00:00:00
has anybody else seen duu and IMAX no
00:00:02
don't say anything oh don't say anything
00:00:04
about Dune all I want to say about Dune
00:00:07
no don't say it is fantastic and I want
00:00:10
to see it again in IMX that's it that's
00:00:12
all I'm saying is that it's worth seeing
00:00:14
twice I don't even want to know that you
00:00:16
think it's good it's overrated it makes
00:00:18
me oh stop both of you see he didn't see
00:00:22
it he didn't sax didn't see it no I saw
00:00:24
Dune Dune two yeah I saw it it's
00:00:26
overated okay stop stop okay stop
00:00:28
everybody you both of the not over
00:00:31
there's like five great scenes sxs the
00:00:35
scene stop stop you guys are
00:00:39
so let your winners
00:00:41
[Music]
00:00:46
ride and instead we open source it to
00:00:48
the fans and they've just gone crazy
00:00:50
with queen
00:00:54
of all right everybody Welcome to the
00:00:56
all-in podcast with me again the
00:00:58
chairman dictator moth poly hoaa David
00:01:02
saaks the Rainman yeah and sulan of
00:01:05
science David freeberg it's your boy
00:01:08
jcal here and we
00:01:11
have so much to go through the doj
00:01:15
dropped a Sherman X suit on Apple today
00:01:17
right as we were about to tape the
00:01:20
program seems like Thursdays is the big
00:01:22
news drop day now so this doj suit
00:01:24
outlines five alleged abuses and they
00:01:27
claim obviously that those abuses reduce
00:01:29
competition
00:01:30
while limiting consumer choice and
00:01:32
raising the prices that consumers pay
00:01:34
for their iPhone we talked about this
00:01:35
actually just a couple of weeks ago when
00:01:37
we talked about Peak Apple the five
00:01:39
categories are very quickly super apps
00:01:41
cloud gaming apps messaging apps
00:01:44
SmartWatches and digital wallets if you
00:01:47
don't know about super apps that's the
00:01:49
one that's maybe you haven't heard of if
00:01:51
you're listening to this in Asia they
00:01:53
mention how alipay we chat and PTM are
00:01:57
super apps what does that mean you get
00:01:59
like five or six different functions in
00:02:01
one app social media images purchasing
00:02:04
getting rides you know all that stuff
00:02:06
and when you have that you can move from
00:02:08
one platform to another super
00:02:11
easily and when it comes to messaging
00:02:13
apps we've all experienced the green
00:02:14
bubble friend so the main argument of
00:02:17
the lawsuit pretty interesting they
00:02:20
explain and it's a really well-written
00:02:22
document I read it this morning that
00:02:25
when Apple faces new competition instead
00:02:27
of lowering prices for consumers or
00:02:30
offering a better deal to developers
00:02:32
they would quote meet competitive
00:02:34
threats by imposing a series of
00:02:35
shape-shifting rules and restrictions in
00:02:37
its App Store guidelines and developer
00:02:40
agreements I've faced this every time
00:02:43
I've invested in an app startup they
00:02:44
complain about the goalpost moving by
00:02:47
Apple and Apple shares down about 3% on
00:02:50
the news today I'm sure everybody's got
00:02:52
some interesting thoughts on it shamat
00:02:54
you were talking about Peak Apple just
00:02:56
last week or the week before I think
00:02:59
what are your thoughts on the lawsuit
00:03:01
that dropped today to be honest I
00:03:03
haven't read it and I don't really
00:03:08
know like the odds of these things just
00:03:11
because it seems like some of this stuff
00:03:12
is so clearly
00:03:14
political and I think that these things
00:03:17
have seasons to it in the sense that
00:03:19
there are moments where these things are
00:03:21
more likely to go in the favor of the
00:03:23
company and more likely to go in favor
00:03:25
of the government the one thing I'll say
00:03:27
is that these guys have been losing
00:03:31
a fair number of these things so they're
00:03:34
kind of 5050 in their fight with epic
00:03:36
they've basically lost against their
00:03:38
fight with
00:03:42
Spotify they definitely are in a moment
00:03:45
where people are looking at the
00:03:46
profitability of these devices
00:03:50
as the source of their long-term cash
00:03:52
flow and I think they realize that
00:03:54
there's not a lot of growth because they
00:03:56
haven't entered a bunch of new markets
00:03:58
so the real question is knowing of that
00:04:00
did they do something beyond what
00:04:02
they've already always done to try to
00:04:05
lock people in and can they prove it I
00:04:07
think that that's really where the
00:04:08
government's case will come down to
00:04:11
because then it's clear that
00:04:12
Apple probably understood that their
00:04:15
Market was kind of solidifying and they
00:04:17
introdu
00:04:19
these blocks essentially into processes
00:04:22
that that force people to stay that's
00:04:23
probably bad news for them but I I don't
00:04:25
really know because I haven't read the
00:04:26
lawsuit yeah sax did you get a chance to
00:04:28
read it or do you have any thought
00:04:29
generally speaking I haven't read the
00:04:32
filings but I read some of the press
00:04:33
coverage about it I would say based on
00:04:36
the Press coverage that I read that
00:04:38
there's not really a Smoking Gun here at
00:04:41
least the Press hasn't reported one and
00:04:43
what I mean by that is let me give you a
00:04:45
couple of examples that were in the
00:04:46
press one is that apparently the filing
00:04:50
made a point about when Tim Cook was
00:04:53
confronted some time ago by a user
00:04:55
saying when I try to send a video by
00:04:59
text to someone with an Android phone it
00:05:01
just doesn't work very well it never
00:05:02
works it was a guy trying to send a
00:05:04
video to his mom and Tim Cook responded
00:05:07
well your mom should buy an iPhone it's
00:05:09
kind of like a throwaway comment by Tim
00:05:10
Cook probably not a great idea for him
00:05:11
to say that but that's an example of
00:05:13
what the lawsuit brings up another
00:05:15
example is that the Apple watch doesn't
00:05:18
work with Android
00:05:20
phones you know it only works with
00:05:22
iPhones
00:05:24
obviously again is that really a smoking
00:05:27
gun issue I don't think so I mean it's
00:05:30
this is Apple's whole strategy is that
00:05:32
all of its products work seamlessly
00:05:34
together and apple Hardware doesn't
00:05:36
really work with other operating systems
00:05:38
it never has so at least based on the
00:05:42
Press coverage I've yet to see a single
00:05:44
Smoking Gun example coming out of this
00:05:46
lawsuit now I think what those examples
00:05:49
highlight is what this lawsuit is really
00:05:51
about is your view of
00:05:54
interoperability what the government is
00:05:56
saying is that Apple needs to make its
00:05:58
apps and its devices more
00:06:01
interoperable with other ecosystems so
00:06:04
the watch needs to be interoperable with
00:06:07
Android Apple messaging needs to be
00:06:10
interoperable with Android messaging and
00:06:12
so on what the government is saying is
00:06:14
that apple is refusing to play ball with
00:06:17
other applications other operating
00:06:19
systems and that creates a monopolistic
00:06:21
Network effect what I think Apple would
00:06:24
say is no the fact is that Apple from
00:06:26
the outset has always tried to do
00:06:28
everything super nuts we've always done
00:06:31
the hardware and the software together
00:06:34
and that's what creates the magical
00:06:35
experience and so Apple's entire product
00:06:38
strategy is based on creating a
00:06:40
vertically integrated stack that goes
00:06:43
from Hardware to operating system to key
00:06:47
applications and I think apple has a
00:06:49
point saying if you try to make us
00:06:51
unwind all of that the product is not
00:06:53
going to work as well it's not going to
00:06:54
be the same product experience that
00:06:55
everyone's used to so again I think that
00:06:58
how you view interoperability at the
00:07:00
core of this lawsuit I think that both
00:07:03
the government and apple make good
00:07:05
points about that and I'm a little bit
00:07:07
skeptical right now that the government
00:07:09
has a Smoking Gun at least one hasn't
00:07:12
been reported in the press and so I'm a
00:07:15
little bit doubtful right now that the
00:07:16
government's gonna be able to win this
00:07:17
case freeberg any thoughts yeah I mean I
00:07:20
think it's a function of consumer choice
00:07:23
if consumers want to have this closed
00:07:26
system where they can iMessage with
00:07:28
other iMessage app app holders and not
00:07:31
be able to have a seamless integrated
00:07:33
messaging experience with Android users
00:07:36
they'll be happy if they're annoyed
00:07:37
they'll switch over to an Android so you
00:07:40
know this has always been
00:07:43
Apple's orientation I I think I
00:07:45
mentioned this to you guys I've been on
00:07:47
a Mac since 1984 when the Mac original
00:07:49
came out I still have my first Mac
00:07:51
original by the way I keep it in my
00:07:52
office on my
00:07:54
shelf and Apple's you know always had
00:07:57
like a really hard focus on the software
00:07:59
that they make available to their users
00:08:01
to create an incredible product
00:08:03
experience so I don't know if this is
00:08:05
necessarily about Market abuse as much
00:08:08
as it is a consumer choice if the
00:08:10
consumers didn't like the product they
00:08:12
didn't like the fact that things were
00:08:13
not available that things were very
00:08:15
expensive they would go elsewhere and
00:08:17
you do see that in segments of the
00:08:18
market and as we talked about a few
00:08:20
weeks ago you do see that xus most of
00:08:23
the smartphone market is actually
00:08:25
Android driven yeah so this is a premium
00:08:27
product that people are willing to pay a
00:08:29
premium price for even if that means
00:08:30
limited access I think developers are
00:08:32
frustrated that they can't access this
00:08:33
premium Market but I'm not sure that
00:08:36
Apple necessarily should be
00:08:39
coerced to service developers when at
00:08:42
the end of the day the consumers are
00:08:43
paying for the product and to your point
00:08:46
like is it is it really the case that a
00:08:48
green bubble versus a blue bubble is
00:08:49
really that limiting you know it's not
00:08:52
the world an it's annoying but the world
00:08:55
yeah I would say apple has completely
00:08:58
abused their power every chance they get
00:09:00
in order to capture this 30% from the
00:09:02
app store they blocked the ability for
00:09:05
you to use Audible or you know other
00:09:08
marketplaces to buy books and media they
00:09:11
blocked the ability to use other media
00:09:13
players like VLC they blocked the
00:09:15
ability to use browsers and if you leave
00:09:19
Apple unchecked they just keep abusing
00:09:21
it and so I think this is kind of one of
00:09:23
those lawsuits that's like if we don't
00:09:25
stop them they'll just keep making it
00:09:27
worse and when people file complaints
00:09:29
then Apple will back down which they did
00:09:31
on media players and and they'll stand
00:09:34
down if you think about this from the PC
00:09:37
era to now then you can see how pricious
00:09:39
their behavior is when you buy a laptop
00:09:42
the idea that you would have to go
00:09:43
through an app store and pay a $30 tax
00:09:46
to put a piece of software on your
00:09:48
computer would seem insane 30% 30 yeah
00:09:51
30% tax on your which would seem insane
00:09:53
like if you buy a laptop you should be
00:09:55
able to put whatever software you want
00:09:56
on it but they did this magic trick
00:09:58
where they said no if you want to put
00:10:00
software on your phone it has to go
00:10:02
through the App Store it has to be 30%
00:10:04
and that's really the anti-competitive
00:10:06
thing here I think this will be settled
00:10:09
and if you look at the different issues
00:10:10
here I think this is going to be
00:10:12
actually a huge win for Apple because if
00:10:14
iMessage were to exist on Android they
00:10:17
would get all of those users to download
00:10:19
iMessage and they would have all those
00:10:21
users if they made the watch compatible
00:10:22
they would open up many more people to
00:10:24
