震撼的 AI 视频：OpenAI 发布 Sora，拜登是否太老？塔克专访普京

David Friedberg (00:00:00): Sacks house tequila. David Sacks (00:00:01): I tasted 10 samples the other day. One was heads and shoulders above the rest, which was a good sign. Oh, So now we're taking that and making it the new baseline, and I'm gonna try 10 more samples, and we're gonna go from there. I think we're very close to having something excellent. Great. And then I did a a side by side taste test of the sample I like the best compared to classic Zulu Ultra. And it was already better than Klas Ultra, which Really? Retails for, like, 3000 a bottle. David Friedberg (00:00:30): Really? David Sacks (00:00:31): Yeah. Holy So it's gonna be better. Jason Calacanis (00:00:33): V One's better than their final product is what you're saying. David Sacks (00:00:36): Yes. Chamath Palihapitiya (00:00:36): And that was not just your taste test, but like you and several people. David Sacks (00:00:40): It's me and 2 other Right. Trust. So we we did it together. Chamath Palihapitiya (00:00:43): Now when you say trust, do you mean underlings, or do you mean actual? They're like, no. David Friedberg (00:00:47): He means alcoholics. Yeah. Where in your pay hierarchy are they? Jason Calacanis (00:00:51): He recruited them at Alcoholics Anonymous in in West Hollywood. David Friedberg (00:00:54): Are they level 2 employees or level 4 employees? David Sacks (00:00:57): One one works for me and one's a consultant. Chamath Palihapitiya (00:01:00): I'll say both of my skin. Jason Calacanis (00:01:01): I just woke up, Cheryl. The weather winter's wide. Raymond David Sanders. Okay. Are we over it or underestimating the impact of the AI boom? David has been on an all time heater. If you don't know, it's market cap is now one 800,000,000,000,000. This week, it surpassed Google and Amazon as the 4th most valuable company in the world. There it is Sacks. Right behind Saudi Aramco. 60 months ago, stock was trading about a $112 a share. Since then, share price is done of 6.5 x on a big number. Shares went higher this week after it was reported that David plans to build custom AI chips. With Amazon, Meta, Google, and OpenAI. In other news, Financial Times reported OpenAI hit a $2,000,000,000 run rate for their reoccurring revenue. It's about a $165,000,000 a month, and they think they can double that number in 20 25 tons of competition coming out. If you didn't see Google rebranded, their generative AI suite to Gemini and they're charging 20 bucks a month for it. And then there was this bizarre Wall Street Journal headline that Sam was gonna raise $7,000,000,000,000. That makes no sense. Maybe that was the TAM We'll get into that. Friedberg your thoughts on this extension. Are we underestimating or overhyping AI? David Friedberg (00:02:35): I mean, it seems like the compute build out is underway. So this is gonna continue for some time. I think the real question that keeps getting asked is, you know, when do you really see the tides recede and what's what's there? The compute build out is underway, but are we seeing application and productivity gains associated with the capability of that compute. Some would say yes, some would say no, but you've gotta build out the infrastructure. If you're gonna assume that there's gonna be these gains in the application layer. And everyone's assuming they'll be there. So we need to meet the demand, which is almost like building out an entirely new internet. And so the core of AI is this matrix multiplication problem. You need these chips that do that really efficiently. They're not traditional CPUs, which are general purpose chips, but they're chips that are very special purpose for a particular set of applications. That render the output of whatever model is being run, it's sort of like the internet. Like, you could pretty much create a bogey of any number on how big this can get. At the same time, you're pence in other parts of the data center or alternative solutions like ARM. And I don't know if you saw this, but in just the last couple of weeks or last week or 2, ARM's valuation doubled. It's come down a little bit since that big doubling. Today, Arm is sitting at 140,000,000,000 valuation. Last week, he kept out as high as the 156. And remember, it was only last August. So if you guys remember, Arm was bought by SoftBank and the Vision Fund. And then I think 25% of ARM was held by the Vision Fund, and 75% was owned by SoftBank. Last August, SoftBank bought from the Vision Fund, the 25% of the Vision Fund owned, at evaluation of 64,000,000,000. So now SoftBank owns 90% of ARM, the last 10% trades publicly, So at a $140,000,000,000 valuation, SoftBank's position in arm is a 125,000,000,000. And I think it really begs the question David Masa have a masterful move here yet again? Because everyone said for years, with all the bets this guy was making in the Vision Fund and some of the missed guided bets he was making with SoftBank and the leverage he was applying on himself and SoftBank to deploy all this capital during the zerp era. David Friedberg (00:05:05): Everyone was saying, you know, this guy had a one hit. It was Alibaba, and that was it, and clearly doesn't know what he's doing. But now all of a sudden, his bet on AI was fairly prescient, and it's paying off pretty powerfully. He bought the whole business for 32,000,000,000 and now he has a a a stake that's worth a 125,000,000,000 7 years later. Jason Calacanis (00:05:26): Yeah. I mean, chip in a chair. Right? David Friedberg (00:05:28): I mean, it's really begging the question. Jason Calacanis (00:05:29): I only need 1, the power law. Right? David Friedberg (00:05:31): You're making a long term investment, you can very easily look like a moron over the short term. And to your point, the power law All it takes is one of them to work out, and it can wipe out the losses on the rest of the portfolio. And we may be seeing Mossick with his whole AI vision story that he's been telling for 7 years, we may see Masa clawing his way out of Chamath Palihapitiya (00:05:50): the hole. You only look like a moron to losers, meaning When people were throwing shade at Masa, it wasn't anybody that's any good. I didn't see headlines that said John Malone thinks Masa is a fraud. Warren Buffett thinks Masa is a fraud. Nobody was saying that because those guys know what the game is. And the game is exactly what you said, Jason. You must always survive. And you need to keep your wits about you. And over time, if you're prepared and do enough good work, you'll get waves of good luck that amplify your hard work. And Masa is an example of an incredibly talented person that has found a way to survive more than anything else. And so waves of success will hit it. The people that complain are the ones that are sort of a little bit stuck on the sidelines and are more frustrated with their own impotence and inability to do anything. Now, on arms specifically, the thing that I would keep in mind is that those guys floated I think about 15,000,000 shares. So there's about a 145, 150,000,000 shares outstanding, 90% owned by them there's about 10 or 15,000,000 shares outstanding. And there was about 12,500,000 shares short going into the earnings report. And so the thing to remember is that there was almost an entire turn of the float that was short. So I don't know how much of this reaction was just an enormous short squeeze of people that were largely long other companies. And so they thought they could short arm essentially as a spread trait to minimize volatility. But this is an example of where if you don't do this analysis properly, GameStop was another where you misjudge or you subanalytically look at the actual share count and what's actually free floating, you can get caught on the wrong side, and these things can be very violent. Jason Calacanis (00:07:47): And to explain the float to folks, You can make a certain number of shares available to the public to trade when you have a small number of those. Correct Chamath, available to the public where things can happen because there's not enough available to short. Chamath Palihapitiya (00:08:02): That's exactly right. Jason Calacanis (00:08:03): And so that could have been the situation here with this run up. But I think I think the overall point of placing bets and being a capital allocator is the important one to discuss here, Sacks, what are your thoughts on all the crazy bets that Masa made. We watched a lot of our companies or companies adjacent to our companies get massively overfunded. Some of them literally got drowned in capital, but then you only need to hit 1 and and maybe win it all back. What are your thoughts on this high alpha you know, betting style of his. David Sacks (00:08:36): Look, I mean, he's a gambler, and he is playing a power loss. So he only needs one really big return to basically make for all the mistakes, and it seems like he's hit that. Jason Calacanis (00:08:46): Once again, he did it with Alibaba too. Right? David Sacks (00:08:48): I mean, he's a major gambler. Most people would be a little bit more risk averse. I don't think it was a great strategy to be pumping $500,000,000 checks into what we're effectively seed companies like they were doing with the Vision Fund. However, Obviously, he made enough good bets that they're gonna pay off that fund. David Friedberg (00:09:06): Well, it's a good point, Sacks. I mean, none of the be I I don't I I just I'd probably need to be careful because I'm not super familiar with the portfolio, but it doesn't seem like any of the big winners wore those seed bits. Like, he doesn't have any returns coming out of that. Kind of investment strategy. DoorDash. DoorDash. DoorDash was not like, what point did they invest? Jason Calacanis (00:09:27): 1,000,000,000 or $2,000,000,000 round was the, Chamath Palihapitiya (00:09:29): pretty important We've heard at dinner, Jason and I, at dinner. We've heard the the waterfall from the softbank side, and it sounds like it was an enormous number. Jason Calacanis (00:09:40): Yeah. That was definitely their David Friedberg (00:09:42): their derisked business. It was a scaling business. Seems a little different than some of these companies that were fairly early on that got monster valuations and large chunks of capital and then struggle to find ways to deploy that capital. Which led to unhealthy behavior. I think Chamath Palihapitiya (00:09:59): the thing you have to give them a lot of credit for is it's so easy to give up when the peanut gallery is chirping. And so the thing that you have to give him a lot of credit for is He has the ability to tune those people out. Now he probably isn't even living in a world where any of those people that chirping even gets to him. And I think that that's a very important thing. But kudos to him. I mean Yeah. To be able to tag something for a 100,000,000,000 here, 70,000,000,000 there, I mean, keep swinging. And by the way, at the end of it all, what is it gonna change for him? Absolutely nothing, except he'll have some incredible stories to tell. About the vault that he took and the roller coaster ride he was on. And I think that's gonna be the most valuable thing. He's gonna be able to tell his grandkids these stories and his their their eyes will just be like, what? And his friends, you know, I mean, I would love to have a dinner with him. Jason Calacanis (00:10:54): Let's do it. I don't know. Come on the pod, Mossin. Let's talk about it. Chamath Palihapitiya (00:10:57): I've only met him once David Friedberg (00:10:58): by the I have a Chamath Palihapitiya (00:10:58): great story to tell about Jason when I was at Facebook. I met him once. But anyways, dead talent. Jason Calacanis (00:11:02): I mean, can you tell it? Chamath Palihapitiya (00:11:03): All I'm saying is I would love to have dinner with him because I just want to hear these stories evolve, like up and down and up and down. And I Jason Calacanis (00:11:11): had 2 lunches with him. We had lunch one day. We had such a good time. He said, can we have lunch again tomorrow? How long are you in Tokyo? I said, yeah. And I came back the next day and had lunch with the price. And it was great. Like, talking 2 or 3 hour lunches where we're just talking about every web 2.0 company. This is in, you know, the 2009 Uber kinda Robinhood period. And he was just fascinated by what was going on and and all the disruption happening. DoorDash series d, $1,400,000,000 post 2018 he did. David Friedberg (00:11:39): The question I was asking is, like, DoorDash was a lot like an arm. There's a point of view that the business is proven that there's a market that it can grow into, that there's a management team that knows how to deploy capital versus a lot of these early stage bets. Where when they got too much money, they ambled about what they didn't Chamath about. Chamath Palihapitiya (00:12:00): They kind of incinerated it. David Friedberg (00:12:03): Incinerated because what do I do with this money? I don't yet have a machine or an engine that can grow with this money. And until the engine can handle the capital pizza thing. Chamath Palihapitiya (00:12:11): Like, the pizza thing. Jason Calacanis (00:12:12): Zoom pizza you're talking about. Yeah. David Friedberg (00:12:14): I mean, if you get dozens of them in that portfolio. Right? Jason Calacanis (00:12:17): Yes. David Friedberg (00:12:17): If you don't have a business that can handle the gas you're putting in the tank, the engine's gonna blow up. The engine has to grow. It has to build. The volume has to build so that it can actually handle the fuel. And I think that's been part of the challenge. And I will just say I've said this in the past, but there was an era in Silicon Valley that started around 20 10, 2009, kind of right after right as right as web 2.0 was starting to venture into more traditional markets, meaning tech companies were becoming other companies. Kind of the mobile local era was was kicking off. And there was a strategic concept that got popular in Silicon Valley on take the market, which is when you feel like you could be the winner, give the person all the chips and say now go over bet and take the whole market because these are gonna be winner take all or these could be winner take most markets. So get 1st mover advantage. Here's more capital than you need. And I remember being pitched this when I was raising my series b that I should raise more than I was trying to raise because I should use the extra capital to take the market. And then that mantra just became the de facto standard, which is, oh, you have something that has something. It has some edge and has some advantage. It started to move in the market Here's a ton of capital you don't really need. Now go take