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Episode: New SEC Chair, Bitcoin, xAI Supercomputer, UnitedHealth CEO murder, with Gavin Baker & Joe Lonsdale
Author: All-In Podcast, LLC
Duration: 01:24:20
Episode Shownotes
(0:00) Bestie announcement! (2:53) Gavin Baker and Joe Lonsdale join the show (4:14) State of the Trump Bump: Debt focus, Deregulation, America's lucky position (20:08) Trump nominates Paul Atkins as SEC Chair, replacing Gary Gensler: What this means for crypto and other markets (41:07) Thoughts on Michael Saylor's Bitcoin play,
state of defense tech, and the US/China AI competition (49:25) xAI's massive GPU cluster, expanding to 1M GPUs, how Grok 3 will test AI scaling laws, and what's next (1:08:28) UnitedHealth CEO murdered, reactions Get virtual tickets for The All-In Holiday Spectacular!: https://allin.com/events Follow the besties: https://x.com/chamath https://x.com/Jason https://x.com/DavidSacks https://x.com/friedberg Follow Gavin Baker: https://x.com/GavinSBaker Follow Joe Lonsdale: https://x.com/JTLonsdale Follow on X: https://x.com/theallinpod Follow on Instagram: https://www.instagram.com/theallinpod Follow on TikTok: https://www.tiktok.com/@theallinpod Follow on LinkedIn: https://www.linkedin.com/company/allinpod Intro Music Credit: https://rb.gy/tppkzl https://x.com/yung_spielburg Intro Video Credit: https://x.com/TheZachEffect Referenced in the show: https://truthsocial.com/@realDonaldTrump/posts/113603133222686186 https://www.nytimes.com/2024/12/04/business/trump-sec-paul-atkins.html https://x.com/davidmarcus/status/1862654506774810641 https://www.bloomberg.com/news/articles/2024-12-05/convertible-bond-arbs-are-making-microstrategy-wall-street-s-hottest-trade https://www.ft.com/content/9c0516cf-dd12-4665-aa22-712de854fe2f https://www.nytimes.com/live/2024/12/04/nyregion/brian-thompson-uhc-ceo-shot https://abcnews.go.com/US/man-shot-chest-midtown-manhattan-masked-gunman-large/story?id=116446382&cid=social_twitter_abcn https://nypost.com/2024/12/06/media/taylor-lorenz-defends-unitedhealthcare-ceo-brian-thompson-jokes
Full Transcript
00:00:00 Speaker_03
Hey, everybody. Hey, everybody. Before we drop this week's amazing episode, just some quick information for you. Sachs and Chamath both had the week off, so we had two amazing friends of the pod on Gavin Baker from Atreides and Joe Lonsdale from 8VC.
00:00:15 Speaker_03
What a treat to have them on the program. But there is some big news, huh, Freeberg?
00:00:19 Speaker_04
Yeah, well, the news dropped after we recorded, so it's not going to be referenced and the show might feel a little stale, but Here we go. Our friend David Sachs is the White House AI and crypto czar of the United States of America.
00:00:34 Speaker_04
Congratulations to our boy. Amazing. Super thrilled. That is a big reason why he wasn't able to join us for the show. He was in the middle of getting this news ramped up. Yes. It came out. We had already recorded. Yeah. Take that into account.
00:00:45 Speaker_03
as we go into the show. Yes. And according to Trump's truth social post, Sacks will quote, guide policy for the administration in artificial intelligence and cryptocurrency.
00:00:56 Speaker_03
He will also lead the presidential council of advisors for science and technology. How great is that free bird? Wow, science corner in the White House. Can't wait. It's gonna be it's gonna be amazing. Pretty awesome. I have no announcements.
00:01:09 Speaker_03
The rumors about me becoming press secretary are obviously premature, but if asked to serve, I will serve my country. OK, let's get to it. Don't worry, besties. All in isn't going anywhere.
00:01:20 Speaker_03
We'll be here every week for you, except maybe Thanksgiving or a holiday now and again. All right. Let's start the show. Humphrey Berg, great episode. Let's go. All right, everybody, welcome to the all in podcast. I am your host Jason Calacanis.
00:01:34 Speaker_03
How are you doing Friedberg?
00:01:35 Speaker_04
I'm hanging in there. I'm waiting for the tsunami to hit. It's gonna we're about 40 minutes away. I'm a little anxious right now.
00:01:42 Speaker_03
more anxious than normal is what you're saying, like, on a scale of one to Freiburg, this is like as anxious as you get with the tsunami. I don't know what's gonna happen.
00:01:52 Speaker_04
This current warning shows a five foot water rise for five meter I can't tell. God, I really hope we don't publish this episode and there's like a total disaster that we're not gonna make light of it.
00:02:07 Speaker_03
We get warnings once in a while just to give everybody a little perspective here. I'm at David Sachs house. I've taken over. As you can see, I got my Montclair hat on, Freeburg. I found Sax's robe. See this shirt?
00:02:20 Speaker_03
It was Sax's robe, but I got a red Sharpie and I just crossed it out and I just put J. Cal on it. And then I went down and I was talking to Chef. Does Sax know that you're staying at his house? He knows I'm staying here, but- Does he though?
00:02:32 Speaker_03
He doesn't know that I found the actual caviar.
00:02:36 Speaker_07
Rain Man David Sax.
00:02:53 Speaker_03
With us today Chamath couldn't make it this week. And surgery and now he looks like Gavin. Okay, yes. And sacks is taking a day off. He's he's got the day off today. I think he's just winning too much with us to substitutes to jump in here for the team.
00:03:13 Speaker_03
cackling you can hear the cackling Joe Lonsdale. There's Joe Lonsdale. I'll take my mom Claire had off here.
00:03:20 Speaker_01
I'm also winning too much, but I'm happy to be here last minute as a sub for David J. Cal.
00:03:25 Speaker_03
Joe Lonsdale, for people who don't know, is to the right of David Sachs. He is a venture capitalist, and he started a couple of companies. You might have heard of them, Palantir. And what are the other greatest hits? Adapar?
00:03:37 Speaker_01
Adapar just crossed $7 trillion, as reported on it this month. It's a good real company, too. Yeah, the OpenGov sold this year. We saw it started a bunch of times. Congrats. They're good.
00:03:46 Speaker_03
Yeah. Joe gets, he's a, you're a little bit lower profile than all these accomplishments. It's pretty incredible. Co-founded, how many billion dollar companies have you co-founded now?
00:03:55 Speaker_01
I don't know, maybe six or so.
00:03:57 Speaker_03
Six or so. Also with us, Gavin Baker from Atreides. He is a hedge fund manager. He does private, he does publics. One of the smartest guys I know. Great analyst. Welcome to the program, Gavin, friend of the pod.
00:04:10 Speaker_02
Thank you, J. Kyle. Happy to be here. Great to see everybody.
00:04:14 Speaker_03
Yeah, we are experiencing a huge Trump bump. The election is over. The cabinet is being assembled, and we're seeing Doge, the Department of Government Efficiency, as well as maybe regulations being pulled down.
00:04:28 Speaker_03
And we'll, we'll get to our first topic about our new sec chair. But just generally speaking, Evan, as a market participant for a living, what's your take on what we've seen over the last three weeks since the election results came in?
00:04:43 Speaker_02
So if they execute on stated plans, and there are some of the world's greatest execution machines involved, Elon generally does what he says he is going to do. This is going to be awesome for America, for markets, for the world.
00:05:07 Speaker_02
And the analogy I keep coming back to is Satya Nadella taking over as CEO of Microsoft. Microsoft was a monopoly, incredibly advantaged. It had just been horribly mismanaged for years.
00:05:19 Speaker_02
All he had to do to start winning was stop doing really, really dumb things. And that's an incredible place to be. America, we're the greatest country.
00:05:30 Speaker_02
We've got oceans on two sides, peaceful neighbors, incredible natural resources, can produce our own food and energy. In many ways, most privileged country on Earth. But sometimes with great privilege comes great stupidity.
00:05:46 Speaker_02
And California, to me, would be a leading example of that. In many ways, most privileged state in America. And it's privileged in a way with bad policies.
00:05:56 Speaker_02
And I do think one thing that everyone of all political stripes agrees on is there are too many regulations that result in far too many administrators, far too much complexity, and an inability to build things in America. So
00:06:13 Speaker_02
It was used very effectively, as it should have been against the Harris administration, that they'd approved $42 billion for rural broadband, hadn't built anything, had approved $40 billion for EV chargers, whatever it was, hadn't done anything.
00:06:28 Speaker_02
And it's not that they didn't want to dig trenches and do broadband. They didn't want to make EV chargers. Their own regulations prevented them. So I just think
00:06:41 Speaker_02
deregulation and simplifying regulations and the tax code is going to lead to an immense amount of growth, which is something that all Americans should be happy about.
00:06:54 Speaker_03
Joe, you want to maybe give us your take? I know, obviously, you're very vocal, you're obviously a conservative run think tank and have strong feelings on all this.
00:07:03 Speaker_03
But there is consensus, I think, amongst all Americans that we don't like fraud, waste, abuse, and those items, those seem to be consensus building. efficiency and paying long lower taxes.
00:07:13 Speaker_03
All of that seems like something almost all Americans, most Americans can get behind. So I guess maybe a little bit of your take on what we've seen in the markets and the plan. And then also, are you going to be involved in this at all?
00:07:28 Speaker_01
Well, listen, Jake, I think I do agree. I think almost all reasonable Americans can see that our growth is ridiculously constrained.
00:07:35 Speaker_01
And I think Jeff Bezos was saying yesterday, like we need a growth oriented mindset if we're going to get out of our debt problems, our deficit problems.
00:07:42 Speaker_01
So it's nice to see everyone kind of coming on the team and saying, yeah, we need to fix these things. I think what people don't understand is like just how broken the government bureaucracy and regulations are. Right.
00:07:53 Speaker_01
It's not like they're kind of sort of bad. It's almost like there are companies that went bankrupt.
00:07:58 Speaker_01
Think of the worst company you know in Silicon Valley that went bankrupt 30 years ago, and imagine if someone just kept pumping money into that worst company you know over 30 years to keep hiring people.
00:08:09 Speaker_03
So like Yahoo or AOL, like some legacy company.
00:08:13 Speaker_01
It was failing and take the worst department there. And then like the worst department gets the most money. So it's like it's like it's like more. I guess you can use the word retarded now. It's more retarded than anything you've seen in a long time.