buy the watch and you would get more
00:10:25
watches I think that Apple's thinking
00:10:27
way too short term about the the lock in
00:10:29
here and they should you know allow more
00:10:32
of these apps allow more watches and
00:10:34
they should allow the gaming thing I
00:10:36
think that they're being petty I don't
00:10:38
think anything's going to happen here
00:10:39
because it's taken them five years to
00:10:42
file there's a at least a 50% chance
00:10:46
that the administration is going to turn
00:10:47
over which means that this lawsuit
00:10:49
changes or goes away entirely and then
00:10:52
even if it does kind of proceed it's
00:10:53
going to take 10 years of very detailed
00:10:56
Arguments for something to happen and
00:10:58
frankly probably in 10 years from now
00:11:00
we've already moved to a different
00:11:01
compute platform and this is not going
00:11:02
to matter I mean there there is the coin
00:11:05
toss of what the Trump Administration
00:11:06
would do here for sure that's valid but
00:11:09
I think these things will get settled I
00:11:11
think the settlement will be iMessage
00:11:12
releases they allow the see the thing
00:11:15
about the Apple watch it's not just
00:11:16
sacks that they're allowing it on
00:11:18
Android it's would you allow Android
00:11:20
watches to connect with the SDK directly
00:11:23
into the IOS operating system which they
00:11:26
block you from doing I think they should
00:11:28
just have a little switch in your
00:11:30
freedberg settings that allows you to
00:11:32
flip it and say I take responsibility
00:11:36
for allowing third party stores and I
00:11:38
want to be able to load any software
00:11:40
it's your computer I don't think the
00:11:42
government should should regulate I
00:11:43
don't think the government should be
00:11:44
able to mandate I think they yeah I mean
00:11:47
I I like the fact everyone keep looking
00:11:49
to the government to do things that they
00:11:51
want as a consumer make your choice with
00:11:53
your dollars make your vote with the
00:11:55
product and service you want to buy
00:11:56
instead of running to the government and
00:11:58
asking the government to come and do
00:11:59
stuff you feel that way about price
00:12:01
fixing what do you mean price fixing in
00:12:03
what context if like a group of people
00:12:05
price fix the cost of a phone or like
00:12:07
let's say the 30% from the app store
00:12:09
which just happens to be the same
00:12:10
between two app
00:12:11
stores do you think price fixing is
00:12:13
something valid for the government to
00:12:15
think it's not the same do you think
00:12:17
price fixing is something the government
00:12:18
should come in on it's the question if
00:12:20
there's limited access to products in a
00:12:22
market and all the participants get
00:12:24
together to set the price in the market
00:12:27
I do think that's anti-competitive and
00:12:28
that's there a good role for the
00:12:29
government to play there but Google and
00:12:31
apple don't price fix because Android is
00:12:35
an Open Access system you can put any
00:12:36
application you want any way you want
00:12:39
there are several app stores to put
00:12:41
Android apps on your Android device
00:12:44
Google operates an app store called
00:12:45
Google play but there are other app
00:12:47
stores you can go to as well and they
00:12:49
all have different prices and Google's
00:12:50
App Store costs by the way are not apple
00:12:53
and they're not 30% and we talked about
00:12:55
this last time I'll pull it up for you
00:12:56
again it's like 15 to 12 going down it's
00:12:58
a sliding scale so there is competition
00:13:00
in that market generally I think the
00:13:02
point about if there's limited access to
00:13:05
a market for product for consumers and
00:13:07
everyone in that market gets together
00:13:08
and sets a price that is
00:13:10
anti-competitive and there's a good role
00:13:11
for government to play there but I don't
00:13:13
think that having the government come in
00:13:14
and say I want this feature to have this
00:13:16
button and this flip in my app is is
00:13:19
what I want my government doing I want
00:13:20
my government protecting me from
00:13:23
crime and you know defending the country
00:13:25
and I don't want all the other stuff
00:13:27
that the government does to drive costs
00:13:28
up which is generally what the
00:13:30
government does so what do you think the
00:13:31
role of the government is here in terms
00:13:33
of anti-competitive especially in the
00:13:36
case I'm curious your thoughts on a
00:13:37
duopoly like if you look at Google
00:13:39
search Monopoly pretty easy to
00:13:41
understand like hey they've got 90% but
00:13:43
here you got two players who have you
00:13:45
know roughly 50% of the market each or
00:13:46
60 40 depending on where you are so what
00:13:49
what is the the the proper role of
00:13:51
government here and is this an
00:13:54
overreach no I mean I actually think
00:13:56
just to give the government lawsuit some
00:13:58
credit I actually think it's good to
00:14:00
hold Apple's feet to the fire and make
00:14:02
sure they're not engaging in
00:14:03
anti-competitive tactics one of the
00:14:05
things I've said previously on the show
00:14:08
is that I think the government's been
00:14:09
making the mistake of going after
00:14:11
bigness for its own sake and I don't
00:14:13
think that bigness in and of itself is
00:14:16
bad it might be a reflection that the
00:14:17
company's done an incredibly good job
00:14:19
and that's why it has a lot of customers
00:14:21
and a lot of market share what I've said
00:14:23
is I think the government should prevent
00:14:25
anti-competitive tactics so I think that
00:14:27
this lawsuit is good in the sense that
00:14:29
it's targeted at the right types of
00:14:32
things it's not just going after Apple
00:14:33
because it's market cap is so big it's
00:14:35
going after specific things that it's
00:14:37
doing to kind of lock in its Network
00:14:40
effect now the problem that I see is
00:14:42
just that the examples that we've been
00:14:44
given so far from the lawsuit just don't
00:14:45
seem that compelling again I'm kind of
00:14:49
waiting to find out where's the Smoking
00:14:50
Gun here but to freeberg point I mean
00:14:53
look I don't think you can just say that
00:14:56
if you don't like what Apple's doing go
00:14:57
to a different platform because because
00:14:59
the point is that there's only two
00:15:01
choices and they can both engage in
00:15:05
anti-competitive tactics and they can
00:15:06
both create lock in but sax there are
00:15:09
not just two choices Android is an open
00:15:11
operating system Google has a fork of
00:15:13
Android that they put on certain
00:15:15
smartphones there are other smartphone
00:15:17
makers that use other Forks of Android
00:15:19
so Android has enabled and the reason
00:15:22
Google bought Android was to provide a
00:15:24
counterbalance to exactly the dynamic of
00:15:27
one handset manufacturer having an
00:15:30
operating system that could control
00:15:32
access to the internet and to apps and
00:15:33
so Google open sourced Android many
00:15:36
handset manufacturers use their own
00:15:38
versions of Android to put their own
00:15:40
experience on the phone and then Android
00:15:42
users can put apps from anywhere they
00:15:44
want and other companies offer app
00:15:46
stores so there are many app stores to
00:15:48
go to and there are many different
00:15:49
handset manufacturers and a lot of
00:15:51
people I think in correctly look at the
00:15:54
operating system landscape in Mobile and
00:15:56
say oh there's Android and there's iOS
00:15:58
but Android is an open platform and
00:16:00
there are many different Forks of it run
00:16:02
by many different companies so I think
00:16:04
that it is actually a very competitive
00:16:05
market like we talked about last week I
00:16:07
think close to 80% of global handsets
00:16:09
are run on Android Forks so you know
00:16:12
it's not necessarily the case that there
00:16:14
are only two choices and Google does not
00:16:16
control Android there are many
00:16:18
developers that contribute to open
00:16:19
source there Google has their own Fork
00:16:21
that they do a lot of work on but anyone
00:16:23
can take their own fork and do I mean
00:16:24
you guys can you know when you when you
00:16:26
um when you boot up a Samsung or Sony TV
00:16:29
that's running Android and that's
00:16:30
running their own version of Android are
00:16:32
you arguing that Apple doesn't have
00:16:33
Market power in the US they do xus
00:16:36
they're you know yeah I mean I think
00:16:38
sure we're talking about the US market I
00:16:40
mean I think the US market they're about
00:16:42
are they about 5050 we pulled this chart
00:16:43
up last week but I more in the US now it
00:16:45
might be 55 45 right now yeah something
00:16:48
like that the issue is the cat and mouse
00:16:50
that apple is really good at playing
00:16:52
they will push their advantage and so we
00:16:54
see the five things that the justice
00:16:55
department wants to go after here but
00:16:57
the App Store is obviously one of them
00:16:59
and before that I mentioned some of the
00:17:01
other categories where they do this
00:17:02
abusive power they basically keep it up
00:17:04
as much as they can until they get
00:17:06
checked and I I think interoperability
00:17:09
is actually in the long term going to be
00:17:10
in their best interest they use
00:17:12
interoperability when they need it so
00:17:14
Apple music and iTunes they allow you to
00:17:16
use Windows and Android it's only when
00:17:19
they see an advantage and that's really
00:17:20
the hypocrisy of apple and I think it's
00:17:23
really important that the industry stand
00:17:26
for more interoperability and the
00:17:28
ability for to load any software that
00:17:30
you want on your device this is a
00:17:31
compute platform the ability for them to
00:17:34
block you from installing your own apps
00:17:35
on it I think it's a really terrible by
00:17:38
the way Jason what you're saying is a
00:17:39
very fair statement from a consumer
00:17:41
point of view and from an industry point
00:17:43
of view and that's where that voice
00:17:44
should come from to force in the
00:17:46
marketplace changes from Apple but
00:17:49
having the government do this and having
00:17:51
the government involved I think that'ss
00:17:52
all these bad they're representing the
00:17:54
people somebody did it they asked Tim
00:17:55
Cook to do it and Tim Cook said pound
00:17:56
salt buy a phone for your mom no but
00:17:58
aren aren't they representing the people
00:18:00
like how do you expect the people to
00:18:01
organize like file a class action no I
00:18:04
think if enough companies boycott the
00:18:06
Apple platform and tell consumers to
00:18:07
boycott they'll I mean consumers can
00:18:09
make decisions developers can make
00:18:11
decisions whether or not they want to
00:18:12
develop for Apple no that's not
00:18:14
realistic you know that not real that's
00:18:16
naive come on I don't think I want the
00:18:17
government stepping in to tell private
00:18:19
companies what to do because customers
00:18:21
don't like what they're doing wait wait
00:18:23
do you think that the government should
00:18:24
stepped in to prevent Microsoft from
00:18:26
taking over the browser the whole
00:18:27
Netscape case
00:18:30
bundling I don't know the case well
00:18:32
enough I mean I remember it but I don't
00:18:34
want to speak I don't want to speak
00:18:36
definitively there was a substantial
00:18:38
chance that if the government didn't
00:18:39
step in then Microsoft would have
00:18:41
extended their Windows operating system
00:18:43
Monopoly they did have an AB to the
00:18:44
Monopoly they did have a monopoly on
00:18:47
personal compute OS at the time well it
00:18:48
wasn't an absolute Monopoly I
00:18:51
mean you were using Macintosh at the
00:18:53
time that's what I'm saying at the time
00:18:55
Macintosh was like 5% of the market it
00:18:57
was under 10% at the time yeah it was
00:18:58
about four or five% at that time
00:19:01
Microsoft was
00:19:02
95% of the personal Computing market so
00:19:04
they did have an absolute Monopoly on
00:19:06
that market you had a consumer Choice it
