have to be very thoughtful about this. So, how confident are you that this isn't going to make a mistake?
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I think that's the key to a lot of this debate. and and when will it be you know
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perfect defined as much better and I guess this dovetales with the self-driving you know thoughts it has to be a
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magnitude better than a human so when will this be a magnitude more accurate than you know when we have uh make a
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mistake as a as a military and we kill a civilian >> yeah no it's it's a good question and um
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I don't know when that moment hits that FSD moment where it get kind of gets
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better certainly not there and you wouldn't want to take huge risk with that in like you know there there's a
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gradation of when you would use that and what kind of risk you were trying to take or not. If you were trying to take
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out a drone using AI using a like a laser or something you'd be pretty like okay making mistakes because you just
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missed the drone you know like whatever with a with a with the laser laser goes off it's all over. Um if you were doing
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something more sophisticated in a population area have densely populated area you'd take less risk. So, we're
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developing procedures, tactics for each scenario. And this is part of the debate
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I had with anthropic, which is we need AI for things like Golden Dome. >> Chinese hypersonic missile comes up.
00:24:02
You've got 90 seconds before it separates and all kinds of decoys and you don't know where the actual payload
00:24:09
is and you want to get it hit it from space. and a human can't doesn't have
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the reaction time, doesn't have the may not be able to discriminate with their
00:24:18
own eyes what they're going after. That's a pretty, you know, lowrisk thing
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because it's in space and you're just trying to hit something that's trying to
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hit you. So, I think in the next 10 years, you're going to see a lot of these applications develop AI to one
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degree or another so long as we think it's safe and it's not going to do the,
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you know, make mistakes. >> Before we get on to the anthropic discussion, and we really appreciate you
00:24:40
coming here and my lord, this has been so informative. So thank you Neil for coming here and explaining to the
00:24:44
American public and to us what you're working on. It really makes us uh I think speak for everybody really
00:24:50
confident in what you're doing and it's so great that you've you know left the
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private sector to do this. >> What I would say just very quickly Emil is I think that not enough people
00:24:58
understand that the American military has had to fight with one hand tied behind their back. Just that little
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>> insight that you just gave about Afghanistan to me seems so scary because the men and
00:25:11
women that sign up for the American military. They're doing this to fight on
00:25:16
behalf of this country. They deserve a lot more than being sent there and all of a sudden being given this rule book
00:25:22
and say, "Do your best." And it's like, "Oh, wait. You violated 19 rules trying
00:25:26
to protect America. Do your job." That's insane. >> Let's just
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>> It's really insane in some cases. I I my my belief is that's what the frustration
00:25:36
for those soldiers who were out there in those wars had more than anything. There
00:25:40
was the broader frustration what are we doing here and then the secondary frustration is while I'm here why can't
00:25:45
I do my job? >> Yeah. Is there is there much of a debate internally and sorry Jake before we move
00:25:51
forward on this >> regarding this idea of full autonomy in military action? I don't want to speak
00:25:57
ahead to the anthropic point, but it was something that the media seemed to say was part of Daario's concern is that
00:26:05
when you press the button and hand over complete autonomy and there's a kill
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action that you're now giving to a robot or to some autonomous system, do we then
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kind of have a moral issue at hand? And is that something that's kind of debated
00:26:19
or discussed? And is that the right way to think about the framing of what goes on?
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>> I mean, we're not even close to there yet, right? where like this the systems
00:26:26
are not we we wouldn't feel that a system uh that would have sort of like real risk for a civilian is ready to
00:26:36
launch yet. So we're not even debating that. We're just trying to get basic
00:26:40
autonomy in drones, basic autonomy in underwater unmanned vehicles, basic autonomy that, you know, you've heard of
00:26:47
this collaborative aircraft that fly along with a the jetcraft so that it has more firepower, but it's still tethered
00:26:53
to what the jet does. So, we're >> incredible. Yeah. >> Yeah. So, we're just at the very
00:26:57
beginning of this stuff, >> but for Golden Dome's a good example of like, yeah, who can oppose that? Like,
00:27:03
it's the only way to get out a threat like that. Um, so who could oppose if you have a military base and you have a
00:27:10
bunch of soldiers sleeping that you have a laser that can take down drones autonomously on that? So there's it's
00:27:16
it's pretty scenario by scenario, but I don't we're not having a lot of debate
00:27:19
because the Skynet thing is so not a realistic thing at this moment, right? Except if one thing I did tell the
00:27:27
anthropic guys, I was like, you know, or I'd tell any company, your models are
00:27:32
getting stolen by the Chinese. They're going to unguard rail them and use them
00:27:36
against us. And then you want our models to be less capable against your models.
00:27:41
It's sort of >> they're not going to be thoughtful. In other words, they're going to go for it.
00:27:44
And you know, if we just benchmark this against where we were at, you know, but 101 15 years ago, there was the Wikileak
00:27:53
of collateral murder, I think they called it, where we tragically had an Apache take out some journalists. And
00:28:00
this technology even applied today probably would have avoided that in my mind. Yeah. Like we have enough that
00:28:07
when you're targeting not drones but you know people on the ground with an Apache
00:28:12
this would have probably avoided that. >> Yeah. Or or you know the Kuwaiti
00:28:17
aircraft hitting you know an American aircraft making a mistake because it doesn't have the identification. I mean
00:28:24
it's the same self-driving argument to a degree. like self-driving could save
00:28:28
lives even though it's scary to look at a car without a human behind the wheel
00:28:32
but there's tons of scenarios where it's a way better safer option more precise
00:28:38
um than the alternative >> all right before we move on to the Dario thing and anthropic and that brew haha
00:28:43
there was one piece that we haven't addressed with this interaction Freeberg
00:28:46
Chimath which is uh the Israeli government and their desire to take out this regime And us according to Tucker
00:28:58
Carlson and a large contingent of the MAGA base they feel that we are captured by this group. Does Israel have too much
00:29:07
influence over the United States with regard to these actions in the Middle East? This is you know a big debate
00:29:13
within the party within the Republican party within the MAGA constituent. Hey we number one we don't want these wars.
00:29:19
Number two is Israel driving this thing to the point of Rubio's quotes that hey,
00:29:23
we're doing this because Israel is going anyway. I think we should address it
00:29:27
here. Not that I have a personal stake in this. I'll give my personal opinion
00:29:29
at the end. >> I don't think the president is captured by Israel in the least. I think he
00:29:34
decides what is in the best interest of the United States. And if Israel can be a part of that, then
00:29:43
they're a part of it. And look, let's be clear, they're incredibly capable. And
00:29:48
so in something like this, to be able to incorporate the intelligence of MSAD, what you're seeing today in this
00:29:55
operation Epic Fury, we're four days in, Iran has been 90% depleted of all of
00:30:01
their munitions. It looks like they're just firing no more missiles out from
00:30:05
Iran to anywhere else. There's fleets of drones and planes just waiting. Everybody knew where the Iranians were.
00:30:12
It's great that when we make a decision on something that we need to do, we can
00:30:16
rely on our allies. I think the opposite question should also be asked like what
00:30:20
was the UK doing? Why is Spain pontificating? Why was Europe taking the weekend off before they could even issue
00:30:25
a statement? Why don't you ask that question? >> Yeah. No, it's equally valid question.