00:08:25 Speaker_01
And I think one of the important things is America used to have these really hard tests for 100 years. You know, this in 1883, we said, you know what? We shouldn't just hire our friends. If someone's going to run something in government,
00:08:36 Speaker_01
Let's have these tough tests, kind of like China did for thousands of years. And for 100 years, we had really hard tests.
00:08:42 Speaker_01
When we went to the moon, when we fought the world wars, when we did the Manhattan Project, the people making those decisions and hiring people had to pass things that really only like 5-10% of people could pass who took them.
00:08:53 Speaker_01
And then in the late 70s, we said, not only are these tests racist, so we can't test people anymore of any background, we also can't fire people anymore because we're going to give them tons of protections.
00:09:03 Speaker_01
And so the last 40 years, it just got dumber. And then 10 years ago, you started doing all the virtue signaling and hiring based on your identity versus based on anything else. So it's gotten even worse.
00:09:13 Speaker_01
And so now it's so broken that, yes, we're letting tens of billions of dollars on fire. And so there's really two things here. One, you've got to take a chainsaw, as Ilana Veliko said, you've got to take a chainsaw and just cut a ton of broken stuff.
00:09:23 Speaker_01
But then Day two is you got to say, how do we make this not stupid in the future? And there's things like maybe you bring back tests, maybe you bring accountability.
00:09:31 Speaker_01
The thing I'm most passionate about is right now there's over a million rules at the federal level. It's stuff that everyone disagrees on. You can be the most left person trying to build solar or wind or whatever. And you're like, what?
00:09:43 Speaker_01
I have to do what study over how many years? This makes no sense. So we got to take these regulations and not only cut them, but we got to make a data-driven system that forces regulations to defend themselves. And that way, instead of having a cancer,
00:09:54 Speaker_01
It just grows forever out of control. You could actually have a process that naturally trims things, naturally makes things fight for itself. And that way it doesn't get as dumb ever again.
00:10:03 Speaker_02
Why not just make them automatically sunsetting after five years if they're not renewed? Exactly. But make the process to renew them difficult and data-driven. Exactly. So if you fight for an allocation.
00:10:15 Speaker_02
The process of renewing them will take so much time that it will slow it down.
00:10:19 Speaker_03
wonder where we got to the place, Friedberg, I will bring you in on this since really, I think it was maybe two or three years ago, you started to point out exactly the debt spiral we're going to get in.
00:10:29 Speaker_03
I want to give you your flowers here on the pod. Because from this pod, and in your obsession, and you're harping on and on about this national debt problem, you saw it early, you talked about it constantly, you brought a lot of consensus on board.
00:10:44 Speaker_03
And now we're seeing it as the issue of the transition is the debt. And we were sitting here for the past year or two saying, when are politicians going to even pay attention to this? And now they are paying attention to it.
00:10:56 Speaker_03
So first, here's your virtual flowers. Second, how are you feeling about the transition today?
00:11:03 Speaker_04
Well, I mean, I think first of all, there's like three layers of the problem, which I've been trying to harp on for almost four years. Number one is the inefficiency and lack of accountability, which Joe and Gavin are obviously talking about.
00:11:13 Speaker_04
And that leads to excessive spending. And that leads to the debt problem. And the debt problem creates this kind of arithmetic debt death spiral, which is something you don't want to find yourself in.
00:11:25 Speaker_04
So that's the inevitability that I've been kind of really worried about. And I think that, you know, look, there's the first derivative and second derivative can kind of get addressed.
00:11:33 Speaker_04
And then hopefully you don't get to the absolute point where you have this breaking breaking point. I think right now everyone's banking number one on can we deregulate in a way that can unlock growth.
00:11:43 Speaker_04
And by unlocking growth that right the the the kind of arithmetic argument is grow GDP because you're not going to be able to shrink debt super fast. In order to grow GDP, there needs to be some unleashing happening.
00:11:57 Speaker_04
And so if you can get GDP to grow 45%
00:12:01 Speaker_04
and you can minimize the excess spending, meaning you can minimize the deficit, the federal deficit, and therefore minimize the increment in the debt level, the debt to GDP ratio becomes more manageable, because ultimately, you can only tax so much of GDP.
00:12:15 Speaker_04
So yeah, I feel like this is important in both senses. One is just cut the inefficient, wasteful spending, get rid of the regulations, and that'll unleash the necessary growth.
00:12:26 Speaker_04
One of the proxies I look to and I think that this is going to be kind of the critical motivating factor for the United States, whether it's this administration or the next or on a content of continuous basis, there's going to be this kind of moment where we're going to look across the water
00:12:40 Speaker_04
at what China has. And you can see what China is getting what China is making what China is doing. I've talked about this a lot as well.
00:12:48 Speaker_04
And I do think this is the most critical metric that no one talks about as much as I think we should, which is the increment in electricity production capacity in China compared to the United States.
00:13:00 Speaker_04
And so we are going from one terawatt to two terawatts, they're going from I think two to eight over the same time period.
00:13:06 Speaker_03
And why is that so important for the people who are listening?
00:13:09 Speaker_04
We'll think that you're saying I'll let you I'll let you answer that.
00:13:12 Speaker_03
Go ahead. Just unpack it for the audience. I mean, I obviously understand why this is important.
00:13:17 Speaker_01
But I want you to the number one thing I'd say is it's usually correlated to how well the working class
00:13:22 Speaker_01
is doing in your country to per capita gdp to cost of goods i mean obviously i care about if you want to scale a i for all the things we're doing i want to be able to do it effectively but if you just look over time it's really clear the relationship between how well is your average working middle class person doing in their quality of life the cost of life.
00:13:39 Speaker_01
and the cost of electricity and cost of power. And it's crazy, we're not just like ramping up and cutting things to do this.
00:13:45 Speaker_04
More electricity means more automation, means more AI, means more things are being done for every person that are being done in factories or being done by machines. And that unlocks a new kind of level of living.
00:14:00 Speaker_04
And that's been kind of a continuous process for humans. There's this guy that writes these books that Bill Gates always talks about, Vaclav Smir, what's his name?
00:14:09 Speaker_02
smell that club smell.
00:14:11 Speaker_04
He's got all these books on the history of the relationship between energy and kind of prosperity.
00:14:15 Speaker_03
There's definitely correlation there. And there's definitely causation there, Gavin. And there's even like really simple ones.
00:14:22 Speaker_03
I don't know if you've ever seen Lee Kuan Yew from, you know, the founder of Singapore essentially talk about just how air conditioning change the country's fate.
00:14:33 Speaker_02
It raises average IQ by two or three points. It really matters. But look, at the end of the day,
00:14:39 Speaker_04
At the end of the day, my key point was we have to make sure that this administration and Joe can hear me on this.
00:14:45 Speaker_04
And I know he believes this, but for me, it has to be such a priority that we accelerate a nuclear energy rollout in the United States, because that's what China is doing.
00:14:56 Speaker_04
They have dozens of Gen four reactors that are going to get built out, each of which has a gigawatt of production. capacity. And they're doing it at a cost that we can't compete with today.
00:15:06 Speaker_04
But fundamentally, they can do it in the US, we can't even do it and regulations.
00:15:11 Speaker_03
It goes back to Joe.
00:15:11 Speaker_04
Yeah. And so the regular the regulatory structure prohibits our ability to actually expand energy capacity or electricity production capacity, which is a critical difference.
00:15:19 Speaker_04
And that ultimately leads to a situation where in 10 years, we're going to be looking across the water at you know, a competitive country that has 3x 4x the electricity production capacity of our country.
00:15:34 Speaker_04
And everything is cheaper, everything is faster, it gives them superiority and a lot of functions that we can't just this is a security thing too, because we need manufacturing here to be affordable and competitive.
00:15:44 Speaker_01
in order for our national security.
00:15:45 Speaker_01
You know, David, when you when you texted me last minute to join this, I was actually in a meeting with our friend from Founders Fund, who's building nuclear fuel again for the first time in the US, that's actually gone away, too.
00:15:54 Speaker_01
And so so that needs to be approved. But you know, I know Chris Wright, he's a nominee for the new energy, Secretary of Energy. And he, you know, he's super pro Liberty guy, but super pro cheap, cheap energy guys, pro nuclear.
00:16:05 Speaker_01
So I think we have some really great people who care about this, we're going to be fighting hard for it.
00:16:08 Speaker_03
Gavin, what's your read on it? Yeah, what's your read on energy and the blockers?
00:16:13 Speaker_02
I mean, more nuclear, more better. I agree with everything Joe said. And the only thing I would just add is it is the most environmentally friendly kind of energy source.
00:16:25 Speaker_02
In some ways, it's even more... I think it is highly likely that in my lifetime, the world just runs on solar.
00:16:35 Speaker_02
We all know compound interest is the greatest force on earth, but if you just look at the rate at which photovoltaic cell efficiency is compounding, battery efficiency is compounding, and people make these balance of system arguments.
00:16:49 Speaker_02
It will never be as cheap as nuclear, but it will likely approach coal. I think a lot of the world will run on solar, but that's going to take 50 years. Nuclear is arguably just as environmentally friendly done right and carefully, and it is here now.
00:17:06 Speaker_02
And so I just... Yeah.
00:17:08 Speaker_01
I mean, that's, yeah.
00:17:11 Speaker_03
It is unbelievable to watch, not exactly Moore's law, but this precipitous drop in the cost of just solar panels.
00:17:20 Speaker_01
Solar is very impressive, but in some ways to me, it's a little dystopian to think about all these forests just covered with this stuff. I mean, I think it's great.
00:17:27 Speaker_04
And it's rate limiting. It's rate limiting. many, many acres rolled out. And with nuclear, you can have a building that can, you know, power the equivalent of many acres. So the answer is both.
00:17:39 Speaker_02
The answer is both. But it is like Elon has tweeted many times about the tiny fraction
00:17:45 Speaker_02
of, you know, deserted desert deserts of America need to be covered with panels, and then you put in batteries, there's still a space limiting, like, let's just fast forward 100 years on planet Earth.
00:17:57 Speaker_04
And if you look at the past 100 years, and 100 years before that, like energy demand, even on a on a per capita basis, has this nonlinear kind of scaling problem. And that means that land consumption will scale nonlinearly. Now we have it.
00:18:13 Speaker_01
going to say 100 years, though, I mean, sorry, interrupt, you're gonna say 100 years technology changes, it's very clear, you can probably do it from space if you really want it to.
00:18:19 Speaker_01
I mean, this sounds crazy, but you probably could have like 10 of these in space. I mean, 100 years as far.
00:18:23 Speaker_04
I mean, we have we have enough uranium and just the crust of the, you know, like Northern Hemisphere to, in other words, to power everything we are on the verge of unlimited energy for all time.
