债券危机逼近？共和党抛弃 DOGE，谷歌用 AI 颠覆搜索，OpenAI 收购乔尼·艾维的 IO

Jason Calacanis (00:00:00): Alright, everybody. Welcome back to the number one podcast in the world, the all in podcast. Today, the original squad is back. No guests, just full contact. Sacks is back. We're gonna break down a number of topics today, including chaos in the bond market as Republicans seemingly have abandoned the Doge agenda. And we're gonna debate the big beautiful bill, which is gonna add trillions to our national debt. And it's a new era for Google as they release an AI first search product. OpenAI has acquired Johnny Ives company IO to make some sort of gadget. They've paid over $6,000,000,000. Is this the real deal or not? You're gonna find out today. And is energy the solution to every problem we have? One, Besties. Got a very interesting take. All that and more on the number one podcast in the world. Stick with us. For the fourth year in a row, we're gonna do the all in summit. If you guys remember four years ago, I decided, hey. Let's do a summit, and then these three besties were like, no. We don't wanna do a summit. Now it's become a big thing, and everybody loves it. September in Los Angeles. Chamath Palihapitiya (00:01:06): You credit for that, Jake. Jason Calacanis (00:01:08): Yeah. After you gave me hell for a year. Okay. I David Friedberg (00:01:10): got Great. Jason Calacanis (00:01:11): It sounds like an apology, but okay. Sure. David Friedberg (00:01:13): I'm sorry. You're wonderful, and I appreciate what you created. Jason Calacanis (00:01:15): Thank you very much. Wow. Finally, some credit. Okay. We all know the goal of the summit is to have the world's most important conversations, and this year will be no different. Yada yada yada. Allin.com/summit if you would like to apply to come. Chamath Palihapitiya (00:01:27): Why do you say the most important conversations and then say yada yada yada as a way to dismiss it? Do think that that increases your salesmanship and effectiveness? Jason Calacanis (00:01:35): I don't wanna make any grand pronouncements here, but these have been important conversations we've had, and it's been pretty great. Have to say. Chamath Palihapitiya (00:01:41): Yada yada yada. Jason Calacanis (00:01:44): No. They just like they put, like, 18 things in the plugs now, and I don't want to do too much Well, Chamath Palihapitiya (00:01:47): why don't you do a modicum of work before you get on camera and actually edit it? Jason Calacanis (00:01:52): Here we go. I get one compliment, and David Sacks (00:01:54): then That's exactly it. He doesn't do the homework, so he runs out of work. He's like, we get the biggest names to come to our summit. The vice president came. He said, yada yada yada. David Friedberg (00:02:05): Elon Musk showed up in person. Yada yada yada. Jason Calacanis (00:02:07): There was an astronaut. Freyberg lost his mind. Chamath Palihapitiya (00:02:09): Yada yada. Yada yada. Jason Calacanis (00:02:11): But this year will be no different. We'll have incredible parties, blah blah blah, and let's get to work. Okay. David Sacks (00:02:18): President did a trip to The Middle East. Yada yada yada. Jason Calacanis (00:02:21): Maybe more peace, a whole new framework for how we don't interfere. David Friedberg (00:02:25): Yada yada yada. World's greatest moderator. Yada yada yada. Jason Calacanis (00:02:28): Blah blah blah. Executive producer for life deal with the Friedberg. Okay. Let's win the contract. Alright. Let's get to work here. The bond market is the captain. Apparently, treasury department sold $16,000,000,000 worth of newly issued twenty year bonds on Wednesday afternoon, and there was weak demand. This pushed yields higher across the board. The ten year, which Besson has said to focus on because it's the benchmark rate for most borrowing costs, you know, mortgages and stuff like that, it spiked. And here it is. And it actually hit a five handle at one point, a lot of people were hand wringing about this and the S and P dropped 1.5% in about thirty minutes. Here's that chart as well. And the three major indices were all down between 1.52% on the day. Obviously in related news, the house passed the big beautiful bill at the eleventh hour last night. This makes the TCJA tax cuts permanent. And it's estimated to increase long run GDP by 60 basis points. That's if all the cuts were implemented. It's also gonna reduce tax revenue by 4,000,000,000,000 over ten years is the estimate, and it's gonna add between 3 and 5,000,000,000,000 to the national debt over ten years. Free break. What's your take on the BBB and the bonds, weak bond market, all of it? David Friedberg (00:04:00): I just wanna take a quick primer on Sure. How the government gets funded. I know we we assume everyone understands it, but I think it's important for folks to really grok it. For the federal government to make payments to employees and contractors and buy stuff, they need to put money in their bank accounts. And the way they put money in their bank accounts is they issue bonds. These are treasury bonds. So they'll sell treasury bonds to the public. And individuals buy it, companies buy it, banks buy it, and foreign governments buy US treasuries. And they transfer or wire cash into the federal government's bank accounts, which they can then use to pay for stuff. And that the treasury department needs to continuously sell treasuries to raise cash to fund the government. When folks don't show up to buy treasuries, that's a bad thing. And that means that the government needs to increase the interest rate that they're paying on those bonds. So what we saw on Wednesday was a really weak demand signal for treasuries on this, you know, modest treasury auction. Selling $16,000,000,000 of bonds is not a lot. There's hundreds of billions being sold each quarter. And so this was not a big number, but there was no buyer. The market was really dry. And so everyone that participates in financial markets saw this and freaked out. And the big motivation, the big understanding of the relationship here is to your point that this big tax bill and spending bill is passing out of the house. And that bill, as we talked about last week, has a high deficit and that'll run up US debt over time, which makes it more difficult for the US government to pay its bills because it has to issue more debt, interest payments have to be paid every year, and so on. Now if you just pull up this one slide, this is something I thought was really worth sharing. The CBO estimates, which is what you referenced, Jason, are estimates of what the cost is gonna be over time. And this is from Jessica Riedel or Riedel out of the Manhattan Institute put this chart together. Jason Calacanis (00:06:02): Congressional budget office. David Friedberg (00:06:05): Yeah. So the congressional budget office, the CBO, creates a estimate of the budget, the spending, the deficit, and ultimately the incremental debt that the US government will need to issue to fund its obligations over time. This is a chart that was put together that the expectation on a baseline basis is that over the next thirty years or so, US debt to GDP will climb to 203%. But what a lot of people don't know and don't talk about is that in the CBO estimates, they assume in all of their models that interest rates are at 3.6%. And with the bond sell off yesterday, what we are now seeing is thirty year treasury interest rates at over 5%. It's 5.1% this morning. And for every incremental 1% above 3.6, you're spending an extra 350,000,000,000 a year in interest. 