E129: Sam Altman plays chess with regulators, AI's "nuclear" potential, big pharma bundling & more

I have a little surprise for my besties everybody's been getting incredible adulation people have been getting incredible feedback on the podcast it is a phenomenon As We Know and I thought it was time for us to do performance reviews of each bestie now I as executive producer I'm not in a position to do uh your performance reviews I too need to have a performance review so I thought I would let the audience do their performance reviews so we went and we're debuting a new feature today at this very moment it's called Reddit performance review oh God cue some music here some graphics Reddit performance reviews and so we'll start off with you David Friedberg this proves

why you haven't been successful in life so far Enterprise in set to yourself which is what all Elite performers do yes you turned it over to a bunch of mids on Reddit yes I'm already doing it they were already doing it we just collected it what elucidation were you going to get from Reddit yeah really let's not ruin the bit do you think Elon does 360 performance reviews on Reddit on Reddit of all things you know how many 360 performance trees I've done in my life zero of course and that's why this will be so interesting okay go go start off with me you are going to be presented with the candid feedback that you've gotten in the last 30 days on Reddit

but for the first time and you have to read it out loud to the class Freeburg you'll go first here's your first piece of candid feedback in your 360 from the Reddit in cells go ahead Freeburg read it out loud David Friedberg deserves more hate he and the others have made it their mission to convince us that reforming Social Security is the only way forward to survive he hides behind this nerdy apolitical Persona and then goes hard right out of nowhere it's that fear-mongered about the deficit as an excuse to restructure entitlement programs we would see that as the partisan right-wing take it is when Friedberg does it we're supposed to act like he has no skin in this game he's

just the Science Guy no he's a rich guy who would rather work your grandparents to death than pay an extra five percent tax all right there's your review very good I think you took it well and you don't have to respond now don't be defensive just take it in just a counter briefly I have highlighted multiple times I think we're going to 70 tax rates but hey you know all right they're wrong everyone's got an opinion that won't generate more Revenue yeah the history is any guide yeah well the audience has been waiting for this David sacks has never taken a piece of feedback and the feedback he has gotten he hasn't taken well so here we go David

here's your performance review go ahead I'm supposed to read this go with the bit come on it's a little feedback for you come on all right and I'm gonna do this too and I haven't seen mine oh Nick pulled these Nick pulled these this is nice these are actual pieces of real feedback Nick you're fired that's it get out of here good sex the thing about David sacks if he wasn't Rich everyone would dismiss him as being both stupid and boring and the secret to his wealth is just follow theater since College it's like if turtle from ontar pretend to be a public intellectual has never had a 360 review he informs us

and I think his staff you know for all the people at Social Capital you can get in on this by just posting to Reddit since he went to 360 reviews at Social Capital go ahead let's pull up your months feedback for the quarter moth is the biggest self-serving leech as long as he can make a dollar trade on it he will burn anything down to the ground [ __ ] the consequences to society or anyone else this was actually the good part yeah why'd you give him such a good review truth it is okay I gotta read mine I haven't seen this I'm embracing for impact here what's the critique exactly what is the critique

from that I mean that's like it's pretty active yeah okay all right here we go I gotta read mine okay I can't wait for AI to replace Jay cow Jay cow is the least skilled knowledge worker on the show I think he has about three shows left before AI replaces his hosting skills and ability to trick dentists into investing in hype that's pretty good that last part I do have a lot of dentist friends in the funds um okay I'm gonna pay for a lot of kids then to school great idea great idea Jay Cal to give us what a great big there's one group one there's one for the whole group this is a group survey this is our group 360. vote to rename the podcast the vote is binding

and the podcast will be renamed three billionaires in jaycal three kind of smart guys and jcal three [ __ ] and Free Bird that's a pretty good survey that was pretty good yeah that's a good one Rain Man [Music] we open source it to the fans and they've just gone crazy [Music] all right everybody Welcome to the all in podcast we're still here episode 129 all in Summit 2023 general admission sold out too many people apply for scholarships that's on pause and there's a couple of VIP tickets left get them while they're hot just search for all in Summit Freeburg anything to add we'll just get

through the grift real quick here at the beginning no it's gonna get it all right that was it yeah I mean just more demand than we predicted we look for a bigger venue couldn't find one we're I think we're excited about Royce Hall it's still as you pointed out two and a half times the size of last year so we want to make sure it's a great quality event but unfortunately way too many folks want to go so we have to kind of pause ticket sales what's my wine budget 300 per person per night a thousand dollars per VIP per event thank you okay I will handle it from here so there's 750 of them so I think you have 750 000 in one budget thank you

I mean I just can't believe I just gave extra mod 750 dollars to buy one all right guys I'm gonna curate an incredible guideline here today by the way oh he's doing yes Melanie Josh somebody hey Josh all right let's get to work okay the senate had a hearing this week for AI Sam Altman was there as well as Gary Marcus a professor from NYU that's an overpriced College in New York City and Christina Montgomery the Chief privacy and Trust officer from IBM which had Watson before anybody else was in the AI business and I think they deprecated it or they stopped working on it which is quite paradoxical there were a couple of very interesting

moments Sam claimed the U.S should create a separate agency to oversee AI I guess is in the chamoth camp he wants the agency to issue licenses to train and use AI models a little regulatory capture there as we say in the biz he also claims and this was interesting dovetailing with elon's CNBC interview with I think Dave Farber which is very good that he owns no equity in open AI whatsoever and was quote doing it because he loves it any thoughts shamath you did say that this would happen two months ago and here we are two months later and exactly what you said would happen is in the process of

happening regulation Licensing and Regulatory capture Sam went a little further then I sketched out a few months ago which is that he also said that it may make sense for us to issue licenses for these models to even be compiled um and for these models to actually do the learning and I thought that that was really interesting because what it speaks to is a form of kyc right know your customer and again when you look at markets that can be subject to things like fraud and manipulation right where you can have a lot of Bad actors banking is the most obvious one we use things like kyc to make sure that money flows are happening appropriately

and between parties that where the intention is legal and so I think that that's actually probably the most important new bit of perspective that he is adding as somebody right in the middle of it which is that you should apply to this agency to get a license to then allow you to compile a model and I think that that was a really interesting thing the other thing that I said and I said this in my in a tweet just a couple days ago is I'm really surprised actually where this is the first time in modern history that I can remember where we've invented something we being

Silicon Valley and the people in Silicon Valley are the ones that are more circumspect than the folks on Wall Street or other areas and if you see if you gauge the sentiment the hedge funds and family offices right now are just giddy about Ai and it turns out if you look at their 13fs they're all long Nvidia and AMD but if you actually look at the other side of the coin which is the folks in Silicon Valley that's actually making it the rest of us are like hey let's crawl before we walk before we run yeah let's think about guard rails let's be thoughtful here and so the the big money people are saying let's place bets and the people building in are saying hey

let's be thoughtful which is opposite to what it's always been I think right we're like hey let's let's run with this and wall Street's like prove it to me sax you are a less regulation guy you are a free market monster I've heard you've been called uh you don't believe that we should license this what do you think about what you're seeing here and there is some cynical cynical thoughts about what we just saw happen in terms of people in the lead wanting to maintain their lead by creating red tape what are your thoughts yeah of course I think you know Sam just went straight for the end game here which is regulatory capture normally when a tech executive goes and

testifies at these hearings they're in the hot seat and they get grilled and that didn't happen here because you know Sam Allman basically bought Into The Narrative of these senators and he basically conceded all these risks associated with with AI he talked about how GPT style models if unregulated could increase online misinformation bolster cyber criminals even threatened confidence in election systems so he basically bought into the center's narrative and like you said agreed to create a new agency that would license models and can take licenses away he said that he would create safety standards specific tests that a mall has

to pass before it can be deployed he says he would require independent audits who can say the model is or isn't in compliance and by basically buying into their narrative and agreeing to everything they want which is to create all these new regulations and a new agency I think that Sam is pretty much guaranteeing that he'll be one of the people who gets to help shape the new agency and and the rules they're going to operate under and what these independent audits are gonna how they're gonna determine what's in compliance so he is basically putting a big moat around his own incumbency here

and so yes it is a smart strategy for him but the question is do we really need any of this stuff and you know what you heard at the hearing is that just like with just about every other Tech issue the centers on the Judiciary Committee didn't exhibit any real understanding of the technology and so they all generally talked about their own hobby horses so you know you heard from Senator Blackburn she wants to protect songwriters Holly wants to stop anti-conservative bias Klobuchar was touting a couple of bills that have her name on them one's called the jcpa journalism competition presentation Bernie Sanders want to do he wants to protect the one percent of the one