00:18:36 Speaker_03
Just to wrap this up and move us on.
00:18:38 Speaker_03
If we can get out of our own way with a bunch of midwits who have put so much regulation in place and who are working from home for four hours a week, if we can just get them out of the way, then maybe we could approve some nuclear reactors and a little more solar batteries.
00:18:54 Speaker_04
Did you just call government workers midwits?
00:18:56 Speaker_03
No, just the ones who are blocking shit. If you're not blocking shit and you're working 50 hours a week, God bless people working hard in the government. That's exactly my point.
00:19:06 Speaker_03
But there's some number of them who are just obviously do not see the forest through the trees.
00:19:10 Speaker_02
On that point, Jake out is interesting. Texas is the number one solar producer in the country. And it's not because everybody there is more environmentally conscious.
00:19:20 Speaker_03
No, we're not.
00:19:22 Speaker_02
It's just, it's easy to build stuff in Texas. Solar power plants.
00:19:27 Speaker_03
Yeah, this is I mean, for the libs. in cities who are so pro solar and anti natural gas or whatever. Yeah, look at Texas, they're just build as much as you want.
00:19:37 Speaker_03
And where Joe and I live in Austin, home prices have gone down two years in a row, rent has gone down two years in a row. They are building like lunatics because you don't need to beg and and bribe people to build stuff. Joe, maybe some thoughts on
00:19:54 Speaker_03
What we've seen in regulation, Austin City Council is not perfect.
00:19:57 Speaker_01
Austin is called the blueberry in the tomato soup. So there may be a tiny bit of baking going on. But despite that, you're able to build there and everywhere else around you're building like mad. So it works. There's there's there's plenty of supply.
00:20:07 Speaker_01
I agree.
00:20:07 Speaker_03
Speaking of regulation, Gary Gensler is out. Paul Atkins is in and Bitcoin just cracked 100. This is all obviously related. Atkins was previously a commissioner under Bush to in the early 2000s.
00:20:20 Speaker_03
In the 90s, he worked for both Bush one and Clinton at the SEC. According to the New York Times, Atkins is admired among DC legal circles and regulators. He's pro-crypto and he's been helping draft some best practices for the crypto trading platforms.
00:20:36 Speaker_03
As you know, Gary Gensler's approach to crypto was there's a rule set follow the rule set. We're not here to change the rules. We're here to enforce them. Good luck.
00:20:47 Speaker_03
And in some cases, I think maybe he was right with icy hosing a bunch of scams, but he also gave good actors no path to go forward. Anybody have strong feelings on this?
00:20:58 Speaker_01
I love Paul J. Cowley. I think he's a fair guy. Yeah, I've met him several times at conferences and groups and he's a really smart guy, cares about the rules, cares about helping innovators.
00:21:08 Speaker_01
The thing that really pissed everyone off with Gary, I mean, I love you probably seen like, I think both Coinbase with Brian and the Winklevoss twins have put something out.
00:21:17 Speaker_01
They won't even hire anyone who worked with Gary on any of this stuff they were doing. And the reason they're that angry at them is they were purposely not defining the rules in certain cases and then going after people.
00:21:27 Speaker_01
after not having to find it in order to kind of like play gotcha game. It was very dishonorable. And Paul sees all that there's no way he's gonna allow that.
00:21:34 Speaker_03
Gavin, any thoughts here on how this might change regulations in our business? Also, the fund business, Joe is a venture capitalist, HVC, you're in public markets and funds.
00:21:45 Speaker_03
have I do precede so yeah, what do you think in terms of funds and regulations there and then crypto and you know, the SEC may be becoming innovative as opposed to punitive and you know, what's the word for free program?
00:22:01 Speaker_03
What's the word I'm looking for here? adversarial? Well, they are a regulator. They are a regulator. They seem to have gone beyond just regulating they seem to have been aggressively adversarial.
00:22:14 Speaker_04
Yeah, I mean, they're regulatory enforcement agency. That's their job. So I don't know, like,
00:22:19 Speaker_03
I mean, but not giving a path or not even meeting with people. I think that was the thing that I felt was kind of weird.
00:22:25 Speaker_01
Well, they meet with you if you're a big donor to the left, they wouldn't meet with you otherwise. That was part of it too. That was sketchy. That was why SBF got tons of meetings, but Brian got none, right? I mean, it's nonsense like that.
00:22:33 Speaker_02
I do think cryptocurrencies at some level fundamentally reduce the power of nation states. And that is something that is oft professed by the true believers, but it is true.
00:22:48 Speaker_02
And so if you are on the left and you are a devout believer in the power of the state to do good things, I get why you would not like cryptocurrencies. At the same time, we're very early in crypto.
00:23:03 Speaker_02
I do think I read with interest all of the posts that David Marcus and his peers at Libra made about what happened to them.
00:23:13 Speaker_03
Libra was a Facebook project to embrace cryptocurrency at a very intrinsic level onto the sort of identity level of every one of their billions of users.
00:23:24 Speaker_02
And I think you can argue it would have been really, really good for not just America, but the entire world.
00:23:30 Speaker_02
You know, there are a lot of immigrants in America and in America who send remissions back to their home countries at extremely high predatory rates, predatory rates.
00:23:41 Speaker_02
It would have made that free, and that would have been amazing for a lot of really hardworking people all over the world. Visa and MasterCard, they do charge big fees.
00:23:52 Speaker_02
I mean, Visa and MasterCard do not charge big fees, but the credit card complex in aggregate is a reasonably big fee. I mean, everybody, oh, it's just 2%, 2.5% to make it perfect and safe.
00:24:05 Speaker_02
I think Facebook had a sound argument that they could have done that cheaper. That would have been an efficiency game for America. And it really did bum me out to read some of the letters that they sent.
00:24:19 Speaker_02
The way they killed Libra, if anyone doesn't know, maybe you could pull up David Marcus's post,
00:24:24 Speaker_02
They just, all these politicians, sent letters to participants in financial markets saying, we don't know if they are doing anything wrong, but we think they probably are, and we're going to look at this very closely, and we want to discourage you from participating.
00:24:40 Speaker_01
Well, it was worse than that. It was like a mafia letter. It was like, if you are to support this and help with this, we are going to look into everything else you are doing and we may then find some issues. It was like a mafia threat.
00:24:51 Speaker_01
We can't stop you legally, but watch out. It was really sketchy. It was Sherrod Brown, who now is out of office, who led this, the senator from Ohio. But it was really bad. It was really bad what they were doing.
00:25:01 Speaker_02
It was really bad. I found it upsetting as an American.
00:25:05 Speaker_03
And it's, you kind of hinted at this, Gavin, the fear of governments is that they will lose control of money supply and monetary policy, maybe unpack that a bit. And then, Freiburg, we'll go to you on the same sort of thread.
00:25:20 Speaker_02
Yeah, I mean, look, it's a, it is a rational fear. I mean, controlling monetary supply, like, at some level, you know, the greatest, you know, powers we give the state are a monopoly on violence to keep us safe.
00:25:34 Speaker_02
And control over the money supply has a means of exchange, a unit of account. And those are great powers, particularly if you're America and you reserve currency.
00:25:44 Speaker_02
The only thing I would just say to balance this out, and I do think people are very positive on Paul Atkins. I've never met him. But the reaction from people who know him, like Joe, and who I respect, has been very positive.
00:25:58 Speaker_02
It is important to remember, we have the best capital markets in the world. you know, the US equity and fixed income markets are the most trusted places on earth and we can always make them better, but just.
00:26:12 Speaker_02
it is very, you know, you want to be very vigilant about keeping them fair and keeping out things like inside information, which makes people feel comfortable doing business here, you know, making, you know, having investors have confidence in a company's financial statements.
00:26:27 Speaker_02
And those financial markets are one reason America is such a great country.
00:26:31 Speaker_03
And Gavin, to put this in context, this was during a time period, this David Marcus Libra process, when they felt certain people in government And I'm not saying I endorse this, but this is their position. Zuckerberg had too much power.
00:26:47 Speaker_03
Zuckerberg was censoring people, the right felt they were being censored. The left felt that Cambridge Analytica and people were using targeting nefariously. The general vibe
00:27:00 Speaker_03
And even JD Vance's kind of was in on this as well, was too much power, specifically at meta, too much influence. Now they've got this many people, this penetration, and the algorithm, plus we're gonna give them money.
00:27:15 Speaker_03
And they're gonna have power over people's wallet. And then what is the government have, they can't censor people, they can't control the message, and they can't control the purse strings. That is the time period we're talking about here.
00:27:26 Speaker_02
I don't know. I understand 100% why they did it. I just think as an American, at a minimum, the way that they did it was to, you know, use one of Joe's phrases, dishonorable.
00:27:38 Speaker_02
You know, if you want to say that we're going to kill this, then just like, let's have a debate as a nation.
00:27:44 Speaker_03
Absolutely. Don't do it in the shadows.
00:27:46 Speaker_02
Yes. Rule of law. Rule of law is also another reason America is a great country. Yes.
00:27:52 Speaker_03
Freyberg, your thoughts on Dave Marcus's comments? and this SEC pick and just generally a more less regulation kind of situation.
00:28:05 Speaker_04
I think the SEC is like one of the most important agencies we have. And I think they're one of the best federal agencies. So I've worked with them. And I've worked with any other agencies.
00:28:16 Speaker_04
And there's all these issues with the SEC, but they play a very important job. And if you've worked in and foreign markets, and you've dealt with foreign securities regulators, you're going to be like, thank God for the SEC.
00:28:27 Speaker_04
Like, can't wait to go back. This whole crypto thing, there's a distinction, I think, between Bitcoin and cryptocurrencies as speculative kind of assets, speculative trading.
00:28:39 Speaker_03
What do you see those differences as?
00:28:41 Speaker_04
Well, I definitely concur with Gavin. I think Bitcoin fundamentally is meant to be supposed to be ultimately will become a real threat to the US dollar.
00:28:51 Speaker_04
And it's kind of ironic that Trump had this declaration this week, that he's going to put 100% tariff on all these BRICS nations that try to participate in an alternative currency to the US dollar, the greatest currency on earth, when he literally turns around and then says, we're going to support Bitcoin.
00:29:06 Speaker_04
It felt like the biggest irony of the week to me, because I do think Bitcoin is the big threat. to the US dollar. And I do think that at some point, whether it's this administration or the next, they're going to wake up to that fact.
