美国司法部起诉苹果、AI 军备竞赛、Reddit 上市、房产经纪佣金和解

Jason Calacanis (00:00:00): Has anybody else seen due to in IMAX? David Friedberg (00:00:02): No. Don't say anything. Chamath Palihapitiya (00:00:03): Oh, don't say anything about June. Jason Calacanis (00:00:05): I I well, I wouldn't say about June. Chamath Palihapitiya (00:00:07): No. Don't Jason Calacanis (00:00:07): say it. It is fantastic. And I want to see it again in IMAX. That's it. That's all I'm saying is that it's worth seeing twice. Chamath Palihapitiya (00:00:14): I don't even want to know that you think it's good. David Sacks (00:00:17): It's overrated. Chamath Palihapitiya (00:00:18): It makes me Stop both of you. See did David Friedberg (00:00:21): he see Jason Calacanis (00:00:21): it? He didn't Sacks. Didn't see it. David Sacks (00:00:23): No. I saw it, dude. Dude, too. Yeah. I saw it. It's over. Chamath Palihapitiya (00:00:27): Okay. Stop. Stop. Okay. Stop. Everybody. You posted the Jason Calacanis (00:00:30): 2 there's, like, 5 great scenes. Sacks. The scene. Stop. Stop. You guys are so nice. For what you're wondering ride. Rainman, David Sachs. Speaker 5 (00:00:46): And I said, open source it to the fans and they've discovered a reason. Jason Calacanis (00:00:55): Alright, everybody. Welcome to the all in podcast. With me again, the chairman, dictator Chamath Palihapitiya. David Sacks the rainman. Yeah. And Sultan of Science. David Friedberg, Nature Boy, Jay Cow, here, and we have So much to go through. The DOJ dropped a Sherman Sacks suit on Apple today, right as we were about to tape the program. It seems like Thursdays is the big news drop day now. So this DOJ suit outlines 5 alleged abuses, and they claim obviously that those abuses reduce competition while limiting consumer choice and raising the prices that consumers pay for their iPhone. We talked about this. Actually, just couple of weeks ago, we talked about peak Apple. The 5 categories are very quickly. Super Sacks, cloud gaming apps, Messaging apps, smartwatches, and digital wallets. If you don't know about super apps, that's the one that's maybe you haven't heard of if you're listening to this. In Asia, they mentioned how Alipay, we Chamath, and Paytm are, super apps. What does that mean? You get like 5 or 6 different functions in one app, social media, images, purchasing, getting rides, you know, all that stuff. And when you have that, you can move from one platform to another super easily. And when it comes to messaging apps, we've all experienced the green bubble friend. So the main argument of the lawsuit, pretty interesting. They explain, and it's a really well written document I read it this morning. That when Apple faces new competition instead of lowering prices for consumers or offering a better deal to developers, They would quote, meet competitive threats by imposing a series of shape shifting rules and restrictions in its Sacks for our guidelines and developer agreements. I've faced this every time I've invested in App Startup. They complain about the goalpost moving by Apple and Apple shares down about 3% on the news. Jason Calacanis (00:02:50): Today. I'm sure everybody's got some interesting thoughts on it. Chamath, you were talking about peak apple just last week or the week before, I think. What are your thoughts on the lawsuit that dropped today? Chamath Palihapitiya (00:03:03): To be honest, I haven't read it, and I don't really know Like the odds of these things just because it seems like some of this stuff is so clearly political. And I think that these things have seasons to it in the sense that there are moments where these things are more likely to go in the favor of the company and more likely to go in favor of the government. The one thing I'll say is that these guys have been losing A fair number of these things. So they're kind of 5050 in their fight with Epic. They've basically lost against their fight with Spotify. There definitely are in a moment where people are looking at the profitability of these devices as the source of their long term cash flow. And I think they realize that there's not a lot of growth because they haven't entered a bunch of new markets. So the real question is knowing all of that, did they do something beyond what they've already always done to try to lock people in, and can they prove it? I think that that's really where the government's case will come down to because then it's clear that Apple probably understood that their market was kind of solidifying and they introduce these blocks essentially into processes that that force people to stay. That's probably bad news for them, but I don't I don't really know because I haven't read Jason Calacanis (00:04:27): Yeah. Sacks, did you get a chance to read it, or do you have any thoughts generally speaking? David Sacks (00:04:31): I haven't read the filings, but I read some of the press coverage about it. I would say based on the press covers that I read, that there's not really a smoking gun here. At least the press hasn't reported one. And what I mean by that is the let me give you a couple of examples that were in the press. One is that, apparently, the filing made a point about when Tim Cook was confronted some time ago by a user saying when I try to send a video by text, someone with an Android phone, It just doesn't work very well. It never works. It was a guy trying to send a video to his mom. And Tim Cook responded, well, your mom should buy an iPhone. Kind of like a throwaway comment by Tim Cook, probably not a great idea from to say that, but that's an example of what the lawsuit brings up. Another example is that the Apple Watch doesn't work with Android phones, you know, it only works with iPhones, obviously. Again, is that really a smoking gun issue? I don't think so. I mean, it's this is Apple's whole strategy is that all of its products work seamlessly together, and Apple hardware doesn't really work with other operating systems it never has. So at least based on the press coverage, I have yet to see a single smoking gun example coming out of this lawsuit. Now I think what those examples highlight is what this lawsuit is really about is your view of interoperability. What the government is saying is that Apple needs to make its apps and its devices more interoperable with other ecosystems. So the watch needs to be interoperable with Android. Apple messaging needs to be interoperable Android messaging and so on. What the government is saying is that Apple is refusing to play ball with other applications, other operating systems, and that creates a monopolistic network effect. What I think Apple would say is, no, the fact is that Apple from the outset has always tried to do everything soup to nuts. David Sacks (00:06:29): We've always done the hardware and the software together, and that's what creates the magical experience. And so Apple's entire product strategy is based on creating a vertically integrated stack that goes from hardware to operating system to key applications. And I think Apple has a point saying if you try to make us unwind all of that, the process is not gonna work as well. Not gonna be the same product experience that everyone's used to. So again, I think that how you view interoperabilities at the core of this lawsuit, I think that both the government and Apple make good points about that. And I'm a little bit skeptical right now that the government has a smoking gun at least one hasn't been reported in the press. And so I'm a little bit doubtful right now that the government's gonna be able to win this case. Jason Calacanis (00:07:18): Free bearing any thoughts. David Friedberg (00:07:20): Yeah. I mean, I think it's a function of consumer choice. If consumers wanna have this closed system where they can iMessage with other iMessage holders and not be able to have a seamless integrated messaging experience with Android users. They'll be happy if they're annoyed they'll switch over to an Android. So, you know, this has always been Apple's orientation. Think I mentioned this to you guys. I've been on a map since 1984 when the Sacks original came out. I still have my first Mac original, by the way. I keep it in my office on my shelf. And Apple's, you know, always had like a really hard focus on the software that they make available to their users to create an incredible product experience. So I don't know if this is necessarily about market abuse as much as it is a consumer choice. If the consumers didn't like the product. They didn't like the fact that things were not available, that things were very expensive. They would go elsewhere. And you do see that in segments of the market. And as we talked about a few weeks ago, you do see that ex US. Most of the smartphone market is actually Android driven. Yeah. So this is a premium product that people are willing to premium price for, even if that means limited access. I think developers are frustrated that they can't access this premium market, but I'm not sure that Apple necessarily should be coerced to service developers when at the end of the day, the consumers are paying for the products. Chamath Palihapitiya (00:08:45): And to your point, like, is it is it really the case that a green bubble versus a blue bubble is really that limiting? You know, it's not Jason Calacanis (00:08:52): the end of the world. Yeah. I I would say Apple has completely abused their power every chance they get in order to capture this 30% from the App Store. They blocked the ability for you to use audible or, you know, other marketplaces to buy books and media They blocked the ability to use other media players like VLC. They blocked the ability to use browsers, And if you leave Apple unchecked, they just keep abusing it. And so I think this is kind of one of those lawsuits that's like, If we don't stop them, they'll just keep making it worse. And when people file complaints, then Apple will back down, which they did on media players, and and they'll stand down. If you think about this from the PCR to now, then you can see how prenish this behavior is. When you buy a laptop, the idea that you would have to go through an App Store and pay a $30 tax to put a piece of software on your computer would seem insane. 30%. 