the market. And the reality is most of those businesses had absolutely no way. Of using that capital to quote, take any market. Because you didn't even know what their market was yet. Jason Calacanis (00:13:42): Yeah. They when you're in the product market fit, product market fit, phase and you don't have the engine as you called it, how do you make the engine go faster? You're literally trying to take a bunch of car parts and then run a Formula 1 race. The car's not even track worthy yet. And Ketera, you know, not to not to pick on any companies, but I remember Ketera which was doing construction. And they just thought they're gonna take over the whole construction injure, you know, industry with this company. It raised like $900,000,000, and I believe it's like a 0 the whole Jason. You cannot you can't put the money to use capital as a weapon maybe Sacks. If you're Uber, Lyft, and DoorDash and you have customers, then you can reduce the price. But Chamath Palihapitiya (00:14:20): you know, what's interesting is when you now look at all bunch of these AI companies, every day, what you see is every round is a minimum of a $100,000,000, But the the dirty little secret is not that these companies have found product market fit or are scaling revenue massively. I'm not talking about OpenAI. I'm talking about these other long tail businesses, the $100,000,000 is largely going to compute. But as we know, and I think We'll talk about this next week when all these announcements are done, but you're about to see a 110th thing of the compute cost. And so what's interesting for those companies is they're going to be left with a lot more money, but back to Freebrook's point, they may be ambling about with too much money at that point. Today, you raise $100,000,000 because you need to spend 70 or 80 on compute. Tomorrow, when you only need to spend 7 or 8 for the same amount of throughput, On one hand, you could say, well, this is great. I have so much more money I can spend. But again, we've seen example after example where if you raise too much money when you don't need it, you will just run yourself into a brick wall. You'll overhire. You'll mishire. You'll misallocate. And it just goes back to the same thing that we've said before, which is there's just enough people that actually know how to run companies. Jason Calacanis (00:15:32): Yeah. And it just becomes a huge distraction. Huge distraction. Did you see Sacks? David you see SORA? This David Sacks (00:15:39): this is breaking news right now. Jason Calacanis (00:15:40): Yeah. This is unbelievable. If you haven't seen it, Sora, is the text David model from OpenAI. They've been talking about this. I guess this, would compete with is table diffusion do video as well? Anyway, you give a prompt I'll just read this one out loud. Beautiful snowy Tokyo City is bustling. The camera moves through the bustling city street following several people enjoying the beautiful snowy weather. And shopping and nearby sta stalls, gorgeous, Sikora, petals are flying through the wind along with snowflakes. And this If you weren't studying it, would look like a major feature film or TV show. Yes, David Sacks (00:16:22): Yeah. I mean, it's unbelievable. I mean, it looks to me like 4 k video. I mean, I'm not sure it actually is 4 k, but it looks pretty darn close. David Friedberg (00:16:30): Yeah. The rendering resolution can be whatever you want it David Sacks (00:16:33): to be. Right. The fact that you can describe the the way that you want the camera to move David Friedberg (00:16:38): So I'm gonna speculate on this. You guys know I talked about this quite a while ago on how I think we're gonna be at prompt to David, meaning people are gonna have personalized video games and personalized movie experiences and music, eventually, where rather than everyone watch the same product made centrally by a producer. We'll all make our own product locally. I spent some time digging into this over the last year. And the big challenge was that the traditional approach for rendering video is you create three-dimensional objects, and then you have a rendering engine that renders those objects. And then you have a system that defines where the camera goes, and that's how you get the visual that you use to generate a two d movie like this. And the best tool out there is unreal engine 5, which is made by Epic Games. I don't know if you guys have ever seen the demos of it, but I've seen it. Jason Calacanis (00:17:25): Yeah. Because they're really historical. Uses with their, like, virtual sets now when they did the Mandalorian. I think they're using the unreal engine or unit. David Friedberg (00:17:32): They probably are. And then there's other tools. If you're in movie production, you'll use different stuff, but unreal engine is just so incredible. But it requires the placement and the rendering of 3 d objects. So where do those objects go? And then the physics of the light moving off those 3 d objects generated 2 d video is pretty straightforward. That's been done for 2030 years. And so the the density, the the rate of improvement, the color contrast etcetera has all improved, made it look incredible. Now it's super photorealistic and great photorealistic David. But it still requires this concept of where are the three d objects in three d space. This doesn't do that. This was a train model. So we don't know what's going on in the model. So how would you train a model to do this without having a three d space because clearly there's thousands of objects in that rendering. If you look at that video, thousands of little objects, the compute necessary to define each of those objects place them in three d space is practically impossible today. So this is being done through some model that starts to render all of these things together. So it is very likely my guess is that OpenAI used a tool like unreal engine 5 and generated tons and tons of, video content, tagged it, labeled it, and we're then able to use that to train this this model that can, for whatever reason, that we don't understand, do that's the output But what's interesting is that this output underneath it, Jason Calacanis (00:19:02): you're referring to synthetic training data. David Friedberg (00:19:04): And yeah. Exactly. Exactly. And and And but what's amazing about this model is that underneath this, this model on its own has rendered physics. So all of the rules of physics, all of the rules of motion, all of the rules of perspective, all of the rules of how objects sit upon one another next to each other, how fluids move. If you look at some of the other demos on this tool, you can actually see fluid moving. It's rendering the movement of fluid or rendering the movement of hair. Those are like physics models that would typically be deterministic rewritten, meaning that a programmer and engineer writes the physics, and then the the unreal engine renders the physics. In this case, the model figured out the physics. And the model probably did it in such a reduced way that you could use a reduced amount of compute to generate something that would otherwise take a ton of compute time. I mean, look at this. It's truly amazing, Nick. Find a Chamath Palihapitiya (00:19:55): lot of golden retrievers playing in this This is way better than this. David Friedberg (00:19:58): But what's amazing is that the and by the way, if you're listening to this, I really recommend going on Twitter and typing in OpenAI, Sora, SORA and looking at some of these demo videos. It's bonkers. And I think it really speaks to what's so incredible right now, which is that software is writing itself and it's replacing a lot of human determinism. The way that humans think about, constructing software is being completely redone with these learn models. This model learns physics on its own, and it renders this thing that looks like the only way we know how to do this today is to create 3 d object models in three d space you've tons of compute to render Jason Calacanis (00:20:33): the And just to to translate that from geek David Friedberg (00:20:36): to Yeah. Jason Calacanis (00:20:36): You know, people listening. This is incredible because Pixar spent years maybe a decade trying to figure out hair. I remember talking to Ed Catamo, and he told me hair was just so hard to get right with wind and lighting, they'd literally built the physics engine for years. Like, maybe even a decade to make hair cross the uncanny valley. What you were saying here, Friedberg, is somehow this language model, this image model just outputs it. And it doesn't actually have a physics model. It just outputs it. Correct? David Friedberg (00:21:07): Yeah. It's it well, we don't know, but the model there may be some determinism built into it. So so I don't wanna assume anything. But the general approach, determinism means you write the physics and you write the formula of the physics. Yep. So that the software can execute the physics and render the thing. But in this case, it may very well be the case, like a lot of the other models that are being trained today, when you create a model that's trained, that it's being trained and on its own, it resolves to figure out how to do the physics. Chamath Palihapitiya (00:21:41): Is there a limit on the length of these sort of videos that you can Generate rate. David Sacks (00:21:46): It's 1 minute right now. David Friedberg (00:21:47): 60 seconds today. David Sacks (00:21:48): Obviously, that'll come off at some point. David Friedberg (00:21:49): By the way, if you can do 60 seconds, you can do 2 hours. David Sacks (00:21:52): Right. The problem that you have is, I mean, if we're talking about creating a movie, is making edits. So, I mean, obviously, I'm gonna use Soria because it just came out today, but I've used Dolly which is just their prompt image service. And I was designing the label for or or the bottle for the all in tequila for you guys. And what I noticed is that it would spit out a bunch of ideas. And then I would take 1 and then wanna just make little changes And I would just say, okay, keep this, but just change this one detail. It would give me a completely new image. So the AI doesn't realize the layers inherent in what it's producing. Somehow it takes this prompt and generates a response, Jason if you give it that same prompt a hundred times, it'll give you a 100 different answers. And if you'd say just modify this, this, or this, it can't do Jason Calacanis (00:22:45): it. Can't Jason. You can't take criticism. Well, David Sacks (00:22:48): it seems like on some level, it's unaware of the output that it's created. Again Yeah. A human creating this in Photoshop would have a lot of layers. And every object in that image would have its own layer, and you could have a layer for text and just quickly modify the text. When I wanna do something as simple as edit the text or change the font, again, it would give me a completely different image. And I just wonder about these videos. If you wanna create a movie, I think you're probably gonna be stuck with, like, the what they give you, and then maybe you can import that at some point into an unreal engine and then do work from there. Jason Calacanis (00:23:24): The editing part is it doesn't exist yet. We when you do text, it's easy because you just you cut and paste it into your Grammarly or your notion or whatever you use and you start editing. Here, there's no exporting, like you're saying, to Final Cut Pro or something. David Sacks (00:23:38): I bet that when they turn this into an API that when you're working in unreal engine, you know, if you're like a VR designer or something like that or you're like a, a filmmaker, you could probably just get started with a prompt, and that could be hugely time saving if they can make that integration work. I think that's pretty interesting. David Friedberg (00:23:59): I looked at this a lot over the last year. This was one of the biggest challenges is in order to have an interactive approach to video production or video game production, you have to be able to say, we'll take that out, put that in. But like like you said, the model doesn't distinguish the objects. It doesn't distinguish each of those little flowers or each of those little cherry blossoms, or it doesn't even distinguish it. There's two people walking down the road. The model doesn't have this concept of objects when it renders. And so, the traditional model where you have objects in a three d model that then get rendered into a video allows you to do those sorts of things. So what may end up happening is a Fusion, and this is something we talked about with Stephen Wolfram and others, that there are these models that are called compute models that do deterministic compute Sacks, then there are these AI train models where we don't really have a sense of how they work. But the fusion of the 2 will unlock a lot of opportunities, and that's very likely the next generation of models is not just purely, non human intervene trained models, but the integration of those models with these deterministic models, with these compute models. And then you can start to do things like instead of saying, hey, render this whole scene you're saying, render all the objects that would go in the scene. They get placed in an unreal engine. And then the unreal engine outputs the the video. And so that integration work I think is the next big phase in AI model development, and that'll unlock, like, insane. David Sacks (00:25:29): Yeah. Because right now, you can't use this to create dialogue, like actors in a movie scene talking to each other and acting, especially like close ups of those actors with their facial expressions. I don't at least I don't see any examples like that. David Friedberg (00:25:44): The way humans wanna have a creative process, it doesn't work. That's right. Yeah. Jason Calacanis (00:25:47): Yeah. It'll get there though. And if you put something like this out there to the public and said it's 20 bucks a month to do this or 50 bucks a month. And you can have a lot of consumers who wanna buy this product. When I see this, I think people are gonna pay for this. And then going back to Nvidia or Arm, okay, more infrastructure to your point, Friedberg is like, what what infrastructure do we need for everybody to have Pixar on their laptop or on their, you know, phone? And people, people are willing to pay for these. David Friedberg (00:26:17): I don't know if you guys saw this, but there was another big breakthrough announced today with the, the new Gemini Pro 15. Can you just pull up Sundar's announcement on it? Jason Calacanis (00:26:24): Yeah. Sundar now has found the password to his Twitter handle. He's he's tweeting David Friedberg (00:26:29): Yeah. The reason I wanna talk about this, if you just scroll down, so when you prompt an AI model, you put in a certain number of words into it like an LLM model today, and it spits words back out. The more words you put into the model, the more compute intensive or challenging it is to do the compute work needed, to render the output. So OpenAI, their GPT 4 turbo model, has a 120 1000 tokens, which means about 128,000 words can be fed into the model to get an answer back out. So you could put, like, a whole essay or a hundred pages of text, and it will read a document for you. You can get a whole book, and and it could give you a summary in a couple seconds. What Google just announced with Gemini 1.5 Pro is a 1,000,000 token context window up to 10,000,000 token context window in total. I don't know what's going on here. Because the problem is the way these models are kind of traditionally built is that that creates a nonlinear scaling and compute needs. To be able to increase that, that context window like that. So there is some architectural work that's gone on to allow these models to scale up in a way that we did not think possible when these models first came out, which is crazy to think was only, like, 24 months ago that they started to get kind of looked at like this. 18. So that yeah. And so There's 2 kind of things that are happening. 