00:30:30
You know, uh Freeberg, do you want to get in on this or no? >> No. >> I'm a Jew. No one's going to care what I
00:30:35
have to say. They're either going to they're either going to be like totally
00:30:39
like or they're going to say this guy's a Jew. We shouldn't listen to him. So,
00:30:42
like let's move on. Go ahead. >> Yeah. Yeah. Yeah. >> Emil, any thoughts on on this? I do want
00:30:47
to know from Emil though like you know is this Iron Dome working this laser in Israel system is this operational and if
00:30:54
so is there any success metrics you can share around it >> I mean I think that the golden sorry the
00:31:00
golden iron beam was the first generation of of the Israeli air air defense thing and then they're build
00:31:06
building Iron Beam and and I think it's still earlyish but yeah it works they're
00:31:11
they're a technologically sophisticated country that's very small that has like
00:31:17
a reason to invest in these things and they have a lot of smart people to do them. So I think I think it's good. But
00:31:23
>> does it primarily work on rockets? And I guess I just want to understand the
00:31:26
logical evolution of this because in the 80s and 90s there was a lot of conversation about space-based lasers
00:31:32
that could shoot ICBMs out of the sky to avoid, you know, global nuclear war and
00:31:38
we could always take out every nuclear warhead delivered on an ICBM. Is that technology feasible? Is there a place in
00:31:44
the near future where we could see basically maximal global deterrence using these systems, either groundbased
00:31:50
or space-based to take out hypersonic missiles? >> I think I think the the harder but more
00:31:57
valuable problem to solve would be the space-based way of doing it because then um you could get at any kind of almost
00:32:04
any kind of threat that hits space, but you still need a ground layer because there's cruise missiles that could come
00:32:10
at you, there's drones and so on. to so we call them multi-layers like how do
00:32:14
you how do you get every kind of weapon at every layer but you know directed energy lasers as
00:32:22
they get more powerful you could take on a bigger weapon farther away right so those uh so those technologies as that
00:32:30
as they improve it gets more and more capable and I think all these defense systems uh are going to get more and
00:32:36
more capable to get more and more of a variety of weapons at farther farther standoff which is what want you want it
00:32:42
to you don't want to shoot it when it's right over Tel Aviv. You want to shoot
00:32:45
it, you know, when it's still over their their land ideally. >> Are the laser interceptors in the field
00:32:51
today. There's reports that they are. >> I I think there's some I think they've
00:32:55
demonstrated some of them. >> Got it. And and is this our technology or Israel's technology? Because
00:32:59
President Trump said, "Hey, that's actually our technology." Is there any
00:33:04
insight there? >> We we have collaborations with Israel on some of this stuff. They have their own.
00:33:09
We have our own. Um, so it's not this is uh but they're good at tech, we're good
00:33:16
at tech. There's certain there's certain ways you get part of our system and part
00:33:19
of their system because it's like a he it's a quickly evolving part of of
00:33:24
science right now. How do you cohhere beams of light to like get distance? How to use high-owered microwave to like
00:33:31
just drop drones in their tracks? Um there's lots of different ways to get at
00:33:35
some of these things. Um and and yeah, a lot of it's ours. uh and a lot of and
00:33:40
some of it's theirs. >> Yeah. And uh to to the earlier question, you know, I I am pro-regime change if it
00:33:47
can be done thoughtfully and obviously isolating a dictator, that's the best
00:33:52
thing you can do. We've done that successfully with, you know, Putin, Kim Jong-un, etc. Keep diplomacy up. But if
00:33:59
there is a moment in time where you could free the people of Iran after 50 years of being subjugated by these
00:34:07
lunatics and dictators, I'm all for it. And I actually trust President Trump to
00:34:11
make that decision. I know this may sound crazy. People think like I'm a libtart or something because of the way
00:34:16
my besties frame me on this program, which is completely inaccurate. I'm an independent.
00:34:20
>> You are. >> I actually I'm completely independent and I am just based on my voting and I'm
00:34:26
not on either one of these sides. I am pro President Trump and I trust his judgment. I think he has more
00:34:31
information than us. I think you have more information. I actually trust you guys to do it thoughtfully and there
00:34:35
obviously was a window here. Israel can have their own, you know, motivation. That could be the China motivation, but
00:34:40
there's also spreading democracy, which might be the least of people's concerns
00:34:45
here, but that's on the top of my list. I would like to see the people of Iran
00:34:49
free. Just to build on your point, Jason, the thing that Emil said before, which I think is important as well, is
00:34:54
we have an enormous amount of learnings about what happened in Iraq. Yeah. We also have a ton of learnings between the
00:35:00
Iran Iraq war and a ton of learnings in 53 when US and the British deposed Mosad
00:35:06
in the or at least foremented that and put the sha and then the sha was booted up.
00:35:11
>> Yeah. >> If you take those three chapters in Iranian history or that regional
00:35:15
history, there's a ton to learn. And to your point, there is a way to affect
00:35:21
what we need to do without creating some 20-year forever war. There was an incredible tweet. I don't know if you
00:35:28
guys saw this. Somebody said, "So every war doesn't have to be >> three decades and trillions of dollars
00:35:35
to your friends in Virginia, Maryland, and DC. Did you guys see that tweet?"
00:35:39
It's true. These things can be one and done in and out. And if President Trump succeeds here, I
00:35:46
just want to also give him some flowers here. The people of Venezuela and the people of Iran being free represent
00:35:53
about 5% of the people in the world living under an autocracy, under a dictator. If those both flip back to
00:36:00
democracies, he'll have done more for the spread of democracy than any president for many decades, perhaps in
00:36:06
our lifetime. This would be incredibly noble. Incredibly noble, incredibly just. And
00:36:11
>> would you in the human rights set >> want him to get the Nobel then?
00:36:16
>> Absolutely. Give him all the Nobels. Like literally if you can free people,
00:36:21
>> all of them. Give him every prize. Give him an Oscar. >> Physics, chemistry,
00:36:27
he can have everything. >> Physics, philosophy. >> Jay Cal's an independent. When's the
00:36:32
last time you voted for a Republican presidential candidate? Just curious. >> Um,
00:36:37
yeah. >> Say it. Say it. >> No, no, no, no. Um, >> Montdale. >> No, no, I didn't. I would have voted
00:36:44
for, if I was of age, I would have voted for um I wouldn't have voted for the
00:36:47
Bushes. I voted for the moderates. Um, uh, uh, obviously Clinton and Obama. >> Oh, we're playing the would have, should
00:36:55
have game. >> I would have voted for Reagan in >> I would have bought Nidia at $4.
00:37:00
>> Well, no. And I I didn't vote for Kamla, so I'll leave it at that. But I voted
00:37:04
probably at that. Why don't you say that you voted for President Trump? >> Just say you voted for President Trump.