Durbin hates section 230 that was the hobby horse he was riding and then Senator Blumenthal was obsessed that someone had published deep fakes of himself so you know all of these different Senators had different theories of harm that they were promoting and they were all basically hammers looking for a nail you know they all wanted to regulate this thing and they didn't really pay much of any attention to the ways that existing laws could already be used absolutely to stop any of these things if you commit a crime with AI there are plenty of criminal laws every single thing they talked about could be handled through existing law if they came out to be

harmed at all yeah but they want to jump right to creating a new agency and new regulations and Sam I think did the you know expedient thing here which is basically buy into it in order an Insider if this was a chess game Sam got to the mid game he traded all the pieces and went right to the end game let's just try to Checkmate here I've got the lead I got the 10 billion from Microsoft everybody else get a license and try to catch up Friedberg we have trimath Pro regulation licensing I think or just being pretty thoughtful about it there you got sax being typically a free market monster let the laws be what they are but these senators are going to do

regulatory capture where do you as the Sultan of science stand on this very important issue I think there is a more important kind of broader set of trends that are worth noting and that the folks doing these hearings and having these conversations are aware of which implies why they might be saying the things that they're saying that's not necessarily about regulatory capture and that is that a lot of these models can be developed and generated to be much smaller we're seeing you know models that can effectively run on an iPhone we're seeing a number of Open Source models that are being published now there's a group called Mosaic ml

last week they published what looks like a pretty good quality model that has you know a very large kind of token input which means you can do a lot with it and that model can be downloaded and used by anyone for free you know really good open source license that they've provided on that model and that's really just the tip of the iceberg on what's going on which is that these models are very quickly becoming ubiquitous to monetized small and effectively are able to move to and be run on the edge of the network as a result that means that it's very hard to see who's using what models how behind the products and tools that they're

building and so if that's the trend then it becomes very hard for a regulatory agency to go in and audit every server or every computer or every computer on a network and say what model are you running is that an approved model is that not an approved model it's almost like having a regulatory agency that has to go in and audit and assess whether a Linux upgrade or some sort of you know open source platform that's that's being run on some server is appropriately vetted and checked and so it it's almost like a Fool's errand and so if I'm running one of these companies and I'm trying to you know get Congress off my butt and get all these Regulators off my butt I'm

going to say go ahead and regulate us because the truth is there really isn't a great or easy path or ability to do that and there certainly won't be in five or ten years once these models all move on to the edge of the network and they're all being turned around all the time every day and there's a great Evolution underway so I actually take a point of view that it's not just that this is necessarily bad and there's cronyism going on I think that the point of view is just that this is going to be a near impossible task to try and track and approve llms and audit servers that are running llms and audit apps and audit what's behind the tools that everyday

people are using and I wish everyone the best of luck in trying to do so but that's kind of the joke of the whole thing it's like let's go ahead and paddle these Congress people on the shoulder and say you got it you're right there you have it folks wrong answer chamatha sacks right answer Friedberg if you were to look at hugging face if you don't know what that is it's a basically an open source repository of all of the llms the cat is out of the bag the horses have left the barn if you look at what I'm showing on the screen here this is the open llm leaderboard it's kind of buried on hugging face if

you haven't been to hugging face this is where developers show their work they share their work and they kind of compete with each other in a social network showing all their contributions and what they do here is and this is super fascinating they have a series of tests that will take an llm a language model and they will have it do science questions that would be for grade school they'll do a test of mathematics U.S history computer science Etc there's a Jeopardy test too I don't know if it's on here but the Jeopardy test is really good it's like straight up Jeopardy trivia and see if it can

answer the questions yeah which actually uh Friedberg was actually his high school uh Jeopardy Championship three years in a row but anyway on this line report you can see the language models are outpacing what openai did I'm sorry closed AI is what I call it now because they're closed Source closed Ai and Bard have admitted that internal person at Bart said the language models here are now outpacing what they're able to do with much more resources many hands makes for light work the Open Source models are going to fit on your phone or the latest you know Apple silicone so I think the cat's out of the bag I don't know how they post something

incompatible about that what Freebird just said with what I said in fact three verse point bolsters my point it's highly impractical to regulate open source software in this way also when you look at that list of things that people are doing on hogging face there's nothing nefarious about it yeah and all the harms that were described are already illegal and can be prosecuted exactly I need some special agency you know giving it seal of approval again this is going to replace permissionless Innovation which is what has defined the software industry and especially open source with the knee need to develop some connection or relationship and

lobbying in Washington to go get your project approved and there's no really good reason for this except for the fact that the Senators on the Judiciary Committee and all of Washington really wants more control so they can get more donations sax I have a question do you think that creating the DMV and requiring a driver's license limits the ability for people to learn how to drive the DMV is like the classic example of how government doesn't work I don't know why you'd want to make that your example I mean people have to spend the whole time he sends people to it he's got a VIP person all day waiting in line to get your photo taken it's insane

I mean everyone has a miserable experience with it no but it's highly relevant because you're you're right if you create an agency where people have to go get their permission it's a licensing scheme you're gonna be waiting in some line of Untold length it won't be like a physical line at the DMV building it's going to be a virtual line where you're in some queue where there's probably going to be some overwork regulator who doesn't even know how this was to approve your project they're just going to be trying to cover their ass because if the project ends up being something nefarious then they get blamed for it so that's what's going to end up happening let me

also highlight something that I think is maybe I think a little bit misunderstood but you know an AI model is an algorithm so it's a it's a piece of software that takes data in and spits data out and you know we have algorithms that are written by humans we have algorithms that have been you know written by machines either machine learn models which is what a lot of what people are calling AI today is effectively an extension of and out of and so the idea that a particular algorithm is differentiated from another algorithm is also what makes this very difficult because these are algorithms

that are embedded and sit Within products and applications that an end user and End customer ultimately uses and I just sent you guys a a link to the you know the EU has been working towards passing this AI good here we go there are a couple of weeks ahead of these conversations in the U.S but I mean as you read through this AI Act and the proposal that it's uh that it's put forth it almost becomes the kind of thing that you say I just don't know if these folks really understand how the technology works because it's almost as if they're going to audit and have you know an assessment of the risk level of every software application out there

and that the tooling and the necessary infrastructure to be able to do that just makes no sense in the context of Open Source software in the context of an open internet uh in the context of how quickly software and applications and tools evolve and you make tweets to an algorithm and you got to resubmit it for authorization sure their number one job freedberg is going to be to protect jobs so anything there that in any way infringes on somebody's ability to be employed in a position whether it's a artist or a writer or a developer they're going to say you can't use these tools or they're going to try to follow them to try to protect jobs because that's their second question of all

three of you do you guys think that this was Sam's way of pulling up the ladder behind him of course no 100 just like okay absolutely it is and it's because no you can you can prove it he made open AI closed AI by making it not open source if you're Sam you're smart enough to know how quickly the models are commoditizing and how many different models there are that you know can provide similar degrees of functionality as you just pointed out jaycal so I don't think it's about trying to lock in your model I think it's about recognizing the impracticality of creating some regulatory regime around model auditing and so you're very so that in that in that world in that

scenario where you have that Vision you have that foresight do you go to Congress and tell them that they're dumb to regulate AI or do you go to Congress and you say great you should regulate AI knowing that it's like hey yeah you should go ahead and stop the Sun from shining you know like it's just yeah so basically he's telling him to do that because he knows they can't no therefore he gets all the points all the joy points all the social credit I don't want to say virtual signaling but he gets all the credit relationship credit with Washington for saying what they want to hear reflecting back to them even though he knows they can't compete