1 is that these models are getting chopped up in a way that you can run small models in a highly trained way locally, and you don't need a massive general purpose model. And so that's gonna make compute needs very small for very specific tasks. And the other one is that there's other architecture that's happening in deploying the models that's allowing massive context windows like this. So it totally changes how scalable they are with the same number of chips or the same amount of computer or the same amount of power. So there are all these amazing Moore's Law effects happening right now in AI Technology Development on the chip level, on the architectural level, on the how they're being built and how they're being deployed. That completely changes the concept that I think most folks had when these first came out 2 years ago and the potential So I think sky's still the limit. David Friedberg (00:28:31): We don't really know how big this is gonna get. But all of these efficiency gains mean that we can do so much more or so much less. And by the way, when you can do more with less, it doesn't mean you need less chips. It means you need a lot more chips because the fact that you can do a lot more with much fewer chips means everyone's gonna wanna do it now. More people can afford to do it. So it unlocks the opportunity for, for computer. And so it really starts to rationalize the Nvidia thesis that it could be worth $10,000,000,000,000 potentially. Jason Calacanis (00:29:01): For people in the audience to understand what this context window means. David Friedberg (00:29:04): I'm sorry if I was too technical. No. No. No. No. Jason Calacanis (00:29:06): I'm just I always like to just give an example or 2 after you explain it. The context window, for example, you could upload the transcript of this podcast, right, And there were only certain services like Claude, maybe, where you could put a PDF attachment, boom, you put it in there and say, Hey, summarize this using your language model and using this content. Now you could be able to say, Hey, take me every Mister Beast video. Take me, you know, take the top 10,000 videos on YouTube, take the transcript, summarize them for me, give some analysis on it. And that was only available to developers prior to these large context windows being open. And that's gonna just open up a massive amount of application, right, to month. Chamath Palihapitiya (00:29:47): The results are actually not that much better. There's these third party service benchmarks. Lombata is probably the most often referred to. But what you see, if you just look at, for example, all the GPTs, even as they increase the number of parameters in a model, the quality of that model doesn't necessarily increase with the rate of parameter increase. So you have this thing of a little bit of diminishing return, which is more a problem of what we said before, which is eventually when you're scouring the open internet, doesn't matter how fast or how how big you scour the open internet. The open internet is a bounded Sacks, and so you get the same answer. So all of these things are they're interesting marketing wear, but I would just encourage us all to keep in mind that the shift is not necessarily these kinds of things. It's kind of like saying, you know, in a chip like, oh, wow. We built this chip on 3 nanometer. Okay. What does it mean? Jason Calacanis (00:30:41): Well, no, I think the piece, respectfully, you might be missing here is, like, your proprietary data, might not be in that language model. So by having this context window and you can add something that you have on your Chamath Palihapitiya (00:30:54): hard drive, that's not how it works. So my point is the context window is not correlated to the quality of the model outputs. Jason Calacanis (00:31:00): Correct. But consumers and business user haven't been able to put their data into the models because that has nothing Chamath Palihapitiya (00:31:07): to do with the context window. That existed when the context window was smaller. But that's what you think you do things like Jason Calacanis (00:31:12): Right. But most people don't have access to that. This is like consumers can now just take something off their hard drive and put it off the same. Yeah. Chamath Palihapitiya (00:31:19): RAG is different than what this is. Jason Calacanis (00:31:21): Okay. Chamath Palihapitiya (00:31:21): Like, this is this, what what you guys just spent all this time talking about, is equivalent to saying I built this chip with on a 7 nanometer process or a 3 nanometer process. And what I'm saying is it is technically more burdensome as Friedberg said. It's technically much more sophisticated and complicated, but the, the translation to quality in the consumer is not what that means. So a 3 nanometer chip is not 2 times better than a 7 nanometer chip for the consumer. Similarly, A context window that's 5 times bigger than the one before, it doesn't make a model 5 times better to the consumer. These are orthogonal ideas It's not to say that it isn't an important thing, but I, I would say that it's a reminder for me that we're in the early phases where there's a lot of, hey, that people can make, but it's important to look at these third party benchmarks that try to sort through and sift through what matters and what doesn't matter. And one of the interesting things that 3rd party benchmark services have figured out is that irrespective of the exponential growth of these things like parameter size. Quality is only growing linearly and now sublinearly. So it's just an interesting point. Jason Calacanis (00:32:40): I understand your point now. My point is, man, when we when you are a consumer of this, And I've been talking to people trying to get their data into, you know, the context window to be able to ask a question. They're always like, how do I put more in there? How do I put more in there? And then these language models, because of the copyright issues, they're not able to upload Blade Runner and then say, hey. Make me something I was able to and just to give a very real example, I did, a podcast around the Ray Crock movie, the founder that we were referencing earlier, I uploaded the screenplay. I found a PDF of the book, and I found 2 other, like, essays about Ray Crock, like HBS Studies, And I said give me like a timeline of it when I use something called Google Notebook, which has a big context window. You can upload all this stuff. And that's where I'm seeing consumers and what these things are capable of vis a vis the context window. It it just unleashes in people's mind. So many applications that you can do. Chamath Palihapitiya (00:33:38): There are two examples today that top of my eye that I think are worth bringing up. The first one is from Meta. Meta published his paper today, which was, like, Pretty crazy. And essentially what they said is that for the realm of the software worker, the software engineer, What they basically built is this LLM tool that runs over Lammacol testgen, and it essentially does automated unit testing. To such a high degree of accuracy. So, you know, in the software development, if you want to spit out a product, you have to go through this thing where you have to functionally run unit tests and make sure the thing works. Has advertised, and this paper essentially now allows you to traverse a code base, understand it, generate these unit tests with high accuracy, So where is this valuable? Think of, remember, the software bugs in like the Boeing triple 7 37 Sacks issue, Jason, where it turned out that it was just bad software. Tools like this now will able will be able to run unit tests where you will not be able to get out, get that plane out the door. Unless all of these functional unit tests not only have been written, but run and have been passed successfully, And it'll all be done by bots, which means that you can't gain that system. So that's that's something today that the last thing developers Jason Calacanis (00:34:54): get to is writing the unit test, right? It's always like, Chamath Palihapitiya (00:34:56): which is why there's all kinds of bugs and security holes in code. Now, I thought that that was a pretty large breakthrough, and I think we're gonna go through a bunch of fine tunes on this that make it interesting. And then I saw this other thing which caught my eye even more, which was this thing that Nat Friedberg tweeted out, which is this thing called magic dot dev. And what essentially it is, is like a coworker. And what they are claiming, and I don't know if it's true, is that now you can basically have this thing understand your style of code and actually be able to write code that is just as good as the way you write code. So now it's not a co pilot, but effectively a coworker. And this is the first real example of what I've seen of a claim that basically says, hey, you know, we can now Be an add on to your workforce. And this to me is just so gargantuan because like if you look at the amount of OpEx inside of any company that sits inside of R&D. If you look at the amount of stock based compensation, Right? If you replace humans with bots, which is what this is, you're gonna crush those things. SBC at the limit goes to 0 because you don't have to give stock to a bot. Right? Do you want it to give stock to people? And OpEx it gets shrunk because now you just pay a license to magic dot dev, or I don't know how they're gonna make money on this, but really, really, really fascinating stuff. It is a scary. Jason Calacanis (00:36:25): There was another open source project. I think it's called Maggie, MG, I don't know if you saw that. Friedberg, but Apple has been working on an open source image project. And so you're kind of gonna see, I think, in iOS 18 or the next iPhone Sacks, they're gonna have an image model off kicked onto that phone. Chamath Palihapitiya (00:36:44): Where is where is Apple and all of this? It's unbelievable. Jason Calacanis (00:36:47): No. They they're where are they? They are building an image model, and you're gonna be able to talk to your phone. Chamath Palihapitiya (00:36:54): They haven't announced anything. David Friedberg (00:36:55): I think you're gonna see a chip on the next set of mobile devices 100%. That will run models locally. Yep. And so goes back to the point about how the hell is the government gonna regulate AI models, which is the stupidest thing I've ever heard. Well, not the stupidest. It's probably, you know, probably tough twenty. But the fact that they're gonna, like, be able to be fully vertically designed that they can have the hardware and the software and integrate all the way through to the application layer, they're gonna have, I would imagine, incredible intuitive AI features built into all of their products that can run locally rather than all the other stuff that's going on where you've gotta make a request on the internet and get the results back over the internet. It'll be pretty powerful. But, obviously, no data. Right? We don't know what they're doing, which is speculating here. Jason Calacanis (00:37:43): Well, no. I mean, you have breadcrumbs. Then the breadcrumbs are they have an image model and they just dropped it in the hugging face of it. You can basically upload an image and just give it a text prompt of how to change the image. So, you know, if Nick were to use this, he could upload a picture of you come off and say, you know, give him 5 o'clock shadow, give him a mustache, whatever. David Friedberg (00:38:01): Nick Nick, will you do that real while we're talking. David Sacks (00:38:04): While you're doing that, can you bring up the video of the robot's life in a cyberpunk setting? David Friedberg (00:38:10): Yes, Peter. Is this Victoria rendering? David Sacks (00:38:12): Yeah. Sasaura. Chamath Palihapitiya (00:38:13): So beautiful. David Sacks (00:38:14): So it's really cool. So but here's the the limitation. And this goes back to what me and Phoebe were talking about earlier. Okay. So you've got these people in the background. Let's say that David Friedberg (00:38:24): you're trying to figure it out. The theater backwards, by the way, you can see the human seat aren't correct. Sort of like a poly problem. Yeah. I'm sorry. David Sacks (00:38:29): What what's cool is that okay. So those cars aren't moving. They're static. You got some movement of these background people, right, at least so. They're kinda they're the extras in a movie. But if you wanted to tell Sora, this is just my guess that, okay, want the people in the background to be doing this. It would render a whole different image. Like, your robot might change too. Right? David Friedberg (00:38:53): Well, window matters. So if you repeat the statement, if instead of writing and then iterating, if you just re prompt it, your prompt got longer and longer and longer with the degrees of specificity you needed. That's the way you use these models today. And to your point, what humans are looking for from a UX perspective is an iterative approach to rendering is an iterative approach, which isn't feasible in a world where the this this is all a matrix. It's a three-dimensional matrix. So there's 2 dimensions of pixels, and then the 3rd dimension is the next image and the next image and the next image. And so that matrix is re rendered from scratch it doesn't have a concept of what are the