00:37:09
I don't want to complicate things, >> but you did. So, just say it. >> I didn't vote for Kla. I'll leave it at
00:37:13
that. All right. >> It's so weird that you that you'll say you're a moderate, but you won't say
00:37:17
that you voted for President Trump. >> I am supporting President Trump in about
00:37:20
60 70% of what he does. Uh, let's leave it at that. Three, two. All right. Let's
00:37:24
talk economic impact of oil and insurance. Oil has rose to $84 a barrel Wednesday
00:37:30
straightfor basically a standstill at this point. Here's the clip. You can see the traffic
00:37:37
slowing down and then hey, some of the dots are even going away. That could be uh ships were taking out.
00:37:45
Unless the straight opens, 3.3 million barrels of daily production would be lost early next week. And then there's
00:37:53
insurance companies. They've all cancelled the war risk coverage of vessels in the
00:37:59
Gulf effective March 5th. Super tanker traffic dropped 94% within the first 48 hours. Trump said the US would provide
00:38:06
political risk insurance for all maritime trade through the Gulf, especially energy. Freeberg, your
00:38:12
thoughts on the economic second order effects that we're starting to experience here and over the next four
00:38:18
weeks could be um you know intense and acute. >> The modern insurance market emerged
00:38:24
specifically to solve the risks of maritime trade. So in the 17th century, Lloyds of London, which was a coffee
00:38:30
shop in London, where all the maritime traders would get together and they talk about, hey, what's the safest route so
00:38:36
pirates don't get our ship and so you don't run into weather. That's where
00:38:39
they would kind of have these conversations and eventually they started underwriting the risks of the
00:38:43
shipping uh routes and giving each other guarantees. They said, "Hey, if you make
00:38:48
this route, great. You pay me a certain amount and if you don't make the route,
00:38:52
I'll pay you the loft value." And that's how Lloyds of London, which is the kind
00:38:56
of world's biggest reinsurance market, started today. Lloyds of London has 78
00:39:00
what are called syndicate members. And these are kind of these pools of reinsurance that underwrite big crazy
00:39:05
risks like maritime insurance for folks that are moving oil tankers through the straight of Hermuz, which the IRGC just
00:39:13
announced they're shutting down. When the IRGC announced that they were shutting down the straight of Hermuz,
00:39:19
there's a significant risk of all the mines going in the straight and the ships getting attacked and blown up. So
00:39:24
loss of value. The insurance premium spiked initially from a quarter% so 0.25% of the value of the ship to 1.25%.
00:39:34
So it went up by like 5x and so folks had to pay a lot more of the value of their ship in order to continue the
00:39:39
routes and get guarantees that they'll make it through. And then all of the markets started to shut down. So once
00:39:45
the conflict got heavier, everyone said, "Let's shut this thing down." And that's
00:39:48
a obviously a massive risk to energy prices globally, which drives inflation and puts US economic security at risk.
00:39:55
And so this is a brilliant move. I would say the US government stepped in with the US International Development Finance
00:40:01
Corporation, which was actually funny enough started a couple of years ago like in 2019 or something like that as a
00:40:08
kind of output of one of the agencies that provided credit from USAD. much talked about USA ID. And so they're
00:40:15
they're leveraging the credit capacity of this old US ID agency to go out and
00:40:21
say to all the shipping companies, hey, we'll give you insurance on your routes.
00:40:26
And the reason they need it is the shipping companies are levered. They take on debt to buy the ships. And the
00:40:32
debtors require that they have insurance or else they're not allowed to take the
00:40:37
routes because the debtors are ultimately going to be out the money. And so the shipping companies themselves
00:40:41
need to have insurance. And so this provides a market that has now gone away. Very smart. And ultimately a lot
00:40:48
of people are saying this could actually reshore or onshore maritime insurance back to the United States and create an
00:40:55
entirely new insurance industry here in the US that has historically been served
00:41:00
almost exclusively by European syndicates and European partners. And it actually creates a big economic
00:41:06
opportunity as this war dies down for American insurance companies and American brokers to basically be the
00:41:12
underwriters and the guarantors of this sort of insurance and create a new industry. So that's super super
00:41:17
interesting kind of side story on what's going on here. All right, some breaking
00:41:20
news here folks via Bloomberg. The Pentagon has formally notified Anthropic that it's been deemed a supply chain
00:41:27
risk. This has never happened to an American company. It has happened to Russian companies. uh and Chinese
00:41:34
companies Huawei and for background the department of war cancelled Anthropic $200 million contract on Friday and said
00:41:43
they would do this. The dispute came down to two clauses according to sources and we have one of the principles here.
00:41:49
So we will hear directly from him in a moment. Anthropic had two concerns. Number one, fully autonomous weapons aka
00:41:56
murderbots. As we previously discussed, Daario didn't feel that their technology
00:42:01
was reliable yet and wanted some assurances. The second thing Anthropic said was uh they were concerned about
00:42:09
mass surveillance of Americans because they believe this technology is uniquely powerful and uh it's can do things
00:42:19
beyond what a series of webcams or a network of 7-Eleven cameras can do. Pentagon said they wanted all lawful
00:42:28
use. Dario, you're welcome to come on the program next week or any time to give your side of the story, but this
00:42:33
week we have Emil. Emil, your thoughts and explain to us what happened here and how this broke down.
00:42:40
>> It's worth a little history, short history. So, if you remember the Biden executive
00:42:46
order on AI, which was this crazy executive order that limited the amount of compute any model company could do
00:42:54
and was essentially grandfathered in a few a small number of AI companies that they were going to designate the winners
00:43:01
and everyone else was out so they could have more control on what they did. Um, Anthropic was one of those winners. Um,
00:43:08
and then they were smart. act as a good sales strategy to sell in to the most sensitive parts of the US government
00:43:16
like all of our combatant commands sent central command that's doing the Iran
00:43:21
fight now the Indoaccom command which is sort of responsible for China several of
00:43:26
the intelligence agencies and they did forward deployed engineers palunteer style so they're very got very sticky um
00:43:33
to the workflows and all that and so I came in and I got the AI portfolio for department in August and I said, I just
00:43:42
want to see the contracts. You know, the old lawyer in me and I looked at contracts. I was like, holy cow, they
00:43:48
say you can't use them for you can't use them to plan a a kinetic strike. You
00:43:53
can't use their AI model to move a satellite. You can't There was a a 20
00:43:58
page. >> You can't do a war game scenario with it. >> You could do a scenario, but you can't
00:44:02
like let's suppose you're writing a plan saying like if this happens, here's what
00:44:06
we would do. and it might involve a kinetic strike which causes harm to a human. So like, well, what do you think
00:44:12
these folks do? You know, we use the Department of War. This is what we do. And so I said, okay, well, I've got to
00:44:18
number one, have direct relationships with these companies, not just through Palunteer, because I want to use it more
00:44:23
broadly. And then number two, I need to have the terms of service be rational relative to our mission set. So we
00:44:30
started these negotiations and and took three months and I had to sort of give them scenarios about like this Chinese
00:44:39
hypersonic missile example. They're like, "Okay, we'll give you an exception
00:44:42
for that." Well, how about this drone swarm? We'll give you an exception for
00:44:45
that. And I was like, "The exceptions doesn't work. I I can't predict for the
00:44:50
next 20 years what all the things we might do use AI for." Um, and so so all
00:44:55
lawful use seems like a good thing. If Congress wants to act, great. We have our own internal policies like we'll
00:45:02
follow them. We're not knuckle draggers here. We want we don't want to hurt
00:45:06
people unnecessarily. So, you know, it's our province to decide how we fight and
00:45:10
win wars um so long as they're lawful. And I think at some point it turned into
00:45:17
a PR game for them because they were not going to win this intellectual battle of
00:45:25
well, we're going to stop you. we're going to use our judgment because we
00:45:28
think Congress is behind and impose it on the US military. And it became this like let's find the issues that are most
00:45:35
inflammatory, robot weapons and mass surveillance. I mean, like we're the Department of War. We're not the FBI.