00:19:07
wasn't a very good consumer choice but
00:19:09
you still a consumer choice you could go
00:19:11
use MacIntosh and you did you were using
00:19:14
lot of people could afford it yeah okay
00:19:16
but the point is that Microsoft had
00:19:18
substantial Market power and what they
00:19:20
were in the process of doing was the
00:19:22
smart thing from a business standpoint
00:19:24
which is you take your operating system
00:19:26
Monopoly you use that to extend into the
00:19:28
browser you kill Netscape you take over
00:19:30
with Explorer you bake Explorer into
00:19:33
your Windows operating system so the two
00:19:35
things are basically the same then from
00:19:37
there hold on from there you leverage
00:19:39
your control of the of the browser in
00:19:41
the home screen to control search okay
00:19:44
and so you think about like all the
00:19:45
dominoes that would have fallen if
00:19:47
Microsoft had continued maybe if like
00:19:49
Bill Gates had continued being CEO and
00:19:52
there would have been no Google there
00:19:53
would have been no Yahoo they would have
00:19:54
controlled the internet they would have
00:19:56
controlled the internet and they were
00:19:57
actively you left out a big piece of
00:19:59
sax which you'll remember the second I
00:20:00
say it they were trying to break HTML in
00:20:03
Open Standards by creating ActiveX and
00:20:06
using all funky Cod right and so you
00:20:09
have to understand these companies will
00:20:11
if you give them an inch they'll take
00:20:12
the mile and that's exactly what Apple
00:20:15
does consistently they consistently try
00:20:18
to squeeze I think it's great saaks is
00:20:20
Right tactics is the way to go after
00:20:22
this companies these are five recent
00:20:24
tactics I think the the government's
00:20:26
going to win changing three of these and
00:20:28
that's win that's a win for me yeah the
00:20:30
mobile operators tried to do the same at
00:20:31
that same time if you guys remember
00:20:33
Verizon yes singular they they you could
00:20:37
only put their apps if you bought it
00:20:39
through their store yeah on their
00:20:41
operating system on the mobile phones
00:20:42
that they contracted to have made so
00:20:45
they all had their own custom version of
00:20:47
the handset manufacturers OS which all
00:20:50
and then they did rev share back with
00:20:51
the manufacturers and that's why Android
00:20:53
was acquired it wasn't actually at the
00:20:55
time to compete with Apple Android was
00:20:58
required to compete with all the mobile
00:20:59
phone companies that were trying to
00:21:01
block access to the internet and apps
00:21:03
well Google wanted to maintain its
00:21:04
search Monopoly let's be honest they
00:21:06
that's why they bought it they knew
00:21:08
users would be there and they wanted to
00:21:09
have the default they want to have the
00:21:11
access to the internet block Yeah by
00:21:13
this by the handset manuf they want it
00:21:15
to be the default search browser in the
00:21:16
app which is what you have to agree to
00:21:18
by the way so if you want to talk about
00:21:19
perniciousness and heavy-handedness if
00:21:21
you have an Android you and you want to
00:21:23
use the Android updates from Google
00:21:25
corre you have to give the bundle of
00:21:27
apps if you want the and support from
00:21:29
Google you can for it but then you don't
00:21:31
get their support which then breaks your
00:21:33
phone if you want their version that's
00:21:35
right yes yeah so you know there's a
00:21:37
little cleverness here I think so you
00:21:39
have two basic ecosystems in Mobile it
00:21:41
is a duopoly and both them Advantage
00:21:43
themselves in ways that grow over time
00:21:48
and I think that if Apple were
00:21:51
completely left unchecked it would
00:21:53
figure out ways to boil the Frog and
00:21:55
keep extracting more and more value out
00:21:56
of Downstream applications tot they boil
00:21:59
we paying 1,600 or phone now how are we
00:22:01
paying 1600 or phone so look I think
00:22:03
it's I think it's good for the
00:22:04
government to hold their feet to the
00:22:05
fire but here here's the thing that the
00:22:07
government's lacking is again that
00:22:10
example they can point to that's really
00:22:11
compelling I mean with the Microsoft
00:22:13
Netscape thing it was really obvious
00:22:15
what they were doing right the browser
00:22:17
was the gateway to the whole new
00:22:18
platform which was the internet and if
00:22:20
Microsoft could make that a feature of
00:22:24
the operating system their dominance
00:22:25
would extend into the new Computing
00:22:26
platform but you remember how they did
00:22:28
it Apple watch is just not the same
00:22:30
thing the Apple watch is kind of a an
00:22:32
appendage of your phone that most people
00:22:34
don't even want so it's hard to point to
00:22:37
something do you remember saxs how they
00:22:39
were getting the browser built in they
00:22:42
were going to the oems the Dells of the
00:22:44
world the HPS and saying if you want
00:22:46
this price for Windows you have to
00:22:49
include the browser on the desktop it
00:22:50
has to load it has to ask for your
00:22:52
credentials all this stuff or you can
00:22:54
pay $150 for Windows um if you want it
00:22:58
with without the browser bundled so they
00:23:00
use this pricing to get the oems to to
00:23:03
bundle it and that that was where well
00:23:05
isn't that what Google's doing with
00:23:06
Android effectively exactly is like it's
00:23:09
exactly right you can have your own
00:23:11
version without Google search if you're
00:23:14
willing to put up with all these
00:23:15
headaches and maintain an operating
00:23:18
system update the operating system yeah
00:23:20
it's exactly what they're doing so
00:23:21
anyway I think three out of five of
00:23:23
these get settled and it'll be good for
00:23:24
consumers ultimately I I I would not
00:23:27
Financial advice but I think that
00:23:29
Apple's going to be able to manage this
00:23:30
I'd buy the stock I may buy more of the
00:23:32
stock I think that this will be good for
00:23:34
them long term all right listen going
00:23:37
even deeper into apple and this Google
00:23:40
relationship big questions emerged this
00:23:42
week as Bloomberg reported that Apple
00:23:44
was speaking to both Google and open AI
00:23:47
about powering certain AI features on
00:23:50
iOS specifically according to the
00:23:52
article this deal between Apple and
00:23:54
Google seems much more likely than the
00:23:56
open a one and could happen this year as
00:23:58
you know we've talked about it on this
00:23:59
show before Google has been the default
00:24:01
search engine on iPhone for I think over
00:24:04
a decade now and uh Google pays Apple 20
00:24:07
billion a year that's pure profit for
00:24:09
Apple U it's unclear what features they
00:24:11
would power with Google Gemini maybe
00:24:15
it's like the search deal and Google
00:24:16
Gemini's on there maybe it's built in
00:24:19
and Apple has been building its own llm
00:24:22
it's called Ajax they've been doing some
00:24:23
other open source stuff called Maggie
00:24:26
what do you think chath you were talking
00:24:27
about this on Twitter you think you had
00:24:29
a pretty good tweet and a pretty strong
00:24:31
position if apple is going to use Gemini
00:24:35
what does that say to you about Apple
00:24:38
and their view of the future I think
00:24:39
it's them giving up this is the most
00:24:42
consequential new development in
00:24:44
technology and compute in probably 20
00:24:47
years 30 years and so to be spending
00:24:51
tens of billions of dollars of R&D and
00:24:54
to not have enough allocated to this so
00:24:57
that you have a legitimate path forward
00:24:58
to do it yourself I think is a little
00:25:00
inexcusable
00:25:01
[Music]
00:25:03
actually it's akin to IBM in the 70s
00:25:06
going to Microsoft and and basically
00:25:09
asking them to build the operating
00:25:11
system for them when you're such a
00:25:13
dominant company in such a dominant
00:25:15
position but you abdicate your
00:25:18
responsibility to innovate I think that
00:25:20
that's a really bad situation for a
00:25:24
company to be in was like Yahoo adding
00:25:26
Google Search right and then by the way
00:25:28
on the heals of like turning off cars
00:25:30
and and losing these antitrust issues in
00:25:35
Europe and then being sued by the doj
00:25:38
here to then be in a licensing
00:25:40
discussion with a third party for such a
00:25:42
critical technology I think is just says
00:25:46
not very good things about the state of
00:25:47
the company freeberg your thoughts on
00:25:50
this potential deal we don't know what
00:25:52
features this would power I don't know
00:25:54
if it's Siri or it's just image editing
00:25:57
or search an extension of search maybe
00:25:59
giving an answer I have no idea it seems
00:26:01
to me like there's if if Apple's doing
00:26:04
the right thing which I'm sure they are
00:26:05
they're probably building their own
00:26:07
alternative platform here they realize
00:26:10
it's going to take them some time in the
00:26:11
interim they want to have a stop Gap and
00:26:13
my guess is by going to Google they're
00:26:15
probably going to get paid instead of
00:26:17
having to pay someone else for the
00:26:19
technology because Google will realize
00:26:22
some benefit from getting users over to
00:26:25
search results and seeing ads so Google
00:26:27
will probably benefit and pay them
00:26:29
instead
00:26:30
of them having to go pay someone for
00:26:33
access to some technology that consumers
00:26:35
might want access to sax any thoughts
00:26:37
here I'm sure apple is goingon to make
00:26:38
an investment in building their own
00:26:39
models here yeah I mean who would look
00:26:42
at the launch of Google Gemini and say I
00:26:46
want that that launch was at total
00:26:49
Fiasco another world company I think it
00:26:52
fit the Apple philosophy pretty good I
00:26:54
how woke would Tim Cook have to be to
00:26:56
look at the launch of Gemini and say oh
00:26:58
yeah I don't see anything wrong there
00:26:59
you got that exactly right
00:27:01
absolutely I want that yeah Siri show me
00:27:04
the president of the United States I
00:27:06
mean apparently Tim Cook is the only
00:27:08
person on Earth who is impressed with
00:27:09
the launch of Google Gemini I mean I
00:27:11
can't believe the story is true it's
00:27:13
just it can't be true I'm so excited
00:27:15
today to launch Gemini on stage here iOS
00:27:20
27 Oh my God can you imagine him on
00:27:23
stage doing searches live the story
00:27:25
can't be true because it' be so
00:27:27
strategically dumb like said even if
00:27:29
Google Gemini were great you'd still
00:27:31
want to invest in having your own thing
00:27:34
because it's such a strategic technology
00:27:36
why would you ever Outsource it to your
00:27:38
main competitor but in this case you
00:27:40
know that Gemini was terrible it was a
00:27:42
fiasco and so the story makes no sense I
00:27:45
just can't believe it's true it's
00:27:47
probably people knocking on each other's
00:27:48
doors they spent $30 billion last year
00:27:51
on R&D 30
00:27:53
billion Apple to be clear they spent $30
00:27:57
billion on R&D what did they spend it on
00:28:01
catering I mean you got to think Apple
00:28:03
vision is a big piece of that right
00:28:06
chips I guarantee you like half of that
00:28:09
is like the M3 M4 30 billion like not a
00:28:12
couple crumbs fall out of somebody's
00:28:14
pocket and so there's 50 million
00:28:15
allocated to just like you know mucking
00:28:18
around with llama or mucking around with
00:28:20
mistol what if they took project Titan
00:28:23
the car car deal that was 10 billion
00:28:26
supposedly they had spent on that and if
00:28:28
they put that towards
00:28:29
AI Microsoft again again it goes back to
00:28:32
the to the people I don't think I don't
00:28:33
think the the person in charge of the
00:28:35
windshield wipers for project Titan is
00:28:37
going to be the person that figures out
00:28:38
how to land a really killer llm yeah
00:28:41
that's a different skill set but it's
00:28:43
not even that expensive I mean's a
00:28:45
mechanical engineer and one's a computer
00:28:46