00:29:18 Speaker_04
And maybe the Bitcoin does, you know, the network state concept does emerge. And that's where we end up. But I do think we want to have and are going to have a strong federal government in the United States for quite some time.
00:29:28 Speaker_04
That's going to play an important role in everyone's lives here. And I don't know if you can really just say, let the dollar, you know, be supplanted by Bitcoin. Bitcoin seems to be a more of a safe haven asset. And that seems to be the trade that it's
00:29:40 Speaker_04
store should be kind of store value and alternative. It's just gonna take over gold.
00:29:44 Speaker_03
What do you think? You think the state has reasonable concerns about crypto competing with it?
00:29:52 Speaker_03
And then maybe specifically, when you saw Trump talking about, hey, congratulations on your Bitcoin, I did this for you on 100k and taking credit for it at the state which he should take credit for it. He did it. He did that last $40,000 per coin.
00:30:05 Speaker_03
And then you see him talking about the bricks. And then we have the US currency. So which is a bigger threat to American exceptionalism and supremacy on planet Earth? Bitcoin or BRICS?
00:30:19 Speaker_01
So one represents a move towards liberty and one represents a move towards authoritarianism. If BRICS were to become dominant, if China and Russia were able to control global currency together and other players, that is terrible. It's bad for the U.S.
00:30:32 Speaker_01
for so many reasons, bad for U.S. consumers for so many reasons. He's right to fight it. At the same time, having, you know, to channel biology, having this like pro-liberty network state, like forces in that direction.
00:30:43 Speaker_01
Like, for example, I think rather than just you know, Hong Kong and Singapore, Hong Kong has been lost. We should have like more Hong Kong and Singapore in the West to compete with the US.
00:30:49 Speaker_01
That'd be good for all of us who are on the pro-freedom side of the US and make the US wealthier, would show examples of new experiments to create great wealth.
00:30:57 Speaker_01
And then that's kind of the side of Bitcoin is you want more experiments and competition from the liberty distributed side. You don't want competition from the authoritarian side. So to me, it was very consistent.
00:31:06 Speaker_02
Yeah, well, I would just say Texas is the Singapore of America, you know, and it is putting pressure on the rest of America. And I don't say that just because I grew up in Texas. Um, it's just a fact.
00:31:15 Speaker_02
I do think longterm Bitcoin, I do not think the bricks will ever be able to replace the dollar. There's rule of law, even if it is occasionally been corrupted in America is very, very powerful. Yes. As opposed to rule by law. And, but I do think Bitcoin,
00:31:36 Speaker_02
will at some point be a serious threat to the US dollar. And that just is what it is.
00:31:43 Speaker_01
And we will see how different administrations react.
00:32:11 Speaker_02
I agree with all that. I will just say on AOC, I thought it was very interesting. I think if you're a Democrat, I think you're probably largely heartened by the intellectual leaders of that party, their reaction to losing.
00:32:24 Speaker_02
It's focused around, hey, we do need to deregulate. It is too hard. to build. Josh Shapiro has been tweeting every three days about how these make it easier, you know, to do business in Pennsylvania.
00:32:34 Speaker_02
It used to take 20 days to become get a hairdresser license. That takes an hour. All that is good. But I actually thought AOC, who is a very talented politician. She's an extraordinary communicator, is extraordinary communicator.
00:32:47 Speaker_02
Her reaction was like she posted this on Instagram. If you voted for Trump, I want to hear why. I want to hear the things you listen to that convinced you. Like, I don't say this out of anything other than genuine curiosity.
00:33:02 Speaker_02
Basically, clearly I am missing something and I, you know, I want to listen. And I just thought that was a very interesting reaction.
00:33:09 Speaker_03
That is the proper reaction. Yeah, absolutely.
00:33:11 Speaker_02
Yeah.
00:33:12 Speaker_03
I want to point out one thing I did. I was doing some research before the show, and I found this SEC speech. This is a really fascinating This is from 2007 from Paul. And he was kind of giving his State of the Union here.
00:33:27 Speaker_03
And he's talking about doing some self reflection. And he's talking about accreditation rules in 2007. Before the great financial crisis. The concept of economic risk and return also affect a different proposal of the commission, the SEC.
00:33:43 Speaker_03
Relating to private investment funds, specifically part of the commission's proposal would add an additional requirement for any natural accredited person to have at least $2.5 million in investments before he or she could invest in a private investment fund like a hedge fund or private equity fund other than a venture capital fund.
00:34:01 Speaker_03
The underlying premise for the Commission's proposal is that these types of investments are too risky for individuals other than the very rich.
00:34:07 Speaker_03
Therefore, we would have to presume that the non-rich are either unsophisticated or lack access to sophistication, and it is simply not tolerable to have these types of people at risk of losing their money on a hedge fund.
00:34:19 Speaker_03
Assuming that these premises are true, however, what evidence does the Commission have to support the conclusion that private investment funds are the most risky? What makes a hedge fund or a private equity fund more risky than a venture capital fund?
00:34:31 Speaker_03
Great question. And how does the risk profile of a pooled investment compare with the risks of investing in securities of a single issuer for which this new 2.5 million standard is? This is where it gets super interesting.
00:34:42 Speaker_03
Many public comment letters express indignation at the commission's proposal. One commentator wrote, stay out of my wallet. Stop trying to protect me from myself. Stop presuming
00:34:52 Speaker_03
to know more than I do about my own life, risk tolerance and financial sophistication.
00:34:56 Speaker_03
The commission's parole may very well prevent the non-rich from losing their money in private investment funds, but it also certainly will prevent the non-rich from participating in any upside profits and gains on these funds.
00:35:08 Speaker_03
Does this mean the rich get richer while the non-rich should be content to just hold their place on the economic ladder? This to me when I saw this, I was like, you know what, I am feeling absolutely fantastic about Trump.
00:35:21 Speaker_03
If he stops these wars, or stops one out of two and keeps us out of you know, participating even though we're not on the ground with the other any new ones, and he removes regulations.
00:35:31 Speaker_03
And we have people in power who understand that moving up the socio economic ladder is as important as protecting the downside risk, especially when we see wealth polarization, this is a great pick.
00:35:45 Speaker_03
Now, the other picks, there are some whack-pack picks in there, I'll be totally honest. I don't know what the strategy is, Joe, I'll ask you that in a minute.
00:35:52 Speaker_03
But what do we think, Gavin, of this sort of approach here, which is really thinking thoughtfully about what is sophisticated and what are we doing here? What is the outcome we're looking for?
00:36:06 Speaker_02
I think it's great. The reality is a hedge fund that runs with a lot of leverage probably is more risky. I don't know that it's more risky than a single security.
00:36:17 Speaker_02
Like at the end of the day, since he wrote that letter, it was an incredible 15 year run for private equity.
00:36:24 Speaker_02
And, you know, now all the big private equity firms are making a huge effort now, um, probably the business is more mature and maybe the return opportunities aren't what they were to appeal to main street America.
00:36:38 Speaker_02
Like it would have been cool if, you know, Blackstone or KKR or whoever, and, 07, 08, 09, 2010, you know, could have had their fund up on like the Fidelity marketplace for subscription. That probably would have been good for America.
00:36:53 Speaker_02
So I think his comments are well taken.
00:36:55 Speaker_01
Imagine if Elon could raise for SpaceX, like, you know, from regular Americans, I'm sure he would have loved to do that if it wasn't crazy risky with the SEC, right?
00:37:02 Speaker_01
So there's all these people, they're blocking us from letting the average person be part of it. It does keep them from climbing the wealth ladder. I think it's crazy.
00:37:09 Speaker_03
Yeah, a freebird. Any thoughts here? I mean, this has been my pet peeve for a long time is letting people do what they want with their money.
00:37:15 Speaker_03
If you don't allow people to take risk with their money and move up from poor to middle class for middle class, upper middle class, and maybe eventually becoming affluent, Jason, there's a lot of places people can invest their money, they can buy public stocks, there's $20 trillion of public stocks, they can buy
00:37:30 Speaker_04
I don't think that you're prohibiting people from transitioning their wealth, like bans by not being able to buy private stocks.
00:37:35 Speaker_04
In fact, I think it's more likely than not that people are gonna go market bullshit securities in private markets and rip poor people off even worse. And that's why there are these regulatory kind of barriers. And I don't think that it's necessary.
00:37:47 Speaker_04
Look, everyone says let's make it everything free and everything libertarian seems like a good idea. And so someone gets punched in the face, gets ripped off, someone dies from a drug, you know, that's not, properly tested.
00:37:58 Speaker_04
And then we're all like, where are the regulators? Where are the agencies to protect the individuals? And I think that's the role that these agencies are kind of providing. And that's the reason these rules are in place.
00:38:08 Speaker_04
I don't think that this is like one of these things where, Oh, liberty is being denied. I think it's, you know, there's a, there's a careful, there's a careful line to walk.
00:38:15 Speaker_03
Yeah.
00:38:16 Speaker_02
I'm generally pretty centrist in most things. So I agree with what a lot of David said.
00:38:22 Speaker_02
I do think if you were to allow ordinary Americans to buy private companies that are held to a lower standard of disclosure and reporting than public companies, something would have to change. If a private company wants to
00:38:38 Speaker_02
Like public companies are, you know, are held to certain standards for a reason. And there is a lot of fraud in venture. There are unethical people. There are.
00:38:52 Speaker_04
And smart, diligent people can't even find it all. You know, that's like the smartest, most diligent people are still getting ripped off.
00:38:59 Speaker_02
Yeah. I mean, look at FTX. I mean,
00:39:01 Speaker_03
I mean, FDM is ripped off some very, very intelligent friends of ours.
00:39:05 Speaker_02
Did any diligence at FDX?
00:39:07 Speaker_03
Yeah.
00:39:08 Speaker_02
But which is an important part of this.
00:39:10 Speaker_03
But I mean, if you had a sophistication, I mean, there's such an easy solution to this, you just do a sophistication test, people take a five hour course, and they answer 50 questions the end like a driver's license.
00:39:20 Speaker_02
Well, I do think it is a little, that's why I talked about private equity. These are extremely sophisticated institutions who are always investing alongside their clients and they're buying established businesses. They're putting leverage on them.
00:39:33 Speaker_02
But like, I think private equity is kind of a middle ground and on a pooled basis. I think you could argue, and maybe those funds would need to change their reporting and their disclosures to deal with the average American.
00:39:47 Speaker_02
And by that, I mean strengthen it. His comments were well taken. That's what I would say.
00:39:57 Speaker_03
Joe, what are your thoughts?
00:39:58 Speaker_02
Yeah.