00:45:41
We're not Homeland Security. We're not >> You're not allowed to legally spy on
00:45:45
Americans. >> Yeah. You're not you're not. So it's so so you're like and then what it came
00:45:51
down to on that issue just as an anecdote is they didn't want us to bulk collect public information on people
00:45:59
using their AI system and they wrote it in a way that I was like so you're telling me before we got to bulk collect
00:46:05
if someone types in you know Shimat's at LinkedIn it's I'm using public available
00:46:12
information that I would be violating your terms of service like yeah well okay let's rewrite it. was months of
00:46:17
this like stuff. Um, which which was sort of interminable and then the trigger point was after the Maduro raid,
00:46:27
one of their execs called Palanteer who we buy ourselves through and asked them uh was our software used in that raid
00:46:35
which is by the way classified information anyway. So we're trying to get classified information and implying
00:46:41
that if there was used in that raid that that might violate their terms of service. So they wanted to enforce, this
00:46:47
is very important here. Yeah. >> They wanted to enforce their terms of service. They went behind your back to
00:46:52
try to collect information to then >> maybe pull your license for their technology.
00:46:59
>> But you know, and it wasn't by behind my back. I don't want to accuse them of
00:47:02
that. Palunteer is the prime contractor this sub. Um, but it raised enough alarm
00:47:07
with Palenteer who's got a trusted relationship with the department to tell me and I'm like, "Holy, what if this
00:47:14
software went down, some guard rail kicked up, some refusal happened for the next fight like this one and we left our
00:47:22
people at risk and I had so I went to Secretary Hath. said this would happen. And that was like a wo moment for the
00:47:28
whole leadership at the Pentagon that we're potentially so dependent on a software provider without another
00:47:34
alternative that has the right or ability to do to not only shut it off, maybe it's a rogue developer who could
00:47:40
poison the model to make it not do what you want uh at the time or sort of trick
00:47:44
you because you have to trick it. I mean all these things that we know we were about models or hallucinate purposefully
00:47:50
or do or not follow instructions like some insider threat stuff. So then that culminated in the Tuesday kind of
00:47:58
dramatic meeting with Hexath and Secretary Hexath and me and and Daario um with the Friday deadline that that
00:48:06
got blown and I never thought they really wanted to make it. M is is the model entirely hosted by Anthropic or
00:48:13
just explain to us technically does this sit in a cloud that Palunteer runs for you guys? Um is there really technically
00:48:20
a way that employees at Anthropic could kind of interfere intervene in the use of the model?
00:48:26
>> Yeah. So they put their model in AWS GovCloud >> GovCloud. Yeah. >> And then Palunteer serves it from there
00:48:35
and they refresh it. They held the control plane for the model. So, so yeah, >> they can change the model weights if
00:48:43
they want. They can do whatever they want. >> Yeah. >> The insight into this thing is
00:48:46
unbelievable. Not just governments, but now if you're running a company, the
00:48:51
reality is that what anthropics showed, which by the way is their right at some level, is that they are going to have a
00:49:01
political perspective and a set of terms that reflect their philosophy and that that philosophy can change on a dime.
00:49:09
But what the government did was also completely reasonable, which is we can't
00:49:13
rely on you if you're going to be completely unreliable and disallow things that are reasonable.
00:49:23
I'll give you a different example to make the point. There's a state that wants to run some
00:49:28
healthcare program, but they're a prolife state. You can't conduct abortions in that
00:49:34
state. Does that mean that the anthropic engineers can decide, you know what, we're pro-choice, so we're going to
00:49:41
change the access model and the capability of that model inside of that state. Is that allowed? Should that be
00:49:47
allowed? At one level, you'd say, "This is a private company. They're allowed to
00:49:51
choose." But what that really means is for the government, for all the states,
00:49:55
for any city, for every company, you cannot choose to only use one of these things because it is just a matter of
00:50:02
time until some person inside of one of these companies goes on some lunatic moral tirade and then jeopardizes your
00:50:10
business against something that is nothing about law, but is everything about subjectivity. That is the huge
00:50:17
thing that this thing tore open this weekend. So if you're not figuring out how to be multimodel and agnostic across
00:50:23
these models, you're taking on enormous business risk after Friday because you
00:50:27
can't tolerate that these folks will do that. It's too critical of a technology.
00:50:32
By the way, this is deplatforming all over again. Remember what happened when you didn't like what was said? Now all
00:50:38
of a sudden you were deplatformed. This is that times a thousand because this is
00:50:42
not about posting on social media. This is about using fundamental technology to
00:50:47
either advantage or disadvantage your business. Emil. >> Yeah. I mean, I think I described it the
00:50:52
other way the other day as these c the leaders of these companies say they're
00:50:58
going to cause 50% white collar unemployment. This is as powerful as a nuclear bomb. You it's like 50,000
00:51:05
geniuses in a data center. So you could have a small country coers the world into its whatever. So you're like, "Holy
00:51:10
cow." All right. So this is a general substrate of intelligence of technology
00:51:15
that's applicable to a lot of things. Very generalized. It's not like workday
00:51:20
like HR software we could just use a competitor. This is going to be part of our everyday life in so many different
00:51:25
ways and the controlling the like what whether it has a moral conscience. I mean anthropic has its own constitution.
00:51:33
It has its own soul. It's not the US constitution. So you're subject to that
00:51:39
plus whatever whims and how that changes. And that's a scary thought for for Americans generally. Um and I think
00:51:46
that did come through a little bit today. And in the coming years it's going to be a bigger and bigger deal.
00:51:51
>> So take us through OpenAI software, Gemini software and Gro software. Have
00:51:58
they push back on any use or are they like Dell or Apple? They sell you a computer and you have the computer and
00:52:05
you can use it as you will. Have any of those given you any push back? So Grock's all in for all awful use cases
00:52:12
across all classified and unclassified networks as you'd expect because and you
00:52:16
know Elon's truth seeking. We want truth and Department of War. We don't want
00:52:20
ideology >> because ideology will mess with operational decisions like you you don't
00:52:25
want anyone to anything to be fake or tilted. >> We're we're surgeing Google and
00:52:30
>> we have them we have Google for all lawful use cases on on classified networks and we're trying to move them
00:52:36
to classified networks. are just they have to build out infrastructure because the stuff's complicated.
00:52:41
>> So they're in compliance in terms of what you're looking for as a partner.