with Facebook's open model which is number one yeah there is historical precedent interesting for companies that are facing Congressional scrutiny to go to Congress and say go ahead and regulate us as a way of Premium relief yeah and I think that it doesn't necessarily mean you're going to get regulated but it's a way of kind of creating some relief and getting everyone to take a breather and a sigh of relief and be like okay the industry is with us you know what do you think the gardas strategy he's pulling here list guard does I think that's in chess when you are going to take the queen anyway what do you think of his chess movies that's uh not a strategy in chess

so I think it is a chess move nonetheless is he pulling up the ladder sacks or no I don't think that's his number one goal but I think it is the result and so I think the the goal here is I think he's got two passing from and when you go to testify like this you can either resist and they will put you in the hot seat and just Grill you for a few hours or you can sort of concede and you buy into their narrative and then you kind of get through the hearing without being grilled and so I think on that level it's preferable just to kind of play ball and then the other thing is that by playing ball you get to be part

of the Insiders Club that's going to shape these regulations and that will I wouldn't say it's a ladder coming up I think it's more of a moat where because it's not that the latter comes up and nobody else can get in but the regulations are going to be a pretty big moat around major incumbents who know they qualify for this because they're going to write these standards so at the end of the day if you're someone in Sam's shoes you're like why resist and make myself a Target or I'll just buy into the narrative and help shape the regulations and it's good for my business I like the analysis this gentlemen this is a perfect analysis let me ask you about the question tomorrow

what is the commercial incentive from your point of view to ask for regulation and to be pro-regulation your pro regulation can you just highlight for me at least what you think you know the the commercial reason is to do that you know how do you benefit from that like not you personally but generally like where does benefit arise I think that certain people in a sphere of influence and I would put us in that category have to have the intellectual capacity to see beyond ourselves and ask what's for the greater good I think Buffett is right two weeks ago

he equated AI to nuclear weapons which is an incredibly powerful technology whose Genie you can't put back in the bottle who's 99.9 of use cases are generally quite societally positive but the point one percent of use cases destroys Humanity and so I think you guys are unbelievably naive on this topic and you're letting your ideology fight your common sense the reality is that there are probably 95 billion trillion use cases that are incredibly positive but the 1000 negative use cases are so destructive and they're equally possible and the reason they're equally possible

and this is where I think there's a lot of intellectual dishonesty here is we don't even know how Transformers work the best thing that happened when Facebook open sourced llama was also that somebody stealthily released all the model weights yeah okay so I don't think a little bit for a neophyte what we're talking about so so there's the model and there's the weights think about it as it's a solution to a problem the solution looks like a polynomial equation okay let's take a very simple one let's take Pythagorean theorem you know x squared plus y squared equals z squared okay so if you want to solve an answer to a problem you have these weights you have

these variables and you have these weights associated with it the slope of a line Y equals MX plus b okay what a computer does with AI is it figures out what the variables are and it figures out what the weights are the answer to identifying images flawlessly turns out to be 2x plus 7 where x equals this thing now take that example and multiply it by 500 billion parameters and 500 billion weights and that is what an AI model essentially gives us to as an answer to a question so even when Facebook released llama what they essentially gave us was the equation but not the weights and then what this guy did I think it

was an intern apparently or somebody he just looked the weights so that we immediately knew what the structure of the equation looked like so that's what we're basically solving against but we don't know how these things work we don't really know how Transformers work and so this is my point when I think you guys are right about yes the overwhelming majority of the use cases but there will be people who can nefariously create havoc and chaos and I think you got to slow the whole ship down to prevent those few folks from ruining it for everybody I haven't had a chance to chime in on my position so I'd like to just move mine nobody cares okay well I do I think

actually I split the difference here a little bit I don't think it needs to be an agency in licensing I do think we have to have a commission and we do need to have people being thoughtful about those thousand use cases chamoth because they are going to cause societal harm or things that we cannot anticipate and then number two for the neophyte with the 1600 rating on chess.com sax gardes an announcement to the opponent that their Queen is under direct attack similar to the announcement of check the warning was customary until the early 20th century so since you do not know the history of check now you've learned something here early 20th century okay well since I've only played chess in the

20th and 21st centuries I'm unaware of that Jake Owen French is pronounced in the context of what we're talking about that models are becoming smaller and can be run on the edge and there's obviously hundreds and thousands of variants of these open source models that have you know good effect and perhaps compete with some of these these models that you're mentioning that are closed source how do you regulate that how do you and then they sit behind an application and they sit behind tooling yeah I think in order for you to be able to compile that model to generate that initial instantiation you're still running it in a cluster of thousands of gpus but let's

say we're past that you can't be past that we're not past that yet okay we don't have five million models we don't have all kinds of things that solve all kinds of problems we don't have an open source available simulation of every single molecule in the world including all the toxic materials that could destroy humans we don't have that yet so before that is created and shrunk down to an iPhone I think we need to put some stage gates up to slow people down what do you mean by those stage kids yeah I think you need some form of kyc I think before you're allowed to run a massive cluster to generate the model that then you try to shrink you need to be able to show people that

you're not trying to do something absolutely chaotic or have it creating that I don't think that that could be as simple as putting your driver's license in your social security number that you're working on an instance in a cloud right it could be your putting your name on your work it becomes slightly more nuanced than that it's like I think that Jake out that's probably the simplest thing for AWS gcp and Azure to do which is that if you want to run over a certain number of GPU clusters you need to put in that information I think you also need to put in your tax ID number so I think if you want to run a real high scale model that's still going to run you tens or hundreds of millions of

dollars I do think there aren't that many people running those things and I do think it's easy to police those and say what are you trying to do here so let me just push back on that because Mosaic ml published this model that is let me I can pull up the the performance chart or Nick maybe you can just find it on their website real quick or the new model they publish to mock they trained this model on open source data that's publicly available and they spent two hundred thousand dollars on a cluster run to build this model and look at how it performs compared to some of the top models that

are closed Source just say it for the people who are listening yeah so for people that are listening basically this model is called MPT 7B that's the name of the AI model the llm model that was generated by this group called Mosaic ml and they spent two hundred thousand dollars creating this model from scratch and the data that they trained it on is all listed here it's all publicly available data that you can just download off the internet then they score how well it performs on its results against other big models out there like llama 7B I know but I don't exactly know what the actual problems they're trying to ask it

to compare right so the but the point is that this model theoretically could then be applied to a different data set once it's been you know built I don't know this is you know I just want to use your point earlier about toxic chemistry because models were generated and then other data was then used to fine-tune those models and deliver an output hold on a second like those answers were to specific kinds of questions if you wanted to all of a sudden ask totally orthogonal thing of that model that model would fail you would have to go back and you'd have to retrain it that training does cost some amount of money so if you said to me hmoth I could

build you a model trained on the universe of every single molecule in the world and I could actually give you something that could generate the toxic list of all the molecules and how to make it for two hundred thousand dollars I would be really scared I don't think that that's possible today so I don't understand these actual tests but I don't think it's true that you could take this model and these model weights apply to a different set of data and get useful answers but let's let's assume for a minute that you can in fact take two hundred thousand dollars worth it here's my point I want to tell you what's happening right now which is that's not possible so we should stop so

that then I don't have to have this argument with you in a year from now which is like hey some jack jerk off just created this model now the cat's out of the bag so let's not do it yeah and and then what's going to happen is like some chaotic seeking organization is going to print one of these materials and release it into the wild to prove it but here's the point for the audience we are at a moment in time where this is moving very quickly and you have very intelligent people here who are very knowledgeable talking about to the degree to which this is going to manifest itself not if it will manifest you are absolutely 100 certain Freeburg that somebody will do

something very bad in terms of the chemical example as but one we're only determining here what level of hardware and what year that will happen chimatha saying we know it's going to happen whether it's 2 or 10 or you know five years let's be thoughtful about it and I think you know this discussion we're having here I think on a spectrum it's this is a unique moment where the most knowledgeable people across every single political Spectrum persuasion for-profit non-profit Democrat Republican right Elon and Sam will just use those as the two canonical examples to demonstrate are pro-regulation and then the further and further you get away the less