scientist so these are not the same
00:28:48
people they're not fungible that way I
00:28:50
mean I guess the question here is Apple
00:28:52
capable of building on a culture basis
00:28:54
freedberg this type of software they're
00:28:57
a hardware company it's not you're
00:28:59
standing on the shoulders of the whole
00:29:00
open source movement all you have to do
00:29:02
like jam said all you got to do is take
00:29:03
the latest mistal model or jump on
00:29:06
hugging face and start working I mean
00:29:09
you're not starting from zero because of
00:29:10
Open Source not not only you're not
00:29:13
starting from zero not only do you have
00:29:14
the foundational models that are
00:29:15
excellent and available in open source
00:29:17
you have probably the most prolific set
00:29:19
of training data that has ever been ex
00:29:21
created in the entire world to make
00:29:22
these models kickass yeah you have all
00:29:25
the Apple photos archive I wonder if in
00:29:27
their ch see that's the thing is their
00:29:28
terms of service is so privacy based I
00:29:30
wonder if they could even use that
00:29:32
information and I just think look at the
00:29:34
end of the day the Apple brand is still
00:29:36
exceptional and so if you're given a $10
00:29:38
million a year job at Google versus a
00:29:41
$10 million a year job at meta versus a
00:29:44
10 million $10 million a year job at
00:29:47
Apple if you're like one of these killer
00:29:49
AI people that get these kinds of offers
00:29:51
I got to presume that Apple gets their
00:29:53
fair share of these people yeah you
00:29:55
would think and even in the worst case
00:29:58
you see Microsoft doing like pretty
00:30:00
heavy handed deals with companies like
00:30:03
open Ai and just this week with
00:30:05
inflection so it's not as as as if these
00:30:07
deals can't be done right and so it just
00:30:11
kind of like leaves I don't know it's
00:30:13
just it's quizzical to spend that much
00:30:15
money to not necessarily be willing to
00:30:18
compete on the human capital to not
00:30:20
necessarily be in the market acquiring
00:30:23
these
00:30:24
businesses I don't know it's just it's
00:30:26
just a question mark like what's going
00:30:27
on over there Jam ask what's going on
00:30:28
over there we have some inside footage
00:30:30
Nick you want to play
00:30:36
tape what's going on
00:30:41
here what are we
00:30:49
watching I hope we didn't keep you
00:30:53
waiting mother nature mother nature well
00:30:57
welcome to Apple how how was the weather
00:31:00
getting
00:31:05
in oh she's controlling the weather was
00:31:07
however I wanted it to be yeah they did
00:31:09
this couple of but but this reflects
00:31:11
their self-image I mean they released
00:31:13
this they care about the plan no it's it
00:31:16
reflects that they think somehow this is
00:31:18
an accurate reflection of the way they
00:31:19
do
00:31:20
meetings no I think it was the um point
00:31:23
they were making is they were trying to
00:31:24
do a skit about like how they're doing
00:31:26
less packaging and including that that
00:31:29
skit was to tell you that you're not
00:31:30
getting a charger in your next iPhone
00:31:32
because they they don't they want to say
00:31:33
didn't it was
00:31:34
cringe I thought the intent was maybe
00:31:37
it's a little cringe but yeah I it a
00:31:39
little cring but I do appreciate that
00:31:41
they are doing sustainable products and
00:31:44
not putting as much stuff in landfills
00:31:46
so I think they should get a lot of
00:31:47
credit for that what I do think about
00:31:48
this deal that's really interesting is
00:31:50
it's sort of cementing the Google and
00:31:52
the
00:31:53
Apple alliance against Microsoft and
00:31:56
Microsoft has big you know AI ambition
00:31:59
so this is kind of interesting if you
00:32:01
lock in the duopoly of Google and apple
00:32:04
and then you lock in Google search
00:32:06
Monopoly and you start fighting
00:32:08
Microsoft I think that's what we're I
00:32:10
think that's what's probably going on
00:32:11
here is they're trying to figure out how
00:32:13
do we keep Microsoft away from running
00:32:16
away with this all right we covered that
00:32:18
huge Nar lawsuit back in December and
00:32:20
there has been a settlement big news for
00:32:23
the National Association of Realtors
00:32:25
they've agreed to pay $418 million
00:32:28
settlement last week and federal jury
00:32:30
found that the n and several large real
00:32:33
estate brokerages conspired to
00:32:35
artificially inflate agent commissions
00:32:38
the settlement is pretty pretty big deal
00:32:40
people are freaking out about it as you
00:32:43
know the seller of a home pays the
00:32:46
buyer's agents commission so you have a
00:32:48
buyer and a seller 6% fee typically
00:32:52
sometimes it's five but they split that
00:32:53
3% to the buyer and the seller but the
00:32:56
seller is paying that 3% to the buyer
00:32:59
now that can't be listed in the MLS
00:33:01
anymore and that deal cannot be done
00:33:03
ahead of time
00:33:05
buyers are responsible for paying their
00:33:07
agents commissions going forward so if
00:33:09
you bought a million dollar house and
00:33:10
you were the buyer you would pay 30,000
00:33:12
to your buyer's agent or you would
00:33:15
choose to not have an agent or you would
00:33:18
choose to negotiate it and you have to
00:33:20
have a signed contract this is a crazy
00:33:24
just shocking shock to the system
00:33:26
according to most people who are in it
00:33:28
I've seen a lot of real estate folks who
00:33:30
are saying this is going to be healthy
00:33:32
because you have this you have to have
00:33:33
this conversation between the buyers
00:33:35
agent and the
00:33:36
buyer but Commissions in the United
00:33:39
States are hundred billion doll a year
00:33:42
and one analyst projected the lawsuit
00:33:44
could lead to a 30% reduction in
00:33:46
commission payments and that would
00:33:49
eliminate about half of the 1.6 million
00:33:51
active NRA members from the industry you
00:33:53
had a lot of feelings on this fredberg
00:33:55
when we talked about it a couple of
00:33:56
months ago what are your thoughts on
00:33:58
this settlement is anything going to
00:33:59
change is this as groundbreaking and
00:34:02
shocking as people seem to think it is
00:34:05
well I would take this
00:34:08
settlement along with a lot of the
00:34:11
developments and advances in
00:34:15
AI as being the moment of catalyzing
00:34:18
real change in the residential real
00:34:20
estate agency
00:34:21
industry it's an industry that's been
00:34:24
known to have fixed
00:34:26
pricing and be very expensive to
00:34:29
Consumers a real tax on the system and
00:34:32
it's largely been wrapped around this
00:34:35
idea of mitigating your liability
00:34:38
reducing risk servicing the customer
00:34:41
many of those aspects over the last
00:34:44
couple of years have been largely
00:34:46
standardized through forms digitized
00:34:48
because so much of this information is
00:34:50
no longer going to get paperwork from
00:34:51
the courthouse but a lot of the
00:34:53
information sits digitally and can be
00:34:54
accessed in a democratized way and the
00:34:57
fact that so much of the service and
00:34:59
Discovery reading through documents
00:35:01
understanding what they mean and what
00:35:02
they say can be automated through Ai and
00:35:04
llms much of this is kind of coalescing
00:35:07
around what I hope and expect will be a
00:35:09
more seamless automated direct
00:35:12
Marketplace for consumers the challenge
00:35:15
is that most consumers put most of their
00:35:18
personal net worth into their home and
00:35:21
so it is where most people's net worth
00:35:23
is tied up and so because it is such a
00:35:25
sensitive investment and it is their
00:35:26
entire
00:35:28
savings they want to have a trusted
00:35:30
advisor by them so it's going to take
00:35:32
some time before that trusted advisor
00:35:34
becomes some piece of software but I do
00:35:37
think that software is going to play
00:35:38
more and more of a role in providing
00:35:41
advisory tools and services to consumers
00:35:43
in this transaction Marketplace and
00:35:45
that's only going to catalyze
00:35:47
and accelerate the fee reduction I do
00:35:50
project and I do expect that much of
00:35:52
what is charged on a commission basis on
00:35:54
a percent of home value today will
00:35:56
change to being a fixed Fe andk 10K for
00:36:00
your buyer AG different services so you
00:36:02
can have someone do ackart do the
00:36:04
disclosure diligence for me for 5K you
00:36:07
know negotiate the purchase for me for
00:36:09
10K and you as a consumer will start to
00:36:11
pick from a a menu of the services that
00:36:14
you want to have rendered for you and
00:36:15
things that you're comfortable doing
00:36:16
yourself I don't need someone to
00:36:17
negotiate price I don't need someone to
00:36:20
find me a home I've got red fin I can go
00:36:21
do that I can arrange open houses on my
00:36:23
own the lock box is there I'll go walk
00:36:25
around the property I don't need someone
00:36:26
to point out the the color is nice in a
00:36:28
room and so I think that there's
00:36:30
elements of what this h of what will
00:36:31
happen here which is a fragmentation and
00:36:34
then an automation of these services and
00:36:35
as a result significant fee
00:36:38
reduction and I'm in the middle of doing
00:36:40
this myself right now with a piece of
00:36:42
real estate where I'm not using an agent
00:36:45
and I've been
00:36:46
using a direct listing service I've used
00:36:49
all of these standard forms there's a
00:36:51
lot of AI tools you can use to kind of
00:36:53
read all the disclosures for you make
00:36:54
sure everything's C pathetic and these
00:36:57
escro they'll handle a lot of what a
00:36:58
lawyer will handle and they'll get paid
00:37:00
a you know a fee which is much less than
00:37:03
the agent fee so I do think that there's
00:37:04
a big disruption happening in this
00:37:06
industry I think it's it's really
00:37:08
important for consumers agents are going
00:37:10
to be you know hands in the air telling
00:37:11
you this is ridiculous you need someone
00:37:12
to help you you need an adviser that
00:37:14
will continue for a good chunk of the
00:37:15
market for a very long period of time
00:37:17
but I do think that it's for the benefit
00:37:19
of consumers over time to see these fees
00:37:21
come out of the system and see those
00:37:23
savings go back in consumer's pockets
00:37:25
and for the value of their real estate
00:37:27
to go
00:37:28
to go in their pockets not into an
00:37:29
agent's pocket is it going to change
00:37:34
the profitability of a realtor pretty
00:37:37
meaningfully right both Realtors won't
00:37:39
be able to be in business right I think
00:37:41
the sellers will do fine and they might
00:37:43
capture more of it because they'll
00:37:45
they'll my understanding is the the the
00:37:47
seller will maybe do both sides of the
00:37:50
transaction no that's not what's going
00:37:52
to happen and there's also going to be
00:37:53
limits on that but but here's what I
00:37:55
will
00:37:56
say if you look at the the the number of
00:37:59
people there are 1.4 million members of
00:38:02
N today the National Association of
00:38:05
Realtors if you look at the distribution
00:38:07
of earnings and you guys know this my
00:38:10
guess is probably 10% of those realtors
00:38:13
make 40% of the fee income or 50% of the
00:38:15
fee income there's a long tale so
00:38:18
there's probably a third of those folks
00:38:20
who are
00:38:21
already kind of sub living standards in
00:38:24
terms of income maybe half of them won't
00:38:27
be able to make enough money in this new
00:38:29
you know fee regime that it'll no longer
00:38:32
be an attractive proposition to be a
00:38:33
real estate agent for maybe half a
00:38:36
million to a million people over time
00:38:39
that are agents today yeah you know it's
00:38:42
interesting this the the sellers are
00:38:45
going to be faced with Buyers who just
00:38:46
show up having seen something on redin
00:38:48
and don't have a buyer's representation
00:38:51
and so they think from the stuff I've
00:38:53
been reading that the sellers agent
00:38:56