00:39:58 Speaker_01
I mean, I think the elephant in the room- Going around the horn here.
00:40:00 Speaker_01
The elephant in the room that's really funny here is that you have the people on the left saying that only people with lots of money are smart enough to be allowed to do this, which I think is just a very funny position to take.
00:40:09 Speaker_01
It's like, yeah, you have to have a few million dollars to be sophisticated enough to be allowed to do this. I like your idea, Jake. I'll have a test. There should be some other way of accessing this if you really want to. I agree.
00:40:20 Speaker_01
Listen, I don't want to live in a world where we're all constantly being spammed to the average person by stupid financial stuff. We would be scammed all the time. There probably should be some rules. I agree. I'm not a total libertarian on this.
00:40:32 Speaker_01
I think it'd be really annoying. But yeah, but just to totally block people from participating, to me, that sounds crazy.
00:40:38 Speaker_02
I mean, a finance college professor, unless they had another job, might not
00:40:46 Speaker_03
you know, be able to do this and make $250,000.
00:40:52 Speaker_04
Let's talk about a very important public market set of transactions.
00:40:57 Speaker_04
Gavin, I'd like your point of view on Michael Saylor's convertible note issuances, being used by Bitcoin, which this morning Bloomberg reported is the hottest trade in hedge funds right now. Nick, if you could pull up the article.
00:41:12 Speaker_04
And then Jekyll, I know you've been an outspoken opinion setter on Michael Saylor's promotion of his securities actions. We'd love your point of view, Gavin.
00:41:23 Speaker_02
At some point, this does get too big. For a while, when it was smaller, you know, you could support the debt.
00:41:29 Speaker_04
Sorry, could you explain it? Can you explain it to everyone, Gavin?
00:41:31 Speaker_02
Yeah. So what he is doing is issuing debt and buying Bitcoin with the premise that Bitcoin is always going to go up. And he, you know, has made eloquent arguments why that is the case.
00:41:46 Speaker_02
no trees grow to the sky and I think the interest expense on his convertible notes is 75 million off the top of my head. And by the way, I am, I could care less about micro strategy. Like I'm not close to it. I'm not involved. Yeah.
00:42:03 Speaker_02
I don't know any hedge funds who own it. No horse in the race. Yeah. Yeah.
00:42:08 Speaker_02
I, I think a lot of hedge funds are short micro strategy, but I have no horse in the race, but the, but he's the underlying business that, you know, pays the interest expense on the debt.
00:42:22 Speaker_02
only does $400 million a year in revenue and it's high gross margin revenue. But I just, unless debt investors have absolute confidence in Bitcoin has collateral, and I don't think that's where fixed income markets are yet.
00:42:43 Speaker_02
he, it will get to a point where it is, it is too big for the size of his company. And then, yeah, maybe he can over collateralize it and, you know, have $10 in Bitcoin for every dollar of debt.
00:42:56 Speaker_02
But then like the, the magic money creation machine that, you know, I see discussed on X breaks down because that's like, you know, that's, um, that's very, very different than what is being discussed today.
00:43:12 Speaker_04
Joe, do you have a point of view? Because Joe's got to run, by the way. So Joe, do you want to close us out with a point of view?
00:43:16 Speaker_01
I see defense people down here in LA. Listen, I am very bullish Bitcoin. I love all the energy of our society around it. I agree with what you said, Dave, that there needs to be some barriers for the public taking crazy risks.
00:43:28 Speaker_01
And I think the risks around how he's accessing this is actually very unusual and does scare me a bit. And people need to do their research and they shouldn't just throw money without studying it.
00:43:37 Speaker_01
It does scare me a little bit how blithely people are throwing money at this without knowing. the kind of leverage he's taking. Yeah.
00:43:44 Speaker_04
Joe, anything else you want to share that you're up to that you're excited about before you head out?
00:43:48 Speaker_01
Well, this weekend is the annual defense forum at the Reagan Library Room on the board. It's the biggest defense event of the year. Everyone's coming. And I guess I'm really excited that America has woken up.
00:44:00 Speaker_01
And assuming we can bring back more advanced manufacturing here, I think there's enough top companies now with Andrew With Saronic, we're going to be building thousands of these vessels for the Navy.
00:44:08 Speaker_01
With AI, with EPRIS, we're turning things off 10 miles away, whatever, fairly far away with microwave radiation. It's some really cool technology coming that actually is going to make us be able to deter our enemies.
00:44:18 Speaker_01
So if you asked me six, seven years ago, I was panicked. We're going to get way behind China. I'm feeling really good about it now. And I think the Pete Hegsteth pick is actually someone I'm quite bullish on from everything I'm hearing.
00:44:30 Speaker_01
So I think things are going the right direction.
00:44:32 Speaker_04
Is there a wholesale upgrade happening in defense in the United States? Are all systems and all strategies being rethought right now, using technology and innovation and kind of a performance based product mindset?
00:44:47 Speaker_04
leading kind of a reinvention of everything? Is that what's going to happen in the next four years?
00:44:51 Speaker_01
Warfare has fundamentally totally shifted. We're seeing some of this in Ukraine. There's all sorts of new ways you want to swarm things on the land, swarm things in the water, swarm things in the air.
00:44:59 Speaker_01
How do they coordinate and how do they work together? How do you manufacture enough of these things? And how do you use electronic warfare in new ways? It's basically created by this. that is just a whole new way of doing things.
00:45:10 Speaker_01
And we are going that direction. Too much of the money, David, like 95% of the money is still going towards like, frankly, like wasteful legacy, like mostly things we don't need. Cost plus maintenance.
00:45:21 Speaker_04
Yeah.
00:45:21 Speaker_01
But enough is shifting and there's enough good people fighting. And as long as we keep just allowing open competition, allow it to say, okay, which is better and just let the best things win.
00:45:29 Speaker_01
As long as we keep doing that, I think it's going the right way. I'm feeling very good about it.
00:45:33 Speaker_04
Is the Chinese position shift in their technology strategy and their system strategy gonna motivate a shift here, do you think?
00:45:41 Speaker_01
Is there a shift underway? It already has. It definitely already has.
00:45:44 Speaker_04
So we don't need big aircraft carriers, we don't need F-35s, we need drones, we need lasers, we need weapons.
00:45:50 Speaker_01
I think there's a role for carriers and force projection. I don't think we need incrementally a ton more of them.
00:45:54 Speaker_01
I'm not this crazy radical where you get rid of all this, but yeah, on the margin, I'd much rather have 10,000 more smart drones above and below the water than like an intro incremental carrier, right?
00:46:05 Speaker_01
So there's there's on a margin, there's all these things that are better uses of money. And I think we're pushing that way.
00:46:10 Speaker_04
And is there a huge tidal wave of venture money? I was at a dinner last night where there was this conversation about defense tech used to be off limits and a lot of LPA. So you can't invest in defense companies.
00:46:20 Speaker_04
That's now changed or is changing and everyone's kind of coming up with their own defense tech strategy. Do you think I mean, you were obviously early in this, Gavin, I don't know if you're an investor in this space.
00:46:29 Speaker_04
But are you guys seeing a big shift? Yeah.
00:46:31 Speaker_01
I obviously, listen, there's only been nine unicorns, I think, still at this point. And I started three of them and invested three of them in the first round. So, I'm obviously pretty involved in the space.
00:46:40 Speaker_01
And I think, listen, it helps me if there's more money for my companies, which is really great. I think there's probably the right answer for the US. It's not going to be like a thousand businesses or a hundred businesses.
00:46:49 Speaker_01
It's going to be like seven to ten new primes. One of them is obviously Yandere. I think one is probably Saronic and Epirus, but we'll see. But there's going to be 7 to 10 new primes, and that's what it's going to be.
00:46:59 Speaker_01
So there's going to be a lot of zeros and a lot of bad investments. But yes, these 7 to 10 new primes are going to be huge. And if you can get access to them, you're going to do really well.
00:47:06 Speaker_02
Kevin, how do you look at that market? Do you agree? I agree with everything Joe said. The only thing I would just add on China
00:47:13 Speaker_02
What we are doing by restricting their access to advanced compute and advanced networking, if you have read or watched the Three-Body Problem, America is unfolding so fond over China.
00:47:27 Speaker_01
Yeah, that's a great way to say it.
00:47:30 Speaker_02
I have been really impressed with some of the Chinese models that have come out. And I think the risk to this strategy is necessity is the mother of invention.
00:47:38 Speaker_02
And despite this handicap, they're managing to stay just behind the leading edge of America, which is amazing. But NVIDIA's Blackwell chip comes out next year. You're going to have new chips from AMD, new ASICs from Broadcom.
00:47:54 Speaker_02
And I think at that point, it is not going to be possible for them to keep up anymore.
00:48:01 Speaker_03
So that's actually positive regulation and great, in your mind, foreign policy.
00:48:11 Speaker_02
It is very aggressive foreign policy.
00:48:13 Speaker_04
Yeah.
00:48:15 Speaker_02
Clearly, you know, that could have lots of unforeseen consequences.
00:48:19 Speaker_04
Yeah. What do you think about the, the rare earth trade restrictions coming to us and is that going to actually affect the supply?
00:48:25 Speaker_02
We have lots of rare earth here in America. Like in America, we have everything in America. Like we, you know, and I think there's a project underway to restart rare earth production. If there were ever to be a conflict, all this stuff would go away.
00:48:38 Speaker_01
It's a cost and it's allowing us to do the refining here. So refining some of this stuff, like we desperately need gallium, gallium nitride for things that I'm doing right with, with like shooting the microwave radiation.
00:48:48 Speaker_01
The problem is the refining is really messy. If you let it happen in the US, it will still be messy, but it will be cleaner. But we're not letting it happen. So there's things like this.
00:48:55 Speaker_03
So we're back to regulation. And obviously the cost here is different. We have a different cost structure.
00:49:00 Speaker_04
Joe, you've got to go meet 20 senators. So thank you.
00:49:02 Speaker_03
We appreciate it. Thank you, guys. This was fun.
00:49:04 Speaker_04
Thanks, Joe. Good times. Yeah. And I would just say this is, I think, a very important moment for AI.
00:49:09 Speaker_03
And, you know, it's a, it's a, it's a, it's a, it's a, it's a, it's a, it's a, it's a, it's a, it's a, it's a, it's a, it's a, it's a, it's a, it's a, it's a, it's a, it's a, it's a, it's a, it's a, it's a, it's a, it's a, it's a, it's a, it's a, it's a, it's a, it's a, it's a, it's a, it's a, it's a, it's a, it's a, it's a, it's a, it's a, it's a, it's a, it's a, it's a, it's a, it's a, it's a, it's a, it's a
00:49:33 Speaker_02
you know, for this entire AI trade in public and private markets. You know, everybody I'm sure who watches your podcast is very aware of scaling loss.