technically astute you are the more anti-regulation and like pro-market you are and all I'm saying is I think that should also be noted that that's a unique moment that the only other time that that's happened was around nuclear weapons and you know that's when Einstein I actually think I think it's politically incorrected right now I think because of what you're saying well just give me a second I think because of what you're saying everyone on the left and the right it's it's become popular to be pro-regulation on AI and to say that AI is going to Doom the world and it's unpopular and absolutely explained my point of view on Sam elon's

different but I think like it I think it's become Politically Incorrect to stand up and say you know what this is a transformative technology for Humanity I don't think that there's a real path to regulation I think that I totally there's laws that are in place that can protect us in other ways with respect to privacy with respect to fraud with respect to biological warfare and all the other things that we should worry about Elon has said pretty clearly he doesn't give a [ __ ] about what it does to make money or not he cares about what he thinks so all I'm saying is that's a guy that's not trying to be politically correct Elon has a very specific concern

which is Agi he's concerned that we're on a path to a digital superintelligence it's a singularity and if we create the wrong kind of artificial general intelligence that decides that it doesn't like humans that is a real risk to the human species that's the concern he's expressed but that's not what the hearing was really about and it's not what any of these regulatory proposals are about and the reality is none of these Senators know what to do about that even the industry doesn't know what to do about the long-term risk of creating an AGI nobody knows nobody really and so and so I actually I disagree with this idea that tomorrow early earlier you said that

there's a thousand use cases here that could destroy the human species I think there's only one there's only one species level risk which is Agi but that's a long-term risk we don't know what to do about it yet I agree we should have conversations what we're talking about today is whether we create some new licensure regime in Washington so that politically connected insiders get to control and shape the software industry and that's a disaster let me give you another detail on this so and one of the chat groups I'm in there was somebody who just got back from Washington I won't say who they are it's not someone who's famous outside the industry but

they're kind of like a tech leader and what they said is they just got back from Capitol Hill and the White House and I guess there's like a White House Summit on AI you guys know about that yeah so what this person said is that the White House meeting was super depressing some smart people were there to be sure but the White House and vp's teams were rapidly negative no real concern for the opportunity or economic impact just super negative of course basically the mentality was that Tech is bad we hate social media this is the hot new thing we have to stop it of course that basically is their attitude they don't understand the technology White House

yeah and the VP specifically because she's the now the AIS are to put Kamala Harris in charge of this makes no sense I mean does she have any background in this like it just shows like a complete utter lack of awareness where is the Megan Smith of course somebody like a CTO to be put in charge of this remember Megan Smith was CTO under I guess Obama like you need somebody with a little more depth of experience here like hopefully you guys than saying your your pro-regulation depending on who's in charge well I'm proud thoughtfulness I'm pro-lawfulness I'm illustrating that really this whole new agency that's being discussed is just based on Vibes you're not down with the Vibes of Vibes

the vibe is that a bunch of people in Washington don't understand technology and they're afraid of it yeah these are socialist David they're socialists they hate progress they are scared to death that jobs are going to collapse they're socialists they they're union leaders this is their worst nightmare Because the actual truth of this technology is 30 more efficiency and it's very mundane this is the truth here I think that Representatives have 30 more efficiency means Google Facebook and many other companies Finance education they do not add staff every year they just get 30 more efficient every year and then we see unemployment go way up and Americans are going to

have to take service jobs and why collar jobs are going to be refined to like a very elite few people who actually do work in the world there is absolutely a lot of new companies if humans can become if knowledge workers can become 30 more productive there'll be a lot of new companies absolutely and the biggest shortage on our economy is coders right and we're going to have an unlimited number of them now they're all going to go I don't know if it's unlimited but yes it's a good thing if you give them superpowers we've talked about this before yeah yeah so I think it's too soon to be concluding that we need to stop job displacement that hasn't even

occurred yet I'm not saying it's actually going to happen I do agree there'll be more startups I'm seeing it already I just think that's what they fear that's their fear is and that's the fear of the EU the EU is going to be protection unionist protect Pro workers aren't going to be affected because these are not blue-collar jobs we're talking about these are knowledge unions at all the media companies created unions and look at them they're all going circling all these media companies are circling the training going into their business but that's on the margins I mean that's not just trying to start Tech unions sure they're trying to start them but when we think of unionized

workers you're thinking about Factory workers and these people are not affected okay listen this has been an incredible debate this is why you tune into the pod a lot of things can be true at the same time I really think the analogy of the the atom bomb is really interesting because what Elon is scared about with General artificial intelligence is nuclear Holocaust the whole planet blows up between those two things are things like Nagasaki and Hiroshima or a dirty bomb and many other possibilities with nuclear power you know Fukushima you know Etc so less than the Hiroshima not yet right and you know the question is is a three mile island is a Fukushima is

a Nagasaki are those things probable and I think we are all looking at this saying there will be something bad that will happen there will be the equivalent strings together and these large language models string together words in really interesting ways and they give computers the ability to have a natural language interface that is so far from AGI I think it's a company hold on I think it's obviously the ability to understand language and communicate in a natural way is a component of a future AGI but by itself these are models for stringing together language auto GPT where these things go out and pursue things without any interference I would be the first one to

say that if you wanted to scope models to be able to just do human language back and forth on the broad open internet you know there's probably a form David where these chat GPT products can exist I don't I think that those are quite benign I agree with you but I think what Jason is saying is that every week you're you're taking a leap forward and already with auto gpts you're talking about code that runs in the background without supervision it's not a human interface that's like hey show me how to color my cookies green for St Patty's Day it's on my trip to Italy yeah yeah it's not doing that so I just think that there's

there's a place well beyond what you're talking about and I think you're minimizing the problem a little bit by just kind of saying the whole class of AI is just chat GPT and asking kid asking it to help it with its homework this example I hate to say it out loud but somebody could say here is the history of financial crimes that were committed and other hacks please with their own model on their own server say please come up with other ideas for hacks be as creative as possible and steal as much money as possible and put that in an auto GPT David and study all hacks that occur in the history of hacking and it could just create super chaos around the world and your computer

history is going to regret buying into this narrative because the members of the Judiciary Committee are doing the same Playbook they ran back in 2016 after that election they ran all these hearings on disinformation claiming that social networks been used to hack the election it was all a phony narrative hold on look what happened the Russians hacked who had to write out that stop they thought they got all these Tech CEOs to buy into that phony narrative why because it's a lot easier for the tech CEOs to agree and tell the centers what they want to hear to get them off their backs and then what did that lead to a whole censorship industrial complex so we're going to do

the same thing here we're going to buy into these phoning names the centers off our backs and that's going to create this giant AI industrial complex that's going to slow down real Innovation and be a burden on entrepreneurs okay lightning round lightning round we got to move on three more topics I want to hit let's keep going if honor to become an evil more evil yeah what is it called an evil uh comic book character a super villain a super villain if you wanted to be an even more loathsome super villain continue I would take every single virus patch that's been developed and publicized learn on them and then find

the next zero day exploit on a whole bunch of stuff I mean it's just like even publish that idea please don't I mean I'm I'm worried about publishing that idea that's not an intellectual leap I mean you have to be a dollar it's obvious okay let's move on another great debate Elon hired a CEO for Twitter Linda yakarino I'm hoping pronouncing that correct was the head of AD sales that NBC Universal she's a legend in the advertising business she worked at Turner for 15 years before that she is a workaholic is what she says she's going to take over everything but product and CTO elon's going to stick with that she seems to be very moderate and she follows people on

the left or right people are starting the character assassination and trying to figure out her politics and that she was involved with the w World economic Forum which anybody in business basically does but your take sacks on this choice for CEO and what this means just broadly for the next six months because we're sitting here at six months almost exactly since Elon took over obviously you and I were involved in month one but but not much after that what do you think the next six months holds and what do you think her role is going to be obviously some precedent this for this with you know why not as basic listen I think this Choice makes sense on this