350,000,000,000 a year. So as we go up by one and a half percent interest over the next ten years, we're spending another $5,000,000,000,000 just on interest payments, half a billion dollars, half a trillion dollars a year of incremental interest on the difference between three point six and five point one. That's an incredible recursive problem. And I say recursive because the incremental interest that we now have to pay because interest rates just went up, because the market is demanding more payments from the government to fund us, means that the government has to issue more debt and it quickly gets away from you. There is a nonlinear relationship between the deficit and interest rates, which drives up the debt problem in a nonlinear way, and it gets away from you and you can't fix it. And that's what the market is telling us is that the current bill that's being passed out of the house is showing such an extraordinarily high deficit that the market does not wanna buy the debt from the government. Rates are now climbing, and that creates a massive problem for the government. Jason Calacanis (00:07:57): Okay. Shammoth, you've been tweeting about this. We thought we were gonna get an administration and maybe some focus from the government that we would be have more austerity measures, balance the budget. Now it looks like we're gonna pour gasoline on the fire. What are your thoughts? Chamath Palihapitiya (00:08:17): I think we have to be careful here. So, Jason, the political calculus will be for the president to decide how much credit he actually wants to take for this bill. Because even though it has his name on it, the contents of the bill are different in actual facts than what I think he intended. And what I mean by that is when you look inside of what happened in the eleventh hour last night, it's disappointing. This thing is like anti Doge. If Doge was meant to be a reflection of the American voting population's desire for meaningful reform in government, cost controls, some form of austerity, and to get this debt spiral in check, this is the opposite of that. What happened was in the eleventh hour, you had a handful of people abstain, you had one person that passed away in the last few days, you had one person that fell asleep on the floor of the house so he wasn't even woken up for the vote. And in the middle of all of that chaos, what happened was all kinds of things were added and attached and canceled at the last minute, because what happens is you have to have these puts and takes, as Friedberg described. If you wanna spend over here, you have to find a cut over there. But I think what happened was there was really not a lot of financial literacy used to decide what to actually put in and what to cut. And that lack of discipline is going to create, I think, a negative set of consequences. So what are those consequences? Today, the tenure is around four point five percent. At the rate in which it's escalating since Liberation Day, by the end of this year, we're going to be past 5%. The thirty year is on a rate now to get past six and a quarter, maybe even reach six and a half percent. Those are way beyond what most people thought was a reasonable place to be for The United States economy. And so what will the implications be as rates go to those levels? You'll delever from The United States. You'll sell US debt. You'll own things like gold and Bitcoin. Chamath Palihapitiya (00:10:44): If you're curious about what's happening to gold and Bitcoin, they started to spike in the last few days. You'll have ratings organizations that add to this cascade by downgrading The United States. That happened on Friday. You'll have very smart people starting to signal that this is a much harder problem than they initially thought. That's how I personally interpreted Elon's comments over the last few days. So what was the House supposed to do? I think what they were supposed to do was implement some form of austerity. They were supposed to, by the will of the people, pass a rescission bill. They were given that rescission bill. It was just $9,000,000,000 They couldn't even pass a $9,000,000,000 rescission. And instead, they passed a $4,000,000,000,000 inflation to our debt. Now you hand this to the Senate. The Senate is in a very difficult place as well. Do they want to quote unquote claim victory and say, here you go, president Trump, here's your bill? But they'll further bastardize this thing, and it will be even further away from what I think benefits MAGA and benefits Main Street. So who does it benefit? Current course and speed right now, this bill is about traditional Republicans and traditional Democrats circling the wagon and putting on a platter a set of things that I think will be hurtful to average Americans. You're going to see energy prices spike. You're gutting the number of electrons that will be available for things like AI. You're going to increase Medicare prices. And the math is wrong. So when you sensitize this thing to a four and a half or five or five and a quarter rate, so meaning not what the CBO use, but the real conditions on the ground, this thing is an albatross. And I think, unfortunately, for president Trump's agenda and for a MAGA movement, this is the worst of all conditions. The financial markets will punish us. And then the last thing I'll say is now to top it all off, I think that Jerome Powell will see the writing on the wall. Chamath Palihapitiya (00:12:58): Many aspects of this thing are inflationary. And if they're not handled well by the Senate, he has a lot of room to actually increase