00:49:43 Speaker_02
And we have not had a scaling loss for training, or if you 10X the amount of compute used to train a model, you significantly improved the intelligence and capability of that model.
00:49:53 Speaker_02
And often they're these emergent properties that emerge alongside that higher IQ. No one thought it was possible to make more than 25,000, maybe 30,000, 32,000, pick a number, NVIDIA hoppers coherent.
00:50:11 Speaker_02
And what coherent means is in a training cluster that each GPU, to kind of simplify it, knows what every other GPU is thinking. So every GPU in that 30,000 cluster knows what the other 29,999 are thinking.
00:50:28 Speaker_02
And you need a lot of networking to make that happen.
00:50:31 Speaker_04
Enabled by InfiniBand, right?
00:50:33 Speaker_02
InfiniBand, and I think even more importantly, NVLink, although a lot of Ethernet is, you know, never bet against the internet, never bet against Ethernet.
00:50:44 Speaker_02
Like if you read the Lama 3.1 technical paper, you know, it got a lot of people excited about skinny link Ethernet.
00:50:51 Speaker_03
Just to slow down for the audience here, Gavin, maybe explain why transporting information between the GPUs is important. And we're in the weeds here a little bit.
00:51:02 Speaker_03
Everybody's heard of Ethernet, but some of the other protocols and ways of moving stuff around, large amounts of data. That's what these H200s, H100s do particularly well.
00:51:11 Speaker_03
They'll move a couple of terabytes a second from one processor to the next processor.
00:51:17 Speaker_02
Yeah. You know, picture a server in the case of a GPU. It looks like maybe three pizza boxes stacked on top of each other, and it has eight GPUs together. And those eight GPUs are connected today with something called NVLink.
00:51:40 Speaker_02
You can think of the speed of communication on chip. is the fastest. Chip to memory, next fastest. Chip to chip within a server, next fastest.
00:51:53 Speaker_02
And so you take those units of servers, which are connected, the GPUs are connected on the server with a technology called NVSwitch, and you stitch them together with either InfiniBand or Ethernet into a giant cluster.
00:52:09 Speaker_02
And each GPU has to be connected to every other GPU and know what they're thinking. They need to be coherent. They need to kind of share memory. For the compute to work, the GPUs need to work together for AI.
00:52:27 Speaker_02
And no one thought it was possible to connect more than 30,000 of these with today's technology.
00:52:35 Speaker_02
from public reports, Elon as he so often does, focus deeply on this, thought about it from first principles, how long it should take, the way it should be done. And he came up with a very, very different way of designing a data center.
00:52:53 Speaker_02
And he was able to make over 100,000 GPUs coherent. No one thought it was possible.
00:53:03 Speaker_02
If I was, I was a last minute ad for this, but I would have said there were all these articles that were being published in the summer saying that no one believed he was going to be able to do it. It was hype. It was, you know, ridiculousness.
00:53:18 Speaker_02
And that was coming. The reason the reporters felt comfortable writing those silly stories is because engineers at Meta and Google and other firms were saying, we can't do it. There's no way he can do it.
00:53:31 Speaker_06
Hmm.
00:53:33 Speaker_02
He did it. And I think the world really only believed it when, you know, Jensen did that podcast, I think with, uh, wasn't it with Kirschner? Yeah, he was with Kirschner and said, um, what Elon did was superhuman. No one else could have done it.
00:53:49 Speaker_02
And I actually think you can argue that Elon doing that in a lot of ways kind of saved NVIDIA from a tough six month period when Blackwell was delayed because everyone who was waiting for Blackwell and thought it was impossible to make a hundred thousand hoppers coherent rushed out and bought a lot of hoppers to try and do it themselves.
00:54:09 Speaker_02
Now we will see if someone else is able to do it. It was really, really hard. No one else thought it was possible. And. As a result of that, Gruk 3 is in trading now on this giant Colossus supercomputer, the biggest in the world, 100,000 GPUs.
00:54:27 Speaker_02
In Memphis. In Memphis.
00:54:30 Speaker_03
At the old Electrolux factory. And they're putting a lot of energy in there, a lot of natural gas, a lot of... Yeah, a dingy Electrolux factory. Yeah.
00:54:40 Speaker_02
With a lot of megapacks around it. And the city of Memphis is all in on supporting this.
00:54:45 Speaker_05
Yeah.
00:54:45 Speaker_02
Which is obviously smart for them. But you have not had a real test of scaling laws for training, arguably since GPT-4. And this will be the first test.
00:54:55 Speaker_02
And if scaling laws for training hold, Grok-3 should be a significant advance in the state of the art. That is an immensely, you know, from like a Bayesian way to look at the world, that is like an immensely important data point.
00:55:12 Speaker_02
But if that card doesn't work, and I think it is going to work, I think ROK3 is going to be really good.
00:55:19 Speaker_03
I should note that I am... With consumers, yeah, you're involved.
00:55:23 Speaker_02
My firm is an investor in XAI.
00:55:25 Speaker_03
Got it. Yeah, they've raised a tremendous amount of capital, a lot of it from the Middle East, and they're supposedly going to build Colossus to a million GPUs. Is this data goal 10 times bigger than it is currently?
00:55:37 Speaker_03
There's been some debate back and forth, Freeberg, about, hey, are we hitting a wall here? Maybe you could explain the wall either of you to the audience?
00:55:45 Speaker_04
Yeah, David, well, I'll let Gavin speak to the wall. I mean, Gavin, I think one of the questions also is, you know, do we see an evolution? If the kind of increment in performance relative to the investment in
00:56:03 Speaker_04
net kind of training compute resources declines? Do we start to see a shift in how the architecture of the systems are run?
00:56:13 Speaker_04
Meaning like, do we start to build models of models and that starts to resolve a higher level architecture that unlocks new performative capabilities? So
00:56:23 Speaker_02
I would just say we're already building models of models. Almost every application startup I'm aware of is chaining models. You start with a cheap model, you check the cheap model's work with a more expensive model.
00:56:34 Speaker_02
Lots of very clever things are being done. Every AI application company has what's called a router, so they can swap out the underlying model if another one is better for the task at hand.
00:56:47 Speaker_02
As far as what the wall is, there's been a big debate that we were hitting a wall on these scaling laws and that scaling laws were breaking down. And I just thought that was deeply silly because no one had built a cluster bigger than 32,000 H100s.
00:57:05 Speaker_02
And nobody knew. It was a ridiculous debate. And there were really smart people on both sides. But there's no new data. GROC 3 is the first new data point to support whether or not scaling laws are breaking or holding.
00:57:22 Speaker_02
Because no one else thought you could make 100,000 hoppers coherent. And I think based on public reports, they're going to 200,000 hoppers. And then the next check is a million. It was reported they're going to be first in line for Blackwell.
00:57:36 Speaker_02
But Rock Street is a big card and will resolve this question of whether or not we're hitting a wall. The other question you raised, David, is very interesting. And by the way, we should note there is now a new axis of scaling.
00:57:51 Speaker_02
Some people call it test time compute. Some people call it inference scaling. And basically the way this works, you just think of these models as human.
00:57:58 Speaker_02
The more you speak to one of these models, the way you'd speak to your 17 year old going off to take the SAT, the better it will do for you. As a human, if I ask you, David, what's two plus two? Four flashes in your mind right away.
00:58:10 Speaker_02
If I ask you to unify a grand unified theory of physics that accounts for both quantum mechanics and relativistic physics, you will think for a lot longer. We have been, yeah, nobody knows.
00:58:21 Speaker_02
We have been giving these models the same amount of time to think no matter how complicated the question was.
00:58:28 Speaker_02
What we've now learned is if you let them think for longer about more complex questions, test and compute, you can dramatically improve their IQ.
00:58:36 Speaker_02
So we're just at the beginning of this new scaling law, but I think the question you raised on ROI is very good. And I'm happy to address it.
00:58:46 Speaker_04
And there's a context window shift underway as well, which also creates a new kind of scaling access, arguably, in terms of the potential set of applications.
00:58:57 Speaker_04
So networks of models, think time, context window, there are multiple dimensions upon which these, these tools ultimately kind of resolve to better performance.
00:59:09 Speaker_02
Oh, yeah, we have even if scaling laws for training break, we have another decade of innovation ahead of us. Exactly.
00:59:16 Speaker_04
And as my understanding from speaking to folks, I'm certainly not as deep and well versed as you, but there's a lot of effort and research going on in reengineering various parts of the stack to reduce energy, to reduce every resource that effectively drives model performance.
00:59:33 Speaker_04
to basically re engineer architecture, it was all like very brute force for a period of time. And it was like, push, push, push.
00:59:39 Speaker_04
But now as we go back, and we start to re engineer and architect things, in perhaps a more designed way, we get better performance. And there's a lot of work to do there still. Absolutely.
00:59:47 Speaker_03
This is one of the great things about capitalism and a functioning capital market is you've got people working just on the context window for people who don't know what that is, is that's the number of tokens, a token is essentially a word, you can think of it a piece of information.
01:00:02 Speaker_03
the number of tokens you can put into a conversation with an a large language model. Some people have really large context windows and have smaller ones.
01:00:10 Speaker_03
But you can basically put an entire book in the context window and start asking questions against the model. And the speed of those is critically important as well.
01:00:18 Speaker_03
Because if you put the book in there, and it takes you 10 minutes to get an answer, that's not functional, right? Gavin, are you an investor in open AI?
01:00:25 Speaker_02
Oh, absolutely not.
01:00:26 Speaker_04
Yeah. Can you kind of theorize on what the build out that's being done with Colossus does to the advantage that OpenAI has today? How long till we kind of catch up there with XAI and, you know, how much is going to be disrupted and how quickly here?
01:00:43 Speaker_05
Well, if scaling laws hold.
01:00:47 Speaker_02
The best information I have is the largest cluster Microsoft has after panicking is still smaller than XAI's cluster in Memphis. If you didn't believe it was possible, you weren't even working on it. Grok three should take the lead.
01:01:05 Speaker_05
If scaling laws hold in January or February, I do think a lot of talent has left open AI.
01:01:15 Speaker_02
I thought it was. a really shocking statement from Mira Mirati that she, um, resigned during a fundraise. That's the only way she can express disapproval of what is going on there and still probably get her money.
01:01:32 Speaker_05
Right.