level Twitter's business model is advertising Elon does not like selling advertising she's really good at selling advertising so he's chosen a CEO to work with who's highly complimentary to him in their skill sets and interests and I think that makes sense I think there's a lot of logic in that what Elon likes doing is the technology and product side of the business he actually doesn't really like the let's call it the standard business chores and especially related to like we said advertising stuff with advertisers I think it's his personal nightmare right so I think the choice makes sense on that level now yeah instantly you're right her hiring

led to attacks from both the left and the right the right you know pointed out her views on covet and vaccines and her work with the wef and then on the left I mean the attack is that she's following Libs at Tick Tock which you're just not allowed to do apparently a follow is not an endorsement well if you're just following lives of tick tock they want to say you're some crazy right winger now well she also follows David sacks so that does mean that she's pretty that that is a signal but the truth is if you sax correct me if I'm wrong here or trim off maybe I'll send it to you if you pick somebody that both sides dislike or

are trying to take apart you probably pick the right person yeah here's what I think okay go ahead we're not going to know how good she is for six to nine months but here's what I took a lot of joy out of here's a guy who gets attacked for all kinds of things now right he's an anti-semite apparently and then he had to be like I'm very Pro semi he's a guy that all of a sudden people think is a conspiracy theorist he's a guy that people think is now on the Raging right all these things that are just like inaccuracies basically fire bombs thrown by the left but here's what I think is the most interesting thing for a guy that

theoretically is supposed to be a troll and everything else he has a female chairman of Tesla a female CEO at Twitter and a female president at SpaceX of course it's a great Insight it's the same insight I think a lot of these virtual signaling lunatics on the left virtue signaling mids and you know what like they're all new house Elizabeth Warren and and Bernie Sanders giving you know the CEO of Starbucks a hard time when he doubled the pay of the minimum wage gave them you love mid right that's a great term isn't it these [ __ ] mids and I paid for the college tuition what gives you the right

at Starbucks to pay for college tuition and double the minimum wage I don't know why it's so funny to me isn't it so great like just because you can picture them when I say that these are these mids feverishly typing on their keyboards their virtue signaling nonsense sex wrapping it up yeah look like you said Elon has worked extremely well with Gwen Shotwell who's the president of SpaceX for a long time and I think that relationship shows the way to make it work here at Twitter which is they have a very culinary skill set I think my understanding is that Gwen focuses on the business side and the sales side of the operation Elon

focuses on product and Technology she lets Elon be Elon I think if Linda tries to Reign Elon in tell him not to tweet or tries to meddle in the Free Speech aspects of the business which is the whole reason he bought Twitter yeah that's right that's when it will fall apart so my advice would be let alone Be Elon you know he bought this company to make it a free speech platform don't mess with that and I think it could work great and a free speech platform it is when you are saying anything about covid and I really don't even want to say it here because I don't want our to even say the word covet or vaccine means that this could get tagged by YouTube and BD you know

algor the algorithm could could uh D um I don't know what they call it deprecate this and when we don't show up and people don't see us because we just said the word covet I mean the censorship built into these algorithms is absurd but speaking of absurd Nina Khan who has been the least effective FTC chair I think started out pretty promising with some interesting ideas she's now moved a block of major Pharma deal and December Amgen agreed to acquire Dublin based Horizon Therapeutics for 27.8 billion this is the largest Pharma deal announced in 2022. FTC has filed a lawsuit in federal court seeking an

injunction that would prevent the deal from closing the reasoning is the deal would allow Amgen to entrench the Monopoly positions of Horizon's eye and gout drugs the agency said that those treatments don't face any competition today and that Amgen would have a strong incentive to prevent any potential Robbers from introducing similar drugs chamoth the pharmaceutical industry is a little bit different than the tech industry insanity explain why and then sax will go to you on the gout stuff because I know that personally impacts you go ahead I think that this is a little like scientifically illiterate to be honest

unpack the thing is that you want drugs that can get to Market quickly but at the same time you want drugs to be safe and you want drugs to be effective and I think that the FDA has a pretty reasonable process and one of the direct byproducts of that process is that if you have a large indication that you're going after say diabetes you have to do an enormous amount of work it has to be run on effectively thousands of people you have to stratify it by age you have to stratified by gender you have to stratify it by race you have to do it across different geographies right the bar is high but the reason the bar is high is that if you do get approval these all of a sudden become these

Blockbuster 10 20 30 billion dollar drugs okay and they improve people's lives and they allow people to live etc etc what has happened in the last 10 or 15 years because of wall Street's influence inside of the Pharma companies is that what Pharma has done a very good job of doing is actually pushing off a lot of this very risky r d to Young early stage biotech companies and they typically do the first part of the work they get through a phase one they even may be able to sometimes go and start a phase two trial a two-way trial and then they typically can get sold to Pharma and these are

like multi-billion dollar transactions and the reason is that the private markets just don't have the money to support the risk for these companies to be able to do all the way through a phase three clinical trial because it would cost in some cases five six seven eight billion dollars you've never heard of a tech company raising that much money except in a few rare cases in far in in biotech it just doesn't happen so you need the m a machine to be able to incentivize these young companies to even get started in the first place otherwise what literally happens is you have a whole host of diseases that just stagnate okay

and instead what happens is a younger company can only raise money to go after smaller diseases which have smaller populations smaller Revenue potential smaller costs because the trial infrastructure is just less so if you don't want industry to be in this negative Loop where you only work on the small diseases and you actually go and tackle the big ones you need to allow these kinds of transactions to happen the last thing I'll say is that even when these big transactions happen half the time they turn out to still not work there is still huge risk so don't get caught up in the dollar size you have to understand the phase it's in and the

best example of this is the biggest outcome in in biotech private investing in Silicon Valley was this thing called stem Centrics and that thing was a 10 billion dollar dud right but it allowed all these other companies to get started after semcentrics got bought for 10 billion freeberg I want to get your take on this especially in light of maybe something people don't understand which is the the amount of time you get to actually exclusively monetize a drug because my understanding you correct me if I'm wrong you get a 20-year patent it's from the date you file it but then you're working towards getting this drug approved by the FDA so by the time the FDA approves a drug this 20-year patent

window how many years do you actually have exclusively to monetize that drug and then your wider thoughts on this FTA yeah I'm not going to answer that question right now because I do want to kind of push back on the point I'm generally pretty negative on a lot of the comments Lena Khan's made and her positioning and obviously as you guys know we've talked about it on the show but I read the FTC uh filing it's in um federal court and if you read the filing let me just start the company that Amgen is trying to buy it's called Horizon Therapeutics which is a company that's doing about 4 billion in Revenue a year about a billion to a billion and a half in

ebitda so it's a it's a business that's got a portfolio of orphaned drugs meaning drugs that treat orphan conditions that aren't very big Blockbusters in the in the pharmaceutical drug context and so it's it's a nice portfolio of cast generating drugs Amgen buying the business gives them real Revenue really but uh and helps bolster portfolio that you know is aging and I think that's a big part of the Strategic driver for Amgen to make this massive 28 billion dollar acquisition the ftc's claim in the filing which I actually read and I was like this is actually a pretty good claim is that the way that Amgen sets the prices for their pharmaceutical

drugs is they go to the insurance companies the payers and the health systems and they negotiate drug pricing and they often do bulk multi-product deals so they'll say hey we'll give you access to those products at this price point but we need you to pay this price point for this product and over time that drives price inflation it drives costs up and it also makes it difficult for new competitors to emerge because they tell the insurance company you have to pick our drug over other drugs in order to get this discounted price and so it's a big part of their negotiating strategy that they do with insurance companies so the ftc's claim is that by giving Amgen this large

portfolio of drugs that they're buying from Horizon it's going to give them more negotiating leverage and the ability to do more of this drug blocking that they do with insurance companies and other payers in the drug system so they're trying to prevent pharmaceutical drug price inflation and they're trying to increase competition in their lawsuit so I felt like it was a fairly kind of compelling case I'm no lawyer on Anti-Trust and monopolistic practices and the Sherman Act but this was not sorry let me just say this was not an early stage biotech risky deal that they're trying to block a mature company with four billion in revenue and a