30. Yeah. It's a 30% tax on your which would seem insane. Like, if you buy a laptop, you should be able to put whatever software you want on it. But they did this magic trick where they said, oh, no. If you wanna put software on your phone, it has to go through the App Store. It has to be 30%. And that's really the anticompetitive thing here. I think this will be settled. And if you look at the different issues here, I think this is gonna be actually a huge win for Apple because if I message were to exist on Android, they would get all of those users to download IMessage and they would have all those users. If they made the watch compatible, they would open up many more people to buy the watch and you would get more watches. I think that Apple's thinking way too short term about the lock in here, and they should allow more of these apps allow more watches, and they should allow the gaming thing. I think that they're being petty. Chamath Palihapitiya (00:10:37): I don't think anything's gonna happen here because it's taken them 5 years to file There's a at least a 50% chance that the administration is gonna turn over, which means that this lawsuit changes or goes away entirely. Then even if it does kind of proceed, it's going to take 10 years of very detailed arguments for something to happen. And frankly, probably in 10 years from now, we've already moved a different compute platform, and this is not gonna matter. Jason Calacanis (00:11:03): I mean, there there is the coin toss of what the Trump administration would do here. For sure that's David. But I think these things will all get settled. I think the settlement will be iMessage releases. They allow the the thing about the Apple Watch, it's not just Saks that they're allowing it on Android. It's would you allow Android watches to connect with the SDK directly into the iOS operating system, which they block you from doing. I think they should just have a little switch in your Friedberg settings that allows you to flip it and say, I take responsibility for allowing 3rd party stores, and I want to be able to load any software into your computer. David Friedberg (00:11:41): I don't think the government should to regulate that. I don't think the government should be able to Jason Calacanis (00:11:45): mandate that. Yeah. I mean, I I I like the fact David Friedberg (00:11:48): that the government is looking to the government to do things that they want as a consumer Make your choice with your dollars. Make your vote with the product and service you wanna buy it instead of running to the government and asking the government to come and Jason Calacanis (00:11:59): do stuff. Make things happen. David Friedberg (00:12:01): What do you mean price fixing in what context? Chamath Palihapitiya (00:12:03): If, like, a Jason Calacanis (00:12:04): group of people price fix the price cost of a phone or, like, let's say the 30% from the app server happens to be the same between 2 app stores. Do you think price fixing is something valid for the government to come in on? David Friedberg (00:12:15): It's not the same. Jason Calacanis (00:12:16): Do you think price fixing is something the government should come in on this David Friedberg (00:12:19): If there's limited access to products in a market and all the participants get together to set the price in the market, I do think that anti competitive, and that's there's a good role for the government to play there. But Google and Apple don't price fix because Android is an open access system. You can put any application you want any way you want. There are several app stores to put Android apps on your Android device. Google operates an app store called Google Play, but there are other app stores you can go to as well. And they all have different prices. And Google's app store costs, by the way, are not apples and they're not 30%. And we talked about this last time. I'll pull it up for you again. It's like 15 to 12 going down to sliding scale. So there is competition in that market. Generally, I think the point about if there's limited access to a market for products, for consumers, and everyone in that gets together and sets a price, that is anticompetitive, and there's a good role for government to play there. But I don't think that having the government come in and say, I want this feature to have this button and this foot in my app is is is what I want my government doing. I want my government protecting me from crime. And, you know, defending the country And I don't want all the other stuff that the government does to drive costs up, which is generally what the government does. Jason Calacanis (00:13:30): Sex, what do you think the role of the government is here in terms of anti competitiveness, especially in the case, I'm curious your thoughts on a duopoly. Like, if you look at Google search monopoly, pretty easy to understand like, Hey, they've got 90%. But here you got 2 players who have, you know, roughly 50% of the market each or Sacks depending on where you are. So what what what is the The the proper role of government here, and is this an overreach? David Sacks (00:13:55): No. I mean, I actually think just to give the government lawsuit some credit. I actually think it's good to hold Apple's feet to the fire and make sure they're not engaging anti competitive tactics. One of the things I've said previously on the show is that I think the government's been making the mistake of going after bigness for its own Sacks, and I don't think that bigness in and of itself is bad. It might be a reflection that the company's done an incredibly good job, and that's why it has a lot of customers and a lot of market share. What I've said is I think the government should prevent anti competitive tactics. So I think that this lawsuit is good in the sense that it's targeted at the right types of things. It's not just going after Apple because it's market cap is so big. It's going after specific things that it's doing to kind of lock in its network effect. Now the problem that I see is just that the examples that we've been given so far from the lawsuit just don't seem that compelling. Again, I'm kinda waiting to find out where's the smoking gun here. But to Friedberg point, I mean, look, I don't think you can just say that if you don't like what Apple is doing, go to a different platform because the point is that there's only 2 choices. And they can both engage in anti competitive tactics, and they can both create lock in. David Friedberg (00:15:08): But, Sacks, there are not just two choices. Android is an open operating system, Google has a fork of Android that they put on certain smartphones. There are other smartphone makers that use other forks of Android, So Android has enabled, and the reason Google bought Android was to provide a counterbalance to exactly the dynamic of 1 handset manufacturer having an operating system that could control access to the internet and to Sacks. And so Google open source Android many handset manufacturers use their own versions of Android to put their own experience on the phone, and then Android users can put apps from anywhere they want and other companies offer app stores. So there are many app stores to go to, and there are many different handset manufacturers. And a lot of people, I think incorrectly, look at the operating system landscape in mobile and say, oh, there's Android and there's iOS, but Android is an open platform, and there are many different forks of it run by many different companies. So I think that is actually a very competitive market. Like we talked about last week, I think close to 80% of global handsets are run on Android Sacks. So, you know, it's not necessarily the case if there are only 2 choices. And Google does not control Android. There are many developers that contribute to open source there. Google has their own fort that they do a lot of work on, but anyone can take their own fork and do. I mean, you guys can you know, when you when you, when you boot up a Samsung or Sony TV, that's running Android. And that's running their own version of Android. David Sacks (00:16:32): Are you arguing that Apple doesn't have market power? David Friedberg (00:16:34): In the US, they do. X US, they're, you know Yeah. David Sacks (00:16:37): I mean, I think sure. We're talking about the US market. Jason Calacanis (00:16:40): I mean, I think the US is already there about David Friedberg (00:16:41): is are they about 5050? We pulled this chart up last week, but I mean, they're 54 Jason Calacanis (00:16:45): in the US now. It might be 5545 right now. David Friedberg (00:16:47): Yeah. Something like that. Jason Calacanis (00:16:49): The issue is the cat and mouse that Apple is really good at playing. They will push their advantage. And so we see the 5 things that the justice department wants to go after here, but the store is obviously one of them. And before that, I mentioned some of the other categories where they do this abusive power. They basically keep it up as much as they can until they get checked And I think interoperability is actually in the long term gonna be in their best interest. They'd use interoperability when they need it. So Apple Music and iTunes, they allow you to use Windows and Android. It's only when they see an advantage, and that's really the hypocrisy of Apple. And I think it's a really important that the industry stand for more interoperability and the ability for you to load any software that you want on your device. This is a compute platform the ability for them to block you from installing your own apps on it, I think is a really David Friedberg (00:17:37): terrible question. From a consumer point of view and from an industry point of view, and that's where that voice should come from to force in the marketplace changes from Apple. But having the government do this and having the government involved, I think that's all these bad Chamath Palihapitiya (00:17:53): questions. They're representing the people. Speaker 6 (00:17:54): Somebody did it. They asked Tim Cook to do it. And Tim Cooks Jason Calacanis (00:17:56): had pound salt buy a phone for your mom? Chamath Palihapitiya (00:17:58): No. But aren't they representing the people? Like, how do you expect the people to organize? Like, file a class action? David Friedberg (00:18:04): No. I think if enough companies boy the Apple platform and tell consumers to boycott, they'll the the, I mean, consumers can make decisions. Test developers can make decisions, whether or not they wanna No. Chamath Palihapitiya (00:18:13): That's not realistic. You know that. It's not realistic. That's naive. Come on. David Friedberg (00:18:16): I don't think I want the government stepping in to tell private companies what to do because customers don't like what they're doing. David Sacks (00:18:22): Wait. Wait. Do you think that the government just stepped in to prevent Microsoft from taking over the browser, the whole NETSCAP case? Jason Calacanis (00:18:30): Bundling? David Friedberg (00:18:31): I don't know the case well enough. I mean, I remember it, but I'm I don't wanna speak I don't wanna speak definitively. I think David Sacks (00:18:36): there was a substantial chance that if the government didn't step in, then Microsoft would have extended their Windows operating system monopoly. David Friedberg (00:18:43): They did have an app for monopoly. They did have a monopoly on personal compute OS, if it is. Speaker 5 (00:18:48): Well, it David Sacks (00:18:48): wasn't an absolute monopoly. I mean, it was a close-up. You could use Macintosh. Chamath Palihapitiya (00:18:52): You were using Macintosh. David Friedberg (00:18:53): No. That's what I'm saying. At the time, Macintosh was, like, 5% of the market. Jason Calacanis (00:18:56): It was under 10% at the time. David Friedberg (00:18:58): Yeah. It was about 4, 5% at that time. Speaker 5 (00:19:00): How does David Sacks (00:19:00): it do operate? David Friedberg (00:19:01): Microsoft was 95% of the personal computing market. So they did have an absolute monopoly on that market. David Sacks (00:19:06): You had a consumer choice. It wasn't a very good consumer choice, but you still have a consumer choice. You could go use Macintosh. Chamath Palihapitiya (00:19:12): And you did. You were using Macintosh. People could afford it. David Sacks (00:19:15): Yeah. Okay. But the point is that Microsoft had substantial market power, and what they were in the process of doing was the smart thing from a business standpoint, which