00:52:44
And then >> I guess the last one is OpenAI and Sam seems to be >> just characteristically playing both
00:52:50
sides a bit trying to his credit um I called him and said I need a solution if this thing goes sideways. I
00:53:01
need multiple solutions. I'd like you to be one of them. And he's like okay well
00:53:05
what can I do for the country? is like, I need to get you up running as soon as I can. And he was he was trying to
00:53:12
protect anthropic to his credit. He was like, don't do don't call him a supply
00:53:16
chain risk. That's bad for the industry. Let me maybe I can negotiate terms that
00:53:20
they'll find acceptable. Uh but he's in the middle because they're they compete
00:53:24
for the same researchers. So, a lot of this comes down to this thousand researchers like baseball players that
00:53:32
get traded between these companies. >> Moneyball. Yeah. These are the best of
00:53:35
the best. It's a very moneyballish sort of thing and there's not that many of
00:53:38
them and you lose >> 20% of them and all a sudden, you know, they launched Claude Code before you
00:53:44
launched Codeex or something like that and then the numbers changed pretty dramatically. So, he was being a real
00:53:49
patriot um to his credit and trying to him, you know, help anthropic while they were trashing him and recruiting from
00:53:56
his company. And I I am not biased. I just I want all of them. I want to give them all the same exact terms uh because
00:54:03
I need redundancy. I want to see if they diverge or not or did they if they converge maybe I only need two over time
00:54:10
but we don't know it's too early >> but why why keep them in the mix? So if
00:54:14
there's clearly like a difference of operations and philosophy and how they want to run their business and there's
00:54:21
other models is is their model particularly good at particular applications that make it important to
00:54:28
keep it in the mix given that there are three or four other kind of alternatives
00:54:31
here. >> Anthropic you mean? >> Yeah. Oh well because number the number
00:54:35
one reason we were having this conversation at all was because they were deeply embedded. So now I have to
00:54:40
unentangle them and the other companies have not gone as heavy enterprise enterprise sales forward deployed
00:54:48
engineers government business. So they're have to catch up not on necessarily the capability of the model
00:54:54
but just how do you serve the government >> the Bible is just way ahead on that
00:54:58
>> right >> but the models themselves you don't think are uniquely advantaged or do you
00:55:01
have a view on that at this point? I don't have a view on that. I I don't
00:55:04
think they're, you know, I mean, certainly cloud code was was innovative and ahead. That's true. Um, but I do I
00:55:12
believe in 12 months Codeex is not going to be close. I think it will be. >> I think you're right. There's an
00:55:18
asmmptoing that's happening. If you just look at the like the confidence interval
00:55:22
on how overperforming or underperformance some of the leading models are, the error bars are
00:55:27
shrinking, right? the confidence intervals like these things are all kind of becoming the same eventually they're
00:55:33
all getting access to enough power enough compute they're generating similar results it turns out which I
00:55:39
think you would expect so even more important that you have a complexion of models the other thing Emil I don't know
00:55:46
if you saw this but they posted about the revenue ramp of anthropic and well I have a small software company
00:55:55
called 8090 and I asked the team. Let's go look at our opex. I posted it because
00:56:00
I was so shocked at these numbers. Our costs have more than tripled since November of 25. Between the inference
00:56:07
cost that we pay AWS, which is ginormous, between our cost with cursor, between anthropic, we are just spending
00:56:15
millions. >> So now more per unit and more more in aggregate >> both. But the problem is that my costs
00:56:23
are going up 3x every three months. My revenues are not >> token use is very addicting.
00:56:30
>> Yeah. And by the way, because everybody has gotten infatuated with what we call
00:56:33
these Ralph Wiggum loops, like just like send the thing off and like it'll just
00:56:37
go figure something out. A, it never figures anything out, and B, you just get this ginormous bill from Cursor. So,
00:56:43
one of the things we had to do was just, we had to say, guys, you got to deprecate cursor because you're just
00:56:47
wrapping cloud code and charging us way too much for these tokens. But I don't
00:56:51
know if you're seeing any of this thing where like the tool usage, it's so great
00:56:55
to use these tools. Let's be honest, it's super fun. It's like you feel like
00:56:59
a genius, >> but then the ROI of these tools are really important. I'm not sure that
00:57:03
that's as much of an issue for you or not in in >> it will be it. It will be
00:57:11
>> for sure. >> As people find more and more use cases, the use cases get more sophisticated. So
00:57:16
the next marginal thing you have it do is likely to be harder and therefore be more consumptive. Right.
00:57:23
>> Right. Right. >> Let me just ask Emil, the important question that I think triggered a lot of
00:57:27
the news this week is why then designate them a supply chain risk? Why not just abandon them, move on, use the other
00:57:35
vendors? Like why take this kind of punitive action? >> Yeah. So I I don't view it as punitive
00:57:40
and I'll tell you why. It's if their model has this policy bias, let's call
00:57:46
it, based on their constitution, their culture, their people and so on. I don't
00:57:52
want Loheed Martin using their model to design weapons for me. I don't want the
00:57:58
people who are designing the things that go into the the componentry to come to me because if that po if you believe the
00:58:05
risk of poisoning threat yes it can enter into any part of the defense enterprise
00:58:12
>> but it's just the defense enterprise so Boeing wants to use anthropic to build
00:58:18
commercial jets have at it Boeing wants to use it to build fighter jets I can't
00:58:23
have that because I don't trust what the outputs may be because they're so wedded
00:58:27
to their own policy preferences. >> I guess a dovetail to that is why couldn't this have been handled
00:58:34
quietly? Is this anthropic who made this a public spat or was it the administration that made it a public
00:58:41
spat or two to tango? I mean, they have a very good sophisticated press operation and like really good and
00:58:50
painting us as doing mass surveillance where where where their issue was like some commercial database thing that
00:58:58
someone else could buy. They didn't want us to buy to use it, which I'm not even
00:59:01
sure we buy them except to do recruiting for soldiers. And you know, we run schools, hospitals, we do a lot of
00:59:06
things at DoD. We don't just fight wars. and um and the the way they were able to
00:59:12
characterize these two things which are genuinely scary to people but were not the real issues. Um it was really the
00:59:20
you worry I worried about them shutting off our system at a moment of need or them messing with our system in motar
00:59:27
>> came to mind is if they are selling you batteries and you need to use the
00:59:31
batteries or the laptops however you need to use them lawfully okay that should be enough for them unless they
00:59:38
are peacenicks and they don't want to be involved in selling weapons which by the
00:59:41
way was Google's position for many years they just didn't want to be involved in
00:59:44
it because to your point they want to recruit talent that is also aligned with that. So there's just seems to be maybe
00:59:52
this isn't the right partner for the Department of War. >> Yeah, you should if you if you don't
00:59:57
want your stuff to be used for department war stuff, you shouldn't be selling to the Department of War.
01:00:02
>> Pretty sure it's in the name. It's in the name. >> Well, and then also I have to say when
01:00:09
you know you said, "Hey, we don't know what how we're going to use this thing."