billion and a half in ebitda I understand and yeah I read it too but two comments it is because the people that traffic in these stocks are the same ones that fund these early stage biotech companies and I talked to a bunch of them and they're like if these guys block this kind of deal we're going to get out of this game entirely so just from the horse's mouth what I'm telling you is you're going to see a Paul come over the early stage Venture financing landscape because a lot of these guys that are crossover investors that own a lot of these public biotech stocks that also fund the

private stocks will change their risk posture if they can't make money that's just the nature of capitalism the second thing is Lena Khan did something really good about what you're talking about this week actually which is she actually went after the pbms and if you really care about drug inflation and you follow the dollars the real culprits around this are the pharmacy benefit managers and she actually launched a big investigation into them but this is what speaks to the two different approaches it seems that unfortunately for the FTC every merger just gets contested for the sake of it being contested because I think that if you wanted to

actually stop price inflation there are totally different mechanisms because why didn't you just Sue all the pbms well there's no merger to be done but you can investigate and then you could regulate and I think that that's probably a more effective way and the fact that she targeted the PPM says that somebody in there actually understands where the price inflation is coming from but I don't think something like an Amgen Horizon because what I think will happen is all the folks will then just basically say well man if if these kinds of things can't get bought then why am I funding these other younger things yeah

but you know yeah we're just not seeing a lot of the younger stuff get get get blocked I don't think we've seen any attempts at blocking speculative portfolio Acquisitions or speculative company Acquisitions so I think these guys are getting caught up in the dollar number you know yeah so I think the problem is they see 28 billion they're like we need to stop it you know what's amazing I'll just wrap on this because it's a good discussion but I think we got to keep moving here is I took the PDF that you shared and I put it into chat GPT now oh wow and you don't need to upload the PDF anymore you could just say summarize this and put the link and

it did it instantly are using the browsing Plugin or I just used chat GP no it's not the browser plugin I just did this is the 3.5 model and it pulled the link in the GPT 3.5 model I don't know I could do that that's new they must have added browse me in the background yeah or just pulling it they did today by the way whoa they did it today yeah remember last week we said that they had to build browsing into the actual product like Bard right otherwise they're moving I gotta get it today yeah closed AI is on the top of their game the app is available in the App Store now right as of today no they they had a test app I was on the test flight no no

no they just launched the app they did oh that's game over man if this thing is an app form that's going to 10x the number of users and it's going to 10x the amount of usage by the way I tested the same thing for Bard we should compare the two but amazing pretty good as well yeah yeah wow to actually compare its summary with chat GPT summary okay tell us which one's better some interesting news here you know we speaking of platform shifts do I get to get my view on the Lena con thing oh well yes I was getting a little personal here David and I didn't I didn't want to trigger you I know you've been struggling with the gout

because of your lifestyle choices the alcohol the the foie gras everything but no you've lost a lot of way to give you a lot of credit tell us what do you think about the bundling we're seeing here because it does seem Microsoft asks with the operating system yeah it's very similar and what I said in the context of tech is that we should focus on the anti-competitive tactics and stop those rather than blocking all mergers and I think the same thing is happening on the Pharma space if bundling is the problem focus on bundling the problem when you just block M A is that you deny early investors one of the biggest ways that they can make a positive outcome and what's the downstream effect of that

yeah exactly look it is hard enough to make money as either a former investor or as a VC that there's only two good outcomes right there's IPOs there's M A's everything else basically goes everything else is a zero it goes bankrupt so if you take M A off the table you really suppress the already challenge returns of venture capital yeah well said well said and you're right you mentioned earlier that we were willing to give Lena Khan a chance we thought that some of our ideas were really interesting because I think there are these huge tech companies that do need to be regulated these big Tech monopolies basically that you have the mobile

operating system duopoly with Apple and Google and you've got Amazon you've got Microsoft and there is a huge risk of those companies uh preferring their own applications over Downstream applications or using these bundling tactics yes if you don't put some limits around that that creates I think an unhealthy Tech ecosystem this is the insight and I think it's exactly correct sex ferlina Khan I know she listens to the Pod hey Lena you want to go after tactics not Acquisitions so if somebody buys something and they lower prices and increases consumer Choice that's great if it encourages more people to invest more money into Innovation that's great

but if the tactics are we're going to bundle these drugs together to keep some number of them artificially high or reduce choice or if we're going to bundle features into the you know Suite of products and we do anti-competitive stuff you have to look at the tactics on the field are people cheating and are they using the Monopoly power to force you to use their App Store just make apple have a second app store that's all we're asking you to do there should be an app store on iOS that doesn't charge any fees or charges one percent fees break the Monopoly on the App Store sax is so right perfectly said she actually did Issue compulsory orders to the pbms so to your point sax the FTC has been

worried that what free Brook said had is been happening but the real sort of middlemen manipulator in this market are the pharmacy benefit managers and so this week she actually issued compulsory orders to the pbms and said turn over all your business records to me I'm going to look into them that makes a ton of sense but then on the same hand it's like you see merger and you're like no it can't happen it just doesn't speak to a knowledge of the market we should have Lena on hey Lena I know you listen to the Pod I've heard the back Channel just come on the Pod I should be a good guess right we would have a good conversation with everything yeah uh open invite Nikki Haley's coming on the Pod by the

way you have homework to do for the summit which is to see if you can get Donald Trump to come to the summit okay huge love J Cal love all in okay because you your mannerisms are unbelievable how did you practice it I did I did a little bit only because I like to troll people and Trigger them I'm gonna really dial in my trump in the coming weeks all right here we go Apple's long anticipated AR headset that stands for augmented reality which means VR you can't see the real world you're just in uh in a virtual world AR lets you put digital assets on the real world so you can see what's happening in the real world but you can put Graphics all

around that's expected to be revealed as early as June the projected cost is going to be around three thousand dollars it won't ship into the fall this is a break from Apple's typical way of releasing products which is to wait till it's perfect and to wait until all consumers can afford it this is a different approach they're going to give this out to developers early and Tim Cook is supposedly pushing this there was another group of people inside of Apple who did not want to release a jamaat but there is some sort of external battery pack it seems like a bit of a Franken product Frankenstein kind of project here

that you know perhaps Steve Jobs wouldn't have wanted to release but he needs to get it out I think because Oculus is making so much progress the killer app supposedly is a FaceTime like live chat experience that seems interesting but they look like ski goggles on this as the next compute platform if they can get it you know to work would you wear these would they have to be Prada what's the story here no and no does this seem like a weird conversation because none of us [ __ ] know none of us have seen this product and none of us have used it we were lucky friend of the podpa lucky says it's incredible so what

that's just like commenting on one guy's five letter five word tweets Palmer knows I mean Palmer invented Oculus great but what are we talking about we have nothing to say about it what do we know about okay I'll a form of a really good question here do you believe this is going to be a meaningful compute platform in the coming years because apple is so good at product how do we know until we see it we gotta see it of course they're of course they're good at product let's let's see the product though like all right fine sax what are your thoughts I think it's a good thing that they're launching this like you said it is a deviation for what they've

normally done they normally don't release a product unless they believe the entire world can use it so their approach has been only to release mass mass market products and have a very small portfolio of those products but when those products work they're you know billion user home runs this obviously can't be at a three thousand dollar price point and it also seems like it's a little bit of a early prototype where the batteries are like in a fanny pack around your waist and there's a ways to go around this but I I give them credit for launching what is probably going to be more of an early prototype so they could start iterating on it I mean the reality is the Apple

watch the first version kind of sucked and first five versions yeah now they're on one that's pretty good I think so look I think this is a cool new platform they get knocked on for not innovating enough I think good let them try something new I think this will be good for meta to have some competition yeah it's great having two major players in the race maybe it actually speeds up the Innovation or maybe we get somewhere down here I mean I I think they should have done something in cars what should they do in cars if you were going to talk about the car what would it be tell me what you think would be the right approach you you were going to do the Facebook phone that could have

changed the entire Destiny of Facebook they should have bought Tesla when they could have the chance for four or five billion they could have bought it for 10 billion 20 billion it's only when it got to 50 60 that it got Out Of Reach what do you think the car should be they could have bought it at 100 billion they could have bought 100 billion Tim Cook famously wouldn't take the meeting Elon said it he wouldn't he wouldn't be bizarre bizarre maybe they missed an opportunity there but I do think the end game with the AR headsetter glasses right yes where you get the screens and you get the Terminator mode and in con is that what is that these are just