objects that I'm rendering. It has a concept of a matrix of pixels. And so it will rerender a matrix of pixels based on a redefined prompt. But what you're describing would require a very different model architecture than the way all of these crane models operate today. Chamath Palihapitiya (00:39:47): This is gonna revolutionize pornography. I think it's the first point. No, no, no, I'm not saying it as a joke. I think that's where you're gonna see this first because then all these issues, potential issues of underage people, or exploited folks. It goes completely away. David Friedberg (00:40:02): And Y'all are guys gonna cut this out. Chamath Palihapitiya (00:40:05): No. And, and, you know, it it'll kill only Sacks. David Sacks (00:40:08): Yeah. It's what I'm saying. And what I'm handling is where every revolution starts. That's where Exactly. Jason Calacanis (00:40:12): That's where Exactly. Chamath Palihapitiya (00:40:13): That's where payments started. That's where the web started. That's where payments got refined. I I think that in pornography, you're gonna see this basically destroy pornography and only offense. But I don't I don't wanna bring up something, that's Jason Calacanis (00:40:26): super offensive, but there was a certain pop music star who had a bunch of images just a couple of weeks ago. That work. Chamath Palihapitiya (00:40:33): Yeah. Yeah. Yeah. Yeah. Deep Sacks. Right? Jason Calacanis (00:40:36): Yeah. There were a bunch of deep fakes of a pop star. I don't feel like actually highlight the person's name because then it just I think it consents more of it. But Sacks did a really good job of blocking all of them, watermarking them, and saying, you can't do this. And so this is like a a whole new world. Do you take any person on the planet and make porn out of them that is realistic. Well, I Chamath Palihapitiya (00:40:55): don't, I don't mean that. I just mean that you'll be able to make pornography in a way that is totally, non human involved, which is generally better, I would say, for all humans involved David Sacks (00:41:07): What's great about the deep fakes is that if you have a sex tape come out, you can just say it's a deep fake. Jason Calacanis (00:41:11): Totally. I was about to ask tomorrow. What is the prompt you're gonna use to make love to yourself tonight? With the new Sohrab model. Chlamab embraces Chamath. Chamath Palihapitiya (00:41:22): All I hope is I, I may just need to publish some data so that whatever deep fake gets some parts accurate. David Friedberg (00:41:27): This is Apple. Oh, short Apple stock. This is terrible. It's not very good. Forward. Yeah. What is this model? This is an Jason Calacanis (00:41:33): Apple model. It's called Maggie MGIE. This is Apple's open source image model. It's way behind. This looks like GPT 0.1. They got work to do, but it's open source. It's gonna be faster. David Sacks (00:41:44): It's very hard to fine tune changes in these models or to get the result that you want. But that's fine. This is just a this is v 0.9. So If Chamath Palihapitiya (00:41:52): you guys wanna see a great fine tune, the juggernaut I'll fine tune. Uh-oh. I would just say try it. It is a fine tune that does not allow Bad looking people. The whole the whole concept is only beautiful people. So it doesn't Jason Calacanis (00:42:08): matter what your prompt is, but these people come up. It's gonna be the most. Chamath Palihapitiya (00:42:11): Yes. Incredibly good looking people I've ever seen Jason Calacanis (00:42:14): as if the standard wasn't, already high enough with filters and everything else. But David Sacks (00:42:19): This is gonna be a revolutionary for independent film. I mean, this is obviously just iceberg. But, you know, the problem with independent film right now is that the economic model literally doesn't work. It's too expensive to make an independent movie relative to the return. And so the independent movie business has Jason Calacanis (00:42:35): almost dried up almost completely. David Sacks (00:42:35): This is gonna revolutionize it because it'll bring cost down close to 0. Now I I don't I don't agree with Friedberg that everyone's gonna design their own entertainment because most people are lazy. David Friedberg (00:42:48): No. I'm not saying design. Sacks, the way you think about creative production processes is what's gonna change. It's all gonna reduce down to sitting down. And it's like when you ask your spouse or partner or whatever. What do you wanna watch tonight and they answer something? That's something will then be delivered to you instantly. That's what's gonna be so powerful. David Sacks (00:43:05): Well, you you mean the AI is gonna create it on the spot for you? David Friedberg (00:43:08): It certainly will, but I I think that there's a certain element of culture that gets integrated into personal, you know, but I've I mean, I I don't think we have time for this, but I'd like a whole philosophy. David Sacks (00:43:19): People still want curation. I mean, if you look at something like YouTube, or really any user generated content site. There are roughly a hundred times more people who are passive than people who are active and actually create stuff. Whatever the ratio is. There's always a lot more passive viewers than there are creators. So there's I'd say most of the content will be created by people who actually care enough to do it. Again, let's call it 1 or 2% of the population. And then of those, 1% might actually be really good Jason Calacanis (00:43:48): Yeah. But here here's where Friedberg, I think, has a really good point because I have been looking into this. Imagine if you took the Sopranos of the you and I love Sacks. And you just said, hey, for each season, give me 10 more minutes per episode and give me, like, 2 more characters or whatever. Now you when you watch it the next time, you could say just fill it in. I want every episode to be 90 minutes instead of 50 minutes. Or I've been doing this thing, with my daughters. We're into Star Wars and the Clone Wars, etcetera, people have been cutting shows like Andor or Rogue 1 clone wars, the prequels, etcetera, and the bad batch. And they're putting in together, like timelines, and they're making their new versions of it by super cutting the different series that are filling things in. So you're gonna be able to say, hey, tell me the whole Star Wars saga with a little more perspective from obi wan, or give me a little more perspective from this person. And that that's gonna just make these things like these franchises so much more watch and deep and rich. David Friedberg (00:44:49): Yeah. So this is my point, Saks, is I don't think it's about ground up personal media creation. I think that it's about the curation model changes. Jason Calacanis (00:44:58): The creator or the central creative force comes up David Friedberg (00:44:58): with a genre with a bunch of characters like a Star Wars and general, like, arcs of stories. And then you can go in and you can view it from any character's point of view. Imagine watching the Star Wars movie from Darth Vader's point of view. Imagine watching the Star Wars movie where you just stayed on Endor the whole time and you watch the news on the TV, like, while you're hanging out. Jason Calacanis (00:45:25): I'm not sure. Fantasy. You with the w you with the Sacks for David Friedberg (00:45:28): your time. David Sacks (00:45:29): You're right that there's a great opportunity for some of these cinematic universes to kinda open up the creative assets and let the fan base do whatever they want with them or create, you know, these alternatives. I still think that it's that 1% of the viewership that actually cares enough to do that. And the reason is because that I think what what you see with all these demos is that it's really easy to get the 1st 90%. It's really hard to get the 9% and then the final 1%, you know, to get to the level of David Friedberg (00:46:01): Of course. David Sacks (00:46:01): Yeah. To get it dialed in to the point where, again, The the first thing it gives you David Friedberg (00:46:06): But the the benefits could outweigh those costs. And this is true in three d video game playing. I don't know if you play Fortnite, But there's all sorts of stuff that you feel could be better, but the overall value of that experience far outweighs the missing elements of it not being truly photorealistic. Chamath Palihapitiya (00:46:21): And I David Friedberg (00:46:22): think that's where the stuff goes. Chamath Palihapitiya (00:46:23): It's ski week next week. And I've done this for All both of my older boys, and I'm doing it now from my youngest boy who is four and a half, almost five. We are going to watch this entire week, all of the Star Wars movies. Jason Calacanis (00:46:40): Fantastic. Chamath Palihapitiya (00:46:41): And then I got a downloaded history of future movies. All the movies. Yeah. From and I got an order. The order was not what I thought. It's not as released, obviously. Jason Calacanis (00:46:50): So you wanna do timeline. So you wanna have the prequels? David Friedberg (00:46:53): I did that once, and I won't tell you. It was super disappointing. Rogue 1, Jason Calacanis (00:46:58): the Star Wars, the original sequel? Chamath Palihapitiya (00:47:00): Well, you're saying this order is not good. Here's what I was told. This is what was the internet was the most popular. You start with the phantom menace. Yeah. Then attack of the clones Yeah. Then revenge of Jason Calacanis (00:47:11): the sith. Yeah. Chamath Palihapitiya (00:47:12): Then solo is optional. Jason Calacanis (00:47:14): Yeah. Yeah. Rogue 1 optional. Yep. Rogue 1, non option. Chamath Palihapitiya (00:47:18): Then 4, 5, and 6, obviously, a new hope. David Friedberg (00:47:20): That's when your kids will lose their mind. They'll be like, what is this? It's like I'm trying Chamath Palihapitiya (00:47:24): to bounce back return Jason Calacanis (00:47:25): to bed. And 6 are too slow for kids. Sacks. That's the problem. Yeah. Chamath Palihapitiya (00:47:28): 7, the force awakens, and 8, the last Jedi, then 9, the rise of Skywalker. Jason Calacanis (00:47:33): Skip the last three. David Sacks (00:47:34): Yeah. The last year of garbage. David Friedberg (00:47:35): They fall asleep during Sacks. Yeah. 456 Sacks the best. David Sacks (00:47:39): Are probably the most watchable. Jason Calacanis (00:47:41): They're very they in in retrospect, they're great, but there's also the clone wars, which is absolutely fantastic. I would sprinkle in some clone wars episodes. Chamath Palihapitiya (00:47:49): Nat and my daughters, I'm forcing them to sit with us for this entire. David Friedberg (00:47:53): That's gonna watch all this? Chamath Palihapitiya (00:47:54): No. She's ready to shoot herself in the face. Jason Calacanis (00:47:56): Yeah. The this is her worst nightmare. Chamath Palihapitiya (00:47:57): She and my daughters are like this. David Friedberg (00:47:58): I put the over under on Nat sticking through maybe a hundred minutes of this, and she's done. She's done. Jason Calacanis (00:48:04): Amari. Oh, why do you poison the kids? So with this a nerd, the stuff, and they're never going to get the girlfriend. It's a friendly filini. What this is not a fellini. This is, how about then they watch something where the people make a love instead of the lights, Chamath Palihapitiya (00:48:17): they would cut people indoors. Watching this. Exactly. Jason Calacanis (00:48:20): He said, no. There's a no love and a joy. There's people out there. So it's like light swords. It's in the fun. But to bridge the gap between your 2 vision, Sacks, and Friedberg. It's just natural points. It's so great. It's Chamath and I will talk when we talk to each other. For literally 20 minutes. As in that, we'll just have a conversation, but it's a conversation we're having. I don't know. Why Chamath that this idea lies such a high interest rate on the convertible note. So why would you do that to me? I'm a your friend. Who's going to be on the board that this person looks like Chamath Palihapitiya (00:48:56): a dumb dumb? What's going on. I don't understand. Jason Calacanis (00:48:59): Well, it's an independent seed, it's math. He's a dog that needs to have. I put the super smart person. Chamath Palihapitiya (00:49:04): This is the opposite of a way to truffle. The white to truffle is Jason Calacanis (00:49:08): a delicious. These are product, the smells are like a poo. But, anyway, between seconds and drinks, we're literally just Uh-huh. David Friedberg (00:49:18): But when I was coming Chamath Palihapitiya (00:49:19): tonight, are you making it for dinner or not? We need David Friedberg (00:49:21): to I'm Jason Calacanis (00:49:21): not I'm I'm gonna try to make it by dinner. I just have, I have to give a keynote at a podcasting conference. Oh my god. Chamath Palihapitiya (00:49:26): Are you wait. Sorry. Are you kidding me? Jason Calacanis (00:49:29): No. I'm not kidding. You guys banned me from having advertising here. I have to make cheddar. I got bills to pay. Just because there's an 8 in front of the Uber stock price doesn't mean I Chamath Palihapitiya (00:49:38): can retire. Will you be there by 7 PM or not? Jason Calacanis (00:49:42): I'm going to make it by 7. Yes. I do keep me in So Chamath Palihapitiya (00:49:45): we are going to start dinner when you get there. Perfect. Jason Calacanis (00:49:49): I will not do David Sacks time. Okay. Thank you. But between Friedberg and Dave, you know, Sacks, you said it's like 1 or 2% the audience for, you know, Show with a million viewers or 10,000,000 viewers, that could be tens of 1000 of lunatics. And I don't know if you knew this, but remember when Luke Skywalker showed up, spoiler alert in the Mandalorian, everybody was like, oh, his young face does not skip the uncanny valley. This is why you gotta watch the Mandalorian. So then some kid did his own AI rerendering of Luke Skywalker, you know, after return of the Jedi, but you know, after he defeats the emperor, and they then hired that kid to work at Disney and Lucas Arts. So what's happening is all these people who are making content for the Star Wars universe, they are going to be the next generation or creator. So between a mister beast way over here, And Lucas Art, there's gonna be a new fill in, and it's gonna be all these great one percentage making interesting with IP that's owned by other organizations. David Friedberg (00:50:50): I think it's a whole new paradigm for media and content. It's gonna be so different. Jason Calacanis (00:50:54): Automated stuff. That's customized for you. David Friedberg (00:50:56): Yeah. It's almost like YouTube and Instagram did for user generated content. There's gonna be Jason