01:00:12
Like immediately came to mind was like 911. you you have to go check with them, you know, if you find out there's
01:00:19
another 911 unique, you know, black swan event that's going to occur and you have
01:00:24
to go clear it with them. Like you That's >> That was literally the comment. That was
01:00:28
literally the comment when I was Yeah. So I was in a room of 20 people. So this is not undeniable if everyone want Daria
01:00:34
wants to deny it. >> And I was giving these scenarios, these Golden Dome scenarios and so on. And
01:00:39
he's like, "Just call me if you need another exception." And you know, I'm
01:00:42
like, but what if the balloon's going up at that moment and it's like a decisive
01:00:47
action we have to take. I'm not going to call you to do something. It's like not
01:00:51
rational. And >> yes, >> uh so it that was another holy cow moment of like how they think about it.
01:00:59
>> That just means that what he wants to be is the secretary of war. >> That's right.
01:01:03
>> He wants to be the the god king there, I guess. Yeah. >> You can't do that. The thing that shocks
01:01:08
me, Emil, I don't know. you maybe you can't say anything but guys you can
01:01:11
comment on this. It's clear that Anthropic just lost all the Republicans but I think that if they think that they
01:01:19
have the Democrats that's fleeting as well because I think progressive Democrats fundamentally just hate
01:01:26
Silicon Valley and technology and so there's no way they're going to let some
01:01:28
god king over here that they don't control either. And so in both ways, I think they accidentally may have pissed
01:01:35
off every constituent. The longer term fallout amongst them and progressives will come home to roost because as the
01:01:41
progressives want more control and these guys push back on them, they're just
01:01:44
going to fall into the same situation. >> Yeah. I mean, it's an interesting
01:01:51
perspective. I think if you don't want to be involved in war that you're right,
01:01:56
I think you mentioned this like three times, Jimoth. Don't sell bullets if you don't want to
01:02:00
be in but you can't call Smith and Wesson and say can I The other thing is what the hell was the senior management
01:02:07
and the board talking about over these last few days because to me it would have sounded insane. So then the
01:02:13
question is were people just so breathless to buy this revenue curve? What is the board doing? What is the
01:02:19
senior management really doing? What do you change guys? What do you think you would tell them if you were sitting
01:02:24
inside of the board of >> Enthrop if you're an investor, you're on
01:02:27
the board, what do you say to Daario when he says, "Hey, I need to dictate to
01:02:32
Emil and Hexth how they use my tool and everybody else is just saying lawful use
01:02:36
as the standard." What's your coaching advice? >> Well, it's also a very unusual
01:02:41
circumstance because I don't think any business in history has grown as fast as
01:02:45
they have in the last 90 days. So, they've added what was it? 6 billion of ARR.
01:02:51
>> Yeah. in a month or something. >> I mean, that's absurd. Like, I mean,
01:02:55
absurd. It's absurd. It's a great product. Open Claw has driven a lot of
01:02:58
this. >> If you're on the board, >> you're closing your eyes. Yeah.
01:03:01
>> You're shutting the up. You're just shutting the up cuz something's
01:03:04
working. >> You're actually >> I think he's off doing his thing and
01:03:08
they're going to let him do it. And I don't think that company's worth 350
01:03:11
billion anymore. God knows what it's worth. >> Oh. Oh, that's interesting. Where do you
01:03:17
If you get put a block of stock right now, where do you put a bid in? I'll tell you where I
01:03:20
>> Oh my god. I had I had this conversation at dinner two nights ago. It's like you
01:03:23
have to pick between OpenAI at their current mark, anthropic at their current mark, or
01:03:29
Google. And it's either multiple from here or net market value creation from
01:03:36
here because those are actually two very different conversations. >> Explain the difference.
01:03:39
>> I think the net market valuation because Google's already worth three trillion.
01:03:43
So if they double, they've added three trillion, but I think Google is the bet.
01:03:47
I think Google is the market value creator bet. But I think anthropic is the multiple bet. I think anthropic is a
01:03:53
trillion five market cap at the end of the day. Unless this blows them up, >> you're still buying the 5x versus the 3x
01:04:00
kind of thing. >> You'd buy the 5x instead of the 2x. >> But if you get put a block of stock now,
01:04:04
do you buy it at the last post or do you buy it at a discount or do you just say,
01:04:08
"Ah, I just buy it at the last post." >> Anthropic is worth a lot more than 350.
01:04:12
That's for sure. >> I I that it's undervalued compared to chat. >> They just added six billion in the last
01:04:17
month. And I will tell you anecdotally, anecdotally, >> I am everyone I talk to is on co-work.
01:04:23
Everyone is like gone deep on this. Everyone's amazed and shocked and actively using it. And everyone's saying
01:04:28
the same thing, which is anthropic, may actually be fulfilling the promise of AI. I will also say that it's only going
01:04:34
to take 90 days for Google to flip on a virtual version of co-work. And once Google like has this integrated with G
01:04:42
Suite and you have a virtual hosted version of co-work sweeps the market with this same competitor. But right now
01:04:48
Coowwork is such an incredible product and everyone's saying the same thing.
01:04:51
It's like giving Elon giving truth to AI. Elon said something with respect to
01:04:57
Grock which was that he expects it to exceed all of these coding models probably in the May spin
01:05:05
but for sure by June. So to your point free like what like I guess my question guys to you is like
01:05:12
what happens okay what do you guys do em what do you do when all the models asmtote let's just say by October of
01:05:18
this year let's just say I can guarantee you just for the thought exercise by
01:05:23
October all the models are the same do you just take a complexion of them all and say great we're going to build some
01:05:30
governance layer around it and now we're indifferent or >> what do you do
01:05:35
>> I would love to be indifferent because then I could compete on price, right?
01:05:39
And then then I have and then I have one one main and one redundant or two mains
01:05:45
and I'd need at least two. >> Yeah. >> Anthropic's not going to be one of them
01:05:50
if they continue sort of with their their sort of posture. So then it would be three. And if one gets wobbly from a
01:05:57
policy scenario too because they all, you know, except for Elon's is based in
01:06:01
San Francisco and has that that vibe to it. So, uh, you kind of want to have two
01:06:06
or three at any given time. And yeah, then I then you price compete them. I do think Google has a long-term strategic
01:06:13
advantage, not because of not only because of their consumer thing, but because they have their own cloud.
01:06:18
>> So, between them, they don't have the margin on top of the cloud that
01:06:22
Anthropical have to pass on. So, it's an interesting economic uh >> uh proposition from them.
01:06:30
And just to build on your point, Freedberg, after you finish your uh insightful comments here, pull this up,
01:06:37
Nick. Almost on quue, Freedberg. You're such an oracle. Here is the announcement
01:06:42
from Google. Google Workspace is now integrated for agents and 40 agent skills were included today. Emilio,
01:06:51
you've been great today. Super honest. Daario's uh position. I'm going to give
01:06:55
you some fast balls here. Daario says, "The real reason the Pentagon and Trump
01:07:03
admin do not like us is that we haven't donated to Trump. While Open AI Greg
01:07:08
have donated a lot, here's Claude's answer to that claim." Here's nine
01:07:14
companies and their activities with the administration from the inauguration to attending the inauguration to the White
01:07:22
House CEO dinner to the Melania documentary. If you go through and you look at these nine companies, Microsoft,
01:07:30
Apple, Tim Apple, Nvidia, Amazon, they have all participated. There's one company that hasn't
01:07:37
participated and that's Anthropic. Are is Anthropic being singled out because
01:07:42
they are not genulecting and because they're not paying the cover charge. People say this administration is pay
01:07:49
for play. That's the accusation he's making. I'd say maybe there's a cover
01:07:53
charge. Nobody likes to pay it, but the other companies have. What do you think here?