might be pointing them to hey go to
00:38:58
these services and be acting as like one
00:39:01
broker essentially representing both
00:39:03
sides that's what people are saying is
00:39:05
the potential downside I don't think
00:39:07
that's yeah that's not gonna happen for
00:39:09
a couple of reasons but let me ask you
00:39:10
guys a question if you guys want to to
00:39:13
go buy a new house currently you just go
00:39:16
you know sign up an agent or buyer agent
00:39:18
they go walk with you and eventually
00:39:19
they'll get paid by the sellers agent so
00:39:21
now you have to negotiate a fee with
00:39:23
them up front would you negotiate a fee
00:39:25
and say to a buyer agent hey I'll you 2%
00:39:28
of whatever home I buy would you be
00:39:29
comfortable doing that or 3% or 4% how
00:39:33
would you have that conversation no what
00:39:35
you say sex I mean forget I know you've
00:39:37
got a different situation because you've
00:39:38
got real estate people like working for
00:39:40
you but like if you were to go out and
00:39:42
and if would you go out and get an agent
00:39:44
and pay and negotiate a fee with him it
00:39:46
is not worth it to the buyer to pay two
00:39:49
to three% of the purchase price to make
00:39:51
appointments you can see all the houses
00:39:53
on MLS through Zillow or redin or
00:39:55
whatever and what about handling closing
00:39:57
and disclosures no buyer would ever
00:39:59
voluntarily agree to pay this massive
00:40:02
commission it's not worth it so it's
00:40:05
game over for the Realtors if buyers are
00:40:09
forced to pay their own broker's
00:40:12
commission the only reason this system
00:40:14
works is because the seller is forced to
00:40:16
pay for it yep and when you sign the
00:40:19
listing agreement with the seller's
00:40:21
agent you can negotiate a little bit at
00:40:23
the margins sometimes you can get the 6%
00:40:25
down to 4 to 5% for a big listing but
00:40:29
50% of it will always go to the buy side
00:40:31
I mean I've said to these guys the buide
00:40:33
agent doesn't do anything why don't you
00:40:34
make it 2% for yourself and 1% for the
00:40:37
buyer they won't do that they just won't
00:40:39
take your business the seller will not
00:40:41
represent you they have like all sorts
00:40:42
of rules against it so the whole thing
00:40:44
is like protect it's like a racket
00:40:46
that's protected some it's cracked yeah
00:40:48
well I I still am like a little bit
00:40:50
skeptical that this is going to work out
00:40:52
exactly the way we're saying because it
00:40:54
is just such a a death blow to the
00:40:57
industry if buyers are forced to pay
00:40:59
their own commissions uh their own like
00:41:01
buy side Brokers commission and in the
00:41:03
Articles they're saying there's still
00:41:05
like some gray area about what's going
00:41:06
to happen but that is what should happen
00:41:10
buyers should be responsible for paying
00:41:11
their own Brokers and if you do that I
00:41:14
think you'll knock out half the fees of
00:41:15
this industry here's an idea why they
00:41:16
let them charge an hourly fee as a
00:41:18
buyer's agent like there will be people
00:41:19
doing that J $200 an hour $300 an hour
00:41:22
doesn't this impact home prices as well
00:41:24
like if you if the buyer had to pay all
00:41:26
of a sudden their affordability
00:41:28
effectively goes down because if they
00:41:30
have to pay an extra $100,000 for a home
00:41:33
then that's $100,000 they can't pay less
00:41:36
than they can pay for the house itself
00:41:38
because they have to pay an agent so it
00:41:40
all comes back into home prices no it
00:41:41
Nets out because the sellers agents no
00:41:43
longer paying 6% they're paying 3% and
00:41:46
so now the sellers agent has 3% more
00:41:52
that yeah but net net I think it's good
00:41:54
for buyers and sellers because the
00:41:56
transaction cost of TR tring go down
00:41:58
exactly money goes back in consumers
00:41:59
Pockets yeah create a more fluid Market
00:42:02
yeah and I think it's a great
00:42:03
opportunity for startups I'll say this
00:42:04
right now like I think there's going to
00:42:06
be a lot of startups that are going to
00:42:07
come out of this ruling that are going
00:42:09
to launch allart Services leveraging AI
00:42:12
to make these services available direct
00:42:14
to Consumers without needing an agent
00:42:16
and they're going to be pretty
00:42:17
compelling services and they're going to
00:42:18
show up real fast I mean a lot of people
00:42:21
will not list their home or sell it
00:42:23
because that
00:42:24
6% might put them underwater so if it's
00:42:27
now now down to two or three totally
00:42:29
yeah people might be like it's always
00:42:31
been crazy to me that anyone would pay a
00:42:32
percent of absolute value it makes no
00:42:35
sense I bought a home for a million I'm
00:42:37
selling it for a million one so I've
00:42:39
made a $100,000 profit but I got to pay
00:42:42
$60,000 of my total growth to an agent
00:42:46
to sell it for me% profit I just gave up
00:42:49
60% of my profit on my home right it
00:42:51
makes no sense and the crazy thing is
00:42:54
that a bad sale of your home would be
00:42:57
let's call it 900,000 or a million and a
00:43:00
great sale would be 1.2 so exactly
00:43:02
there's a very small margin where they
00:43:05
actually have an impact based on the
00:43:07
quality of their effort but they get
00:43:08
compensated for the whole thing yeah for
00:43:11
the whole thing get compensated no
00:43:13
matter should be that you get a flat
00:43:15
rate
00:43:16
$10,000 at a million and then you get
00:43:19
10% over a million or something you
00:43:21
could give just like you with a sales
00:43:23
person the incentive comp should be
00:43:25
variable based on performance whereas
00:43:29
the guaranteed part of the comp should
00:43:31
be like you said a flat fee it's kind of
00:43:32
like the salesperson has an OT right Bas
00:43:35
variable yeah I mean you could say if
00:43:38
you said 1% up to a million so that's
00:43:40
10K and then 10% for the next 100K and
00:43:44
then 20% for the next 100K so you you
00:43:47
know that 1.2 million is really hard to
00:43:49
get yeah I'll give you 20% of that
00:43:50
incremental 100 that would be a much
00:43:52
better deal you would be getting paid
00:43:54
for the actual performance so anyway
00:43:56
really you know Jal I have an idea for
00:43:58
the National Association of Realtors oh
00:44:00
here we go if they want to stop being
00:44:03
perceived as an evil monopolist all they
00:44:05
got to do is put out a cringe ad talking
00:44:06
about the environment everyone's going
00:44:07
to love him again absolutely they should
00:44:09
do an ad where they have a diverse cast
00:44:12
of people and that diverse cast could
00:44:15
talk about like putting sustainable
00:44:17
forestry around it all I got to do is
00:44:19
say something something landfills
00:44:21
everyone will love them again they can
00:44:22
charge ABS absolutely virtual signaling
00:44:24
right they can genu something something
00:44:25
landfills yes absolutely all right let's
00:44:28
keep the train moving here the AI
00:44:30
landscape shifting yet again Microsoft
00:44:33
just just did another one of these
00:44:35
shadow Aqua hires this time of
00:44:38
inflection AI bizarre deal Microsoft has
00:44:41
hired most of the team at inflection AI
00:44:43
including the CEO Mustafa who everybody
00:44:46
knows I just actually had him on this
00:44:47
week in startups he was the co-founder
00:44:50
of deep mind he worked at Google for
00:44:51
years and now he's going to be the CEO
00:44:55
of a new company called Microsoft AI
00:44:58
it's essentially the consumer AI
00:45:00
division of Microsoft but they did give
00:45:01
him the CEO title for background
00:45:04
inflection have raised 1.5 billion over
00:45:06
the last two years it was one of these
00:45:08
giant fundings that occurred to build a
00:45:11
foundational model like open AI is doing
00:45:14
like anthropic is doing they had a chat
00:45:16
bot called Pi very similar to chat GPT
00:45:19
it was supposed to remember your history
00:45:21
and build a relationship with you that's
00:45:22
all getting shut down Reed Hoffman who
00:45:25
is a major investor in in this company
00:45:28
and who's on the board of Microsoft and
00:45:30
who so LinkedIn to Microsoft played an
00:45:32
important role in this deal according to
00:45:34
reports and the inflection investors
00:45:37
included Bill Gates Eric Schmidt and a
00:45:39
bunch of other interesting folks but
00:45:41
this was a aqua hire which is the weird
00:45:43
thing chth they hired all the employees
00:45:46
they leave the shell of a company the
00:45:47
company's going to go do some Enterprise
00:45:50
stuff and investors get to keep their
00:45:53
Equity inflection but I guess that might
00:45:55
be worthless there's some going on here
00:45:57
that we don't know about this deal
00:45:59
structure when you saw this deal and you
00:46:01
see
00:46:02
Satia taking the entire team like he
00:46:05
threatened to do with open AI if you
00:46:06
remember the same exact kind of thing
00:46:07
I'll aquire everybody if you don't take
00:46:09
the deal what is your takee of of what's
00:46:12
going on here why did this occur like
00:46:14
this instead of just buying the company
00:46:17
I mean it occurred like this because
00:46:19
Reed and
00:46:20
Bill are inexorably tied to Microsoft so
00:46:23
they were able to get a deal for
00:46:24
investors that would have never happened
00:46:26
otherwise and so good on them I think
00:46:28
they did a very good job protecting the
00:46:30
fiduciary interests
00:46:33
of the investors of this startup sa no
00:46:36
conflict no interest right yeah I mean
00:46:38
we say that a lot this is so weird
00:46:40
though why not buy the company sax is it
00:46:43
because of antitrust actually that's a
00:46:45
good theory it's just it's hard for
00:46:47
Microsoft to get anything through at
00:46:48
this point so probably they're just like
00:46:50
why even deal with the antitrust they
00:46:52
don't really need the assets so I think
00:46:55
they licensed the core from the
00:46:58
inflection C Corp and then they hire
00:46:59
away all the talent and then the
00:47:01
investors get made whole so I think it's
00:47:04
like an aqua hire with a little bit of
00:47:07
tech along with it that they get through
00:47:09
the licensing deal maybe that's just to
00:47:11
protect them from an IP standpoint my
00:47:13
take on this is that this was a bailout
00:47:16
this was a bailout of the investors I
00:47:18
don't think the investors got ripped off
00:47:19
here I think the investors were like
00:47:21
thrilled to get their money back for
00:47:22
whatever reason this company wasn't
00:47:24
going anywhere it had raised hundreds of
00:47:25
millions of dollars Reed and Bill
00:47:27
obviously are are wired in they're on
00:47:29
the Microsoft board and this company did
00:47:32
have some talent that Microsoft wanted
00:47:34
so they basically did a giant Aqua hire
00:47:36
and it bailed out the investors freeberg
00:47:39
is that your take this is a bailout or
00:47:41
do you think this is a new interesting
00:47:43
end run around antitrust where hey if
00:47:46
Adobe wants to buy the next figma just
00:47:49
buy the team do a license of figma some
00:47:52
faka lunacy or do you think this is a b
00:47:56
what what's your the the here freeberg
00:47:58
and what does it say about Microsoft's
00:48:00
approach to the AI space I don't think
00:48:02
this is some runaround antitrust I think
00:48:05
obviously like a lot of
00:48:08
companies there's been a realization on
00:48:10
how quickly foundational model
00:48:12
development is commoditizing and how
00:48:14
quickly costs are escalating and how
00:48:17
many folks are chasing it so having some
00:48:20
unique advantage in the particular plane
00:48:23
of the market where they were
00:48:25
participating as a startup
00:48:28
maybe became difficult and untenable and
00:48:31
negotiations and conversations between
00:48:33
all these parties who all know each
00:48:34
other very very well and are all very
00:48:36
friendly you know this ended up being
00:48:38
kind of the best way to move forward so
00:48:41
all right there you have it folks in