is you take your operating system monopoly, you use that to extend into the browser. You kill netscape. You take over with Explore. You bake Explorer into your Windows operating systems. The 2 things are basically the same. Then from there, hold on. From there, you leverage your control of the of the browser and the home screen to control search, Okay. And so you think about, like, all the dominoes that would have fallen if Microsoft had continued, maybe if, like, Bill Gates had continued being CEO, and there would have been no Google. There would have been no Yahoo. Jason Calacanis (00:19:54): They would have controlled the internet. David Sacks (00:19:55): They would have controlled the internet. Jason Calacanis (00:19:57): So actively, you left out a big piece of it. Sacks, which you'll remember the second I say it, they were trying to break HTML in open standards by creating active X and using all those funky colors. And so have to understand these companies will if you give them an inch, they'll take the mile. Speaker 5 (00:20:13): Right. Jason Calacanis (00:20:13): And that's exactly what Apple does consistently. They consistently try to squeeze I think it's great. Sacks is right. Tactics is the way to go after these companies. These are 5 recent tactics. I think the the government's gonna win changing 3 of these. And that's when. That's a win for me. David Friedberg (00:20:29): Yeah. The mobile operator has tried to do the same at that same time. If you guys remember, Verizon Jason Calacanis (00:20:34): Yes. You couldn't hit that. David Friedberg (00:20:35): Key singular They they you could only put their apps if you bought it through their store on their operating system on the mobile phones that they contracted to have made. So they all had their own custom version of the handset manufacturer's OS, which all get and then they did red share back with the manufacturers. And that's why Android was acquired. It wasn't actually at the time to compete with Apple. Android was acquired to compete with all the mobile phone companies that we're trying to block access to the internet Sacks. Jason Calacanis (00:21:03): Well, Google wanted to maintain its search monopoly. Let's be honest. That's where also that's why they wanted. David Friedberg (00:21:07): They knew users would be Jason Calacanis (00:21:09): there, and they wanna have the default branch David Friedberg (00:21:11): of the access to the Internet block Speaker 5 (00:21:13): Yeah. David Friedberg (00:21:13): By this by the handset manufacturer. Jason Calacanis (00:21:14): Want it to be the web portal browser in the app. Which is what you have to agree to, by the way. So if you don't wanna talk about perniciousness and heavy handedness, if you have an Android, you and you wanna use the Android not correct. David Friedberg (00:21:24): Google. You know, you have Jason Calacanis (00:21:26): to give the bundle of apps if you want the updates and support from Google. You can fork it, but then you don't get their support. Which then breaks your David Friedberg (00:21:33): phone. If you want their version, that's right. Jason Calacanis (00:21:35): Yes. David Friedberg (00:21:35): Yeah. So they, you know, there's Jason Calacanis (00:21:37): a little cleverness here, I think. David Sacks (00:21:38): So you have 2 basic themselves in mobile. It is a duopoly and both them advantage themselves in ways that grow over time. And I think that if Apple were completely left unchecked, it would figure out ways to boil the frog and keep extracting more and more value out of downstream applications. Jason Calacanis (00:21:58): Totally paying Sacks a phone now. Yeah. How are we paying 1600 a phone? David Sacks (00:22:03): So, look, I think it's I think it's good for the government to hold the fire. But here here's the thing that the government's lacking is, again, that example they can point to that's really compelling. I mean, with the Microsoft Netscape thing, It was really obvious what they were doing. Right? The browser was the gateway to the whole new platform, which was the internet. And if Microsoft could make that a feature, of the operating system, their dominance would extend into the new computing platform. Jason Calacanis (00:22:27): But do you remember how they did it, Sacks? David Sacks (00:22:28): Apple Watch is just not the same thing. The Apple Watch is kind of a a an appender. Of your phone that most people don't even want. So it's hard to point to something. Jason Calacanis (00:22:37): Do you remember Saks how they were getting the browser built in? They were going to the OEMs, the dells of the world, the HPs, and saying, if you want this price for Windows, you have to include the browser on the desktop. It has to load. It has to ask your credentials, all this stuff. Or you could pay a $150 for windows. If you want it without the browser bundle, So they use this pricing to get the OEMs to to bundle it. And that that was where Wasn't David Sacks (00:23:05): that what Google's doing with Android effectively? Jason Calacanis (00:23:07): Exactly. David Sacks (00:23:08): Is like Jason Calacanis (00:23:08): it's exactly right. David Sacks (00:23:10): You can have your own version without Google search if you're willing to put up with all these headaches. Jason Calacanis (00:23:16): And maintain an operating system, update the operating system. Yeah. That's exactly what they're doing. So, anyway, I think 3 out of 5 of these get settled and it'll be good for consumers. Ultimately, I I I would Not financial advice, but I think that Apple's gonna be able to manage this. I'd buy the stock. I might buy more of the stock. I think that this will be good for them long term. Alright. Jason. Going even deeper into Apple and this Google relationship. Big questions emerged this week as Bloomberg reported that Apple was speaking to both Google and OpenAI about powering certain AI features on iOS specifically. According to the article, this deal between Apple and Google seems much more likely than the OpenAI 1 and could happen this year. As you know, we've talked about it on this show before. Google has been the default search engine on I own for, I think, over a decade now. And, Google pays Apple 20,000,000,000 a year. That's pure profit for Apple. It's unclear what features they would power with Google Gemini. Maybe it's like the search deal and Google Gemini's on there. Maybe it's built in. And Apple has been building its own LLM. It's called Ajax. They've been doing some other open source stuff called Maggie. What do you think, Shamoff? You were talking about this on Twitter. You had a pretty Good tweet and a pretty strong position. If Apple is gonna use Gemini, what does that say to you about Apple? And their view of the future. Chamath Palihapitiya (00:24:39): I think it's them giving up. This is the most consequential new development in technology and compute in probably 20 years, 30 years, and so to be spending tens of 1,000,000,000 of dollars of R and D and to not have enough allocated to this so that you have a legitimate path forward to do it yourself, I think is a little inexcusable, actually. It's akin to IBM in the seventies going to Microsoft and and basically asking them to build the operating system for them. When you're such a dominant company and such a dominant position, but you abdicate your responsibility to innovate. I think that that's a really bad situation for a company to be in. It was like Jason Calacanis (00:25:25): Yahoo ad in Google search. Right? Chamath Palihapitiya (00:25:27): And then by the way, on the heels of, like, turning off cars and and losing these antitrust issues in Europe and then being sued by the DOJ here, To then be in a licensing discussion with a third party for such a critical technology, I think, is just says not very good things about the state of the company. Jason Calacanis (00:25:49): Friedberg with us on this potential deal. We we don't know what features this would power. I don't know if it's Siri or it's just image editing or search or an extension of search, maybe giving an answer? David Friedberg (00:26:00): I have no idea. It seems to me like there's if if Apple's doing the right thing, which I'm sure they are, they're probably building their own alternative platform here, they realize it's gonna take them some time in the interim. They wanna have a stop gap. And my guess is by going to Google, they're probably gonna paid instead of having to pay someone else for the technology, because Google will realize some benefit from getting users over to search results and seeing ads. So Google will probably benefit and pay them instead of them having to go pay someone for access to some technology that consumers might want access to. Jason Calacanis (00:26:36): Sacks, any thoughts here? David Friedberg (00:26:37): I'm sure Apple's gonna make an investment in building their own models here. David Sacks (00:26:41): Yeah. I mean, who who would look at the launch of Google Gemini and say, I want that? That launch was a total fiasco. Speaker 6 (00:26:50): I know they're a web company. David Friedberg (00:26:51): I think it fits Speaker 6 (00:26:52): the Apple philosophy pretty good. David Sacks (00:26:54): Would Tim Cook have to be to look at the launch of Gemini and say, oh, yeah. I don't see anything wrong there. You got that exactly Jason Calacanis (00:27:00): right. Absolutely. Chamath Palihapitiya (00:27:02): I want that David Sacks (00:27:03): Yeah. Siri Speaker 6 (00:27:04): show me the president of the United States. David Sacks (00:27:06): I mean, apparently, Tim Cook is the only person on earth who is impressed with the launch of Google Gemini. I mean, I can't believe the story is true. It's just it can't be true. Jason Calacanis (00:27:14): I'm so excited today to launch Gemini on stage here at iOS. 27. Speaker 6 (00:27:21): Oh my god. Can you imagine him on stage 2 in searches? David Sacks (00:27:24): It just the story can't be true because it'd be so strategically done. Like Jamaz said, even if Google Gemini were great, you'd still want to invest in having your own thing because it's such a strategic technology. Why would you ever outsource it to your main competitor? But in this case, you know that Gemini was terrible. It was a fiasco. And so The story makes no sense. I just can't believe it's true. Jason Calacanis (00:27:46): It's probably people knocking on each other's doors. Chamath Palihapitiya (00:27:49): They spent $30,000,000,000 last year in R and D. 30,000,000,000 Jason Calacanis (00:27:54): Apple, to be clear. Chamath Palihapitiya (00:27:56): They spent $30,000,000,000 on r and d. What did they spend it on? David Sacks (00:28:00): Catering. Jason Calacanis (00:28:02): I mean, you gotta think Apple Vision is a big piece of that. Right? Chips, I guarantee to you, like, half of that is, like, the end is free and fortune. Chamath Palihapitiya (00:28:11): Billion, like, not a couple crumbs fall out of somebody's pocket, and so there's 50,000,000 allocated to just like, you know, mucking around with llama or mucking around with misrule. Jason Calacanis (00:28:21): What if they took project Titan, the car car car deal? That was 10,000,000,000 supposedly they had spent on that. I mean, if they put that towards AI, what would be Microsoft? Chamath Palihapitiya (00:28:31): Again, it goes back to the to the people. I don't