glasses acting like they were like fancy technology this this size glasses is what you're talking about yeah when you have like a little camera built in and heads-up construction with AI then it gets really interesting so that that's the end game here I think give the audience an example of what this combination of AI plus AR could do when you're walking around it could layer on intelligence about the world you meet with somebody and it can remind you of their name and the last time you met with them and give you a summary of what you talked about what action items there are you could be walking in a city and it could tell you it knows you like Peking

dock it could show you hey there's a peking dog place over here some reviews of it it just knows you and it's customized in the world what about for people that do the same routine 99 of the time how does it gonna help you though it could tell you your steps every day could tell you incoming messages so you don't have to take yourself three thousand dollars on that no but you would spend people spending three years to get your notifications on your wrists why do you want it on your eyes for three thousand I would love this maybe I just do like a lot of meetings or I'm at events where people are coming up to me

and I've met them like once a year before like it would be really helpful to kind of have the terminal let's be honest though the Terminator mode for you to be able to be present with your family and friends but be playing chess with Peter TL on those glasses that's your dream come true you and Peter in AR playing chess all day long throw up the picture of sax beating Peter Thiel I watched the clip from the earlier all in episodes when we discussed you beating Peter Thiel what a great moment it was for you all right listen let's wrap up with this Gallup survey the number of Americans who say it's a good time to buy a house has never been lower 21 say it's a good time

to buy a house down nine percent from the prior low of a year ago prior to 2022 50 or more consistently though it was a good time to buy significantly significantly fewer expect local housing prices to increase in the year hey uh Sachs is this like a predictive of a bottom and pure capitulation and then that means maybe it is in fact a good time how would you read this data I don't see it as a bottom necessarily the way I read the data is that the spike in interest rates have made it very unaffordable to buy a house right now you've got you know the mortgages are what like seven percent interest rate or even slightly higher so people just

can't afford the same level of house that they did before I mean mortgages were at three three and a half percent like a year and a half ago now I think what's kind of interesting is that even in the 1980s the early 1980s when interest rates were at like 15 you still had 50 thought it was an okay time to buy a house or an attractive time to buy a house so for the number to be this low tells me that it's not just about interest rates I think consumer confidence is also plummeting and people are feeling more insecure so I think it's just another economic indicator that things are looking really shaky right now and I'll tell you one of the the knock-on effects

of this is going to be that people can't move because in order to move you have to sell your current house and then buy a new one and you're not going to want to sell your current house when prices are going down and then for the new one you're going to lose your three percent mortgage enough to get a new one at seven percent so you're not going to buy anything like the house so it freezes the market it freezes Mobility I think over the last few years during covid you saw tremendous movement between states I think that's going to slow down a lot now because people just can't afford to trade houses so as a result of that I think discontent is going to rise because I

think one of the ways that you create a pressure valve is when people are unhappy in a state they just move somewhere else well now they're not able to do that well and you can also move to a better opportunity for you and your family whether that schools taxes a job lifestyle so yeah you can you can you're going to reduce joy in the country and it also it screws with price Discovery doesn't it if you if you don't have a fluid Market here then how does anybody know what their house is worth and then this just again creates more I think of a frost I think Friedberg has said this a couple times freeberg you can correct me if I'm wrong but like the the home is

like the disproportionate majority of most Americans wealth right mm-hmm it's all their wealth all their wealth yeah so I mean there's that factoid yeah and then what does that do foreign what's going on they're bringing you lunch no I was looking I was looking at uh mansion that's for sale 175 million dollars but they just got the price to 140 so I'm just taking a little again I mean there's gonna be a lot of distress in the market soon I'm predicting a lot of distress actually can we shift to the commercial side for a second I just passed away yeah Sam Zell passed away today oh wow rest in peace yeah rest in peace uh Chicago uh um yeah crazy but speaking of bombastic

interesting guy yeah but speaking of the real estate market so I want to give an update on San Francisco cre I was talking to a broker the other day and so here are the stats that they gave me so it was a local broker and someone from Blackstone and they're fans of the Pod and just came up to me and we started talking about what's happening in San Francisco shout out shout out to them didn't take a didn't take a photo but but any event they're they're fans of the pot of so we start talking about what's happening in San Francisco real estate so the SF office Market is just a level set is 90 million square feet they said

the vacancy rate is now 35 so that's over 30 million square feet vacant and vacancy still growing as Lisa's end and companies shed space because some of that space that they're not using is not up for sublease everyone says what about AI is AI going to be the Savior the problem is that AI companies are only that's only about a million square feet of demand so one million out of 30 million is going to be absorbed by Ai and you know maybe that number grows over time over the next five ten years as we create some really big AI companies but it's just not going to bail out San Francisco right now the other thing is that you know VC backed startups are very demanding in terms of

their tenant improvements and landlords don't really have the capital right now to put that into the buildings and storms just are not the kind of credit worthy tenants that landlords really want so this is not going to bail anybody out there they said there are a ton of zombie office Towers especially in Soma and all these office towers are eventually going to be owned by the Banks which you have to liquidate them and then we're going to find out that these loans that they made are gonna have to be written off because the collateral that they thought was Blue Chip that was backing up those loans is not so blue chip anymore so I think we've got not just a huge

commercial real estate problem but it's going to be a big banking problem as basically people stop pretending you know right now they're trying to restructure loans it's called pretend and extend you reduce the rate on the loan but add term to it but that only works for so long if this keeps going if the market keeps looking like this I think we're gonna have a real problem and and that will be a problem in the banking system now San Francisco is the worst of the worst but they said that New York is similar and all these other big cities with empty office towers are directionally I'm in New York right now for the side connections conference and uh

it is packed the city is packed getting anywhere there's gridlock you can't walk down the street you got to walk around people every restaurant it is dynamic and then I talk to people about offices and they said people are staying in their houses in their tiny little New York apartments instead of going three train stops to their office they go to the office one or two days a week unless you're like JP Morgan or some other places that's that Drop the Boom but there's a lot of people still working from home the finance people have all gone back media people are starting to go back so there are three to five days here and the city is

booming contrast that I spent the last two weeks in San Francisco walking from Soma to the Embarcadero back dead nobody in the city it like literally a ghost town it's a real shame it's a real real shame I wonder if these this is the question I have for you sacks can they cut a deal can they go to like month to month rent sublets you know loosey-goosey just give people any dollar amount to convince them to come back is there any dollar amount because I'm looking for a space for the incubator in San Mateo I've been getting a ton of inbound but the prices are still really

high and I'm like how do I cut a deal here because shouldn't people be lowering the prices dramatically or are they all just pretending or will I get a lower Ritz or definitely coming down big time especially for space that sort of commodity and not that desirable but what's happening is according to the people I talk to is that the demand the people who actually are looking for new space they only want to be in the best areas and they want to be in the newest buildings that have the best amenities and so uh that sort of commodity office tower where there's barely anybody ever there like no one wants that um people would rather pay a higher rent I mean

the rent will still be much lower probably half the price of what it used to be but they'd rather pay a little bit more for that than get like a zombie office tower we can't talk about all this without talking about two cases tragically a shoplifter a criminal who was stealing from a drugstore in San Francisco I got shot and the video was released I'm sure you've seen in sacks and then here in New York everybody's talking about this one instance of a Marine trying to subdue a violent homeless person with two other people and it's on everybody's Minds here and Brooke Jenkins is not Prosecuting in San Francisco the shooter

they look like you know a clean shoot as they would say in the police business an appropriate and it's tragic to say it is but the person did charge the security guard the security guard did fear for their life and shot him so Brook Jenkins is not going to pursue anything but in New York City they're pursuing manslaughter for the person who did seem a bit excessive from the video it's hard to tell what the reality is in these situations any thoughts on it David these two cases in Two Cities yeah look I mean the only time you can get a source da excited about Prosecuting someone is when they act in self-defense or defensive others I mean