interest rates. So I would just say that the senate has an incredibly difficult job. I think the president has an even more difficult job about what to do right now, but the house did nobody favors. They did not do anybody a favor yesterday. Jason Calacanis (00:13:22): Here's the, prediction from polymarket on what will happen to fed rate cuts in 2025. It's across the board. It seems like nobody can tell if it's gonna be zero, one, two, or three, twenty, 20 two, 20 five, and 15% respectively for those four options. Sachs, you don't speak for President Trump. You're the czar of AI and crypto specifically. So let's put that out there. But I'm curious your thoughts on what happened with Doge? Why are we continuing to spend ourselves into oblivion? And what will the downstream issues be here? Because this sounds like it's gonna be inflationary. This sounds like it's gonna be hard for people to buy homes. It's gonna create more austerity in the future. How bad is this? Do you feel it's as bad as Dave and Chamath are framing it? David Sacks (00:14:13): Well, look. I mean, I wish we had 435 members of the house who thought like Freiberg about spending and deficits. We don't. The Democrats all want a lot more spending and a lot more taxes. Remember, if it wasn't for Manchin and Sinema, we would have had that 4 and a half trillion dollar build back better. And among the Republicans in the House, unfortunately, we have a bunch of Republicans who are pretty soft on spending. I mean, you can call them rhinos if you want. And we only have, what, like a three vote margin in the House and the Democrats are not cooperating in any way, so you don't have that many votes to spare. So what I'm saying here is you can't make the perfect enemy the good. I think you have to be realistic about how much we can get done here. And I do think that this bill does contain a lot of good things in it. There are a lot of priorities for the administration in here. Do I wish it cut spending more? Yes. I mean, do I wish that it made all the Doge cuts permanent through rescissions? Yeah, absolutely. I think it's outrageous that there were enough House Republicans who didn't wanna back up Doge that that wasn't enacted. But there are a lot of good things in the bill, and I should just highlight them for balance here. So the number one thing here is that this bill will permanently extend the twenty seventeen tax cuts. And if we don't pass this bill, let's just assume that we do nothing. Okay? If we do nothing, you're gonna get the largest tax increase in decades. And it won't just affect the rich, this affects the middle class as well. The 2017 tax cuts increased the standard deduction, which is important for the middle class. It raised the child tax credit. So again, if you do nothing, you get a huge tax increase as soon as the 2017 tax cuts, which Trump passed back in his first term when they sunset. So that's number one. In addition, there are promises here that were made during the campaign to eliminate taxes on tips and overtime that have been enacted. And the president promised to do those things and he is accomplishing those things. So I think that's important. David Sacks (00:16:14): There's funding for the border wall here, 10,000 new ICE officers, more detention beds, and so on. On energy, it repeals methane tax and unlocks new oil and gas on federal lands. And there's a bunch of other things as well. So there are a lot of good things in here. Now to Tronav's point, will this bill be bad for the Republicans' prospects in the midterms? I guess what I would say to that is, I don't understand how you expect to do well in midterms if Republicans preside over the largest tax increase in decades. A tax increase that Joe Biden tried to get during his administration. Biden tried to raise taxes and couldn't get the votes for it. But if we don't make those tax cuts permanent, if we allow the sunset to happen, then you will accomplish what Joe Biden could not, which is to raise taxes on the American people. So look, no bill like this that's passed by a one vote margin on straight party lines when you only have a three vote margin in the entire house, it's gonna satisfy everyone. Chamath Palihapitiya (00:17:11): Here, let me David Sacks (00:17:12): Well, John, Jason Calacanis (00:17:12): let me ask you a question there. You have Trump at his peak power. You have all these threats of, hey, we're gonna primary anybody if they don't do like, what we're saying here. Why isn't Trump just coming in and using his power and just saying, hey. Not big enough. Get back to work. We need to cut spending, period, full stop. And he's got that power. I don't hear him saying that. Chamath Palihapitiya (00:17:35): I do think that there are ways to enact the tax cuts and make them permanent. And I think that that is a good part of what this bill did. The problem was what happened from 11PM to 6AM. And that's all of the nonsense where, I'll just be honest, I think the people in the house are not nearly as financially literate as they need to be. And I think what they wanted to do was pass something and throw it over the wall and say mission accomplished. Now it's up to the Senate. And the good news is, look, the Senate has these six year election cycles for a reason. It allows them to think strategically and see past what's right in front of them. So I still think that there's a chance for the president to have his cake and eat it too, but I just wanna highlight that as a supporter of his and a supporter of that MAGA agenda, which I think a lot of people voted for, I just wanna be honest and say this is not it. And there has to be some meaningful reforms in the Senate version of this thing that gets sent back to the House. So I'll give you an example of one. 80 one percent of the incremental energy that's generated in The United States last year came from private enterprises that were investing in short term forms of power that have a credit and a transfer market tied to it. This is just the financial machinery. This is how Blackstone and Goldman Sachs and Brookfield and all of these big players move tens and hundreds of billions of dollars around. They changed those rules at the eleventh hour. What is the impact of that? Elon foreshadowed it. Nick, maybe you can show the headline of the article. He said, We could be running into a power capacity issue by mid next year. Now, if we knew that, why would we take the short term incentive away to generate more electrons? All the great things that David has done, that the president has done on AI, I mean, we'll