think I don't think the the person in charge of the windshield wipers for project Titan is gonna be the person that figures out how to land a really killer LLM. Yeah. That's a different skill set. David Sacks (00:28:42): The But it's not even that expensive. I mean, they're, Chamath Palihapitiya (00:28:44): like, a chemical engineer and wants a computer scientist. So these are not the same people. They're not fungible that way. Jason Calacanis (00:28:49): Mean, I guess the question here is Apple capable of building on a culture Jason, Friedberg, this type of software, their hardware company, David Sacks (00:28:58): So they have it in Chamath Palihapitiya (00:28:59): their day. David Sacks (00:28:59): You're standing on the shoulders, the whole open source movement. All you have to do, like Jamas said, all you gotta do is take the latest misrule model or Jason Calacanis (00:29:06): Yeah. Jump on hugging face and start working. David Sacks (00:29:08): I mean, you're not starting from 0 because of open source. Jason Calacanis (00:29:11): Not not only are you not Chamath Palihapitiya (00:29:13): starting from 0. Not only do you have the foundational models that are excellent and available in open source, You have probably the most prolific set of training data that has ever been created in the entire world to make these models kick ass. Jason Calacanis (00:29:24): Yeah. You have all the Apple photos, archive. I wonder if in their term so that's the thing is their terms of service is so privacy based. I wonder if they could even use that information. Chamath Palihapitiya (00:29:33): And I just think, look, at the end of the day, the Apple brand is still exception. Speaker 5 (00:29:36): And Chamath Palihapitiya (00:29:37): so if you're given a $10,000,000 a year job at Google versus a $10,000,000 a year job at meta versus a $20,000,000 a year job at Apple. If you're like one of these killer AI people that get these kinds of offers, I gotta presume that Apple gets their fair share of these people. Yeah. You would think. And even in the worst case, you see Microsoft doing, like, pretty heavy handed deal with companies like OpenAI and just to speak with inflection. So it's not as as as if these deals can't be done. Right? And so it just kind of like leaves I don't know. It's just it's quizzical to spend that much money to not necessarily be willing to compete on the human capital, to not necessarily be in the market, acquiring these businesses I don't know. It's just it's just Jason Calacanis (00:30:26): a question mark. Like, what's going on here? David Sacks (00:30:27): Chamath Sacks, what's going on over there? We have some inside footage. Nick, you wanna play tape? What's Jason Calacanis (00:30:37): going on here? What are we watching? Chamath Palihapitiya (00:30:50): I hope we didn't keep you waiting. Jason Calacanis (00:30:52): Mother Nature. Mother Nature. Welcome to Apple. How how was the weather getting in? Oh, she's controlled. Speaker 5 (00:31:06): The Chamath Palihapitiya (00:31:06): weather was, however, I want Jason Calacanis (00:31:08): it to be. Yeah. They did this couple David Sacks (00:31:10): of But but this reflects their self image. I mean, they release this. Jason Calacanis (00:31:13): They care about the plan? David Sacks (00:31:15): No. It's it reflects that they think somehow this is an accurate reflection of the way they do meetings? Jason Calacanis (00:31:21): No. I think it was the no. Chamath Palihapitiya (00:31:22): I think it was saying Jason Calacanis (00:31:23): we're making a they were trying to do a skit about, like, how they're doing less packaging and including that, that skit was to tell you that you're not getting a charger in your next iPhone because they don't they wanna say it's cringe. I think it's Chamath Palihapitiya (00:31:36): a little Yeah. Jason Calacanis (00:31:37): Maybe it's a little cringe, but, yeah, I think it's a little cringe, but I do appreciate that they are doing sustainable products and not putting as much stuff in landfill. So I think they should get a lot of credit for that. What I do think about this deal that's really interesting is It's sort of cementing the Google and the Apple alliance against Microsoft. And Microsoft has big, you know, AI ambition. So this is kind of interesting. If you lock in the duopoly of Google and Apple and then you lock in Google search monopoly, and you start fighting Microsoft. I think that's what we're I think that's what's probably going on here is they're trying to figure out how do we keep Microsoft away from running away with this. Alright. We covered that huge NAR lawsuit back in December, and there has been a settlement, big news, for the National Association of Realtors. They've agreed to pay $418,000,000 in a settlement last week, and, federal jury found that the NAR in several large real estate brokerages conspired to artificially inflate agent commissions. The settlement is pretty pretty big deal. People are freaking out about it. As you know, the seller of a home pays the buyer's agent's commission. So you have a buyer and a seller Sacks% fee. Typically, sometimes it's 5, but they split that 3% to the buyer and the seller, but the seller is paying that 3% to the buyer. Now that can't be listed in the MLS anymore, and that deal cannot be done ahead of time. Buyers are responsible for paying their agents commissions going forward. So if you bought a $1,000,000 house and you were the buyer, you would pay 30,000 to your buyers Jason, or you would choose to not have an agent, or you would choose to negotiate it, and you have to have a signed contract. This is a crazy just shocking shock to the system according to most people who are in it. I've seen a lot of real estate. Jason Calacanis (00:33:30): Folks were saying this is gonna be healthy because you have this have to have this conversation between the buyer's agent and the buyer, but commissions in the United States are a $100,000,000,000 a year And one analyst projected the lawsuit could lead to a 30% reduction in commission payments, and that would eliminate about half of the 1,600,000 active NRA members from the industry. You had a lot of feelings on this. Friedberg, when we talked about it a couple of months ago, what are your thoughts on this settlement? Is anything gonna change? Is this as groundbreaking and shocking as people seem to think it is. David Friedberg (00:34:05): Well, I would take this settlement along with a lot of the developments and advances in AI as being the moment of catalyzing real change in the residential real estate agency industry. It's an industry that's been known to have fixed pricing and be very expensive to consumers, a real tax on the system, and it's largely been wrapped around this idea of mitigating your liability, reducing risk, servicing the customer, many of those aspects over the last couple of years have been largely standardized through forms digitized because so much of this information is no longer going to get paperwork from the courthouse. But a lot of the information sits digitally and can be accessed in a democratized way. And the fact that so much of the service and discovery leading through documents, understanding what they mean, and what they say can be automated through AI and LLMs. Much of this is kind of coalescing around what I hope and expect will be a more seamless automated direct marketplace for consumers. The challenge is that most consumers put most of their personal net worth into their home. And so it is where most people's net worth is tied up. And so because it is such a sensitive investment than it is their entire David. They wanna have a trusted advisor by them. So it's gonna take some time before that trusted adviser becomes some piece of software, but I do think that software is gonna play more and more of a role in providing advisory tools and services consumers in this transaction marketplace, and that's only gonna catalyze and accelerate the fee reduction I do project and I do expect that much of what is charged on a commission basis on a percent of home value today will change to being a fixed fee. And a 5 k, Jason Calacanis (00:35:59): 10 k for your buyer's agency. David Friedberg (00:36:01): Services. So you can have someone do a la carte. Do the disclosure diligence for me for 5 k. You know, negotiate the purchase for me for 10 k, and you as a consumer will start to pick from a a menu of the services that you wanna have rendered for you and things that you're comfortable doing yourself. I don't need someone to negotiate price. I don't need someone to find me a home. I've got Redfin. I can go do that. I can arrange open houses on my own. The lockbox is there. I'll go walk around the property. I don't need someone to point out that the color is nice in a room. And so I think that there's elements of what this hap of what will happen here, which is a fragmentation and then an automation of these services. And as a result, significant fee reduction. And I'm in the middle of doing this myself right now with a piece of real estate where I'm not using an Jason. And I've been using a direct listing service. I've used all of these standard forms. There's a lot of AI tools you can use to kinda read all the disclosures so you make sure everything's copacetic. And these escrow agents, they'll handle a lot of what a lawyer will handle. And they'll get paid a, you know, a fee, which is much less than the agent's fee. So I do think that there's a big disruption happening in this industry. I think it's it's really important for consumers. Agents are gonna be, you know, hands in the air telling you this is ridiculous. You need someone to help you. You need an adviser. That will continue for a good chunk of the market for a very long period of time, but I do think that it's for the benefit of consumers over time to see these fees come out of the system. And see those savings go back into consumers pockets and for the value of their real estate to go, to go in their pockets, not into an agent's pocket. Chamath Palihapitiya (00:37:30): Is it gonna change the Profitability of a realtor pretty meaningfully. Right? David Friedberg (00:37:38): Both realtors won't be able to be a business Speaker 5 (00:37:40): Right. I Jason Calacanis (00:37:40): think the sellers will do fine, and they might capture more of it because they'll they'll my understanding is the set the the seller will maybe do both sides of the transaction. David Friedberg (00:37:51): No. That's not what's gonna happen. And there's also gonna be limits on that. But but here's what I will say. If you look at the the the number of people, there are 1,400,000 members of NAR today. And the National Association of Realtors. If you look at the distribution of earnings, you guys know this. My guess is probably 10% of those Realtors. Make 40% of the fee income or 50 percent of the fee income. That is a long tail. Yeah. So there's probably a third of those folks who are already kind of sub living standards in terms of income. Maybe half of them won't be able to make enough money in this new you know, fee regime that the it'll no longer be an attractive proposition to be a real estate agent for maybe half a million to a million people over time. That our agents today. Jason Calacanis (00:38:40): Yeah. You know, I it's interesting this the the sellers are going to be faced