00:48:43
other related news the Saudis are
00:48:45
planning a $40 billion AI fund according
00:48:47
to the New York Times reps from the
00:48:49
public investment fund uh in
00:48:52
Saudi have spoken to a number of firms
00:48:55
about partnering on it the would be the
00:48:57
second largest Venture fund of all time
00:48:59
behind soft Banks hundred billion Vision
00:49:01
fund one which you remember was also
00:49:03
backed by the Saudis and some other
00:49:05
folks in the Middle East region this new
00:49:07
fund would reportedly invest in AI
00:49:09
startups chip companies and data
00:49:11
centers so we thought we'd do a little
00:49:14
quiz here if you were given the 40
00:49:15
billion David Sachs how would you
00:49:18
allocate the 40 billion in AI in today's
00:49:22
market 2024 going on if they put you in
00:49:24
charge of this $40 billion AA fund II
00:49:27
fund where would you deploy it same
00:49:29
question would come around the horn to
00:49:31
you freeberg and then you
00:49:33
Chima well the first thing is I wouldn't
00:49:35
be in a rush to deploy all 40 billion at
00:49:37
once because that's a recipe for
00:49:39
spraying a lot of money into
00:49:40
unproductive or overhyped things so I
00:49:42
would take my time first of all but
00:49:45
second in terms of coming up with the
00:49:46
framework I would think about the
00:49:48
different levels of the stack of AI and
00:49:51
try to figure out where the value
00:49:52
capture is going to be and I think
00:49:53
there's maybe four different layers of
00:49:55
the stack first you've got the Silicon
00:49:57
you've got the chips where Nvidia is
00:49:58
dominant then you've got the foundation
00:50:01
models where it's open Ai and then
00:50:03
there's some open source models and then
00:50:05
you've got kind of infrastructure Dev
00:50:07
tools Vector databases things like that
00:50:09
and then finally you have the
00:50:09
applications sitting on top of that
00:50:11
which are just getting started I think
00:50:13
it's really hard to know from where
00:50:14
we're seeing today exactly who's going
00:50:16
to capture the most value in the stack I
00:50:18
mean you could make an argument for
00:50:21
against pretty much any layer of the
00:50:22
stack I guess if I had 40 billion to
00:50:25
deploy what I would do is try to
00:50:27
identify who are the leading companies
00:50:30
at each level of the stack and then who
00:50:31
are the most promising Challengers and I
00:50:33
would make a bed at every layer so I'm
00:50:36
covered that's not what I personally do
00:50:38
because I'm not you know I'm just not a
00:50:41
hardware investor I'm not really an
00:50:43
infrastructure investor I'm more of an
00:50:44
application investor so I'm going to
00:50:46
focus on that fourth layer of the stack
00:50:48
and just trust that there's G to be
00:50:49
enough value there but again if I was
00:50:51
managing a $40 billion Sovereign wealth
00:50:54
fund then I would play at every single
00:50:56
level and I would hire the best people
00:50:58
who know each layer of that stack sax
00:51:01
think you did a good job of sort of
00:51:03
showing the the four layers of the stack
00:51:05
I think open source the application
00:51:07
layer and specifically Robotics are huge
00:51:10
opportunities that are underinvested in
00:51:11
right now so I would take the top open
00:51:13
source projects I'd find those top
00:51:15
contributors take the top 20 or so open
00:51:17
source projects and back them to the
00:51:19
tune of you know significant money 50
00:51:21
million 100 million whatever it takes
00:51:24
and try to own the top 20 or have
00:51:26
insights into those top 20 open source
00:51:28
models and own those teams look for the
00:51:30
top contributors really easy to do on
00:51:33
GitHub and hugging face and repet and
00:51:35
other places where they're active and
00:51:37
Empower
00:51:38
those then obviously there's verticals
00:51:41
we're working on people who are doing
00:51:42
screenplays and tax just like you are
00:51:44
sacks and that's a fantastic place to
00:51:47
deploy money but then I think robotics
00:51:48
is going to be super super compelling
00:51:51
here and that takes a lot of money and
00:51:54
so you do have the capital as a weapon
00:51:57
and you know the 20-year view of this
00:51:59
and making a general P purpose robot
00:52:02
like elon's doing with Optimus or figure
00:52:04
AI is doing with their robot I think
00:52:07
robotics is a major place you could
00:52:09
probably buy I don't know who owns
00:52:11
Boston Dynamics now I know Google sold
00:52:12
it so you could probably buy some
00:52:14
robotic companies and then put the AI on
00:52:16
them and really take a 20-year view of
00:52:20
Robotics freeberg your thoughts how
00:52:22
would you deploy the 40 million the
00:52:24
bottom Three Stacks are are very
00:52:27
difficult right now to
00:52:29
find a footing obviously you know I
00:52:32
think saxs the you know it's it's the I
00:52:34
think the generally accepted framework
00:52:36
for how to think about how the market is
00:52:38
broken
00:52:39
apart but on the application side I
00:52:42
think is where you could think about
00:52:44
finding
00:52:46
more traditional business model
00:52:49
advantages so you know I think your
00:52:51
point about robotics is a really
00:52:52
interesting one you know is there a
00:52:54
Enterprise likee sale of robotics tools
00:52:57
that have positive Roi for Enterprises
00:53:00
and is there a business that's working
00:53:01
there and that is scalable vertical
00:53:04
Solutions in labor and Automation and
00:53:06
productivity gains are probably the best
00:53:09
sharp ratio good Alpha lower beta and a
00:53:13
good place to kind of deploy competing
00:53:15
in chips competing in infrastructure
00:53:18
competing in models it's such a you know
00:53:20
as we just talked about with respect to
00:53:22
what happened with inflection and
00:53:24
Microsoft this week it's such a rapidly
00:53:26
changing environment it's hard to have
00:53:28
high confidence in where things are
00:53:29
headed there so I do think that we do
00:53:32
know that there are Enterprise markets
00:53:33
we know that there are segments of
00:53:35
things like food
00:53:37
medicine you know manufacturing these
00:53:39
are markets that aren't going anywhere
00:53:42
and they could all certainly benefit
00:53:43
from unlocks in software or in robotics
00:53:46
and Automation and Hardware so that's
00:53:49
probably where I would think about
00:53:51
concentrating Capital but you know 40
00:53:53
billion is a lot of money so you'd
00:53:55
probably think about deploying it over
00:53:56
what period of time is it 10 billion a
00:53:58
year over four years and then is it
00:54:00
broken apart in what way over those
00:54:02
sectors and over what geographies and
00:54:05
you know then find good managers to help
00:54:06
you get it
00:54:08
employed trth you're batting clean up
00:54:10
here you got to hear everybody's answers
00:54:12
before giving your own what are your
00:54:14
thoughts on your other besties answers
00:54:16
and what's your plan to deploy 40
00:54:18
billion for the Kingdom of Saudi
00:54:21
Arabia's public investment fund the most
00:54:23
important thing that fund managers get
00:54:25
wrong is not having appropriate reserves
00:54:28
for your winners and if I look back the
00:54:32
real profit dollars that I leaked was
00:54:34
not not investing enough up front but
00:54:37
when I didn't have enough Reserve to do
00:54:39
the full prata or even super prata and
00:54:41
the ones that worked so the first thing
00:54:43
you have to do and when I do the
00:54:44
regression on all of my funds you really
00:54:47
need to reserve between 40 and 50% of a
00:54:50
total fund size for reserves so take 20
00:54:52
billion off the table and now you have a
00:54:54
smaller problem which is how do you
00:54:55
deploy 20 billion because the other 20
00:54:57
billion is purely meant for the winners
00:55:00
where you cram the money into the few
00:55:01
that are winning so that you can make
00:55:03
the most money of that 20 billion I
00:55:07
would probably take 2third of it and I
00:55:10
would go to all the hyperscalers and
00:55:12
anybody that's providing Cloud compute
00:55:15
and essentially buy out all of the
00:55:17
compute credits on
00:55:19
gpus so that I could tell any startup in
00:55:22
the world you will do a safe with me the
00:55:26
Kingdom of Saudi Arabia I will give you
00:55:29
free compute on pick your cloud provider
00:55:32
pick your model I don't care so if you
00:55:34
want to run llama on grock great if you
00:55:37
want to run mistol on gcp great if you
00:55:40
want to run open AI on open AI fantastic
00:55:44
but we will pay for all the compute in
00:55:46
return we get 7% up front and you have
00:55:49
to tell us some Benchmark of how this
00:55:51
model is
00:55:52
improving and then you are hiring a team
00:55:55
of people whose job it is and you can
00:55:57
probably train a model to do this as
00:55:59
well to ingest the reporting in a
00:56:02
systematic way to understand if it is as
00:56:05
you guys said a robotics company there
00:56:07
are measures of the quality of a robo A
00:56:11
robot's dexterity or Vision or
00:56:13
manipulation or tax completion rate if
00:56:15
it's a search engine it's a different
00:56:17
thing if it's a consumer facing app it
00:56:19
could be users if it's a drug Discovery
00:56:21
app it's the number of legitimate
00:56:23
protein synthesis passes that that pass
00:56:27
whatever it is so now you've scoped the
00:56:30
problem to 20 billion is in reserves 15
00:56:33
billion of it is tied up in credits and
00:56:35
then the five billion I do think it's
00:56:36
what David said what saak said which is
00:56:39
a billion and a half to the hardware a
00:56:41
billion and a half to infrastructure a
00:56:43
billion and a half to some of these
00:56:44
discrete
00:56:45
ideas you probably need a 30 or 40
00:56:48
person team total no
00:56:50
more but that business can could make a
00:56:52
trillion dollars if it was set up that
00:56:54
way but the key is to get the credits
00:56:56
out to people so that the reality is
00:56:59
what the commonality across every single
00:57:02
AI startup is that they will have to run
00:57:04
on a model and that model will be hosted
00:57:07
somewhere in a cloud and all of that
00:57:09
compute will need to be paid for so
00:57:11
Saudi Arabia should pay for that compute
00:57:14
get six or s% UPF front and retitle the
00:57:17
safe not as the what is a safe called
00:57:21
Jason simple agreement for future Equity
00:57:25
there should be the Saudi
00:57:27
for future Equity I love it that's what
00:57:30
right well there you have it MBS the
00:57:32
Allin KSA $40 billion fund give us a
00:57:36
call we'll fire it up and we'll deploy
00:57:38
the 40 billion for you I kid maybe
00:57:41
actually I'm curious you guys since
00:57:43
everyone kind of seems to agree with the
00:57:45
the framework of the four levels of the
00:57:47
stack where do you guys think the value
00:57:49
cap is going to be do you think it's
00:57:50
going to be by the chip companies the
00:57:53
foundation model companies the INF
00:57:56
structure companies or the or the
00:57:57
applications I'll actually change my
00:57:59
answer in a little bit I don't think
00:58:01
it's necessarily new technology
00:58:02
companies per se that are going to
00:58:04
benefit most but I think that it's
00:58:06
businesses in traditional industries
00:58:08
that are going to be able to leverage
00:58:10
these tools whether they're using open
00:58:11
source tools or third party technology
00:58:14
capabilities that they're buying as a
00:58:16
service or as a piece of software
00:58:18
there's an incredible set of advances
00:58:20
are going to be realized in things like
00:58:21
chemical
00:58:22
manufacturing drugs General
00:58:24
manufacturing that have existing scale
00:58:27
and infrastructure that are the fastest
00:58:29
to move to adopt these Technologies are
00:58:32
going to benefit the the most and I
00:58:33
think that's probably where most of the
00:58:34
value will acre is not necessarily a
00:58:37
chip company but in other businesses in
00:58:39
traditional industries that can
00:58:40
transform themselves using AI so your
00:58:44