01:01:33 Speaker_02
So I think, I think there's, there's a lot of reasons if scaling loss holds to be, to, to be optimistic about crock three.
01:01:44 Speaker_02
But I think, and then by the way, on the power question, and they are, you know, 23 and 24, it was just a panic to get GPUs and get them plugged in.
01:01:54 Speaker_02
Now we're, you know, trying to make them efficient and thoughtful, and to your point, re-architecting them.
01:01:59 Speaker_03
And the H200s now are 50% less power and either 50% more or twice as much compute. depending on the task.
01:02:07 Speaker_02
They have a little more compute and a lot more memory, which really matters. So per kind of a unit of effective compute, they're a lot more power efficient.
01:02:16 Speaker_03
Two or three times, you think, or?
01:02:18 Speaker_02
No, the H200s, probably not 2X, but a good increment. And the H100 was a great chip. And then Blackwell is just around the corner, and that's an entirely new architecture with an entirely new set of networking technologies.
01:02:32 Speaker_03
What would consumers, if we had to sort of speculate here, how would consumers' experiences change in using forward-facing language models?
01:02:42 Speaker_03
And then maybe what are developers going to see on the back end in terms of what they're going to be able to build?
01:02:48 Speaker_02
If this pans out, you know, next, you know, right now, you have two years, right now, you have like a friend in your pocket, who has an IQ of 115, 110, maybe, but has all of the world's knowledge, accessible to it. And that's what makes it amazing.
01:03:06 Speaker_02
I think this will be like you have a friend in your pocket, but and they sometimes make things up. Again, they're very human. And a lot of humans when they don't know the answer, they dissemble. These AIs do it too.
01:03:18 Speaker_02
So you will have a friend in your pocket with an IQ of maybe 130 that knows everything, has more up-to-date knowledge of the world, and is more grounded in factual accuracy.
01:03:35 Speaker_02
And it is interesting for any question involving real time information, mostly sports and finance. You know, I always, you know, if there's a stock down 25%, ask every AI, why is the stock down 25%? Generally, Grok is the one that knows.
01:03:48 Speaker_02
But I'm obviously biased.
01:03:51 Speaker_03
Yeah, no, Grok knows. Grok, because of the Twitter data set, knows what is happening at the moment.
01:03:58 Speaker_02
In the world today.
01:03:59 Speaker_03
All right. And then, you know, as we sort of wrap up here on the AI issue, What about the ROI here that David was mentioning?
01:04:08 Speaker_02
Yeah, so I find these debates also very funny. There have been articles written about multi-hundred billion dollar ROI questions. Those are very strange to me because
01:04:21 Speaker_02
The biggest spenders on GPUs are public companies, and they report financial results every quarter. And you can calculate a metric called return on invested capital.
01:04:33 Speaker_02
And ROI has gone vertical since they ramped their CapEx on GPUs, and actually just started to level out in this latest quarter. So the ROI on AI has been very positive thus far, just a fact. It's a really good question.
01:04:50 Speaker_02
will it continue, particularly if you know, it's going to cost $100 billion to train a model in two or three years, which I think is a realistic estimate.
01:04:58 Speaker_03
I guess the counter to that isn't the counter to that, that maybe there's a little bit of hype that, you know, maybe there are people are trying to determine the ROI and correlate it more precisely.
01:05:12 Speaker_03
And I guess that's the challenge, you know, meta, doing AI across its entire enterprise, you might see in Google, you might see it directly making ads more effective as an example. Yeah.
01:05:25 Speaker_03
But then for other folks, like, you know, is it actually happening? Or is it a toy? I guess is the criticism I hear. I'm not saying that's my position. But that's the criticism I hear is like, are people actually getting money from the copilot?
01:05:39 Speaker_03
Or maybe this is just product market fit discovery process. Because the the AI laptops AI intelligence on Apple and let's say, some general LLMs people feel maybe aren't worth the money or Co-Pilot for Microsoft, maybe not worth the money.
01:05:55 Speaker_02
Yeah. I mean, I personally have not had good experiences with Co-Pilot, but I would say that, and I'm sure both of you have come across these, there are lots of companies that are just these thin wrappers over a foundation model.
01:06:13 Speaker_02
and they go from zero to 40 million instantaneously and they're profitable. And for their customers, they're replacing labor budgets.
01:06:23 Speaker_02
And I think, I'm sure you guys are noticing this too, but startups today at a given size are employing fewer people than they would have three years ago. And just like, you know, it's funny, people were very skeptical.
01:06:33 Speaker_03
I would say 50% less.
01:06:34 Speaker_02
Yeah. And that's the ROI on AI. And like in, you know, I went to the first AWS reinvent conference and no big companies were using cloud computing. It was all startups. Startups always adopt technologies first.
01:06:46 Speaker_02
So outside of the ROI on AI that you're seeing in Google and meta from you know, using this across their businesses, you're seeing real ROI on AI from startups, the same way they saw real ROI from cloud computing before anyone else.
01:07:00 Speaker_03
It's crazy.
01:07:01 Speaker_02
But I don't think these companies are in a classic prisoner's dilemma. They all believe to varying degrees that whoever gets there first to artificial superintelligence is going to create tens or hundreds of trillions of dollars of value.
01:07:15 Speaker_02
And I think they may be right. And if they get there, And they think that if they lose the race, their company is at mortal risk. So as long as one person is spending, I think they will all spend, even if the ROI decelerates.
01:07:30 Speaker_02
It is a classic prisoner's dilemma.
01:07:32 Speaker_03
competition is amazing. It really is when you have a free market with competition. We're sitting here two years ago, three years ago on this pod, Gavin, just lamenting like, Oh my god, what could happen in China could just roll over us.
01:07:44 Speaker_03
They've got everything dialed in. We're a disaster. And now here we are. China is a disaster. They've got all kinds of challenges. And the free market is even with weapon systems, we're seeing capitalism applied and competition applied there.
01:07:56 Speaker_03
Alright, I think we should just wrap up on this Brian Thompson story. The CEO of United Healthcare was shot and killed in outside of Manhattan Hotel on Wednesday morning.
01:08:05 Speaker_03
United Healthcare is an insurance subsidiary of United Health Group, and they employ over 140,000 people may provide coverage to millions.
01:08:15 Speaker_03
And this was I don't know if you've seen them assuming you guys have seen the video on social media or go by on x. there's been a big debate. Was this like a really well trained killer, like an assassin, like a hired gun?
01:08:29 Speaker_03
Was it something personal, maybe in this person's a hack, and they're not really good at doing a hit like this. And most people are sort of coming somewhere in between.
01:08:37 Speaker_03
ABC has reported and this is where this thing is taken like a crazy turn that the words deny, defend and depose were discovered on the bullet casings at the scene. And those are the terms.
01:08:53 Speaker_03
Two of the three are in a book about how health insurers reject many of the claims every year, they deny it, they defend it, and then they will depose people to harass them essentially. This is a crazy, crazy story. And it's breaking here.
01:09:10 Speaker_03
I don't know if anybody has any insights on it. But I thought I would bring it up here to just maybe intelligently speculate about what we've seen.
01:09:18 Speaker_04
I mean, it seems like the most likely case is someone's loved one died because they were denied coverage. And whether this person was hired or they're a victim or related to a victim, I don't know if it matters.
01:09:31 Speaker_04
I think there's the observation I'll make is a question, which is, should CEOs be personally responsible for corporate actions, generally speaking. So there's a difference between a CEO committing fraud or being negligent.
01:09:55 Speaker_04
But if you don't get a good service or a good quality of service or the product you expect, even if it is something you depend on for healthcare, for example, let's say you take a drug and the drug causes a side effect that causes some permanent damage, should the CEO be individually held accountable?
01:10:16 Speaker_04
And if that were the case, would anyone want to be a CEO of a company that sets out provide services that are critical like this?
01:10:23 Speaker_04
It's a very, like, I think, challenging question to think about, because certainly, you could feel like you want to hold someone responsible because a loved one died.
01:10:33 Speaker_04
Because that CEO's job was to make more money for their shareholders, and therefore deny claims. And therefore, the way that they run that business is wrong.
01:10:43 Speaker_04
I think ultimately, we've got to kind of have this distinction between negligence, fraud, and acting on the corporate behalf.
01:10:53 Speaker_04
There's a, there's a for a period of time, all of these documentaries and this movement against the idea of the corporation, generally speaking, guys, remember, this was like a decade ago, or 15 years ago.
01:11:04 Speaker_03
Anticapitalism movements.
01:11:07 Speaker_04
Yeah, and it's like this, the corporation shields individuals, and the corporation creates a shield for individuals to do harm is kind of the argument that's made.
01:11:18 Speaker_04
And so there's a lot of people in this camp that think that these old CEOs of companies that let people down or evil should be killed, should be put in jail, whatever the awful kind of contextualization of that is.
01:11:30 Speaker_04
And I do think like, it's really important to think about, well, if no one were to be the CEO, because they face that threat, and those companies can't make money as a business, then those services go away entirely.
01:11:40 Speaker_04
That's kind of the end state of where this goes. There's going to be these difficult situations if a CEO does something negligent, fraudulent, wrong, there's a court and there's a system and there should be kind of laws that protect people.
01:11:52 Speaker_04
I don't know, man, I the whole thing is pretty depressing. To think that a guy who's the CEO, he's, you know, from from what I heard, he's got a family.
01:12:00 Speaker_04
Yeah, I mean, he's got a family, he's got a wife, you get people that have known him said he was like a nice guy and a good guy. And he runs a tough business. You know, insurance is a very tough business.
01:12:09 Speaker_03
Well, and to your point about this seems like it's very personalized with the casings, if that is in fact true. Again, this is breaking news. So we're speculating here, hopefully informed.
01:12:19 Speaker_03
this chart has been the one that's been circulating on social media. Now, this has now become Gavin, like a Rorschach test about how you feel about corporate America, healthcare, etc.
01:12:30 Speaker_03
But United Healthcare, at least according to these charts that are speculating, deny claims at a rate at a multiple two or three x other people in the industry and that they are the most hated.
01:12:43 Speaker_03
Not that any of this obviously results in somebody deserving to die.
01:12:49 Speaker_03
I mean, I can't believe I'm even saying this, but tell Lorenz was went viral with a series of tweets, not tweets, I think she's on whatever the blue thing is sky blue, blue sky, where she wrote some quotes here.
01:13:08 Speaker_03
And people wonder why we want these executives dead. Lorenz wrote on blue sky and microblogging social media site alongside an article about how blue sky Blue Cross Blue Shield no longer cover anesthesia for the following surgeries.