with buyers who just show up having seen something on Redfin and don't have a buyer's representation. And so they think from the stuff I've been reading that the sellers agent might be pointing them to, hey, go to these services and be acting as, like, one broker essentially representing both sides. That's what people are saying is the potential downside. David Friedberg (00:39:06): I don't think Speaker 5 (00:39:07): that's because it David Friedberg (00:39:07): yeah. That's not gonna happen for a couple of reasons, but let me ask you guys a question. If you guys wanted to go buy a new house. Currently, you just go, you know, sign up an agent or buyer's agent and they go walk with you and eventually they'll get paid by the seller's agent. So now you have to negotiate a fee with them up front. Would you negotiate a fee and say to a buyer's agent, hey. I'll pay you 2% of whatever home I buy? Would you be comfortable doing that or 3% or 4%. How would you have that conversation? What would you say, Saks? I mean, forget I know you've got a different situation. Because you've got real estate people, like, working for you. But, like, if you were to go out and get and if would you go out and get an agent and pay and negotiate a few of them? David Sacks (00:39:46): It is not worth it to the buyer to pay 2 to 3 percent of the purchase price to make appointments. You can see all the houses on MLS through Zillow or Redfin or whatever. David Friedberg (00:39:56): What about handling closing and disclosures? David Sacks (00:39:58): No buyer would ever voluntarily agree to pay this massive commission. It's not worth it. So it's game over for the realtors if buyers are forced to pay their own brokers commission. The only reason this system works is because the seller is forced to pay for Jason Calacanis (00:40:16): it. Yep. David Sacks (00:40:18): And when you sign the listing agreement, with the seller's agent, you can negotiate a little bit at the margins. Sometimes you can get the 6% down to 4 to 5% for a big listing. But 50% of it will always go to the buy side. I mean, I've said to these guys, the buy side agent doesn't do anything. Why don't you make it 2% for yourself, 1% for the buyer. They won't do that. Jason Calacanis (00:40:38): They just won't take your business. The seller will not represent you. David Sacks (00:40:41): They have, like, all sorts of rules against it. So the whole thing is, like, protect. It's like a racket that's protected. And now Jason Calacanis (00:40:47): it's been wrecked. Yeah. David Sacks (00:40:48): Well, I I still am like a little bit skeptical that this is gonna work out exactly the way we're saying. Because it is just such a a death blow to the industry if buyers are forced to pay their own commissions. Their own Speaker 5 (00:41:01): Oh, yeah. David Sacks (00:41:01): Buy side brokers commission. And in the articles, they're saying there's still like some gray area about what's gonna happen, but that is what should happen. Buyers should be responsible for paying their own brokers. And if you do that, I think you'll knock out half the fees of this industry. Jason Calacanis (00:41:15): Here's an idea. Wanted to charge an hourly fee as a buyer's agent. Like, you might David Friedberg (00:41:19): be doing that, Jake. 200 dollars Jason Calacanis (00:41:21): an hour or $300 an hour. Chamath Palihapitiya (00:41:22): Doesn't this impact home prices as well? Like, if you if the buyer had to pay all of a sudden their affordability effectively goes down because if they have to pay an extra $100,000 for a home, that's a $100,000. They can't pay less than they can pay for the house itself because they have to pay an agent. David Friedberg (00:41:39): So But it all comes Chamath Palihapitiya (00:41:40): back into home prices. No? David Friedberg (00:41:41): And that's out because the seller's Jason no longer paying Sacks, they're paying 3%. And so now the seller's agent has 3% more that Right. They'll take a net. Yeah. But net net I David Sacks (00:41:54): think it's good for buyers and sellers because the transaction cost of trading go down. David Friedberg (00:41:58): Exactly. Money goes back in consumers' pockets. Jason Calacanis (00:42:00): Create a more fluid market. David Friedberg (00:42:02): And I think it's a great opportunity for startups. I'll say this right now. Like, I think there's gonna be a lot of startups that are gonna come out of this ruling. That are gonna launch a la carte services leveraging AI to make these services available direct to consumers without needing an agent. They're gonna be pretty compelling services, and they're gonna show up real fast. Jason Calacanis (00:42:19): I mean, a lot of people will not list their home or sell it because that 6% might put them underwater. So if it's now now down to 2 or David Friedberg (00:42:28): 3. Totally. Jason Calacanis (00:42:29): Yeah. People might be like David Friedberg (00:42:30): It's always been crazy to me that anyone would pay a percent of absolute value. It makes no sense. I bought a home for a 1,000,000. I'm selling it for a 1,000,001. So I've made a $100,000 profit, but I gotta pay $60,000 of my total gross to an agent to sell it from you. Sacks% of the profit. I just gave him Sacks% of my profit on my home. It makes no sense. David Sacks (00:42:52): And the crazy thing is that a bad sale of your home would be, let's call it, 900,000 or a 1,000,000, and a great sale would be one point too. So Exactly. There's a very small margin where they actually have an impact based on the quality of their effort, but they get compensated for the whole thing. David Friedberg (00:43:11): Yeah. For the whole thing, no Jason Calacanis (00:43:12): matter what. Compensated. No matter the out should be that you get a flat rate, $10,000 at a 1,000,000, and then you get 10% over a 1,000,000 or something you could give just like you might be the salesperson. David Sacks (00:43:23): The incentive comp should be variable based on performance, whereas the guaranteed part of the comp should be, like you said, a flat fee. It's kinda like Salesperson has an OTE. Exactly. Yeah. Variable. Jason Calacanis (00:43:36): Yeah. I mean, you could say if you said 1% up to a 1,000,000, so that's 10 k. And then 10% for the next 100 k and then 20% for the next 100 k. So you would, you know, that 1,200,000 is really hard to get. Yeah. I'll give you 20% of incremental 100, that would be a much better deal. You'll be getting paid for the actual performance. So, anyway, really interesting. David Sacks (00:43:57): You know, Jake, hell, I I have an idea for the National Association of Realtors. Jason Calacanis (00:44:00): Oh, here we go. David Sacks (00:44:02): If they wanna stop being perceived as an even monopolist, all they gotta do is put out a cringe ad talking about the environment. Everyone's gonna love them again. Jason Calacanis (00:44:08): Absolutely. They should do an ad where they have David Sacks (00:44:11): a diverse Jason Calacanis (00:44:12): cast of people and that diverse cast could talk about, like, putting sustainable, far street around it. David Sacks (00:44:19): All I gotta do is say something something landfills. I'm gonna love them again. They can charge this up. Jason Calacanis (00:44:23): Absolutely. Purchasing them. Right? They can change that. David Friedberg (00:44:25): Something landfills. Yes. Absolutely. Jason Calacanis (00:44:28): Alright. Let's keep the train moving here. The AI landscape shifting yet again. Microsoft just just David. Another one of these Shadow acquires. This time of inflection AI bizarre deal, Microsoft has hired most of the team at inflection AI, including the CEO, Mustafa, who everybody knows. I just actually had him on this weekend start ups. He was the cofounder of DeepMind. He worked at Google for years, and now he's going to be the CEO of a new company called Microsoft AI. It's essentially the Consumer AI division of Microsoft, but they did give him the CEO title. For background inflection had raised 1,500,000,000 over the last 2 years. It was one of these giant fundings that occurred to build a foundational model, Like OpenAI is doing, like in the tropic is doing. They had a chatbot called py, very similar to Chamath GPT. It was supposed to remember your history and build a relationship with you. That's all getting shut down. Read Hoffman, who is a major investor in this company and who's on the board of Microsoft and who's so linked into Microsoft. He played an important role in this deal according to reports, and the inflection investors included Bill Gates, Eric Schmidt, and a bunch of other interesting Sacks. But this was a aqua hire, which is the weird thing, Tremac. They hired all the employees. They leave the shell of a company. The company is gonna go do some enterprise stuff. And investors get to keep their equity inflection, but I guess that might be worthless. There's something going on here that we don't know about this deal structure when you saw this deal and you see Satya taking the entire team, like he threatened to do with opening eye, if you remember saying exact kind of thing, I'll acquire everybody. If you don't take the deal, What is your take, of what's going on here? Why did this occur like this instead of just buying the company? Chamath Palihapitiya (00:46:17): I mean, it occurred like this because Read and Bill are inexorably tied to Microsoft, so they were able to get a deal for investors that would have never happened otherwise. And so good on them. I think they did a very good job protecting the fiduciary interests of The investors of this startup. Sacks will conflict no interest. Right? Jason Calacanis (00:46:37): Yeah. I mean, we we say that a lot. This is so weird though. Why not buy the company, Saks? Is it because of antitrust? David Sacks (00:46:44): Actually, that's a good theory. It's just as hard for Microsoft to get anything through at this point. So probably they're just like, why even deal with the antitrust don't really need the assets. So I think they license the core tech from the inflection C Corp, and then they hire away all the talent. And then the investors get made whole. So I think it's like an aqua hire with a little bit of tech along with it that they get through the licensing deal. Maybe that's just a protect them from an IP standpoint. My take on this is that this was a bailout. This was a bailout of the investors. I don't think the investors got ripped off here. I think the investors were, like, thrilled to get their money Sacks. For whatever reason, this company wasn't going anywhere, and it raised 100 of 1,000,000 of dollars Read and Bill obviously are are wired in. They're on the Microsoft board. And this company did have some talent that Microsoft wanted. So they basically did a giant aqua hire and it build out the investors. Jason Calacanis (00:47:38): Friedberg, is that your take? This is a bailout, or do you think this is a new thing and run around antitrust where, hey, if Adobe wants to buy the next Figma, just buy the team, Do a license of Figma, some Fococaca lunacy, or do you think this is a bala? What what's your theory here? Freeburgen, what does it say about Microsoft's approach to the AI space? David Friedberg (00:48:01): I don't think this is some runaround antitrust. I think, obviously, like a lot of companies, there's been a realization on how