talk about what happened in The Middle East. But when the rubber meets the road and you actually have a shortage of electrons, because these financial actors, they're not, and in fairness to them, they're acting rationally. You take the financial incentive away and you can't underwrite this thing. What are they gonna do? They're just gonna stop doing it. Chamath Palihapitiya (00:20:02): So in the absence of electrons, what happens? Prices go up, it's inflationary, and now you'll have to allocate electrons. Do the electrons go to an AI data center or does it go to a home? In a different example, actually on the residential side, places like Florida, I think there was like an incentive for like batteries. If you were about to get hit by a hurricane, you can buy these big battery systems from Tesla, as an example, but there are other ones, Generac and whatever, Trane. That was cut out. And so in Texas, all of these impacts will have negative consequences. My point is, I think you have to really look at what happened in the eleventh hour and fix those things because the problem with these plans is you can't look at gains that are in years six through 10 to justify pain in years one through five. You can't do that because I understand how that mathematically makes sense. It doesn't make sense practically for the average American. It's just not how life works. You don't go into a J curve. We do that as investors. Right? But you don't do that as a normal American, which is be on the wrong side of the economy for four or five years in the hopes that year six and seven are good. That's the point. Has to get fixed. Jason Calacanis (00:21:23): Asked Chamath the question. Shouldn't Trump use his capital he's built up here and say, not good enough? Make some cuts here. What would you say to president Trump if he was asking you for your advice, Friedberg? David Friedberg (00:21:37): I think the writings on the wall that the system is winning, and the rebels came in, and they tried to fix the inefficiencies in government with Doge under Elon's leadership and our friend Antonio's participation and a great group of individuals who are true patriots who are spending time trying to help reassess how the government operates. And they as I've said from day one, from my first visit to DC during inauguration weekend and every visit I've done since then, I always leave after meeting with members of congress deeply worried that they won't actually do what they need to do to make the changes. And the last line of defense ultimately is the president with his veto authority and his ability to tell people to go back, rethink this, and cut spending. I feel like we're in a last ditch effort. And I'll tell you why I say it's last ditch. I think that there's a relationship between what's going on in The United States and what's going on in Japan. Nick, if you'll pull up the Japanese government forty year bond yield chart. So just so you guys can kind of observe, in the last couple of days, we've seen Japanese bond yields soar from two and a half percent to three and a half percent. Remember, Japan owns $1,100,000,000,000 of US treasuries. I'll just read a quote from a guy, who's the chief global strategist named Albert Edwards at Societe Generale, and he said recent developments in Japan may signal the end of the favorable investment cycle that's been established since the two thousand and eight global financial crisis, potentially reshaping global financial landscapes in the coming months. Can I Chamath Palihapitiya (00:23:09): translate that? Because I it's it's incredibly important what Friedrich said, but I'll translate that. What he is saying so this is a guy from SocGen. Since 02/2007, '2 thousand and '8, every now and then the markets give you free money. One of the most obvious free money trades was the yen carry trade. And in order to to execute that trade, you're effectively leveraging treasuries against the Japanese bond market. What he is saying is that there is increasing risk that that trade unwinds. When that trade unwinds, what you're going to have are net sellers of up to, as Friedrich said, a trillion plus dollars of US treasuries. What will that do? It will further exacerbate the market's reluctance to own US treasuries, which means yields go even higher, which means David Friedberg (00:23:59): think interest rates for businesses and individuals go higher. Correct. And the only way to keep those interest rates low will be for the Federal Reserve to try and step in and buy those bonds, which will devalue the dollar. And in his commentary, he went on to say that, the twenty year Japanese bond auction that just took place, similar to the US treasury auction that just took place, was the worst they've seen since 1987. That's how significant this event was in Japan over the past week. So the massive climb in bond yields in Japan indicates a massive sell off in credit. And remember, if you look at the historical perspective, when the global reserve currency nation sees their debt sell off, it usually is part of a global sell off that happens. It's not just The US that gets affected. And any one of these markets can cause a cataclysmic follow on to the rest of the global financial markets. Like, if Japan sells off too much, we are going to start to see a lot of unraveling happening. That's the consequence, I think, of this particular bill because it it signals a lack of a reluctance to actually address issue. Me say Chamath Palihapitiya (00:25:09): something here. I called Friedberg today on the way here. It's very rare that he and I agree about this kind of stuff, because normally what I say is you're catastrophizing, calm down. But this is where I will say, I'll put my money where my mouth is and I'll put the chips on the table to say, this is the moment. This is the moment where we either re underwrite what we voted for or we mistakenly pass this Christmas tree concoction. It does have president Trump's signature on the top of it. It does have some features that he asked for, but what I hope he sees and realizes is the details here matter. And without some technical maneuvering in the Senate, this is a bad bill is constructed. And if it passes, forget what any of us think, the bond markets will act decisively, and they're gonna go in one direction, and it's away from us. And I just hope that we figure this out. Jason Calacanis (00:26:14): Seems like a classic diffusion of responsibility here. So actually, you have congress, senate, and POTUS not willing to step up and say, let's cut the spending. David