Calacanis (00:51:01): this whole new model of AI David Friedberg (00:51:01): generated content. The the real winners are gonna be the technology platforms that bring these tools in a simple intuitive way that to Saks's point doesn't challenge the user to do work. But makes their life feel easier and better and brings them a more rich experience than they're getting today from any other media source. And that's gonna be a game changer. Jason Calacanis (00:51:22): Alright. Lots going on in AI. I thought I'd bring up a really interesting story that happened just around stock options and employees and advice you're gonna get generally speaking. Just tons of cash at the start of BOLT If you don't remember, that's a one click checkout startup. It was founded by a guy named Ryan Breslow. He's been on my other podcast this week in startups. He went viral in 2022 after he called YC and Tribe like mob bosses and had this whole conspiracy in the area of how they were trying to kill his company. Don't know if it's true or not. But at its peak, Bolt was valued at $11,000,000,000 per month, and they're buying back shares at $300,000,000 valuation down 97 percent yadayada. What makes this interesting was that in 2022, Breslow announced a new stock auction program for his employees on Twitter, and he did this in a very bombastic lecturing kind of way to the entire industry saying that both would offer loans to any employee to exercise their options early, we all know about these type of loans. From their balance sheet? That is the idea here. Yes. And he called it the most employee friendly plan possible and said that half of bulk 600 plus employees took the deal. Sacks. He since deleted the entire thread, but at the time, a lot of VCs who'd been through this before, you know, explained to Ryan is a terrible idea. Here's G GVs, Jeff Richards, for what it's worth, almost every private company, Silicon Valley did this in the nineties. It was an absolute disaster. Employee spent years paying back loans for worthless stock Sacks bills. For merely exercising, etcetera, yadayada, and his now deleted tweet was over half our employees chose this, plus I would strongly encourage my family and friends to choose this. But VC say it didn't work in the 90, so it's a disaster. VC, Twitter, pumps the tweet. This is why VC run companies are never able to make strides for employees. Obviously, all those options Chamath Palihapitiya (00:53:13): at 11,000,000,000 are worthless now, but, sorry, they did this when they were worth 300,000,000. 11,000,000,000. Jason Calacanis (00:53:19): And it was reported that at same time in a a new industry publication that Reslo was selling his shares in secondary. Reso confirmed with that newsletter that he had sold 10,000,000 and, sources, anonymous sources, yadayadayada, take that forward. It's where it said he didn't tell the team. He was doing that. 2 investors also accused the company of misleading shareholders and raising capital on inflated metrics. SEC investigated, but did not recommend any action. Sacks, I don't know if either you wanna take this. This is really mechanical but it does speak to what happens when things implode. Should employees be taking loans to buy these kind of stocks? Chamath Palihapitiya (00:54:01): Yeah. At a minimum, hopefully, these loans are nonrecourse. Jason at the maximum, if they were recourse, but it looked like these guys were doing these kinds of shady things, they have to kind of forgive the loans and eat it. David Sacks (00:54:14): There's a reason why almost no one does these types of exercise loans anymore. I mean, whoever the VC was, who pushed back was right. I mean, these things were common 20 something years ago, people stop doing it. And the reason why is that well, there are a couple of reasons. So the mechanics of the loan are that the company loans you the money to pay down the exercise price, the strike price for the options, and then you're supposed to pay the company back at some future date. Basically when you can sell the shares. And in effect, from the point of view of the balance sheet of the company, this was cashless because it would loan the exercise price to the employee who would then exercise and pay that money back to the company. So everyone's like, well, what's wrong with this? This just seems like Simple mechanics where no one loses. The employee gets to start the clock on their shares for long term capital gains. That's why they would do it. The problem is that what people discovered is that if the company didn't work out and those shares became worthless, then the employee is still on the hook for the loan. And if they don't pay the loan back, then there's a loan forgiveness issue. In other words, the forgiven amount of the loan or the defaulted amount of the loan becomes ordinary income. And so what happens is you end up having to recognize as income the loan that you never pay back. So you can lose. Furthermore, if there's spread at the time that you exercise between the strike price and the fair market value of the shares. Then although if if it's the right kind of option, if it's an ISO, you can defer paying tax on that spread. However, people got whammy by the AMT that that spread still counted for alternative minimum tax. So there are a lot of people during the first dotcom bubble who exercised thinking they can't lose because the market was always up into the right. David Sacks (00:56:03): And then the company would go bust, and they would get hit with a big AMT, and then they would get hit with a loan forgiveness issue. So that's why everyone stopped doing these things. David Friedberg (00:56:11): Yeah. Yeah. I mean, really importantly, getting taxed on that spread you owe that money no matter what, no matter what, no matter what. The IRS demands that money in the cal California franchise tax Sacks demands that money, So I I just wanna be very specific so people understand this. If the value of your company's gone up to $2 a share as a private company, and your options are 10¢ a share. You pay 10¢ a share to get those shares. You owe tax on the dollar 90 difference. And ultimately, if the company is now worth less than a dollar when you're finally able to sell or it shuts down, you actually have money. You have to pay to the IRS, the franchise tax board, and you did not make enough money to cover the tax bill. The way a lot of these companies do this is they do a cashless early exercise or cashless exercise loan, You know, you don't even have to put money up to to pay the $0.10 a share. The company is just covering it for you. To Saks's point, you end up getting taxed for that later. If you don't pay it back. So the whole thing creates a lot of tax obligations, and it's a very complicated structure and system. And the Jason options exist is so that people could buy their options and not have to pay taxes at the time that they receive them. Because if you just get shares in a company rather than options, the value of those shares is your tax bill, even if you can't sell the shares. Well, it's income. So it's income. And so options were created as a way that you would have a strike, and the strike was the fair market value. So you're actually not getting any value today. And so you can avoid the tax bill. But now it leads to all these other loops way too complicated for running Jason Calacanis (00:57:45): and file employees is what it comes down to. David Friedberg (00:57:47): Like, I I saw Jason Calacanis (00:57:47): this with, like, senior executives trying to get, like, the top 5 positions, you know, a CFO or something for CFO. David Friedberg (00:57:53): It is. Reduce your tax bill Yeah. From 50% to 20% And at the end of the day, you open up all of these other problems if you try and do that completely. David Sacks (00:58:01): One of the stupidest things about the way this was used is that they would give the exercise loan to employees who are leaving the company because they said that, you know, normally when you're a departing employee from a company or 3 months to exercise your options or you or you lose them. So they were saying that this would be a solution to that. Right? We are loading the money to exercise. All they are doing is creating a huge tax problem for that former employee. And you're right. The average employee is not sophisticated enough to navigate all of these issues. It's not clear also why you'd wanna create this complicated benefit for departing employees. Seems like if you're gonna do this, you you would wanna do it for a key exec who's joining the company. That's the only context in which I've seen it, by the way. Jason Calacanis (00:58:46): Yeah. Same. Yeah. David Sacks (00:58:48): So they were trying to solve a problem using this complicated device that that really backfired but it's not even a problem that you should try and solve in that way. I mean, there's a much simpler solution, which is extend the period of time that employees have to exercise. If you don't want them to lose their option if they don't exercise within 3 months, give them 10 years. And there are a bunch of companies that have done that where they give you a lot longer to exercise the option. Jason Calacanis (00:59:12): The trend I'm seeing with startups, like early stage, or I've seen state startups, which are really indicative of what startups will do later on, hiring people, cash basis, paying them hourly outside the United States, not having to worry about stock options, not having to worry about health care, just finding a global workforce and using these third party tools as a lot of third party tools to manage employees in Portugal or Manila, Canada or whatever, South America. And they're just saying, you know what, stock options are gonna be for, like, an elite group, the top 10% of the company, And then we're gonna automate the rest of the jobs with AI, and we're gonna outsource and have hourly workers or full time contractors outside the United States. It's the undeniable trend. Terrible. Why? David Sacks (00:59:57): That's throwing the baby out with the bathwater. One of the most magical things about Starps and Silicon Valley is that when it worked everyone got rich. I mean, you have the story of the Google chef who made a $100,000,000 or the secretary of Microsoft, you got to retire it, you know, those are extremely examples, but Chamath Palihapitiya (01:00:12): The graffiti artists at Facebook. David Sacks (01:00:14): Yeah. The artists that He didn't Jason Calacanis (01:00:15): realize. What's his name, David? David Cho. David Cho. David Sacks (01:00:18): The matter is that Smith Valley had to share the wealth mentality where the rank and file employees did participate in the ownership of the company, and they got equity. And it was highly motivating or it is highly motivating. Sure. For not just like lower level employees, but mid level employees and senior employees, to basically get equity in the company. That's one of the things that makes Silicon Valley company special or companies created it outside Silicon Valley, but using this Jason Calacanis (01:00:44): The methodology. Yeah. The philosophy David Sacks (01:00:46): of getting rid of options altogether is a terrible Jason Calacanis (01:00:49): Now what they're doing is more like for the core team that's in Silicon Valley. Options. But then, like, for work, that is not considered as essential, you know, just hiring people offshore who don't David Sacks (01:01:00): Well, try to get those people then to work nights weekends the way that you might be if you're the owner of the company. They're not having ownership mentality. Jason Calacanis (01:01:08): Yeah. I agree. I mean, I guess David Sacks (01:01:10): get 9 to 5 workers that way. Jason Calacanis (01:01:12): And I think what people are starting to realize is, like, maybe there's but there's remote workers. A lot of people are doing 9 to 5 work. And maybe that, like, hardworking culture just doesn't exist in Silicon Valley like in Houston. Chamath Palihapitiya (01:01:23): You may be able to find hardworking entrepreneurial like folks that don't necessarily speak English that now with these AI tools basically become some of your best Sacks, but there are many countries that don't value equity, don't have an understanding of it. And so to Jason's point, it's almost more of a complication to try to give it. So that may be the balancing thing Sacks that happens, which is that all these tools actually allow somebody in some country that speaks some language that's not English, but who can be completely committed, who becomes this linchpin of a business and gets paid an extremely great salary in American terms that makes them rich in their country get to the same place, maybe. Maybe. Jason Calacanis (01:02:08): I don't know. The infrastructure needs to be built for stock options in other countries because I don't know that that exists. Chamath Palihapitiya (01:02:13): Or just pay people more cash because a lot of folks have different again, stock options make sense when you have, a differential in taxation between stock equity and income. Yes. Yeah. But in other places where You have a flat tax or no income tax whatsoever. What's the difference? Yeah. Jason Calacanis (01:02:32): If you're in Dubai paying 1%, like, You could just ship it. Right? Yeah. Ship it. David Friedberg (01:02:37): And you can always go back to a model where people vest shares rather than vest options. And those shares vest on a trigger of time and a liquidity event. And that way, they can't exercise it real, or they won't get taxed prior to the liquidity event happening. But then they will have to pay ordinary income tax rates on their shares. David Sacks (01:02:58): Hold on. We're making it sound like exercising options is a bad thing. I it can be a very good thing. Mean, if you're an early employee of a startup and the options are worth pennies, and you can exercise for, I don't know, a few $100, then that's a great tax benefit because you start the clock ticking on long term capital gains treatment. And when you sell those shares, eventually, if there's liquidity event, you get Sacks at a capital gains rate, not an ordinary income rate. That's the tax benefit. That's why people want to be able to exercise their options in the first place. The problem is that as you join the company later and later, the strike price of the options goes up. And so, therefore, if you want to exercise, you're gonna have to write a pretty big check, and so you're gonna take a meaningful risk. Some people do that, and that's fine. The trouble comes in when you try to get cute and go around taking that risk by saying, okay. Well, the employee doesn't have to go out of pocket for their exercise price. We're