quickly foundational model development is commoditizing and how quickly costs are escalating and how many folks are chasing it. So having some unique advantage in the particular plane of the market where they were participating as a startup, maybe became difficult and untenable and negotiations and stations between all these parties who all know each other very, very well and are all very friendly, you know, this ended up being kind of the best way to move forward. Jason Calacanis (00:48:41): Alright. There you have it, folks. In other related news, the Saudis are planning a $40,000,000,000 AI fund according to the New York Times reps. From the public investment fund, in Saudi have spoken to a number of firms about partnering on it This would be the 2nd largest venture fund of all time behind SoftBank's $100,000,000,000 Vision Fund 1, which you remember was also back by the Saudis and some other folks in the Middle East region. This new fund would reportedly invest in AI startups, chip companies, and data centers, So we thought we'd do a little quiz here if you were given the 40,000,000,000, David Sachs. How would you allocate the 40,000,000,000 in AI in today's market 2024 going on. If they put you in charge of this $40,000,000,000 AF fund, Where would you deploy it? Same question will come around the horn to you, Friedberg, and then you, Chamath. David Sacks (00:49:34): Well, the first thing is I wouldn't be in a rush to deploy all 40,000,000,000 at once because that's a recipe for spraying a lot of money into unproductive or overhyped things. So I would take my time, first of all, But second, in terms of kind of the framework, I would think about the different levels of the stack of AI and try to figure out where the value capture is gonna be. And I think there's maybe 4 different layers of the stack. First, you've got the slick on. You've got the chips where NVIDIA is dominant. Then you've got the foundation models where it's OpenAI and the some open source models. And then you've got kind of infrastructure, dev tools, vector databases, things like that. And then finally, you have the applications sitting on top of that, which are just getting started. Think it's really hard to know from what we're seeing today exactly who's gonna capture the most value in the stack. I mean, you could make an argument for against pretty much any layer of the Sacks. I guess if I had 40,000,000,000 to deploy, what I would do is try to identify who are the leading companies at each level of the stack and then who are the most promising challengers, and I would make a bet at every layer so I'm covered. That's not what I personally do because I'm not you know, I'm just not a hardware investor. I'm not really an infrastructure investor. I'm more of an application investor. So I'm gonna focus on that 4th layer of the stack and distrust that there's gonna be enough value there. But, again, if I was managing a $40,000,000,000 sovereign wealth fund, then I would play at every single level. And I would hire the best people who know each layer of that stack? Jason Calacanis (00:51:00): Sacks mean you did a good job of sort of showing the the four layers of the Sacks. I think open source, the application layer, and specifically robotics are huge opportunities that are under invested in right now. So I would take the top open source projects I'd find those top contributors, take the top 20 or so open source projects, and back them to the tune of, you know, significant money, 50,000,000, 100,000,000, whatever it takes and try to own the top 20 or have insights into those top 20 open source models and own those teams. Look for the top contributors. Really easy to do. On GitHub and hugging phase and and replet in other places where they're active and empower those. Then obviously there's verticals. We're we're working on people who are doing screenplays and Sacks just like you are Sacks, and that's a fantastic place to deploy money. But then I think robotics is gonna be super, super compelling here, and that takes a lot of money. And so you do have the capital as a weapon and, you know, the 20 year view of this and making a general Jason purpose robot like Elon's doing with Optimists or Figurais doing with their robot. I think robotics is a major place. You could probably buy, I don't know, who owns Boston Dynamics now. I know Google sold it. So you could probably buy some robotic companies and then put AI on them and really take a 20 year view of robotics. Freight, your thoughts? How would you deploy the 40,000,000? David Friedberg (00:52:24): The autumn three stacks are very difficult right now to find a footing. Obviously, you know, I think Sacks the, you know, it's it's the, I think, the generally accepted framework for how to think about how the market is broken apart. But on the application side, I think is where you could think about finding more traditional business model advantages. So, you know, I think your point about robotics is a really interesting one. You know, is there a enterprise like sale of robotics tools that have positive ROI for enterprises. And is there a business that's working there and that is scalable, vertical solutions, in labor and automation and productivity gains are probably the best sharp ratio, good alpha, lower beta, and a good place to kind of deploy competing in chips, competing in infrastructure, competing in models. It's such a you know, as we just talked about with respect to what happened with inflection and Microsoft this week, it's such a rapidly changing environment it's hard to have high confidence in where things are headed there. So I do think that we do know that there are enterprise markets. We know that there are segments of things like food, medicine, you know, manufacturing. These are markets that aren't going anywhere, and they could all certainly benefit from unlocks in software or in robotics and automation and hardware. So that's probably where I would think about concentrating capital But, you know, 40,000,000,000 is a lot of money. So you probably think about deploying it over what period of time is at 10,000,000,000 a year over 4 years. And then is it broken apart in what way over those sectors and over what geographies and, you know, then find good managers to help you get it deployed? Jason Calacanis (00:54:09): Tremoth, you're batting cleanup here. You got to hear everybody's answers before giving your own. What are your thoughts on your other besties answers and What's your plan to deploy? 40,000,000,000 for the Kingdom of Saudi Arabia's public investment fund? Chamath Palihapitiya (00:54:23): The most important thing that fund managers get wrong is not having appropriate reserves for your winners. And if I look back, the real profit dollars that I leaked was not not investing enough up front us, but when I didn't have enough reserve to do the full pro rata or even super pro rata and the ones that worked. Jason Calacanis (00:54:42): So the Chamath Palihapitiya (00:54:42): first thing we have to David Friedberg (00:54:43): do Chamath Palihapitiya (00:54:44): when I do the regression on all of my funds, you really need to reserve between 40 50% of a total fund size for reserves. So take 20,000,000,000 off the table. And now you have a smaller problem, which is how do you deploy 20,000,000,000 because the other 20,000,000,000 is purely meant for the winners where you cram the money into the few that are winning so that you can make the most money. Of that 20,000,000,000, I would probably take 2 thirds of it. And I would go to all the hyperscalers and anybody that's providing cloud compute and essentially buy out all of the compute credits on GPUs, so that I could tell any startup in the world, you will do a safe with me, the kingdom of Saudi Arabia, I will give you free compute on pick your cloud provider, pick your model. I don't care. So if you wanna run llama on grok, great. If you wanna run MISTRAL on GCP, great. If you wanna run OpenAI on OpenAI. Fantastic, but we will pay for all the compute in return. We get 7% upfront, and you have to tell us some benchmark of how this model is improving. And then you are hiring a team of people whose job it is, and you can probably train a model to do this as well. To ingest the reporting in a systematic way to understand. If it is, as you guys said, a robotics company, there are measures of the quality of a robot a robot's dexterity or vision or manipulation or tax completion rate. If it's a search engine, it's a different thing. If it's a consumer facing app, it could be users. If it's a drug discovery app, it's the number of legitimate protein synthesis passes that that pass. Whatever it is. So now you've scoped the problem to 20,000,000,000 is in reserves. 15,000,000,000 of it is tied up in credits. And then the 5,000,000,000, I do think it's what David said, what Sacks said, which is a 1000000000 and a half to the hardware, a 1000000000 and a half to a 1a half to some of these discrete ideas. You probably need a 30 or 40 person team total, no more. But that business can could make a $1,000,000,000,000 if it was set up that way, but the key is to get the credits out to people so that The reality is what the commonality across every single AI startup is that they will have to run on a model And that model will be hosted somewhere in a cloud, and all of that compute will need to be paid for. So Saudi Arabia should pay for that compute Get 6 or 7% up front and retitle the safe, not as the what is a safe call, Jason? Jason Calacanis (00:57:22): Simple agreement for future equity. Chamath Palihapitiya (00:57:24): This should be the Saudi agreement Jason Calacanis (00:57:27): for future equity. David Friedberg (00:57:29): I love it. That's what Speaker 5 (00:57:30): they should do. Chamath Palihapitiya (00:57:30): Well, there you have Jason Calacanis (00:57:31): it, MBS. The all in KSA, $40,000,000,000 are fun. Give us a call. We'll fire it up, and we'll deploy the 40,000,000,000 for you, a kid. Baby. David Sacks (00:57:41): Actually, I'm curious you guys since everyone kind of seems to agree with the the framework of that 4 levels of the stack, where do you guys think the value capture is gonna be? Do you think it's gonna be by the chip companies? The foundation model companies, the infrastructure companies, or the or the applications. David Friedberg (00:57:58): I'll actually change my answer in a little bit. I don't think necessarily new technology companies per se that are gonna benefit most, but I think that it's businesses in traditional industries that are gonna be able to leverage these tools, whether they're using open source tools or third party technology capabilities that they're buying as a service or as a piece of software, There's an incredible set of advances that are gonna be realized in things like chemical manufacturing, drugs, general that have existing scale and infrastructure that are the Speaker 5 (00:58:28): fastest to move to adopt these technologies are gonna benefit David Friedberg (00:58:29): the the most. And I think that's probably where most of the value will accrue is not necessarily a chip company, but in other businesses in traditional industries that can transform themselves. Using AI. So your answer David Sacks (00:58:44): is at the application level. Application level. Yeah. And then within application level, you