Sacks (00:26:25): Well, I don't think that's fair. I mean, look. The the president backed up Elon and Doge. First of all, he created Doge. He gave it The US Digital Service. He backed it up in every cabinet meeting and every public pronouncement. There's a limit though to what he can do. Congress has the power of the purse. And we said on our previous episode that at the end of the day for the Doge cuts to become permanent, Congress has to incorporate that into the budget. And the reality is there are still a number of these like old bull appropriators on the Republican side who just are not wired to make spending cuts. Jason Calacanis (00:26:57): But why aren't we hearing him vocally saying, stop this madness? He is the most vocal guy in the world who mixes it up on every topic on the planet. Why Chamath Palihapitiya (00:27:07): is he Well, give him the benefit of the doubt. Let's give him the benefit of the doubt. He's probably working it all in the back channel. There are the things that he wants and he's in the midst of negotiating as well. But my my point is just this, the level of financial illiteracy in this bill will come back to bite America in the ass. David Sacks (00:27:23): Look. Here here's the point is that what what you guys wanna sell right now is austerity. And the reality is that the politicians in Washington just are not buying austerity right now. I mean, that's what you want is austerity. That's right. Jason Calacanis (00:27:36): Yep. David Sacks (00:27:36): And the reality is the only way you get true austerity, like a painful set of changes, is when both parties link arms and jump off the cliff together and make those changes. The Democrats right now have no willingness to do that. They're opposed to doing this. This is a straight line party reconciliation vote. I think you're trying to overload this vote with way too much stuff. You're trying to basically say that this vote has to fix America's fiscal problems. Just not gonna happen. I mean, look, I agree with you that the fiscal situation needs to get fixed. This is just not the vote where it's gonna happen. Chamath Palihapitiya (00:28:09): You cannot exacerbate it. David Sacks (00:28:10): Well, I don't know. I mean, look, I understand that this doesn't have as much stuff as as we want. I mean, like I said, I wanna see the doge cuts made permanent. But the alternative to this bill, let's say the alternative is just do nothing, that is actually meaningfully worse because you will get a massive tax increase. Massive. I think President Trump inherited a Biden economy that was already feeling pretty shaky. I don't know what the argument is for a massive tax increase in an economy that's not doing great. I'd rather see the tax cuts made permanent. I'd rather see the no tax on tips in overtime implemented, important campaign promises. I'd rather see funding for the border wall. I mean, are all important things that we need to have happen. And I just don't think that this bill is how you're Chamath Palihapitiya (00:28:51): gonna stop. But what I'm David Sacks (00:28:52): saying is Chamath Palihapitiya (00:28:53): why do you pay for that with electron supply for homes and AI? David Sacks (00:28:57): I don't know. I mean, you're talking about a pretty esoteric issue, Chamath. This is not the same as solving Chamath Palihapitiya (00:29:02): The US budget think why do it by doing Medicaid cuts? Why? David Sacks (00:29:05): Well, let's solve it with the Medicaid cuts. First of all, I mean, you're being a little bit schizophrenic about this. I mean, you guys are saying that you want to see more cuts, but then you also believe that the Medicaid cuts are a bad idea. So you got to kind of choose David Friedberg (00:29:17): I'm not saying that. I think all cuts are great. Jason Calacanis (00:29:19): All heavy spending cuts spending cuts across the board. Yeah. Cuts across the board. Spread it out. David Sacks (00:29:23): You gotta decide what you're opposed to. Are you opposed to cuts or you want more of them? David Friedberg (00:29:27): I want more cuts given the fiscal situation, I'm actually if someone showed up and said, hey, we're gonna increase taxes, I'd say that's what we gotta do right now. Everyone's gotta take a hit on this. But, hey. I know I'm gonna be alone in that, so I'm not gonna try and make that argument. I guess the question for Saxe, is Jason Calacanis (00:29:40): I agree with you. Well, let me ask you David Friedberg (00:29:42): a question, Saxe. What do you think is the moment when the two parties lock arms and do jump together? What is the conditions that need to be kind of prevalent for us to take, you know, draconian austerity measures? David Sacks (00:29:55): Probably the bond market forces it on the politicians, force it on Washington. Chamath Palihapitiya (00:29:59): Yeah. I think you're right. David Friedberg (00:30:00): You're an economist by background. Do you do you see that happening right now? Like, do you see this the sell off that's happening, not just in The US, but everyone that's linked to The US with Japan and so on? Don't you think that the market's telling us that this might be the moment? David Sacks (00:30:11): It could be the moment, but, you know, I remember the April when Larry Summers came on the pod and said that the markets were melting down and that was a different moment that he was trying to sell in favor of his policy. So my point is just there's market volatility and we won't know for a while whether this means anything. It could just be a blip. Right. So look, you asked me what are the conditions for getting austerity? I think that austerity will have to be imposed on Washington from the outside. Washington's not gonna find the will internally. We had a wonderful moment here where you have Elon come in with Doge, which the president made possible, okay? No other president would have even have David Friedberg (00:30:50): done Agreed. Jason Calacanis (00:30:51): Big credit for that. Big credit. David Sacks (00:30:53): Where you get a total outsider to come in and bring a team of like young, big, bald geniuses and you let them go through these departments line by and start deleting things. Okay? And they made, I think, great progress. I think they found 160,000,000,000 a year of cuts that can be made administratively. Beyond that, they need Congress to approve it. And I will acknowledge that there are still a number of soft on spending RINO Republicans, and there's just not a majority for the types of austerity and cuts that you guys would like to see. I mean, that's the