gonna loan them the money. Well, they thought that they had figured out a way to avoid taking that risk, but as it turns out, all you end up doing is potentially incurring AMT and a loan forgiveness issue. So there's no way around the fact that if you want to exercise your options to get the potential tax benefit of a lower tax rate, you have to also take the risk of losing the strike price. That that that check that you write into the company. That's a fair trade. Right? If you want the potential benefit, you take the potential risk. But that doesn't that doesn't mean that you should never exercise. There's a lot of cases. Again, I think if you're early in a company, you should have Jason Calacanis (01:04:33): Low thousands of dollars, low 100 of dollars, cover it. Chamath Palihapitiya (01:04:36): There's all kinds of ways where when the basis is extremely low, it's nominally not a lot of money. So you can take the risk, But when you start talking about tens of 1000 or 100 of 1000 of dollars or 1,000,000 of dollars and then using loans and leverage and Jason Calacanis (01:04:52): You got the risk of ruin coming out. Chamath Palihapitiya (01:04:53): Bad news bears all the Jason Calacanis (01:04:56): way around. No, Ben. Alright, Sacks. Here's your red meat. Did you see a poll about Biden's age and the unfavorable percentage of people who think he is too old. David Sacks (01:05:07): How can I not see that? Chamath Palihapitiya (01:05:09): I think the most important thing that we should talk about is that president Biden has decided to not go through a cognitive test as part of his annual physical. Jason Calacanis (01:05:18): It's the Chamath Palihapitiya (01:05:19): first time it's ever happened. Jason Calacanis (01:05:20): Joe Biden now eighty one years old, eighty two at the start of his second term if he wins. He'll be eighty Sacks at the end, making him by far the oldest president ever. Trump is 77. He would be 78a half when he gets his second term. If he won 82.5 at the end of his term, his histogram, of age of presidents. These are the oldest. Just to give you a everybody obviously refers to Reagan as the oldest president prior to this, He was a spy 69 at the start of his presidency by the end. He was 77, which is younger, obviously, and Biden and Trump today. So, Sacks thoughts or Shamal's thoughts? Chamath Palihapitiya (01:06:01): Let's just say that we've had a bunch of these issues over the last few years. President Trump didn't disclose his tax returns. Is that a huge issue? I think people made it to be a huge issue, but it's more of an issue of judgment. But I don't think it fundamentally compromises his ability to leave the country. You had a different issue, not with the president, but with the current defense secretary who had prostate cancer. The disclosures were, let's just say, somewhat suboptimal He had a UTI. He got emergency admitted to the hospital. He just had another acute issue and those disclosures weren't good. But you're talking about an acute kind of a thing where you're incapacitated, there's a chain of command that immediately kicks in. Those are a class of issue that I think people can find things that are wrong with, probably correlated to one's political affiliation. The other side probably cares more than the side that the that the leaders on. But I think this issue is a really big one. And I posted this clip of KJP basically saying nothing to see here move on. And the first comment was Elon, which I think nailed it. He said a basic cognitive test should not be something that someone who controls nuclear strikes is allowed to skip. And I think that that is part of the fundamental issue that I have with what they decided to do here, which is that it just massively increases the risk that you could have somebody that was fundamentally unelected, running and making decisions, and I think that is a huge issue, and it's an enormous reason why for me, this was sort of the straw that broke the Chamath back and why I just absolutely cannot vote for Biden anymore. I was trying to David Friedberg (01:08:02): find There's Chamath Palihapitiya (01:08:02): a news story. Okay. I was trying to find a lot of good reasons to support him. Stability, normalcy, all of this stuff, but this is not what stability looks like. And I go, again, back to this very simple thing, a cognitive test for somebody that can control the ability for us to go to war or for us to completely eviscerate entire populations through weaponry that he and he alone controls. Should be something that is just mandatory. You can't skip it. This is not a thing where it's a nice to have. I think it's a must have And in the absence of it, I think it compromises his ability to be a legitimate choice. Jason Calacanis (01:08:44): And we do have a minimum age, Sacks, and what Shamap is saying is what The majority of Americans are saying ABC news ran a poll, 86% of Americans across both parties, Think Biden is too old, be president. 59 percent bow said both Biden and Trump were too old. You said on a previous episode, Sacks, that you thought the public should decide not a and that that doesn't need to be a cognitive test? Are you sticking with that, or do you think you're gonna maybe move to Chamont's position? And mine, cognitive test should be mandatory to be present. David Sacks (01:09:15): Well, I think it's a tell that they won't take the cognitive test because they're worried that he might fail. Just like it was a tell that they refuse to do the Super Bowl interview, which the president always does. That's the most softball interview that Biden could possibly have. And they refused to do it, obviously, because his aids and advisors are nervous about how that might go. We had the her report come out where the special counsel investigated the classified documents case for Biden said that we can't prosecute this guy. He'll be too sympathetic a defendant because he's manifestly senile, and he'll come across as an old man who can't remember what happened. So that's why they decided not to prosecute the Babylon be at a hilarious headline or take on this, which was man deemed 2 senile to stand for trial still fit to run country. That's the situation we're in. He can't stand for trial, but he's still running in the country. David Friedberg (01:10:07): Yeah. David Sacks (01:10:08): And the thing that was most damning about the her report was not just what the special counsel wrote, but it was Biden's reaction to it. Apparently, he demanded that he wanted to go out and do a press conference that very day to refute the idea that his memory was bad or that he was seen out. And he then did this press conference and it completely backfired. It came across as kind of an old man shaking his fist yelling get off my lawn. I mean, that was basically the the vibe that he gave to the press. And then the thing that he got wrong was he confused Egypt from Mexico in regards to the whole crisis in Gaza. So it would have been one thing if it was just her saying that Biden was senile, but then Biden himself came out and seem to confirm it by making these mistakes and gaps. So they know they have a problem. Jason Calacanis (01:11:03): So to my original question, would you be in favor And we change your position here that we should have cognitive tests for the presidency of the United States. Yes, sir. David Sacks (01:11:12): I think that the real issue is that Biden would fail such a test. I mean, that's the problem is that he is cognitively impaired. And the thing to realize about these sorts of conditions is they're not static. There's a trajectory to them. So in the same way that Biden is manifestly worse than he was a year ago or 3 years ago. Jason Calacanis (01:11:33): We're checking off. So it's obviously sharper. Yeah. David Sacks (01:11:35): Whatever this condition is, it's gonna be worse in Jason Calacanis (01:11:37): a year. I I wouldn't ask you a third time to answer the question, but you're choosing not to answer the question. For what what do David Sacks (01:11:43): you say when you say that, should the president take a cognitive test? Sure. He should take a cognitive test. Jason Calacanis (01:11:48): Should it be the law of of the land? Just like we have a 35 year minimum age. I'm just asking you to be specific. David Sacks (01:11:54): You could make him take a cognitive test, but the point is that let's say the doctor says, yeah, he's cognitively impaired. Is that gonna bar someone from running for office constitutionally? No. That's not gonna be part of the the constitutional requirements. You you you have to pass a constitutional amendment. Yes. Would it be a good idea for someone to take a cognitive test part of their physical to be present? Sure. Is that gonna be a constitutional requirement? No. You can't have some doctors say. Chamath Palihapitiya (01:12:20): By the way, that that's my whole point. Like, you you could take a a physical bill Clinton David that, and people used to joke about his cholesterol levels in He would go for a jog and stop at a McDonald's. So I'm not saying by any means that the results should bar you from the ability to run. It should still be up to the voters. But just like we would make sure that acute or chronic health conditions were well understood, right? The idea that this entire body of judgment, which is around your brain, around the judgment of the president of the United States, to basically say no, we're good here. We can skip it I think that that's really dangerous, and it's part and parcel of a systematic set of behaving now by the Democratic party which I think is really not where they want to be. So the only person that's really stood up to all of this is Dean Phillips. Jason Calacanis (01:13:09): Yep. Chamath Palihapitiya (01:13:10): But he is being prevented and railroaded from even being able to put that issue on the table so that the voters can decide. My fundamental view is the voter should decide, but all of these tests should be done. And skipping them is a form of a tell, as David said, and I think that this is the most important tell that we've been given about the amount of cognitive decline that he suffered. And John Stewart, by the way, had the funniest version of this. John Stewart's essentially monologue was like, Hold on. Everybody is out here giving sound bites that say he is a chess grand master in private, but then he shows up in public, and it looks like he can't even play checkers. Yeah. Jason Calacanis (01:13:48): Friedberg. Let me let me jump to you there. You shared the clip with us. What what are your thoughts? What are your thoughts on this whole issue? Cognitive test. I don't, David Friedberg (01:13:54): I mean, I don't think a cognitive test should be the law. I because you're starting to get into edge cases where you'll create lots of different requirements. Like, what's the strategic test and, you know, what's the under pressure test? And there's obviously, a lot of ways that folks can game and challenge and create new systems for and you criteria, the system of democracy, however, is meant to solve these problems. The system of democracy is meant to allow individual voters to say, We judge that someone is not equipped or prove us wrong, which is what the voters are saying and doing right now based on the polling data. The majority of voters in the United States are saying we do not think that this individual is equipped to be president. Rather than respond to that with a cognitive test, We are stuck with a single candidate, and I think it speaks more to the problem of the democratic caucus and how the electoral system works in the United States today. Where the insiders get to decide who the nominee is for the party. And those insiders are self dealt They are getting benefits by putting someone in the seat for next term because that person is in the seat this term and is approving things that they want this term. And so it feels very corrupt and it feels very unfair and very undemocratic. I think it leads to either a sense that the individual voters rise up and say, we want a third party because the way that this 2 party system works and the way that the caucus system works isn't fair. Or we end up seeing a really unfortunate outcome where you have a similar sort of like January 6 type event where folks are just fed up with the whole system and don't trust it. And if the citizens lose faith in democracy, we're we're in peril. But as John Stewart said in his monologue, it is the responsibility of the citizens of this country, To step up and not lose faith, but to take action and to resolve to a solution, we have the power we have the authority as voters. And if enough of us get together and say there should be a third party, or we do not want this individual to be the candidate, something will change rather than just resolve to letting the insider set the terms of the caucus. Jason Calacanis (01:16:02): Third party is seeming more and more viable. As a we've talked about here, people forget the case of Rossboro getting 19%. RfK looking pretty favorable. And the 3rd party candidate, something I think the 2 parties dismiss all the time, but it it is completely possible. So maybe this is the time that this is the breakout season for it as Sacks alluded to the horror report also came out. It was released. Special Counsel, Robert Hur, Republican, and Trump appointed AJ declined to prosecute Biden because he feared they couldn't reach the standard of reasonable doubt. As Sacks pointed out, And I'll just quote from the report. We conclude that the evidence does not establish Mister Biden's guilty on a reasonable doubt. And they also said he was an elderly man with a poor memory, or that's how a jury would view Biden. Democrats felt this was partisan, obviously. And then pointed out a bunch of times that Trump has misstated people's names or been confused. Is there any correlation here between the 2 candidates in your mind? Shamoff is trump right behind Biden in terms of this and is he too old to run as And do you think the gaps that he's made are comparable? Chamath Palihapitiya (01:17:22): I think that He looks much younger and spitelier than Biden does, to be totally honest. David Sacks (01:17:30): Yeah. And look at the schedule he maintains. It's nothing like Biden's. I mean, look, Democrats are trying to both sides the issue because it's their only choice. They're stuck with a candidate who's an obvious decline. And the problem for Democrats wasn't just the her report, which, like you said, Jay Cal, they can dismiss this partisan because they control the media. The problem is that Biden himself demanded to go out in front of a press conference to refute the her report, and he ended up confirming it. And the