could divide it up between existing companies and startups. Yeah. And existing companies that are able to leverage AI innovations that are lower in the stack. Jason Calacanis (00:58:56): Another way to answer your question, Sacks, is which is the most crowd which Sacks are the most crowded already. And so, obviously, chips are super crowded, lots of income, and lots of people going after it. And the foundation models are very crowded as well. And the application lab will is yet to sort of be built out, right, because we're in year 0 or year 1 of that. So I do think application levels where there's a lot of value, but I also think the hosting and the development of these various niche models is gonna be a huge opportunity. So just once again, those open source models being put into a cloud computing environments and optimized that could be a whole new level of AWS's and Google Cloud and Azure's. So there's an opportunity for somebody to compete with those incumbents by just being better at those models that are open source and having the team that's doing those updates and then optimizing their cloud. So I would go with the cloud level for those open source models and providing that as a service like VMware does or other folks do. WordPress would be a tiny example of an open source project like that. And then I just something tells me this robotic space, which has been a full start over and over and over again. I think this is the time where, actually, it's gonna work. And so I'm I I love that hardware robotics space for AI. Chamath Palihapitiya (01:00:14): I think you're right, Sacks. I think it's kind of book ended in my mind. I think the the folks that are building fundamental hardware will make a lot of money over the next 5 to 10 years, and then the folks that are building The fundamental application level experiences will make a lot of money as well. And then who knows? The thing that we're not talking about enough, and I don't understand it well enough is the entire way in which apps are built needs to fundamentally be we thought from 1st principles because you essentially basically have these client server apps where you have all of this business logic that's sitting back in some server somewhere. And I don't think that that's how apps get built today in a world of AI. And so it doesn't need to work Jason Calacanis (01:00:59): that way. Chamath Palihapitiya (01:00:59): So I don't exactly know what that means, but it it just seems like most of the architecture of how the internet works today doesn't make much sense. So that would then support Freebrook's point that all of the kind of the legacy things that we all know and trust also get rebuilt. And so that could create an entire wave where networking value gets recreated and everything. So I so my gosh. I mean, it could be very, very transformational. Jason Calacanis (01:01:22): I mean, the idea that you would just talk to a computer or in a chat interface and you wouldn't use an app interface. You would just ask it questions. It would give you answers. Ask your questions. It gives you answers. Task, it gives you a result. Chamath Palihapitiya (01:01:34): This is very compelling. Yeah. This is why like Saudi needs to basically make a bet that there's just developers that are swarming around ideas, let them show you what's happening because paying 800,000,000 a year of fees is not the best way to generate a return on $40,000,000,000 if this is where you wanna be investing. I don't Jason Calacanis (01:01:52): Yeah. Chamath Palihapitiya (01:01:52): 800,000,000 could pay for a lot of credits, which probably gets you one step closer to the to the answer. Jason Calacanis (01:01:58): Or it read it went public today. They have 800,000,000 in revenue. Company is worth over $8,000,000,000 in trading. It's up 50%. What do you think? Chamath, the opening of the IPO window again. So it's a one off. You got Stripe coming. And and what do you take from it popping 50% on the 1st day? Chamath Palihapitiya (01:02:19): I don't know. I really haven't looked at the company. I haven't looked at the the financials. But like this last 3 or 4 weeks, I think people have been so excited and rearing to go. We're in the middle of another meme coin craze. Jason Calacanis (01:02:35): Oh god. Don't bring it up. Chamath Palihapitiya (01:02:36): I just David Friedberg (01:02:36): think we are all Jason Calacanis (01:02:37): getting pulled into that nonsense. Chamath Palihapitiya (01:02:39): I think the point is that I think there is a speculative party going on right now. And I'm not saying that Reddit is part of it, but whenever these things are so mispriced, just means that people are are ready to gamble a little bit. Jason Calacanis (01:02:54): There's definitely a lot of gambling in the system as we've seen, and we're recording this on Thursday. So who knows what the stock price will be tomorrow? Chamath Palihapitiya (01:03:02): Generally I mean, by the way, sorry. The the other thing is, like, Powell did say, finally, it looks pretty likely we're gonna get these 3 cuts. So We're gonna be down to four and a half to four seven five on fed funds by the end of the year. It probably means that we'll get another 50 to 75 basis points through 2025. So people will look out to the end of 2025 and look at a fed funds rate that's sort of like 375 to 4%. So they're getting pretty excited and frothed up. So this is the beginning of the beginning in terms of that kind of speculation. Jason Calacanis (01:03:37): Yeah. We saw crypto go bonkers the last couple of weeks. Yeah. What what's your take on all this, Sacks, is does it feel like people are in a gamble mode again. And does that concern you, I guess, after what we just experienced? David Sacks (01:03:52): Well, I think their pricing in these rate cuts is if they're definitely gonna happen. Like Shamas said, I think the ex market's expectation is with, let's call it, 70 percent certainty that you're gonna get 3 rate cuts this year. And it still seems to me that that's a little bit up in the air, because inflation has not come down to the Fed's target of 2%. It's still right around 3%, 3.1%. So it's been sticky around 3%. It was coming down pretty fast last year, but it's still there. So people I think are may be gambling in the sense that they're counting on rate cuts that haven't happened yet, but they liked pals, dovish rhetoric. Yesterday. And they seem to think that that means that the rate cuts are definitely coming. I don't know how pal can promise that without inflation coming down unless he's trying to create a Biden put. Jason Calacanis (01:04:46): There it is, folks. David Sacks (01:04:47): Which was my theory going into this year. Is that Yeah. Because he took the get a Biden put from the fed. Jason Calacanis (01:04:53): Absolutely. And it's looking like Biden has a clear path to victory based on the lowest unemployment of our lifetimes and this boring stock market records. Yeah. So it's a easy biden victory. Friedberg, what do you think? About the risk on David Friedberg (01:05:11): I don't know. David Sacks (01:05:12): Biden is incredibly unpopular. If you look at his actual polling, he should not win the election. But that's in spite of you're right. The economy seems to be doing pretty well, and the stock market's certainly doing pretty well. A president with these fundamentals would normally get reelected, but Biden currently is not his polling is not the polling of a president who's gonna get reelected. Jason Calacanis (01:05:33): It is But if if Powell comes David Sacks (01:05:35): if Powell comes through with the rate cuts, that will help him. Jason Calacanis (01:05:38): It's pretty amazing how horrible a job he's doing that he's made Trump look like a better candidate to some people. That is an extraordinary achievement by Biden, and we'll have to agree there. David Sacks (01:05:49): Look, I think the the bigger economic issue be talking about was that buried article in the Wall Street Journal about commercial real estate. Do you see that article? Chamath Palihapitiya (01:05:59): That was crazy. David Sacks (01:06:00): So this Wall Street Journal reported that of the 36,000,000,000 of office loans that came due in the commercial mortgage backed securities market last year, Only 1 quarter were paid off in full. That's according to data from real estate analytics from cred 10. Jason Calacanis (01:06:17): Is that an extended pretend strategy that you see in there? David Sacks (01:06:20): Oh, yeah. I mean, only 1 quarter of the loans got paid off. So 75% didn't get paid off in full. So there's tons of buildings that are underwater right now, but nobody wants to foreclose and then sell them at a fire sale price. So, yeah, everyone is it's pretend and extend. Jason Calacanis (01:06:38): Yeah. Kicking the can down the road. Nobody wants to take the medicine. So, yeah. Speaker 5 (01:06:41): Well, David Sacks (01:06:41): they're hoping they're hoping that rates will come down fast enough, and occupancy rates will go up fast enough that no one has to foreclose. But if rates don't come down, then you have a real problem. And, again, everyone is just assuming that inflation will continue its path from 3% to 2% and then we'll get these rate cuts. And they're hoping they can cling on. Landlords are clinging on, and I think the banks that loaned them all this money are clinging on for dear life. But if rates stay higher longer, then you're gonna see some real distress Yeah. Including the regional banking system. Jason Calacanis (01:07:17): Friedberg, you had a a science one here. A couple of different things came up, the Hubble Telescope, 3 d printed, organs, what where do you wanna go with this? David Friedberg (01:07:27): I mean, do you guys wanna talk about how the universe is expanding at an accelerating rate and expanding differentially everywhere we look, and we don't understand how or why. Jason Calacanis (01:07:36): A 100% and Saks needs to use the loo. So, yeah, definitely. He's off. He dropped. David Friedberg (01:07:42): He dropped. He dropped. Jason Calacanis (01:07:43): I love Cyence quarter. Let's do it. Free Berkeley, it's your time to sign to to shine. The something of science. Tell us what's going on with the universe. David Friedberg (01:07:51): My favorite topic. Astrophysics. My favorite topic. My Jason Calacanis (01:07:56): favorite's not back. David Friedberg (01:07:57): Sex is back. David Sacks (01:07:58): Are we headed for Uranus? David Friedberg (01:07:59): We're actually Jason Calacanis (01:08:00): dead set on it. We're dead. It's a collision court over his anus. He disappeared again. Speaker 6 (01:08:04): He's just gonna drop in and do gain your racist jokes. David Friedberg (01:08:07): I hear him giggling with his camera off. Jason Calacanis (01:08:09): He's with his writers. He's a he just went to the writer's room to get an update on the horrendous jokes. David Friedberg (01:08:15): It's long been known that our universe is expanding. We've all heard about the the big bang theory and Couple decades ago, scientists began to observe the brightness of supernovae or exploding stars. And then by looking at their brightness, we could tell how far away they were. And then looking at the shift of the light, whether it's getting red or blue, you can tell whether the light, the the the supernova is moving away from us or towards us