answer is at the application level level
00:58:46
yeah and then within application Level
00:58:48
you could divide it up between existing
00:58:49
companies and startups yeah and existing
00:58:52
companies are able to leverage AI
00:58:55
innovations that are lower in the stack
00:58:57
another way to answer your question saxs
00:58:59
is which is the most CR which spaces are
00:59:01
the most crowded already and so
00:59:03
obviously chips are super crowded lots
00:59:04
of incumbents lots of people going after
00:59:06
it and the foundation models are very
00:59:08
crowded as well and the application
00:59:10
Level is yet to sort of be built out
00:59:14
right because we're in year zero or year
00:59:15
one of that so I do think application
00:59:17
Level is where there's a lot of value
00:59:19
but I also think the hosting and the
00:59:22
development of these various Niche
00:59:24
models is going to be a huge opportunity
00:59:26
so just once again those open source
00:59:28
models being put into cloud computing
00:59:30
environments and optimized that could be
00:59:33
a whole new level of aws's and Google
00:59:36
cloud and azures so there's an
00:59:39
opportunity for somebody to compete with
00:59:41
those incumbents by just being better at
00:59:44
those models that are open source and
00:59:46
having the team that's doing those
00:59:48
updates and then optimizing that cloud
00:59:50
so I would go with the cloud level for
00:59:51
those open source models and providing
00:59:53
that as a service like VMware does or
00:59:56
other folks do WordPress would be a tiny
00:59:58
example of an open source project like
01:00:00
that and then I just something tells me
01:00:03
this robotic space which has been a
01:00:04
false start over and over and over again
01:00:07
I think this is the time where actually
01:00:09
it's going to work and so I'm I I love
01:00:12
that Hardware robotic space for I think
01:00:15
you're right SX I think it's kind of
01:00:16
bookended in my mind I think the the
01:00:18
folks that are building fundamental
01:00:20
Hardware will make a lot of money over
01:00:22
the next 5 to 10 years and then the
01:00:24
folks that are building
01:00:26
the fundamental application Level
01:00:27
experiences will make a lot of money as
01:00:29
well and then who
01:00:31
knows the thing that we're not talking
01:00:33
about enough and I don't understand it
01:00:35
well enough is the entire way in which
01:00:38
apps are built needs to fundamentally be
01:00:41
rethought from first principles because
01:00:43
you essentially basically have these
01:00:45
client server apps where you have all of
01:00:48
this business logic that's sitting back
01:00:51
in some server somewhere and I don't
01:00:53
think that that's how apps get built
01:00:55
today in a world of AI and so it doesn't
01:00:58
need to work that way so I don't exactly
01:01:00
know what that means but it it just
01:01:02
seems like most of the architecture of
01:01:04
how the internet works today doesn't
01:01:05
make much sense so that would then
01:01:07
support free br's point that all of the
01:01:09
kind of the Legacy things that we all
01:01:11
know and trust also get rebuilt and so
01:01:13
that could create an entire wave where
01:01:15
networking value gets recreated and
01:01:17
everything so so my gosh I mean it could
01:01:20
be very very transformational yeah I
01:01:23
mean the idea that you would just talk
01:01:25
to a computer or in a chat interface and
01:01:27
you wouldn't use an app interface you
01:01:29
would just ask it questions it would
01:01:30
give you answers ask a questions it
01:01:31
gives you answers give it a task it
01:01:32
gives you a result this is why comp this
01:01:35
is why like Saudi needs to basically
01:01:37
make a bet that there's just developers
01:01:39
that are swarming around ideas let them
01:01:42
show you what's happening because paying
01:01:44
800 million a year of fees is not the
01:01:47
best way to generate a return on $40
01:01:49
billion if this is where you want to be
01:01:51
investing I don't think yeah 800 million
01:01:53
could pay for a lot of credits which
01:01:55
probably gets you once closer to the to
01:01:57
the answer or rdit went public today
01:01:59
they have 800 million in Revenue company
01:02:01
is worth over 8 billion dollar in
01:02:05
trading it's up 50% what do you think
01:02:08
chamath is this the opening of the IPO
01:02:10
window again so a oneoff we got stripe
01:02:13
coming and what do you take from it
01:02:15
popping 50% on the first
01:02:18
day I don't know I really haven't looked
01:02:21
at the company I haven't looked at the
01:02:23
the
01:02:24
financials but like these last three or
01:02:27
four weeks I think people have been so
01:02:29
excited and rearing to
01:02:31
go we're in the middle of another meme
01:02:34
coin craze oh God don't bring it up we
01:02:37
all getting pulled into that nonsense I
01:02:39
think the point is that I think there is
01:02:42
a speculative party going on right now
01:02:45
and I'm not saying that Reddit is part
01:02:47
of it but whenever these things are so
01:02:51
mispriced just means that people are are
01:02:53
ready to gamble a little bit there's
01:02:55
definitely a lot of gambling in the
01:02:56
system as we've seen and we're recording
01:02:59
this on Thursday so who knows what the
01:03:00
stock price will be tomorrow generally
01:03:03
way sorry the the other thing is like
01:03:06
Powell did say finally it looks pretty
01:03:08
likely we're going to get these three
01:03:09
Cuts so we're going to be down to four
01:03:12
and a half to
01:03:14
475 on fed funds by the end of the year
01:03:18
it probably means that we'll get another
01:03:19
50 to 75 basis points through 2025 so
01:03:22
people will look out to the end of 2025
01:03:25
and look at a fed funds rate that's sort
01:03:26
of like 375 to 4% so they're getting
01:03:29
pretty excited and froed up so this is
01:03:33
the beginning of the beginning in terms
01:03:35
of that kind of speculation yeah we saw
01:03:37
crypto go bonkers the last couple of
01:03:39
weeks yeah what's your take on all this
01:03:42
Sachs is does it feel like people are in
01:03:46
h gamble mode again and does that
01:03:48
concern you I guess after what we just
01:03:51
experienced well I think they're pricing
01:03:54
in these rate Cuts as if they're
01:03:55
definitely going to happen like jamas
01:03:57
said I think the the Market's
01:03:59
expectation is with let's call it 70%
01:04:03
certainty that you're going to get three
01:04:04
rate Cuts this year and it still seems
01:04:07
to me that that's a little bit up in the
01:04:09
air because inflation has not come down
01:04:12
to the fed's Target of 2% it's still
01:04:14
right around 3%
01:04:16
3.1% so it's been sticky around 3% it
01:04:20
was coming down pretty fast last year
01:04:22
but it's still there so people I think
01:04:24
are Maybe gambling in the sense that
01:04:26
they're counting on R cuts that haven't
01:04:28
happened yet but they liked Pal's doish
01:04:33
rhetoric yesterday and they seem to
01:04:36
think that that means that the ray cuts
01:04:37
are definitely
01:04:38
coming I don't know how pal can promise
01:04:41
that without inflation coming down
01:04:42
unless he's trying to create a Biden put
01:04:46
there it is folks which was my theory
01:04:48
going into this year is that yeah get a
01:04:51
Biden put from the FED absolutely and
01:04:54
it's looking like Biden has a clear path
01:04:56
to Victory based on the lowest
01:04:57
unemployment of our lifetimes and this
01:05:00
roaring stock market
01:05:02
records yeah it's just a easy Biden
01:05:04
Victory freedberg what do you
01:05:07
think about the risk
01:05:10
on I don't know Biden is incredibly
01:05:13
unpopular if you look at his actual
01:05:15
polling he should not win the election
01:05:17
but that's in spite of you're right the
01:05:19
economy is seems to be doing pretty well
01:05:21
and the stock market certainly doing
01:05:22
pretty well a president with the these
01:05:26
fundamentals would normally get
01:05:27
reelected but Biden currently is not his
01:05:30
polling is not the polling of a
01:05:31
president who's going to get reelected
01:05:33
it is but pal comes if pal comes through
01:05:36
with the ray cuts that will help him
01:05:39
it's pretty amazing how horrible a job
01:05:40
he's doing that he's made Trump look
01:05:42
like a better candidate to some people
01:05:44
that is an extraordinary achievement by
01:05:46
Biden I will have to
01:05:47
agree there look I think the the bigger
01:05:51
economic issue to be talking about was
01:05:53
that buried article in the The Wall
01:05:55
Street Journal about commercial real
01:05:58
estate do you see that article that was
01:06:00
crazy so this Wall Street Journal
01:06:02
article reported that of the 36 billion
01:06:04
of office loans that came due in the
01:06:07
commercial mortgage back Securities
01:06:09
market last year only one quarter were
01:06:12
paid off in full that's according to
01:06:14
data from Real Estate analytics fir cred
01:06:16
10 is that extend and pretend strategy
01:06:19
that you see in there oh yeah I mean
01:06:21
only one quarter of the loans got paid
01:06:23
off so 75% get paid off in full so
01:06:27
there's tons of buildings that are
01:06:28
underwater right now but nobody wants to
01:06:32
foreclose and then sell them at a fire
01:06:34
sale price so yeah everyone is it's
01:06:37
pretend an extend yeah kicking the can
01:06:39
down the road nobody wants to take the
01:06:40
medicine so yeah well they're hoping
01:06:42
they're hoping that rates will come down
01:06:43
fast enough and occupancy rates will go
01:06:45
up fast enough that no one has to
01:06:48
foreclose but if rates don't come down
01:06:52
then you have a real problem I mean
01:06:53
again everyone is just assuming that
01:06:55
inflation will continue its path from 3%
01:06:58
to 2% and then we'll get these rate cuts
01:07:01
and they're hoping they can cling on
01:07:02
landlords are Clinging On And I think
01:07:04
the banks that loan them all this money
01:07:06
are clinging on for dear life but if
01:07:10
rates stay higher longer then you're
01:07:13
going to see some real distress yeah
01:07:15
including in the regional banking system
01:07:17
freeberg you had a a science corner here
01:07:19
a couple of different things came up the
01:07:20
Hubble telescope 3D
01:07:23
printed organs what where do you want to
01:07:25
go with this I mean do you guys want to
01:07:27
talk about how the universe is expanding
01:07:30
at an accelerating rate and expanding
01:07:32
differentially everywhere we look and we
01:07:34
don't understand how or why 100% And sax
01:07:37
needs to use the L so yeah
01:07:40
definitely red he dropped he dropped I
01:07:43
love science quarter let's do it
01:07:45
freeberg it's your time to sign to to
01:07:48
shine of science tell us what's going on
01:07:50
with the universe my favorite topic
01:07:53
astrophysics my favorite top
01:07:56
my Z is back are we headed for Uranus we
01:08:00
dead set on it we're
01:08:03
dead he disappeared again he's just
01:08:05
gonna drop in and do an Uranus jokes I
01:08:07
hear him giggling with his camera he's
01:08:10
with his writers he's he just went to
01:08:11
the writer's room to get an update on
01:08:13
the Uranus jokes it's long been known
01:08:17
that our universe is expanding we've all
01:08:20
heard about the The Big Bang
01:08:22
Theory
01:08:24
and couple decades ago scientists began
01:08:28
to
01:08:29
observe the brightness of supern noi or
01:08:34
exploding stars and then by looking at
01:08:37
their brightness we could tell how far
01:08:38
away they were and then looking at the
01:08:40
shift of the light whether it's getting
01:08:42
red or blue you can tell whether the
01:08:44
light the the the Supernova is moving
01:08:47
away from us or towards us and how
01:08:49
quickly and so what scientists have used
01:08:53
those observations to deduce several
01:08:56
decades ago and for which a group won
01:08:58
the Nobel Prize is that our universe is
01:09:02
expanding meaning that everything is
01:09:05
moving away from itself it's almost as
01:09:07
if we're all in a cake the best analogy
01:09:09
I've heard is that there's raisins in
01:09:10