people in the United States can just look at Joe Biden. And every time he talks, no matter how much they try to hide him, when he does speak, the American people are left with the impression that this is somebody who's invisible to decline. Trump, although he does misstate a word or 2 here and there, does not give that impression. Trump maintains a vigorous schedule. Not only is he running a presidential campaign, he's battle. He's in court every other day fighting all this law fair. He is willing to give interviews. In fact, he barely turns down a press interview. And most importantly, he's willing to do a hostile interview. He's willing to step into the lion's den. He's willing to go on CNN to those town halls and basically battle Jason Calacanis (01:18:35): I think that's your David Sacks (01:18:35): best point. Reporters. Jason Calacanis (01:18:37): I think that's your best point. David Sacks (01:18:38): Won't even sit down for the Super Bowl interview, which is as much like softball interview as you're ever gonna get. Jason Calacanis (01:18:44): Yeah. Yeah. No. No. I mean, that's your that's your best point. I think who's who times really who does a 2 or 3 you you can't do a 2 or 3 hour interview, I don't think you could be trusted. Chamath Palihapitiya (01:18:53): What do you think is gonna run the country in the second term if if Biden were to win? Jason Calacanis (01:18:57): You know, that that is the question. I think it's Biden. David Sacks (01:19:00): No. The staff runs it. Jason. This will be this will be a region president where the presidency becomes an office instead of a person and it's run by powerful ministers, like in some sort of European system. That's what we'll get. Jason Calacanis (01:19:14): Or happened under Reagan. David Sacks (01:19:15): And the fact of the matter is Jason Calacanis (01:19:17): Or or Sacks has happened under Reagan. You can say? David Sacks (01:19:20): In the last couple of Jason Calacanis (01:19:21): years, of Reagan. Exactly what happened in Jason. David Sacks (01:19:24): Start to or not similarly at Alzheimer's, and it it really, I think, started to become factor in the last couple David Friedberg (01:19:29): of years. Chamath Palihapitiya (01:19:30): It was the last 2 years. Yeah. David Sacks (01:19:32): But the 1st 6 years were very strong. Jason Calacanis (01:19:33): 25% of his presidency, it who was running the country is the question. Yeah. So it's a valid question. Chamath Palihapitiya (01:19:39): Do you think there's a difference to your account between 25% 50%? No. No. Jason Calacanis (01:19:43): It I I think it's like we only have I'm just looking other corollaries where this happened and what happened. Who who is sending it? Chamath Palihapitiya (01:19:49): I think the this isn't a corollary exactly because when he ran, when Jason ran for a second term, he was cognitively sharp. It was true that he was diagnosed with early onset Alzheimer's in the 2nd year of his second term. And then that was not properly disclosed to Americans. David Sacks (01:20:05): That was just it was just the beginning in the last 2 years. If you look at if you look at the 1984 campaign, the morning and American campaign, Jason still did debates. He was still sharp on his feet. He was debating Mandel. Remember? Yeah. He gave speeches all the time. He maintained a vigorous schedule. There was no evidence that there being a problem. Jason Calacanis (01:20:24): My only point here at Chamath is, like, does the public has a right to know when these things happen, and this seems to have happened a couple of times in history. Chamath Palihapitiya (01:20:31): Well, so I would take Friedberg roadside. I'm not sure that the public You could say, irrespective of whether the public has a right to know, the public has a right to judge. And I think in order to judge, you have to make yourself available so that you can actually see it in front of your own eyes or hear it or listen to it or watch it or what have you. And that's the second problem that I think we're starting to see, which is it is so controlled. How we get to interact with with our leader. And I think that should give people some pause so that they ask themselves why would this happen? And I think that that's worth internalizing here. Jason Calacanis (01:21:12): Friedberg, would you vote for a presidential candidate who does not debate, or who does not subject himself to, you know, serious strenuous conversational adversarial interviews. Those 2 things. Are those 2 things a requirement for you to vote for somebody? David Friedberg (01:21:29): I don't know how much that matters anymore. The problem with the 2 party system is you vote for your party. Jason Calacanis (01:21:33): No. I know. But to you. If, like, a trump abide and they just refuse to do it because we're we're getting to the point where maybe they're just gonna refuse to actually bid in or trump. Trump has refused to do any debates. So maybe they're just both gonna refuse to debate. Would you vote for a candidate if they refuse to debate? That's my question to you, Fredra. David Friedberg (01:21:54): I mean, I'm just in a very different mindset on this stuff. I'm not excited to book for a candidate that's not making their priority to fix the fiscal Jason Calacanis (01:22:02): problem of the US. Alright. So you're back to that. That David Friedberg (01:22:05): topic. Yeah. It's not that topic. It's like, for me, it's like, there's a car driving towards a wall. And you've got your foot on the gas pedal. It's like, which guy do you wanna keep the foot on the gas pedal? Like, I don't care. Like, we gotta take the foot off the gas pedal. That's the point. Jason Calacanis (01:22:19): You perceive there's a difference between the 2 and spending. You're talking. Okay. So Yeah. You're you're voting for a 3rd party candidate that would lean towards Tremoth, you'd would you vote for David Friedberg (01:22:27): some party candidate? They can't win in the system. Jason Calacanis (01:22:29): Well, I mean, they can't until they can, right, until they do. So we'll see. Chamath, would you vote for a candidate who didn't debate or subject themselves to a rigorous adversarial interview? Chamath Palihapitiya (01:22:43): Not unless I wanted to shadow government. Jason Calacanis (01:22:45): Okay. Saks, same question to you. Jason, you're acting as David Sacks (01:22:49): if we need to have all of these tests because we don't know whether Biden has a cognitive problem or not. We know. Jason Calacanis (01:22:56): Including trump in this. I'm including trump in this, like, the debate issue. David Sacks (01:22:58): Well, I think we also know about Trump. Trump maintains a vigorous enough schedule. He takes enough difficult interviews. He does enough speeches. Jason Calacanis (01:23:05): What about the debate part? That's the one I'm curious. If he refuses to debate, would you would you still be willing to vote for him, you know, or any candidate? David Sacks (01:23:13): You're acting like we need to judge this question based on proxies for the real issue. When the real issue is that we know one of these candidates has basically dementia. He's invisible decline. Jason Calacanis (01:23:25): I'm not asking you this about Biden. I'm asking you in general because we're talking about norms. One of the norms of, you know, releasing your taxes I mean, I'm not asking you about, but you're changing subject David Sacks (01:23:35): from the core substantive issue. Jason Calacanis (01:23:37): We have already all agree that Biden is in cognitive decline. I'm asking you another question. I'm opening up the aperture as the moderator here. And I'm asking you to address another question. David Sacks (01:23:46): I think Canada should debate. Period. Should be. David Friedberg (01:23:48): That's what I'm asking you. I don't Jason Calacanis (01:23:50): know why you're going back and telling me what I think. David Sacks (01:23:52): Because I think that the tactic of Democrats, the mainstream media, right now, is that they can't there's no way for them to paper over or deny the visible reality of Biden's decline. So they're trying to muddy up the waters. They're trying to claim, well, Trump is old too, or that, Trump refused to debate too. They're trying to both sides the issue. I think we all know that Biden has a problem that Trump does not have. Now I think that Chamath is also right that there's a lot of Democrats who are comfortable voting for a shadow government. They're fine. With the presidency being a figurehead or a rubber stamp. And I think the reason why they're fine with it is because Democrats basically control most of our ruling institutions, really all of them. I don't think you can name 1 major institution run by Republicans, and they don't need a president to do anything other than be a rubber stamp. Republicans are looking for something different. Republicans need a president who's willing to push back on the permanent bureaucracy in Washington, push Sacks on the deep state or the state department creating new wars. They want someone to push back on Wall Street. They want someone to push back on all these institutions. Republicans are Jason Calacanis (01:25:01): looking. Yeah. David Sacks (01:25:02): Populous are looking for a tribunal. The plebs, basically, to push back on this sanitorial class that runs Washington for their own benefit. Democrats are different. Democrats are the ruling elite, and they're fine. With the president basically just being a a figurehead who will sign their legislation. Jason Calacanis (01:25:20): Doesn't drop out tomorrow. David Sacks (01:25:21): Bills they don't like. Jason Calacanis (01:25:23): Does he drop out Shamaf at this point? Is is this the moment we're gonna look back on and say, this is the peak when that 86% poll comes out and all this negative press? Do you think Biden is there's an exit ramp here. And do you think there'll be a different candidate fielded by the Democrats? Chamath Palihapitiya (01:25:38): No. This is, this was their way of saying we're going for it. Jason Calacanis (01:25:42): Okay. Freiber, do you have any thoughts on that? You think they'll make a switch? David Friedberg (01:25:46): On Biden? Yeah. I think there's a chance. Jason Calacanis (01:25:48): I think David Friedberg (01:25:48): there's a chance. Last we got a few conversations that led me to think that that there are not super influential people in the party, but people that are in the party that, you know, have connections to people of influence in the party. I'd love to hear 2 months. Like, conversations you may have had around this stuff too, but people are not happy in a party. Yeah. Very, like, very much unhappy. And everyone would love to see someone else. Now the assumption is Gavin is gonna be shoved in that seat, and that's also a losing proposition. So if you shove Gavin in the seat, you're in a worse place. Than you are with fighting in the seat with respect to your shot at winning. And it's a little late now, but I still think that there's a chance. Jason Calacanis (01:26:28): Sacks, what do you think? Biden drops out. David Sacks (01:26:30): First of all, the only reason these people are unhappy is because they think that Biden's problems have become so manifested it might cost them the election. That's what they're worried about. They don't care about the fact that the Biden Biden presidency will be run by staffers as long as those staffers will basically do what they want, sign their legislation, or veto that belongs Jason Calacanis (01:26:48): to the question we're asking you. Will he drop out? David Sacks (01:26:50): No. He's already said he won't. Look. The problem that people in the democratic party have who have this concern about buying buying losing the election because of this cognitive issue is that there is no mechanism to replace a candidate who has won all the necessary primary votes against his will. Biden has said he's gonna be the nominee. He has no desire to to drop out. Unless he changes his mind or there's some act of god, he's gonna be the nominee. The time for Democrats to make this change was a year ago. It required mounting a primary challenge to Biden the way that Dean Phillips has done. The problem is that the Democratic Party elder and the powerful people in the party said we're going with Biden. And so no one wanted to run against him, and they basically set up the primary calendar so that Biden would win. And he is gonna win. He'll have all of the primary votes he needs locked up by the end of March. And Dean Phillips is not gonna be able to basically stop him. So there is no mechanism to remove Biden. He's gonna be the candidate. You know, barring act of god unless he can be persuaded to step down. So it's not gonna happen. David Friedberg (01:27:58): What do you think about this new third party effort in DC No labels. Have you heard about it? Have you been pitched it? David Sacks (01:28:04): I've heard of it. I haven't been pitched it. David Friedberg (01:28:06): Samantha, have you been pitched it? Chamath Palihapitiya (01:28:08): I host at a dinner at my house with some folks about it. David Friedberg (01:28:11): And? Yeah. I mean, Chamath Palihapitiya (01:28:12): I think, like, it could be interesting. I think that the David Friedberg (01:28:16): is there room for a third party in the country, you Yes. Chamath Palihapitiya (01:28:18): And I, and I think that there is a very reasonable chance, and I would put reasonable somewhere between 30 and 50% that this third party gets created after the presidential election And that is the one of the very likely outcomes of RfK's candidacy. Because it is an infrastructure that will have gotten on presidential ballots in 50 states. And it's an infrastructure that if people are willing to fund specifically no labels and other people, I think the artifact could be a third party. And if if RfK can get 30 plus percent support, which in some states, I think he will. I think that there's a decent chance. That would be an enormous outcome. Obviously, the most disruptive outcome for RfK would be that he won the presidency, but I'm just saying that A very powerful outcome that is huge longitudinal benefits to America would be that his candidacy essentially is the is the founding story of a third party. David Friedberg (01:29:27): Yeah. And Chamath Palihapitiya (01:29:29): that was the shame of what happened with Perot. I think that there was a chance that Perot could have done that and He must have been under just an enormous amount of pressure. I I can't even imagine what he must have dealt with. But that could have been the artifact back then, but it definitely can be the artifact today. David Friedberg (01:29:43): So we'll see. Jason Calacanis (01:29:46): They haven't announced either, and there's no timeline for them announcing. They've asked to come on this program many times to just talk about the concept. I think, like, the they wanna have, like, the executive director on or No label. Yeah. They they they've asked over the years. Yeah. I mean, I was like, well, maybe when you pick a candidate, that would be a better time than just talking about it in the abstract. I think it's a great idea. I think that's what Americans want. So Maybe we'll get to David Sacks (01:30:11): the in 9 months. We're running out of time. I mean, it's entirely too late to be talking about new candidates who aren't even in the race. Not gonna happen. I mean, this whole David knew some things of fantasy. Even if Biden were to see the light and step down, be pressured to do that. Kamala Harris just said, I'm ready to serve. She wants to be president. And even though she's not seen out, she's actually even more unpopular than Biden. So you have that huge problem in the Democratic party that even if somehow they could prevail on Biden to step down, now you have Kamala Harris ready to serve. So how do you pass over her? Chamath Palihapitiya (01:30:46): He's not stepping down. He didn't go through all of this craziness this past week to step down. They didn't David the cognitive test for him to step down. They're not doing all that. They're not keeping him away from the media so that he can step down. Jason Calacanis (01:30:59): None of Chamath Palihapitiya (01:30:59): that is happening. They're not having people come out with the sound bites about how he's got mass of everything in private so that he can step down. He's running. Donald Trump is running, and RfK is running. Those will be the 3 people on the ballot in November of 2024. David Sacks (01:31:17): Biden's staff are the absolute last people who would ever pressure him to step down. Why? Cause it'd be out of a job. I mean, from the staff's point of view, having a weak president who basically they administer Chamath Palihapitiya (01:31:30): it's not just a job. It's like you you allocate the future as the president of the United States. David Sacks (01:31:35): You decide. It's the best it's the best situation possible for a staffer is to have a president who is borderline incapacitated, and you get to just do whatever you want. You are the president. Chamath Palihapitiya (01:31:45): Yeah. Jake, I'll give us a rundown of the Tucker Putin thing. What'd you think? Jason Calacanis (01:31:48): Just as a programming note, it came out. It dropped right after we taped. We would have covered it. Obviously, we're not covering it for a reason. I give him a b on it. Could have been better. But it wasn't bad. All things considered. I don't think any journalist is ever going to be able to trap Putin or get good information out of him or any of those things. And if you have somebody like Tucker who is obviously very sympathetic to Russia, and who believes that, you know, the west forced Putin to invade Ukraine, you know, you're not gonna get, like, a really great interview I did think he had a great moment where he asked for the Wall Street Journal reporter back at that moment to take back with him. He did a lot of softball questions. He asked 43 questions during the interview. About 15 of them were kind of softballs, and he had about 6 fastballs. But he lost control over the interview very early, obviously, if you watched it. And that's just kind of, obviously, Chamath Palihapitiya (01:32:43): I'm not asking like a you're, you're like Chris Collins with you. I'm not asking for a technical analysis of the play. I'm asking you what did you think of the interview? What did you take away from it? What did you think going in? Nothing. And was there a delta and a change going out? Just a Jason Calacanis (01:32:57): normal No. Cause I I've watched the other interviews. I watched Megan Kelly's. I watched NBC's. He's done I did a research on, and it's done about 9 interviews in the last 10 years. So it's not like this was anything new. And when you watch the other ones, it's just Putin spinning and pontificating and nothing gets accomplished. And he doesn't answer hard questions. So I had 6 questions. I I said he should ask him. He did ask 2 of them, but he didn't ask the other really hard questions I had. And so you know, he's not I wouldn't say Tucker is like the useful idiot like Hillary Clinton said, but he is biased And he didn't ask enough hard questions. I would have asked 3 or 4 harder questions, but the you're not gonna get a lot out of Putin. This guy's like a KGB Stasse trained manipulator of media. It's his specialty. Chamath Palihapitiya (01:33:44): I had 2 really interesting takeaways. The first was If you had wanted to see some crazy mad men, you actually left that interview thinking, okay, this is a person that's leading a nation that has a deep historical context that goes back to basically the dawn of Christianity, of which he has a pretty deep grasp of and it seems that his decisions are rooted in a multi 1000 year history. I didn't know that. And that was an interesting takeaway for me. So that was a broad strategic takeaway. So he was a little professorial. He was a little historical. And all of that to me made it harder for me to leave that interview thinking that he was a crazy person. In fact, it's more like he's a bit of a methodical thinker, I guess. The second is much more tactical, and I thought super salacious, and I wish Tucker would have dug into it. Which is that in 1999, when he was meeting Bill Clinton, he asked Bill Clinton, can we join NATO? And Bill Clinton said to him, yes, and let's go hash out the details over dinner. And then that night, they have dinner and Clinton says my team says no. And to me, when I looked at the arc of that interview, that was one of these really unique moments where it explains to me so much, which is a country that's at the that's birthing a democracy where Putin transitioning from yeltsin had to make a lot of very important difficult decisions the idea that he would have made an entree to Clinton to say, can we join NATO? And then to be told yes and then rebuffed, I suspect has an underlying amount of emotion that explains a lot of what's happened since. And I think that that should have been explored much, much more. I think they crossed over it and they went on, but it was a really important moment. Those are my 2 big takeaways from that from that from that interview. Jason Calacanis (01:35:47): David you watch your free bird? Any thoughts? David Friedberg (01:35:49): I don't understand. I think when he said that point, he was talking in the theoretical, not in the I'd like to join NATO because the intention of NATO was to create a unified defense against the Russian armament, which is the most significant besides the US. And at that point, before China's rise, ahead of China. So I think it doesn't make sense to be like, hey. There's two sides of this defense system. Let's unify the two sides of the defense system. It it literally is a nonsensical That's not true. Chamath Palihapitiya (01:36:23): Not true in 1999. That's totally not true. David Friedberg (01:36:26): What was the other side? 9099 Chamath Palihapitiya (01:36:28): was weird. We toward this whole thing down. It's no longer the Soviet Union. Right. So what is rush out, we're going to democracy. It's probably just an organization that looks like any other organization, like AZN, What's AZN? Well, AZN is an organization. Could they have military defenses supposedly? It's, but it's a grab bag of countries. What's the bridge? It's another grab bag Jason Calacanis (01:36:49): of Well, this is David Friedberg (01:36:50): this is a defense alliance. This is an economic alliance, Chamath Palihapitiya (01:36:53): but in that moment, the the the justification for NATO was the least powerful it said had to forbid. So in in some ways, joining NATO would have been akin to dismantling NATO and saying, we don't need this anymore. David Friedberg (01:37:03): That's the point. Like, why would he say, why would the US and the Western Europe allies say, let's dismantle NATO? He did. Chamath Palihapitiya (01:37:12): Of that moment is important. He did it at the moment where they were transitioning to a democracy. David Friedberg (01:37:16): I don't know. It's like saying, let's get rid of the defense. Jason Calacanis (01:37:18): West Russia was transforming into a democracy? Chamath Palihapitiya (01:37:20): Well, when the USSR was breaking down and transitioning to a democracy in, Jason Calacanis (01:37:24): how did that democracy go? David Friedberg (01:37:25): If there was if there was massive disarmament in Russia. Chamath Palihapitiya (01:37:28): The question is what would have happened had they said yes and Clinton took a different path? All I'm saying is, guys, without prejudging it, that, that was, I think, a very important context that is not understood in history, I wouldn't dismiss it. Jason Calacanis (01:37:42): No. No. I certainly ever I think everybody raised their eyes. Like, really that happened. What David you think of that moment? Chamath Palihapitiya (01:37:47): And then I also Clinton who is so steeped in history and policy is not somebody that would say something like that in an uncalculated way only to pull back. That does not seem, and I know Bill Clinton. That is not who he is. So just in that context, he's a very thoughtful person. So he would have said that thinking, wow, this makes a lot of sense on many dimensions. And again, the concept was it was a it was kind of like, let's sit down for dinner and figure out the details, and it's like, my team says no. And, of course, the team would say no because it's like, well, how are you gonna so Jason Calacanis (01:38:22): we haven't heard from Clinton, you know, confirming that or how it was structured. David Friedberg (01:38:26): This doesn't make sense. It sounds like it was a theoretical, like, Jason Calacanis (01:38:29): yeah, that's that was my interpretation. David Friedberg (01:38:30): It just feels like a weird. Jason Calacanis (01:38:31): He said it and kinda shocked, but he's like, let me look into that. That's crazy. What did you think of that moment, Sacks, and then overall? David Sacks (01:38:39): Well, Jason, the fact that Putin sought to joined aid or at least made that offer is a well known, well documented historical fact. This is definitely not the first time this has been raised. More generally, I think what you heard in that interview, once you got past the the sort of the ancient history lecture, is that Putin when he first came to power sought cordial relations with the US and with American presidents, and he was rebuffed. His attempt to join NATO was rebuffed. More generally, the US reneged on its promise to Gorbatchoff not to expand NATO. 1 inch eastward And instead, we began multiple waves of of NATO expansion. And I think it's very important to understand that you don't need to believe Putin on this or trust Putin, American diplomats were saying at the time what the ramifications of this would be. And I just wanna put two data points in evidence. One is George Kennon, who was the father of the containment doctrine during the cold war. He was our most respected cold war diplomat said in the late nineties, when they were first debating on NATO expansion, he David, that, quote, expanding NATO would be the most faithful air of American policy in the entire post cold war era. So think about it. This is somebody who's been around since the 19 forties. He was our chief diplomat and defined our containment policy towards the Soviet Union, and he said that expanding data would be the most faithful air of American foreign policy. And he said that a decision like that would inflame the nationalist anti Western and militaristic tendencies in Russian opinion It would have an adverse effect on the development of Russian democracy, and it would restore the atmosphere of the cold war. So this is somebody who really knew what he was talking about and warned us not to go down path. David Sacks (01:40:26): And then in 2008, second data point is that Bill Burns, who was our ambassador to Moscow, who is now Joe Biden's own CIA director, wrote a memo to Connolly's arises in the secretary of state called NET means NET. And what he said in that memo is that NATO expansion to Ukraine specifically is the brightest of all red lines for the entire Russian elite not just Putin. In other words, the idea of bringing Ukraine into NATO was an idea that was rejected, not just by Putin or by hardliners. But even by liberal reformers inside of Russia. And nevertheless, we persisted in this policy. And so I think What you hear in that interview are a lot of points by Putin around how he sought good relations with the West. But what was our reaction to him? Pressure, pressure, pressure, pressure. We supported it, the meidan queue in 2014. We try to expand NATO into his backyard on his most vulnerable border. And then finally, we supported these hard right, ultra nationalist neo Nazi elements in Ukraine. Now whether or not you believe everything that Putin said, my takeaway is that this was a rational actor. This was not a madman. This is somebody who we could have negotiated with. And in fact, there was still an opportunity before this war to prevent the war by taking NATO expansion off the table. We refused to do that. And even today, there was this new press story that in the wake of this interview, the Biden administration still rejects entering negotiations with Russia even though Putin held out that olive branch in that interview. So You know, again, this is, very sad how we have conducted American Russian relations over the last 25 years, we turned what could have been an ally into an enemy and proven George I think this has been the most faithful air of American policy in the last 30 years. Jason Calacanis (01:42:28): Alright. What an amazing episode has this been? I think we talked about Tucker and Putin enough. For the Sultan of Science, the dictator, and the rainman. I am the world's greatest moderator. We'll see you next time. Bye bye. Chamath Palihapitiya (01:42:41): Bye bye. Jason Calacanis (01:42:43): The Leggett Winter's Friedberg. Rainman, David. David Sacks (01:42:50): And it said We open sources to the fans, and they've just gone crazy with it. Jason Calacanis (01:42:59): Uh-uh. I'm missing your driveway. Speaker 5 (01:43:13): We should all just get a think you, George, because they're all just useless. It's like this, like, sexual tension, and they just need to release their vows. David Friedberg (01:43:23): What? You're a thief. Jason Calacanis (01:43:27): We need to get mercy's artifacts.