and how quickly And so what scientists have used those observations to deduce several decades ago and for which a group won the Nobel Prize is that our universe is expanding, meaning that everything is moving away from itself. It's almost as if we're all in a cake, The best analogy I've heard is that there's raisins in the cake. And as the cake expands in the oven, all of those raisins look around, and they're all moving apart from each other. So The distance between everything is getting wider. Space is expanding. And so we Jason Calacanis (01:09:24): can actually moment of the big bang. David Friedberg (01:09:26): That's the theory is right. This all started in the big bang. And it's not like, you know, we're all in the middle of the universe Jason the universe is moving away from us. It's that the entire entirety of space is expanding itself, and so everything is moving away from everything else. The challenge in the data was that recently we saw the different types of stars that were observed with the Hubble Space Telescope had actually a different rate of expansion of the universe than what was previously thought from the supernova that we saw, and everyone thought there was something wrong with the Hubble Space Telescope data. So, you know, in a final print published last month, the James Webb Space Telescope which showed much higher resolution of imaging. And as a result, much better data. Here's an image of it. You can just see the difference between what came out of James Webb. And what was used in Hubble. So that shows one star that was used to calculate the rate of expansion of the universe. And what the Shar star showed is that the rate of expansion of the universe as measured across a 1000 of these stars called cepheid stars in 5 different galaxies had a value that didn't match the value that we see when we look at exploding stars very far away. And so it once again confirms what the original Hubble data showed, which is that the universe is expanding at different rates in different parts of the universe. Which totally doesn't make sense, and there's no really clear answer as to the physics of why. If there was a big bang and the universe started to expand, it should be expanding the same everywhere. There's no reason that different parts of the universe should be expanding in a different rate than other parts of the universe, that there's differential expansion happening across the universe. And it really tells us that there's very little we know or understand about this large scale structure of the universe and why these things are happening. There was one group that put out a theory where they said that the local universe where we see these cepheid stars that this data is based on, there's almost like a little bubble. And on the outside of the bubble, there's galaxies and they're pulling stuff out faster than what's happening where there's not as much density. So there's a lot of different reasons and ex and explanations for why this might be happening. David Friedberg (01:11:36): But it's kind of a big story because it basically confirms that we see a lot of differential expansion happening across the universe, and we don't know why. Just another big mystery of the universe. So super kind of interesting confirmatory data from James Webb this week. Chihuahua, do you wanna talk about the the the pig kidney? Chamath Palihapitiya (01:11:55): I mean, I think it's it's really incredible. They took a kidney from a pig and then they use CRISPR Cas9 to edit out the certain subset of the pig genes and edit in a certain useful subset of human genes. And then they transplanted that kidney into a sixty four year old man. I said, and he's he apparently seems to be doing well. It's really incredible. And this is a guy that was at end stage kidney disease. And my father went through this but when you're at that end stage renal disease, you're getting dialyzed every 3 days for up to 4, 5, 6 hours trying to, basically, have a machine that does the job of the kidneys for you to keep your blood clean. But it's just it's kind of a death sentence, and it's like a slow moving death sentence like that. So the idea that you could now use this effectively infinite source of organs. Seems really compelling. Pretty amazing. I don't know what are you using. David Friedberg (01:13:01): Definitely where we're headed. Jason Calacanis (01:13:03): I don't even think they're gonna need. Yeah. David Sacks (01:13:05): Speaking of medical breakthroughs, did you guys see the the guy who got the neuralink chip. And crabbled with his brain? Jason Calacanis (01:13:13): He's using the force. Yeah. Chamath Palihapitiya (01:13:15): That was awesome. David Sacks (01:13:16): He's using the force. Jason Calacanis (01:13:17): Yeah. He, you Chamath Palihapitiya (01:13:17): know, he described it as Jason Calacanis (01:13:18): he was playing chess. And he said, like, I love playing chess, and I've learned to use my mind to move pieces around and He David, like, it's like having the force. I mean Wow. Amazing. Chamath Palihapitiya (01:13:29): I watched the live stream, and he said that he was a quadriplegic from the shoulders down, but He loves chess. He wasn't able to play chess. Now he's able to play chess. He was able to play civilization, the game, which I guess was really hard. In the absence of having this this chip, and now he can do that, it's it's incredible. I mean, it's really that David Sacks (01:13:48): they kinda went public with it. Or he I mean, obviously, he agreed to to a public with it. I think Trevor is his name. Jason Calacanis (01:13:54): It's pretty amazing. And there's more amazing stuff coming. They're making significant progress over there. I was talking to somebody who works there. And, you know, it's it's it's gonna be yeah. It's it's gonna be a process, but they're making significant progress and they're gonna have, I think, even bigger announcements in the coming year. They're getting it done. It's fully close. David Sacks (01:14:18): My kids were really blown away by it. You know, it's it's interesting to me what, like, penetrates their cynicism bubble. And, like, what they get actually Yeah. Impressed or excited by, and they thought this was really cool. Chamath Palihapitiya (01:14:30): You know, it's so funny. It's like people are breathlessly, like, looking at the Elon Don Lemon David, and they're trying to opine whether he had a good interview or a bad interview. And it's like he actually had one of the best weeks of his life. Jason Calacanis (01:14:45): Yeah. Starship 3 made it up. Chamath Palihapitiya (01:14:47): Yep. Stars had an incredible performance last week, and then this thing this week. I mean, what an incredible 7 day run. It's more than most of its will have in our lifetime. Jason Calacanis (01:14:57): It's also nuts. It's so crazy. That down lemmon interview, like, there was actually some really same topics discussed, but I I felt like this was like, this was the perfect, like, baton passing between old media and and new media where He was constantly trying to do a gotcha journalism thing, and Elon was trying to engage in good faith and, like, an interesting discussion. And then every time they discussion got interesting, He kept trying to go back to, like, sensational gacha journalism, and it was a totally wasted opportunity. If you had just found Lemon had just stayed in the moment, and and, like, engaged in good faith instead of trying to get this, like, clip. It was a really bad performance by Don Limmon. I thought It it was really getting interesting at moments in time. He's David Sacks (01:15:38): obviously trying to get a job back at some mainstream media company. Maybe. This is his This is his resume. If he can basically get some clip of Elon saying something that he can twist into something that it doesn't mean, and he can say I got Elon Musk, then he can get his job back at CNN or one of those places. Jason Calacanis (01:15:56): Paid out in full, like, 20,000,000 dollars, 30,000,000 bucks And by the way, those jobs are not they don't exist anymore. Like Tucker and him were, like, the last of that generation to get those huge pay days. That's what it's over. Chamath Palihapitiya (01:16:08): Don Lemon got paid $30,000,000 by whom. Jason Calacanis (01:16:11): I think CNN the report was CNN paid out his full contract. The same thing happened, I think, with Tucker, they both got paid their full contracts. Whoever negotiates those contracts with the networks over the last couple of decades is awesome because it's pay it's pay for play. Like, whether you are on air or not, you get David, and the and then they don't let you go to a competitor. That's why both of them are doing internet Sacks or whatever carved out. So I just wanted to give a shout out here at the end of the pod for the guys that all in talk, Chris and Spencer did an amazing job the team over there from good future media of creating just that amazing fan account now that we're growing up here over at all in, and we'll have a CEO announcement at some point. We have taken over the accounts and we're starting to make our own clips. So thanks to them for supporting us and helping grow it If you want to see the 4 of us, go to YouTube and type in all in podcast and then subscribe. We're almost at 500,000 subscribers, and we decided that if we hit 1,000,000 subscribers by the end of the year, we're gonna throw a party. And, y'all will be invited. Love as many people at the party as possible. So, go ahead and find us on TikTok, LinkedIn, and Instagram. Just do a search for all in, and you can search for all of us, Jamoff, David Friedberg, David Sacks, and Jason Calacanis. Thanks again to the super fans for helping us build up this amazing audience couldn't have done it without you. And, yeah, we're we're just posting clips, I think, every other day on the YouTube channel. And so if you go in there, you can subscribe and then next to it, there's a little alarm bell. You hit the bell. You get an alert and you get to see our faces and and know what we look like. We also put a lot of graphics. So if you hear us referring to charts, that's all on the YouTube channel for David Sacks. Jason Calacanis (01:17:57): I'm up. I'll talk to you, David Friedberg. I am Jason. Jason we will Chamath Palihapitiya (01:18:02): see the voice mail spread David Sacks (01:18:03): as moderator. You forgot your Jason Calacanis (01:18:05): top line. And, the host of this week in startups. So search for my podcast. For interview startup founders. Ready to plug in for that. No. Some people don't know I have another podcast. So please search for this week in startups and, subscribe to that Speaker 5 (01:18:16): as well. Jason Calacanis (01:18:17): We'll see you all next time. Bye bye. Chamath Palihapitiya (01:18:18): Love you, boys. Jason Calacanis (01:18:21): We'll let your winners ride. Rain David Sacks. Speaker 5 (01:18:28): And I said We open source it to the fans, and they've just gone crazy with it. Jason Calacanis (01:18:32): From US sweetheart. Best is our car. Chamath Palihapitiya (01:18:51): We should all just get a room and just have one big huge order because they're all just useless. It's like this, like, sexual tension, but they just need to release them out. David Friedberg (01:19:00): You're a beep beep. What? Chamath Palihapitiya (01:19:04): Where did you get mercy's