this Marine I guess Daniel penny is his name he was acting in defense of others the person who he stopped was someone with an extensive criminal record who had just recently engaged in a attempted kidnapping who had punched elderly people had pretty gnarly dozens of arrests in fact people on Reddit were talking about how dangerous this person was apparently a dozen years ago or so he was seen as more of like a quirky like Michael Jackson impersonator street performer street performer but something happened this is according to a Reddit post that I saw where something happened and there was some sort of psychological break and

then since then he's had dozens and dozens of primes and they just keep letting him loose through this revolving door of a justice system we have and now look no one likes to see him basically dying and yeah it's too bad it's horrible that that happened tragic I don't know though that if you're trying to stop someone I don't know how easy it is to precisely control whether you use too much force or not so I think Daniel penny has a strong case that he was acting in self-defense and defense of others and there were two other people by the way who were holding this person down there were three of them restraining him and what universally New Yorker said to me of all different

backgrounds was this is not a race issue the other I think one or two of the other people were people of color it was not a race issue and they're trying to make it into a race issue in both these cases and it's this is literally what happens it's just having been through this in New York in the 70s and 80s when you do so who's they who's they when you say trying to make it a bunch of protests on the street both in San Francisco and New York people protesting these as you know justice issues the fact is if you do not if you allow lawlessness for too long a period of time you get a Bernie gets situation and Bernie gets people can look it up in the 80s I was a kid when

it happened but they tried to mug somebody he had a gun he shot him and like this is what happens if you allow lawlessness for extended periods of time it's just you're basically gambling and what happened to Bernie Getz he got knocked guilty the case he got not guilty but I think he had an illegal gun so he was guilty of that the Bernie gets thing was really um crazy because at the time the climate in New York in this 1984 shooting there was a portion of people who I don't want to say they made him a hero but they made it a c this is what happens if you allow us to be assaulted

forever we're going to fight back at some point that was the vibe in New York when I was a child that was 14 15 years old when this happened he was charged with attempted murder assault what was the name of that vigilante group that used to walk the streets to something angels that was the um Guardian Angels Guardian Angels so it was so bad in the 80s and I actually almost signed up for the guardian angels I went to their headquarters because I was practicing martial arts and I thought I would check it out and um they had their office in Hell's Kitchen I didn't wind up joining but what they would do is they would just ride the subway they would wear a certain type of hat

and wear a guardian angel shirt and all they did was arrested the Subways a red beret and they would just ride the subways and you felt kind of martial arts were you taking Taekwondo I was in Taekwondo yeah this is before a mixed martial arts but they just rode the Subways and honestly I've been on the Subways with them many times you felt safe and it wasn't Vigilantes they were garden angels they used that term and many times they would do exactly what this Marine did which is try to subdue somebody who was committing crime I was I had two distinct instances where people tried to mug me you know riding the Subways in New York in the 80s

two distinct times and one was a group of people and one was one person like it was pretty scary both times I navigated it but it was yeah not pleasant in the 80s in New York can I say one more thing about this Daniel Penny Jordan Neely case so look at the end of the day this is going to be litigated I don't know all the details they're gonna have to litigate whether Daniel Penny's use of force was was excessive or not but but here's the thing is that the media has been falsely representing Jordan Neely by only posting 10 year old photos of him and leaving out crucial information this was a press report so again this is why I mentioned the whole Michael Jackson

impersonator thing is that the media keeps portraying nearly as this innocent harmless guy who is this like delightful Michael Jackson impersonator in truth he hasn't done that in more than a decade because again he had some sort of mental break and since then he's been arrested over 40 times including for attempting to kidnap a seven-year-old child and so the media is not portraying this case I think in an accurate way and I think as a result of that it leads to pressure on the D.A to prosecute someone who has I think a strong self-defense claim or you know maybe the D.A just wants to do this anyway and it gives the D.A cover

to do this Soros is I mean I know that we have this back and forth with this why is CNN being inaccurate do you think sucks they're basically cooperating with Alvin Bragg's interpretation of the case and they're trying to make the case against penny look as damning as possible yeah why don't they just take it straight down the middle it's a tragedy we have a screwed up situation here we got a mental health crisis and it's a tragedy for everybody involved on the Bernie get stuff he served eight of a 12 month sentence for the firearm charge and he had a massive 43 million dollar civil uh judgment against him in 1996 decade later it's just this is a

little different than the the Getz thing because pulling out a gun and shooting somebody well yeah no that's deadly intent yeah yeah that's that's the congratulations Penny he's a he's a trained Marine right he's trying to immobilize him he has to believe that he he's just trying to subdue yes Neely and so using a Chokehold to kill him that's an unfortunate consequence of what happened but he was trying to restrain the guy as far as we know right as far as we know yeah I mean tragedies all around we got to have Law and Order I I tweeted like I don't know why we still have the post office maybe we can make that like once a week and redo all of

that space and allow every American who's suffering from mental illness to check in to what used to be the post office you know maybe like once a week and obviously you can give those people very gentle Landings but I don't think we need Postal Service more than once or twice a week and then let you know let's reallocate some money towards mental health in this country where anybody who's sick who feels like they're violent or feels like they're suicidal can just go into a publicly provided facility and say I'm a sick person please help me this would solve a lot of problems in society we've got a mental health crisis we should provide

Mental Health Services to all Americans and it's a obviously easy thing for us to afford to do and if we had done that then this never would have happened exactly I mean literally you have sacks who wants to balance the budget saying hey this is something we're spending on we can all agree on this compared to the impact on society I don't think it would be a huge expense we would save money we'd save money because a city like San Francisco could become quite livable or New York if and then if God forbid these terrible school shootings you know if you avoid even one of them it's 30 people's lives or 10 people's lives

convert post offices what we need to do is stand up scaled shelters and it doesn't need to be done on the most expensive land in a given city outside of cities there is no expectation in Europe for like Paris or London to be affordable or Hong Kong to be affordable there are affordable places 30 minutes outside of those places where you could put these facilities I just want to ask one question to sax because I don't know and I know Saks is a little bit deeper into the center what is George soros's motivation for putting in these Lawless insane DA's like I understand that he was able to buy them they're low cost there's not a lot of money in them okay

I understand that that's table Stakes but what is his actual motivation for causing chaos in cities listen we can't know exactly what his motivation is but what he did is he went into cities where he doesn't live and flooded The Zone with money to get his preferred candidate elected his D.A now the reason he did that was to change the law and the way that he changed the law was not through legislatures the way you're supposed to operate but rather by abusing prosecutorial discretion so in other words once he gets his Soros D.A elected they can change the law by

deciding what to prosecute and what not to prosecute right and that's why there is so much lawlessness in these cities but that there's a better path you're saying yeah this is not the only way that Soros has I'd say imposed his values on cities that he doesn't live in where does he live I think he's a New York guy but I'm not sure but but he's gone far beyond that obviously in these elections but also he's done this across the world Soros has this thing called the open societies Foundation which sounds like it's spreading democracy and liberal values but in fact is fermenting regime change all over the world and he's been sponsoring and funding color revolutions

all over the world now if you like some of the values he's spreading then maybe you think that's a good thing but I can tell you that the way this is perceived by all these countries all over the world is it creates tremendous dissension and conflict and then they look at America and they basically say you know this American billionaire is coming into our country and he's funding regime change and it makes America look bad now he's doing this I think with the cooperation of our state department a lot of cases and maybe the CIA I don't know but this is why America frankly has hated all over the world as we go running around meddling in the in the

internal affairs of all these countries too is this guy all there like that was the other thing I heard is that he's not all there and the people around him are doing these kind of things in his organizations I heard something similar is that it's the idiot son Alexander who's really now pulling the strings would you would you allow source to speak at all in Summit would you interview yeah sure yeah let's have Sorrows or a son and they could explain themselves if they're so proud apparently there is an article that Alexander Soros has visited the White House like two dozen times during the Biden presidency this is an extremely powerful and connected person I mean I'm

sure he listens to pod okay we'll see you all next time this is episode one two nine of all in we'll see you on episode 130 bye bye we love you bye-bye to let your winners ride Rain Man [Music] we open source it to the fans and they've just gone crazy with it [Music] besties [Music] release [Music] [Music]