01:07:57
>> I mean, it's literally one of the dumbest things I've ever heard. I I
01:08:02
truly just because I'm like, I'm in the Department of War. I need to win wars.
01:08:07
If you help me win wars and I don't have to waste time transitioning you out, I'm
01:08:12
that makes me thrilled. Um, and it sort of it's a criticism on me because it's
01:08:17
not like Trump, President Trump dipped in and he's like, "Hey, Emil, by the
01:08:21
way, those guys didn't get any money. you can't use them anymore. I mean,
01:08:24
obviously, it's sort of like like invention in his own mind. It's like I
01:08:28
don't know if people sleep at night if those thoughts get in there. Um and and
01:08:33
I was trying to work with them. Why would I spend three months trying to negotiate with them to get to a simple
01:08:37
standard if I would have just said, "Okay, guys, you're out. Bye." So, I I
01:08:42
think it's just some internal psychosis. That's the only way I can explain that.
01:08:47
>> Okay. It could be on Dario that he's antagonistic to the administration both
01:08:51
with respect to how he operates commercially and it's also reflected in the fact that he doesn't want to support
01:08:56
the administration. >> I have a different theory. >> I think that they have a massive
01:09:01
instance of co-work internally that helps them come up with business strategy. And I bet you there's like
01:09:09
some element of AI that says, "Yeah, you should do it. Do it. It just makes
01:09:12
sense. >> Zig where they zag and get more press." And so now there's some some
01:09:17
cladbot telling them to basically tell the department of war to pound sand. It's gonna turn out to be the stupidest
01:09:23
decision. >> Listen, if I was chairman of the board of that company, I pull Dario aside and
01:09:27
I'd say, "Listen, you're obviously a genius. We obviously have the best tool
01:09:30
in town. This is not a battle you can win and it makes no sense. You're going
01:09:35
to come across as not being patriotic." And Tim Cook is showing up for the Melania premiere. Would it kill you to
01:09:42
support the president? Would he kill you to show up? Look what happened when Biden Look what happened when Biden
01:09:47
excluded Elon that ankled him. Show up for the president. Show up for America and be a patriot. You don't have to
01:09:55
donate, but be a patriot and show up for the dinners. >> That's terrible advice. Here's my
01:09:58
advice. >> Okay, here's your advice. Okay. >> Hey Dario, call a meal back right now
01:10:03
and say, "You know what? Sorry, weed up. We're gonna own this and we're going to
01:10:08
put out a press release that says we support our customers use of our models to do everything and anything that's
01:10:17
lawful. Number one, and number two, that our terms of service are written in stone and that you can expect solidity
01:10:25
and reliability from us. And this was just a misstep. >> Camille, how do you respond?
01:10:31
>> I mean, I would say that's what I've always wanted. I need a reliable, steady
01:10:35
partner that gives me something that'll work with me on autonomous because someday it'll be real and we're starting
01:10:43
to see earlier versions of that and I need someone who's not going to wig out
01:10:47
in the middle and we're just at the early stages and it's rational. But then,
01:10:53
>> you know, you called President Trump in your 5,000word essay on Friday a wannabe
01:10:57
dictator. >> You're going to have to apologize to more people than just me. Yeah, maybe
01:11:02
time to rewrite the position here. Uh, let let's just say Kumbaya, everybody.
01:11:07
Kumbaya, we solved the problem. And look who's on the line. Surprise guest. Daario's here. I thought I would
01:11:11
surprise everybody. Nick, pull Dario up. No, he's not here. >> What's your view on how the industrial
01:11:17
supply chain for hardware components and systems is coming along in the United States? Because my understanding is
01:11:23
we're trying to reduce dependency on Chinese manufactured components. Where are we with respect to where we need to
01:11:30
get to in the US manufacturing supply chain? >> We are early days. Um critical minerals
01:11:37
you see you've seen the action around that. Um you'll start to see so I have
01:11:42
the office of strategic capital which has 200 billion in lending authority. And what we're trying to do is is it's
01:11:49
like a treasuries plus 100 bips loan to companies, show them that the department
01:11:54
needs their solid rocket motors, their batteries, their fiberglass, like all the things that we that we're heavily
01:12:01
dependent on for our defense industrial base that are completely outsourced to China and domesticate them here. Um, and
01:12:09
we've got uh a bunch of great people running it. So, but but it's early days.
01:12:13
is going to take for the rest of the term to get um I think we'll get critical minerals done before the rest
01:12:20
of the term where where we have the access to what we need to from US or allied countries. Um but from batteries
01:12:30
is like the next problem I'm trying to solve. For example, batteries are totally outsourced both technologically
01:12:34
and from lithium to China. Um, and there's like, you know, kind of call it 20 critical things. If I could get to
01:12:42
all of them at some level, but then it'll take a few years for them to like build plants and do that stuff. But
01:12:46
there there it's it's very important. I hope whatever administration comes next
01:12:50
continues it because I'm all free market, but but we outsource so much that um, you know, it crippled sort of
01:12:59
the the kind of the assembly part of putting all these things together. Do we have a munitions risk right now given
01:13:06
the conflict that we're involved in? >> We don't have a munitions risk, but um
01:13:11
we do need to plus up because the Europeans are taking a long time to contribute like Ukraine. Russia has
01:13:18
consumed a lot of munitions from like all over the world and then uh obviously these conflicts we've been in and
01:13:28
um we need to have like the next generation we're still there's still a large degree we're fighting with 1980
01:13:34
cold war weapons >> right and not modern weapons and so we need to plus up those things that to to
01:13:41
regenerate them I mean our nuclear missiles are 50 years old some of the planes are 40 years old so all has to be
01:13:48
renewed. >> Do you think um just speak to the venture capitalists in the audience?
01:13:54
>> Are we in the early stages of this kind of defense tech boom? Is defense tech
01:13:59
wellunded at this point or is it kind of too hypy and bubbly and that's not really the issue? It's not about funding
01:14:05
the companies. It's about funding some of the further upstream uh issues that
01:14:08
we're facing. What's what's your view on where we are there? >> There's more defense tech venture
01:14:12
capital than ever by you know 3x more than last year. So, you know, it it's growing. What I need to do and what the
01:14:20
department needs to do is have some of these companies win big contracts quick like whether you know and sure um uh
01:14:28
Seronic sure like bunch of these companies so that more money flows in more entrepreneurs do it and I could buy
01:14:35
more because genuinely I do think warfare is going from big car carrier ships that cost20 billion dollars and a
01:14:44
decade and a half to build to mass traitable lowcost um things and that's what these
01:14:52
new these new entrance can do. So we need those to succeed so that the flywheel goes with venture capital money
01:14:58
entrepreneurs capabilities >> in that sense and what I've heard as kind of the explainer for this is we're
01:15:04
moving from the old primes to the new primes that there's going to be a small
01:15:08
set of big winners and then obviously lots of seconds and and subs and whatnot. Is that really how this
01:15:14
market's going to evolve? So, are we going to end up with Andrew, Palanteer,
01:15:17
and maybe three or four others, and that's where most of the value is going to acrue from a market perspective?