reality. Yeah. But I still think that the question with this bill is just how pure you want to be. My point is just, are you going make the perfect the enemy of the good? I don't think you're going to get austerity out of Washington right now. It's just not in the cards. The question is whether this bill is basically better than the status quo, and I and I think it is because of the tax cuts. Chamath Palihapitiya (00:31:47): To your point, without opining on it, I think what's gonna happen is the bond market will sensitize this budget at real rates. They're not gonna use the 3.6 that Friedberg pointed to. They're just gonna re underwrite this at five, five and a quarter, five and a half. That is a very different risk exposure, I think. And so to your point, they'll react. If it looks like it passes as is, then that's what they'll do. And to your point, David, we'll know in the next sixty to ninety days. David Sacks (00:32:16): Let's say that this is just a blip in the market, and it's not some larger once in a century type event. The reality is we don't know exactly what's gonna happen. Look, I don't like America's fiscal picture at all, but what if the AI and robotics revolution plays out in the most optimistic way over the next decade and is massively deflationary and we get basically AI powered robots expanding Chamath Palihapitiya (00:32:37): the economy You power for that. David Sacks (00:32:40): I get that. And we need to do power generation for sure. But my point is just what if the new technology provides an answer to the fiscal situation that's not currently on the table? Chamath Palihapitiya (00:32:51): I think it can. David Sacks (00:32:51): So this is point is is Washington's not gonna embrace Chamath Palihapitiya (00:32:54): I understand, but you're gonna brown out some blackouts of average human homes to do that? No. You shouldn't have to make these decisions. Those are dumb trade offs. You're not gonna be David Sacks (00:33:01): able to solve the power generation problem in reconciliation bill. Jason Calacanis (00:33:04): And I wanna just add my 2¢ at the end here. Leadership starts at the top. This president acts unilaterally all the time, whether it's immigration, DEI, he has no problem. And this is what he is doing. He's endorsing this bill. He's saying it's big, it's beautiful. He is saying this is historic. I think this is bad leadership. I'll just say it straight out. He was elected to balance his budget and to have austerity. He's going to put more onto the debt, and we sat here on this very podcast, the four of us, and said this was the most important issue on the world, and Trump is putting gasoline on the fire. I think it's bad leadership. Let's continue on the docket. David Sacks (00:33:47): I suggest you look at the constitution because the power of the purse rests with congress. Jason Calacanis (00:33:51): He's endorsing this. He's endorsing it. So it actually he's not even putting up a fight. David Sacks (00:33:56): When it comes to immigration, these other areas, the president far more unilateral power, and he's used that every chance he gets. But when it comes to spending, you have to get congress on board. This is a bill that passed with a one vote margin. I don't know where you think the opportunity is to squeeze out more concessions from Congress. I don't Jason Calacanis (00:34:13): think it's He speak up and say, do better. He's doing the opposite. He's doing the opposite. David Sacks (00:34:19): This bill passed by one vote margin. It was hanging on by a thread. And if it failed, you get basically hundreds of billions of tax increases, which we don't need right now. He's not even trying. In of, I think he's trying. In terms of Republican prospects, look, people vote for Republicans to do two things, cut taxes and cut spending. I wish that this bill did two out of two. It does one out of two with some of the second one, like with the Medicaid stuff. If we didn't at least cut taxes, there'd be no reason to vote for Republicans. Jason Calacanis (00:34:52): None. You all are much closer to him than I am. Y'all should be challenging him to not endorse this and to do the opposite. That would be the profile in courage. David Sacks (00:34:59): Then we get the biggest tax Jason Calacanis (00:35:00): increase in decades. Great. Well He should just go to everybody and say, do better. Chamath Palihapitiya (00:35:04): I don't agree with that tactic. I think the better tactic is to do what he did, but then work behind the scenes and help the senate implement the technical guardrails that make the bill better than it as is. Look. Nobody thinks that this bill is gonna pass as is. It's gonna go through its own set of changes in the senate. Now I think the opportunity is to understand these puts and takes with a little bit more detail and a little bit more mathematical precision and fix it. So I still hold out hope that we're gonna get to a better place, but he's gonna have much more influence, Jason, by actually taking the positive path than throwing everybody under the bus. The real question will be in thirty days or forty five days, what is the final version of this thing? And whatever gets passed and signed by him, there will have been enough time to understand it and you'll see the real time reactions. All I'm trying to indicate is I think that this was a moment where people were very pensively optimistic that the approach of Doge would really be embraced and that we'd see some broad scale attempts to at least and, you know, Friedrich said this, just to go back to 2019. Even if we don't do anything else, just go back to 2019, pretend COVID didn't happen. David Friedberg (00:36:13): Yep. And we would be by way, if we did that, we would have a budget surplus, and the bonds would be trading down to 2% yields again. I mean, we would be in such an incredible condition. We've got 2% inflation right now. Anyway, we don't need to beat the dead horse. Jason Calacanis (00:36:26): Let's move on here. David Sacks (00:36:27): I I wish I wish there were 218 members of the house who fought David Friedberg (00:36:31): like that. I hear I Oh gosh. Hear Listen. Jason Calacanis (00:36:33): This guy is saying he's gonna primary anybody who, you know Jake, I don't think he's right. He should be speaking up right now. I'll tell you what, David Sacks (00:36:41): give him the line item veto, and then let's talk. David Friedberg (00:36:43): Right. Jason Calacanis (00:36:44): How about you saying, guys, spend less money? He doesn't have to throw him under the bus, Shemoth. It could be something