01:13:23 Speaker_03
That's according to the New York Post. Gavin, your thoughts on this insanity and tragedy?
01:13:29 Speaker_02
Yeah, well, first of all, it's a tragedy. And actually, I'm in New York as we record this, and it happened one block from where I am. And I mean, it is absolutely, it's a human tragedy.
01:13:44 Speaker_02
Taylor Lorenz was not the only person on social media who reacted that way, which I thought was deeply troubling.
01:13:50 Speaker_03
It was a large group of people who are writing very morbid comments. There's a lot of anger around this issue that I was unaware of.
01:13:58 Speaker_02
I was completely unaware of it.
01:14:02 Speaker_03
Well, I think we all probably are very privileged to have great health care and able to pay our premiums. So we're not affected by this at this stage in our lives. I was very affected by this 30 years.
01:14:12 Speaker_02
We're all very lucky on this podcast.
01:14:14 Speaker_03
Yeah.
01:14:16 Speaker_02
And like, I can't imagine how I would feel if, you know, someone I loved had been denied medical care and died. And I felt like it was unnecessary and, you know, due to, you know, some corporation trying to make more money.
01:14:37 Speaker_02
But I just, I cannot believe, I'm sure I'd be outraged. I just can't believe I was deeply disturbed as a person by the number of people online celebrating this.
01:14:50 Speaker_03
It's really crazy.
01:14:52 Speaker_02
Yeah. I thought it was, it was awful. And I guess the last thing I would just say about that chart is I think it is a little misleading. I think that is initial denial.
01:15:04 Speaker_02
you know, maybe the, you know, in other words, maybe the company that, you know, only denies 7%, that's a final deny, you know, they, that's a company that, and who knows if the chart's even correct.
01:15:14 Speaker_03
I bring it up only that it is the trending item and people are, I find in these tragedies, they become like Rorschach tests, right?
01:15:22 Speaker_04
Like, yeah. United healthcare is, medical loss ratio is about 85%. So 85 cents of it. So 85 cents of every dollar they collect in insurance premium, they're paying out in claims.
01:15:35 Speaker_04
If you guys wanna look at what the most egregious insurance industry in the world is, it's title insurance. And I'll give you the list of the rest. Travel insurance is pretty bad. They pay out like nothing.
01:15:45 Speaker_03
You were in the insurance business for a bit there.
01:15:46 Speaker_04
Yeah, like I mean, health insurance is the hardest, one of the hardest besides auto insurance businesses to be in. you're paying out constantly.
01:15:55 Speaker_04
And there is a very difficult kind of process of managing losses, because the number of claims that comes in, it's very easy to suddenly pay everything out. And then your premium goes up, and then people can't afford the health insurance.
01:16:06 Speaker_04
So you're striking this balance of making health insurance affordable, against the cost of medical claims. So it's a very kind of difficult business.
01:16:13 Speaker_04
And I think it's very complicated to walk people through the how they in their individual circumstances, aren't necessarily motivated by some corporate, you know, malfeasance. It's just the way the thing has to operate, unfortunately.
01:16:28 Speaker_04
Let me just say, I think that they're much like we saw with Hamas. And the attacks in Israel a year ago, there were people celebrating that behavior.
01:16:39 Speaker_04
And we've seen that several times since and people have become very vocal about their celebration of what they view to be
01:16:46 Speaker_04
the death and harm done to those who view who they view to be oppressors, in whatever context you want to kind of fit this to, and put that oppressor label on an individual.
01:16:57 Speaker_04
And that mindset seems to hold true through any social, financial, economic, political context, there is an oppressor group, and there's an oppressed group. And if you're in the oppressor group, you deserve harm, you deserve death, you deserve jail.
01:17:11 Speaker_04
And this is another manifestation of that mindset playing out. This is an individual with a family who ran a business who worked very hard for many years and wasn't trying to hurt people.
01:17:21 Speaker_04
And for him to kind of have his life taken like this and for people to say, that person is an oppressor, I think really speaks to how deeply people's minds have been contorted by this concept that there's oppressors and oppressed.
01:17:34 Speaker_04
It's almost like a mind virus. And I'm not gonna call it the woke mind virus, but, because I just think you immediately shut down and won't hear that, because it sounds cliche, but there is this concept of like, everyone is in one of two groups.
01:17:45 Speaker_04
You're either being oppressed or you're an oppressor. And if you're an oppressor, there is no limit to what I should do or what should be done to you. I think it's well said. And it's a very stark and sad kind of commentary on what's going on right now.
01:17:57 Speaker_02
And if you're oppressed, the corollary to that is, if you are considered oppressed, you can do no wrong.
01:18:03 Speaker_04
You can do no wrong.
01:18:04 Speaker_02
And that is, Obviously, there are people who are oppressed on this planet, but they can still do wrong. They should still be held to a moral standard.
01:18:14 Speaker_03
there. And there is a moral standard. And there is a standard and murder. Obviously, an assassination like this is not acceptable. And it's just tragic. I just feel so terrible for this. These kids.
01:18:25 Speaker_04
Let's end on a happy note. So we'll see you on Saturday. Big party.
01:18:28 Speaker_03
Yeah, hard turn here. But looking forward to seeing everybody on Saturday for the all in holiday is sponsoring the all in holiday. So if you want to go to all in.com, you can go sign up there, right? Freebird.
01:18:41 Speaker_04
Yeah. And then you can sign up for the Zoom. Gavin, we expect you to sign up. Yes.
01:18:47 Speaker_03
We have a caviar budget we have to replenish over here at Saxon.
01:18:50 Speaker_04
We do appreciate Zoom helping us out for the event. Zoom AI companion helped set up the live stream. So thanks to Zoom for doing that. It's going to be awesome.
01:18:58 Speaker_03
Look at that, AI everywhere. I have to say, you know what? One of the great, I have a couple of experiences with AI that are really great. Notion has a phenomenal AI built into it and so does zoom with the AI summaries.
01:19:11 Speaker_03
I love getting these AI summaries of calls. I asked people permission to turn it on and we get a summary and the bullet points really well done.
01:19:17 Speaker_04
I went to we did a hackathon in the office a couple of weeks ago and we used Have you guys actually built applications with cursor?
01:19:24 Speaker_03
I have not. Was it fun to build it on?
01:19:28 Speaker_04
Well, it was great because we had so many people that have never built software applications in the hackathon. And they built tools from scratch, deployed them in production, and are now using them.
01:19:39 Speaker_04
And I think it really showcases the kind of the impressive impact that AI is having on workplace productivity. You don't need to buy SAS tools. You don't need to have service providers do stuff for you.
01:19:49 Speaker_04
Individuals in the edit, by the way, it's only getting better.
01:19:51 Speaker_03
And you can kind of be disappointing the ability to just wake up in the morning and say, I want this app and have it built for you. It is.
01:19:58 Speaker_04
And by the way, I'll just say it's it's like 70, 80 percent there. You still have to debug. You still have to have someone come in and help kind of get things into production. So there's still a little bit of work. Well, it's just like web pages, right?
01:20:07 Speaker_04
Going back, going back to the going back to the question. two months ago, and they go back to 60% there.
01:20:12 Speaker_02
Now it's 70 to 80.
01:20:15 Speaker_04
And you fast forward 12 months. And now you've got the architecture where the AI can run its own QA testing and debugging. And the AI can run its own kind of sales and marketing, its own UX of the application, and it can run everything.
01:20:28 Speaker_04
So you're basically going to say, I want this app to do this. it builds it, it tests it, it builds the UX, it tests the UX, it iterates the UX, it does everything streamlined for you.
01:20:37 Speaker_04
And then you show up a couple hours later, and you're using a new product that was built on the fly for you.
01:20:42 Speaker_04
It is, and we're literally like, climbing this ladder, Gavin, like very quickly, that it's going to totally change this entire software industry is like getting rearchitected.
01:20:53 Speaker_03
I could guess Freeberg's app at his company hackathon. What do you think I made? I made a vegan version of Yelp. It only profiles all the vegan restaurants.
01:21:04 Speaker_04
I actually tried to make a CRM tool so that I wouldn't have to pay for CRM licenses.
01:21:08 Speaker_02
I tried nine months ago to make a multiplayer.
01:21:11 Speaker_03
Shout out Mark Benioff.
01:21:12 Speaker_02
Sorry, go ahead, Gavin. I tried nine months ago to make a multiplayer app for Skyrim, which I was very excited with Skyrim. But I do think I failed. Maybe I should give it another go. But the... You learned. You didn't fail. I learned. I learned.
01:21:28 Speaker_02
I didn't fail. I learned. Yeah, I have a growth mindset.
01:21:31 Speaker_04
We learned the limits. We all tested the limits.
01:21:33 Speaker_02
We stress tested the... But I think next year, human language will be the dominant programming language. totally, totally awesome.
01:21:41 Speaker_03
It's totally, yeah, it's, it's, I, you really made a great insight earlier, Gavin, with, you know, startups is where you see these innovations happen. And I always say internally, re resource constraints really do drive innovation.
01:22:01 Speaker_03
And when you only have a nickel, you got to try to get $1 out of it. And when you got $1, and you got a lot of dollars, you're like, it's okay, if I get a nickel out of $1, I got more dollars laying right over here.
01:22:12 Speaker_03
And Dylan always talked about this as well. Like they, they asked him, like, why did blood on the tracks? Like, why did you do that? It was incredible. Like it's this Rolling Stone interview was talking to Dylan about it. He said, I
01:22:24 Speaker_03
this was like my favorite album. And this is incredible, whatever. And like, what was the inspiration? Take me behind it.
01:22:28 Speaker_03
And he said, Well, you know, I owed Columbia Records an album and they had given me an advance and they were gonna sue me and I had to give the money back and I just gone through a divorce and I needed the money and I couldn't do it.
01:22:38 Speaker_03
So I wrote the album crushed that Dylan's one of his best albums and pieces of art in his life was strictly a function of the pressure of
01:22:52 Speaker_02
necessity is the mother of both technical and creative invention.
01:22:56 Speaker_03
Yeah, absolutely. All right, everybody for thanks, guys. Gavin Baker, Joe Lonsdale, David Friedberg, and we miss you sacks taking an a victory day and it's taken victory day today and Chamath both out of the office today.
01:23:13 Speaker_03
I am the world's greatest moderator and we'll see you next time on the all in podcast. Bye bye.
01:23:29 Speaker_09
We should all just get a room and just have one big huge orgy because they're all just useless. It's like this sexual tension that they just need to release somehow.
01:24:01 Speaker_07
We need to get merch