01:15:22
>> I mean, Andrew and Palanteer want that, and I joke with them all the time about
01:15:25
it, but I I want I definitely want at least a second layer that's innovative
01:15:31
and trying to disrupt the first layer all the time. I met a mom and pop like wholly owned company that that makes
01:15:37
these missiles called Rams that are we really sell and send send to Ukraine and they do it with like 30 people and they
01:15:43
can do a thousand a year because they've designed a manufacturer and it's
01:15:46
awesome. So I want companies like that to continue innovating maybe and then b buys them but the the one of the reasons
01:15:54
the primes are such a small number it's not the only but it's one is they learn
01:15:59
how to contract with the government. They learned how to go through the bureaucracy and that became a
01:16:04
competitive advantage. I'm trying to take that competitive advantage away. >> That's a really important point. How do
01:16:09
you disassemble all that bureaucracy so that product innovation can actually get
01:16:14
to you? >> Yeah. So we we did a big So part of it comes down to requirements reform. What
01:16:22
used to happen is people like oh we need a new fighter jet. So, Army, Navy, Air Force put in the requirements and were
01:16:28
you know it would we needed to be stealthy to hold a missile to hold four humans and you know it became this
01:16:37
unbuildable thing but the contractor didn't care because they're getting paid
01:16:41
cost plus so like sure I'll fulfill your requirements two years from now you're
01:16:46
like that was never engineered properly it'll be another few years late and a
01:16:50
couple more billion dollars so we're trying to change that to I tell you my common operational problem. I need a
01:16:56
bunch of missiles that go 500 miles or more that have this kind of blast. Come to me with solutions, as little
01:17:01
requirements as possible on that side. And on the contract piece, trying to get to as close to commercial contracts as
01:17:08
possible. And this is going to take, and this is where the startups are so good,
01:17:12
they'll do fixed cost pricing. They'll do, you know, pay you don't pay me as
01:17:17
much if I deliver late. You pay me more if I deliver early. >> It's very disruptive to the existing
01:17:22
system. Yeah. >> Super disruptive. But that's that's what I'm I'm like waking up every day trying
01:17:27
to do. >> So you could put out as something saying, "Hey, the straight of horses is
01:17:30
super important. We need to keep it open. We need these type of devices to keep it open." But come to us with your
01:17:36
ideas and let them be creative entrepreneurs as opposed to, you know, just trying to goose the profits. Yeah.
01:17:43
It's really brilliant. >> Yeah. >> Emil, you also oversee DARPA. Yeah.
01:17:47
>> Yeah. DARPA is the father of the modern internet and it's created a lot of
01:17:52
really critical technologies. Can you talk about what's going on in there? Are
01:17:55
there interesting things that you think our audience should know about that you're trying to push forward?
01:18:00
>> I mean there's so it's probably my favorite part of of my my office is like
01:18:05
because there that's where you it's sort of like it's still a very honored
01:18:10
profession to be part of DARPA. like you know being a being in government service
01:18:14
for a long time is sort of reduced in its stature since the Manhattan project now because now now if you're a great
01:18:22
ass you know uh someone who wants to do rockets and stuff you go to SpaceX DARPA
01:18:26
still has the best of the best and so the most creative ideas happen there one of the things that they're working on
01:18:32
that's public is they're trying to use biology to synthesize critical minerals
01:18:36
so so how do you so how can you just pull them out of ground use biology to do it so you don't need to do all this
01:18:42
crazy messy dirty refining that would like change the game big time on our ability to get the critical minerals we
01:18:49
need faster and leaprog the Chinese in terms of tech. Um, so they're doing a lot of that kind of
01:18:55
stuff. They're deep in cyber cyber attacks are are the next huge threat with AI, right? The what what we saw
01:19:02
with the creating all these agents to attack systems that anthropic happened to them. Um, so they're they're they're
01:19:09
working on that's there's not a ton I can talk about kind of DARPA because
01:19:13
it's so it's so classified, but those are a couple examples for you. >> All right, speaking of classified, uh,
01:19:19
just two quick questions before we wrap here. Are there aliens? And what are you
01:19:22
going to tell us? And number two, uh, in all seriousness, I I'm curious, what
01:19:28
have you learned about China and where they're at and the threat there and our
01:19:32
ability to counter it? like give us some idea of where we're at as a country cuz
01:19:38
we hear a lot of hyperbolic stuff. They're building this incredible mobile small navy. They've got hypersonics.
01:19:45
They're just way ahead of us. You know, we hear these things. But realistically,
01:19:49
are we competitive? >> Um I fought Well, I'll answer your first question, which I fought for the alien
01:19:55
portfolio. I didn't get it. >> Work to do more work to do. All the guys on my team were like,
01:20:02
"Dude, you got to get this for us. Please talk to the secretary. We want to
01:20:06
do this." >> But I but I I was like, you as long as I had 100% access to everything, I would
01:20:12
do it because that would be it would be amazing, right? >> Sabers would be a game changer.
01:20:17
>> Um but on the second one, uh it is true that Chinese have had the greatest
01:20:23
military buildup in world history in the last 15 years. and we're asleep at the
01:20:28
wheel to some degree because we're focused on global war and terror. So, they've advanced without sort of us
01:20:34
thinking about threat. That being said, our operational expertise and our space,
01:20:40
like we have some sophisticated stuff, you know, our subs, our space layer, um we still have the best stuff in the
01:20:49
world that does, you know, but but we have to make sure that gap doesn't narrow,
01:20:54
>> right? We can't be complacent. We should sleep well at night knowing you're
01:20:58
there. Yeah. >> Knowing President Trump's allocating money towards this and he's decisive in
01:21:02
his actions. But we cannot be complacent trying to I feel like this week was a true reminder of how fortunate we are to
01:21:09
have the defense that we have for the United States. When you look at what happened in Dubai and in Doha and in Tel
01:21:17
Aviv and you see how people in their residential homes are getting attacked and bombed, you realize just how
01:21:24
fortunate we are to have all of the layers of protection that we have by our government. And I've actually come
01:21:29
around to this quite a lot. >> I'm a true kind of arguably libertarian
01:21:33
at heart, small government, but the one thing that I've realized is so critical
01:21:37
for us to have the freedom to do all the things we want to do is defense. And so
01:21:42
I think it's an amazing institution, very valuable to the United States. Emil, thank you for what you do.
01:21:47
>> Yeah, thank you. Really appreciate you coming on and being so candid and
01:21:51
thoughtful and insightful. This has been a fun amazing episode. We'll see you
01:21:56
next time. Byebye. >> Love you, boys. Byebye. >> Let your winners ride.
01:22:08
We open sourced it to the fans and they've just gone crazy with it. >> Love you. Queen of
01:22:15
>> yours. Besties are gone. >> That is my dog taking your driveway. >> Oh man. Myasher will eat me.
01:22:30
>> We should all just get a room and just have one big huge orgy cuz they're all
01:22:34
just useless. It's like this like sexual tension that you just need to release
01:22:37
somehow. >> Your feet. We need to get merch. I'm going all in. I'm going all in.