very subtle. Chamath Palihapitiya (00:36:49): But you make it that way. The way that you position it is like you make it such a black and white thing, and it's Jason Calacanis (00:36:55): just like Speak Up? David Friedberg (00:36:56): Is it black Jason Calacanis (00:36:56): and white? He's saying this is a great bill. Chamath Palihapitiya (00:36:58): No. But what I'm saying is he is, I'm guessing, I don't know, but I'm gonna assume Okay. Working behind the scenes. And what you're saying is he should virtue signal and prognosticate in public. I'm saying that I I never said virtue signal. That's what you're asking him to do. No. Jason Calacanis (00:37:15): I'm not. I'm asking him to say reduce spending in the bill because that's good for America. David Sacks (00:37:21): This bill cuts 880,000,000,000 for Medicaid over a decade, which is something that already is politically tough and controversial. It imposes work requirements for able-bodied adults. This is similar to what Bill Clinton did back in 1996 with welfare reform, basically saying that you can't be a layabout and get welfare. So these are relatively tough things to do politically. It's like, do I want to see even more cuts? Yeah, absolutely. But again, when you have a one vote margin, whose vote are you going to pick up by doing more cuts? I guess you get Thomas Massey maybe, but you probably have to go all the way to balance the budget to get his vote. I don't know what it takes to get a Thomas Massey vote. So I don't know what votes you think you're going to pick up by cutting even more. And we can't afford to lose even one vote. Jason Calacanis (00:38:04): It's literally the art of the Jason, we gotta move on. Will move on. But if you're gonna tell me I'm asking virtue signal, you're gonna lie about my position, I will correct. David Friedberg (00:38:10): It's been forty minutes. So my position is not Jason Calacanis (00:38:12): to virtue signal. It's to go flip a couple people and say, do better. Okay. It was a huge week for AI again. Google and the ghost of Steve Jobs took center stage. Let's start with Google here. They had their IO conference on Tuesday. This is where they show a bunch of new stuff. They get developers to come together to embrace their products and the stock ripped 5% on a day, which might be a turning point for Google. Up again today. And up again today, search was the big announcement. And we had a discussion with Sergei about that in Miami. And we had multiple discussions about it here over the last couple of months. They demoed something called AI mode. No, not founder mode, AI mode, and they compared it to regular search. Here it is on the screen if you're watching us on YouTube or Spotify, a very elegant app. And so here you have somebody searching, and what you can see is in AI mode, it looks like a nice comprehensive search instead of 10 blue links and tons of advertising. So you can flip over and see all, or you can do perplexity like search here. We're showing you what this search would have looked like, the AI summary at the top, and then your 10 blue links. It's distinctly different. It is exactly, Chamath, what you talked about. Somebody has to have the courage to flip the switch here. And so that's was the big drop. And I think that in your interview, Dave, didn't Sundar say we're gonna integrate ads into that kind of result? Yes. The comprehensive search result? David Friedberg (00:39:38): I think there were a couple of things that Sundar said in the interview that showed up in a really important way at IO. The first was exactly this, which is to make AI mode more ubiquitous in search and effectively over time replace search with this AI mode experience, which they've been testing in a small group, and now they've expanded very specifically to kind of point a couple weeks ago, they should try and flip the switch. Well, it appears they've done that. The key question and the challenge has always been, what's the revenue per query? How are you gonna make money? And I think one of the other kind of interesting announcements that we saw come out of IO, which indicates the business model opportunity here is not just AI mode and search, but some of the other tools that they've launched, bundling them together, and they have this product offering called AI Ultra for $250 a month that includes, you know, YouTube premium. It includes 30 terabytes of storage on your Google account. It includes access to Flow, which is their movie creating AI model where you can use they have v o three, Gemini, and Imagen below it. Those are the three models that contribute to this movie creation studio tool. And they've launched a number of other kind of high value Gemini models as stand alone research apps, and you can get access to all of these kind of high powered tools for $250. So I do think this sets a new direction that goo that Google is likely testing as a business model, Jason Calacanis (00:40:58): which is Subscriptions, you're saying? David Friedberg (00:41:00): Can we yeah. Very high dollar volume subscription model for consumers that over time could create a very meaningful shift in the revenue mix for Google away from ads and more towards subscription revenue that we already see in some of the consumer services like YouTube and YouTube TV. This is, I think, a really important turning point. I would say if anyone were to identify the week that Google really pivoted into the AI business model, it might be this week. They launched over 15 products at this thing. And another important one I'll highlight, Sundar talked about this in the interview, I did with him. In the early days of Google from 02/2002 till about 02/2011, Google had this kind of playground of products called Google Labs where they would introduce new stuff. I don't know if you guys remember checking out new So they relaunched Google Labs, like, a year ago or so. And as Sundar said, they're putting a lot more stuff in Labs. So Labs is now becoming the new test bed, and they launched a bunch of the announcements in Labs. So that becomes the place where they'll say, what's the business model? What's the use case? Do people like it? Do they love it? If they do, it graduates out of Labs into full production. And I think that opens up the opportunity for some of the things like Chamath was talking about where they could experiment new ideas, new modalities, and then productize them if they work. Jason Calacanis (00:42:13): And they discontinued labs in 2011. They just brought it back last year. David Friedberg (00:42:16): Brought it back. Yep. Jason