the cake and as the cake expands in the
01:09:13
oven all of those raisins look around
01:09:15
and they're all moving apart from each
01:09:17
other so the distance between everything
01:09:19
is getting wider space is
01:09:23
expanding Central moment the Big Bang
01:09:26
that's the theory is right this all
01:09:28
started in the Big Bang and it's not
01:09:29
like you know we're all in the middle of
01:09:31
the universe and the universe is moving
01:09:32
away from us it's that the entire
01:09:35
entirety of space is expanding itself
01:09:37
and so everything is moving away from
01:09:39
everything else the challenge in the
01:09:40
data was that recently we saw that
01:09:42
different types of
01:09:44
stars that were observed with the Hubble
01:09:46
Space
01:09:47
Telescope had actually a
01:09:50
different rate of expansion of the
01:09:53
universe than what was previously
01:09:55
thought from the Supernova that we saw
01:09:57
and everyone thought there was something
01:09:58
wrong with the Hubble Space Telescope
01:09:59
data so you know in a final print
01:10:02
published last month the James web Space
01:10:06
Telescope which showed much higher
01:10:09
resolution of Imaging and as a result
01:10:11
much better data and here's an image of
01:10:13
it you can just see the difference
01:10:15
between what came out of James web and
01:10:17
what was used in Hubble so that shows
01:10:19
one star that was used to calculate the
01:10:22
rate of expansion of the universe and
01:10:24
what this sh star showed is that the
01:10:26
rate of expansion of the universe as
01:10:29
measured across a thousand of these
01:10:31
Stars called sehid stars in five
01:10:32
different galaxies had a value that
01:10:35
didn't match the value that we see when
01:10:36
we look at exploding Stars very far away
01:10:40
and so it once again confirms what the
01:10:43
original Hubble data showed which is
01:10:44
that the universe is expanding at
01:10:47
different rates in different parts of
01:10:49
the universe which totally doesn't make
01:10:51
sense and there's no really clear answer
01:10:53
as to the physics of why if there was a
01:10:55
big bang and the universe started to
01:10:57
expand it should be expanding the same
01:10:59
everywhere there's no reason that
01:11:00
different parts of the universe should
01:11:02
be expanding at a different rate than
01:11:04
other parts of the universe that there's
01:11:05
differential expansion happening Across
01:11:07
the Universe and it really tells us that
01:11:09
there's very little we know or
01:11:11
understand about this large scale
01:11:13
structure of the universe and why these
01:11:15
things are happening there was one group
01:11:17
that put out a theory where they said
01:11:19
that the local Universe where we see
01:11:21
these seph stars that this data is based
01:11:24
on there's almost a little bubble and on
01:11:26
the outside of the bubble there's
01:11:27
galaxies and they're pulling stuff out
01:11:29
faster than what's happening where
01:11:30
there's not as much density so there's a
01:11:32
lot of different reasons and and
01:11:34
explanations for why this might be
01:11:35
happening but it's kind of a big story
01:11:38
because it basically confirms that we
01:11:40
see a lot of differential expansion
01:11:42
happening Across the Universe and we
01:11:43
don't know why just another big mystery
01:11:46
of the universe so super kind of
01:11:47
interesting confirmatory data from James
01:11:49
wed this week Jam do you want to talk
01:11:51
about the the the pig kidney I mean I
01:11:55
think it's it's really incredible they
01:11:57
took a kidney from a pig and then they
01:12:01
used crisper casine to edit out the
01:12:05
certain subset of the pig genes and edit
01:12:07
in a certain useful subset of human
01:12:09
genes and then they transplanted that
01:12:11
kidney into a 64 year old
01:12:13
man I and he apparently seems to be
01:12:16
doing well it's really incredible and
01:12:18
this is a guy that was at end stage
01:12:20
kidney disease and my father went
01:12:24
through this but when you're at that
01:12:26
endstage renal disease you're getting
01:12:28
dialed every 3 days for up to four five
01:12:32
six hours trying to basically you have a
01:12:35
machine that does the job the kidneys
01:12:37
for you to keep your blood clean but
01:12:39
it's just it's kind of a death sentence
01:12:40
and it's like a slow moving death
01:12:43
sentence at that so the idea that you
01:12:45
could
01:12:46
now use this effectively Infinite Source
01:12:50
of
01:12:53
organs seems really
01:12:56
compelling pretty amazing I don't know
01:12:58
what do you
01:13:00
think definitely where we're headed I
01:13:03
don't even think they're gonna need yeah
01:13:06
speaking of medical breakthroughs did
01:13:08
you guys see the the guy who got the
01:13:10
neuralink
01:13:11
chip chess with his brain he's using the
01:13:14
force yeah that was awesome using the
01:13:16
force yeah he described it as he was
01:13:19
playing chess and he said like I love
01:13:20
playing chess and I've learned to use my
01:13:22
mind to move pieces around and he said
01:13:25
like it's like having the force I mean
01:13:27
totally wow amazing I watched the live
01:13:29
stream and he said that he was a
01:13:31
quadriplegic from the shoulders down but
01:13:34
he loves chess he wasn't able to play
01:13:35
chess now he's able to play chess he was
01:13:37
able to play Civilization the game which
01:13:39
I guess was really
01:13:41
hard in the absence of having this this
01:13:43
chip and now he can do that it's it's
01:13:45
incredible I mean it's that they kind of
01:13:48
went public with it or I mean obviously
01:13:50
he agreed to go public with it I think
01:13:52
Trevor is his name it's pretty amazing
01:13:55
and there's more amazing stuff coming
01:13:58
they're making significant progress over
01:13:59
there I was talking to somebody who
01:14:01
works there and you know it's it's it's
01:14:04
going to
01:14:06
be yeah it's it's going to be a process
01:14:09
but they're making significant Pro
01:14:11
progress and they're going to have I
01:14:13
think even bigger announcements in the
01:14:14
coming year they're getting it done it's
01:14:18
for FKS my kids were really Blown Away
01:14:20
by it you know it's it's interesting to
01:14:22
me what like penetrates their cynicism
01:14:25
and like what they get actually
01:14:27
impressed or excited by and they thought
01:14:29
this was really cool you know it's so
01:14:31
funny it's like people are breathlessly
01:14:33
like looking at the Elon Don Lemon video
01:14:36
and they're trying to opine whether he
01:14:38
had a good interview or a bad interview
01:14:40
and it's like he actually had one of the
01:14:42
best weeks of his life yeah Starship
01:14:45
three made it up yeah Starship had an
01:14:48
incredible performance last week and
01:14:50
then this thing this week I mean what an
01:14:53
incredible 7-Day run it's more than most
01:14:55
of us will have in our lifetime it's
01:14:57
it's also nuts like C that Don Lemon
01:15:00
interview like there was actually some
01:15:01
really interesting topics discussed but
01:15:03
I I felt like this was like this was the
01:15:05
perfect like baton passing between old
01:15:08
media and and New Media where he was
01:15:10
constantly trying to do a gotta
01:15:12
journalism thing and Elon was trying to
01:15:14
engage in good faith and like an
01:15:16
interesting discussion and then every
01:15:18
time the discussion got interesting he
01:15:20
kept trying to go back to like
01:15:21
Sensational gotcha journalism and it was
01:15:24
a totally wasted opportunity if he had
01:15:25
just Don Lemon had just stayed in the
01:15:27
moment and like engaged in good faith
01:15:29
instead of trying to get this like clip
01:15:32
it was it really bad performance by Don
01:15:34
LM and I
01:15:35
thought it was really getting
01:15:36
interesting at moments in time he's
01:15:38
obviously trying to get a job back at
01:15:39
some mainstream Media Company maybe this
01:15:42
is his this is his resume if he can
01:15:45
basically get some clip of Elon saying
01:15:48
something that he can twist into
01:15:49
something that it doesn't mean and he
01:15:51
can say I got Elon Musk then he can get
01:15:53
his job back at CNN or one of those he
01:15:56
got paid out in full like 20 30 million
01:15:58
bucks and by the way those jobs are not
01:16:00
they don't exist anymore like Tucker and
01:16:03
him were like the last of that
01:16:05
generation to get those huge payday over
01:16:08
Don Lemon got paid $30 million by whom I
01:16:11
think CNN the report was CNN paid out
01:16:14
his full contract the same thing
01:16:16
happened I think with Tucker they both
01:16:17
got paid their full contracts whoever
01:16:19
negotiates those contracts with the
01:16:21
networks over the last couple of decades
01:16:23
is awesome because it's pay it's pay for
01:16:26
play like whether you are on air or not
01:16:29
you get paid and the and then they don't
01:16:31
let you go to a competitor that's why
01:16:33
both of them are doing internet stuff X
01:16:36
or whatever carved out stuff just wanted
01:16:37
to give a shout out here at the end of
01:16:39
the Pod for the guys at all in talk
01:16:41
Chris and Spencer did an amazing job the
01:16:44
team over there from good future media
01:16:45
of creating just that amazing fan
01:16:48
account now that we're growing up here
01:16:49
over at Allin and we'll have a CEO
01:16:51
announcement at some point we have taken
01:16:55
over the accounts and we're starting to
01:16:56
make our own Clips so thanks to them for
01:16:59
supporting us and helping grow it if you
01:17:02
want to see the four of us go to YouTube
01:17:04
and type in Allin podcast and then
01:17:06
subscribe uh we're almost at 500,000
01:17:09
subscribers and we decided that if we
01:17:11
hit one million subscribers by the end
01:17:13
of the year we're going to throw a party
01:17:15
and uh you all will be invited we'll
01:17:18
have as many people at the party as
01:17:19
possible so go ahead and find us on Tik
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search for Allin and you can search for
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all of us jamath David fredberg David
01:17:29
Sachs and Jason calacanis thanks again
01:17:32
to the super fans for helping us build
01:17:34
up this amazing audience couldn't have
01:17:36
done it without you and uh yeah we're
01:17:38
we're just posting Clips I think every
01:17:40
other day on the YouTube channel and so
01:17:43
if you go in there you can subscribe and
01:17:45
then right next to it there's a little
01:17:46
alarm Bell you hit the Bell you'll get
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an alert and you get to see our faces
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and and know what we look like we also
01:17:51
put a lot of Graphics so if you hear us
01:17:52
referring to charts that's all on the
01:17:55
YouTube channel for David saaks jamala
01:17:58
David freeberg I am Jason K canis and we
01:18:02
will see love you boys world's greatest
01:18:03
moderator you forgot your and uh the
01:18:06
host of this week in startups so search
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for my podcast this week in startups we
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interview startup Founders gotta get a
01:18:11
plug in for that no some people don't
01:18:12
know I have another podcast so please
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search for this week in startups And
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subscribe to that as well we'll see you
01:18:17
all next time byebye love you
01:18:20
boys let your winners
01:18:23
ride Rainman d
01:18:28
and instead we open source it to the
01:18:30
fans and they've just gone crazy with it
01:18:32
love
01:18:36
[Music]
01:18:40
you besties
01:18:42
are that's my dog taking your
01:18:45
[Music]
01:18:48
driveway oh man my meet me we should all
01:18:52
just get a room and just have one big
01:18:53
huge orgy cuz they're all usess it's
01:18:55
like this like sexual tension that they
01:18:57
just need to release
01:19:03
Som we need to get merch
01:19:09
[Music]
01:19:13
our
01:19:16
[Music]
01:19:18
going