Calacanis (00:42:16): Sax, you, I think, mentioned, hey. They have the I'm feeling lucky button. Here, they put the AI search up in the top bar where you have images, video, shopping, etcetera, news. We're all familiar with that. What do you think? Just swap out I'm feeling lucky for delight me with AI and and may or maybe just if you're a product manager there because you've done a lot of great product work in your career before you were in politics. Would you just a b test this and say anybody who, let's say, doesn't click on ads, let's send them to the AI search and just see how they do because they don't click on ads anyway and then just let the ad clickers keep going to the ad product. Well, I think, you know, David Sacks (00:42:53): we were all calling on previous podcasts for Google to risk disrupting their dominance in search by moving to more of an AI based model. And I think they've taken an important step in that direction. They've sort of thread the needle here between keeping their old UI and product and then also incorporating the new sort of AI UI. So this is a compromise. I mean, they're trying to have their cake and eat it too. It ultimately feels a little bit like a transitional move. I doubt that this will be the end point, but given their need to protect their search business while also developing their AI business, this feels like a pretty good compromise, I think. I mean, it certainly shows that they're in the game and they're not gonna get caught totally flat footed and let the whole world disrupt them while they're trying to figure out AI. I mean, they are responding now, and the market seemed to like it. I think they were up like 5% on this news. Jason Calacanis (00:43:49): Yeah. And then up again today. Chamath, you talked about having some design sense and maybe some bravery here. Looks like they're pretty much on the cusp of doing that. The search results in AI look elegant. They look, dare I say, perplexity like. When you look at them, I would say, I would like to have that as my default, I think, when I'm doing search. What do you think of the product we're showing it here again? And what do you think the road map will be? I gave one possibility. Chamath Palihapitiya (00:44:23): Sacks is totally right. I think that this is not the destination, but they've taken a really important step. And now they have to follow through. We all know what has to happen. So I think we're all just gonna debate when it happens, and I think what the market is betting is that it's gonna happen in the next eighteen months. So what is it exactly? It's when AI mode becomes the default for a large swath of existing Google users. How will we know that happens? They're probably running AB tests right now. They're probably gauging behavioral patterns of which kinds of users, what the actual impacts to search are, and what impacts exist to CPCs, to cost per click, which is one of the inventory types that they sell. But I think this is the beginning of a process. I suspect it'll be done in less than a year. And for a large swath of users, they are going to put AI in the front door. I think that's a fete complete. I think we're just now debating the mechanics of getting there per how Sax alluded to it. That's a really powerful step. But here, Jason, I think I go back to what they also have to keep in mind. What you don't want to have when you are going through an innovator's dilemma is to have the competitor be onto the next lily pad while you are figuring out the current lily pad. And the reason I bring this up, and I'm sure we'll talk about this, is it's impressive what Sam Altman is doing right now at OpenAI. I don't know if it was a troll or not, but to buy IO, Johnny Ives' firm, at the end of Google IO. And I read an article that said OpenAI has been trying to do this for a couple years in a row. But what Sam alluded to in that video was some next gen whiz bang device that they've been working on that was the industrial logic for the M and A. I think what you don't want to have happen if you're Google is to finally get the search thing right and then now have to play catch up on some device. So I would encourage them to just run the AB tests and shorten the window of measurement. I think we all know what has to happen, so it's probably better to just do it sooner than later and then start to allocate the incremental resources to these new form factors and other things so that they shorten the distance between them and OpenAI. Jason Calacanis (00:46:49): Let me tee up exactly what happened. OpenAI, they're the makers of ChatGPT, bought Johnny Ives startup. The startup is called IO. They bought it for 6,500,000,000.0 in an all stock deal. If you remember, Johnny Ives was Steve Jobs' collaborator and designer, iPhone, iPod, iPad, all that beautiful stuff. So OpenAI is buying IO. IO is not loved from. If you've heard about that, that's his design agency. And so they did a really interesting rom com video. I don't know if you guys saw this. It's incredibly funny and Let's play it. Here are two people having a meet meet cute. Chamath Palihapitiya (00:47:25): Dude, you're right. It's like a love story. Jason Calacanis (00:47:27): It literally is like a meet cute. Here comes Sam. He's walking around San Francisco, and he's a genius according to this video. Here's what I've said about Sam. David Friedberg (00:47:38): Johnny, was like, I've never met a man who's so brilliant and so humble. Jason Calacanis (00:47:41): I mean, it's embarrassing, the language. The responsibility that Sam bears is actually honestly beyond my comprehension. He's a cofounder of IO. Yeah. OpenAI already owns 20% of it. Chamath Palihapitiya (00:47:51): Yes. No. No. No. 23%. Jason Calacanis (00:47:53): Twenty three As all Sam Altman deals, if Chamath Palihapitiya (00:47:57): you learned anything, they're conflicted. Jason Calacanis (00:48:00): But the the copy here, I just wanna get your general the gentleman's comment on. What I see you worrying about are other people or about customers, about society, about culture. Chamath Palihapitiya (00:48:10): And to me, that tells me everything I wanna know Jason Calacanis (00:48:12): about something. Chamath Palihapitiya (00:48:12): You guys are such haters on this. I'm excited to see what this thing is. Jason Calacanis (00:48:15): Why are we? What happened? I just thought this You guys are like, you're falling David Friedberg (00:48:19): for it. Jason Calacanis (00:48:20): I'm getting my. I I know don't know why we're even talking about this. I watched David Friedberg (00:48:27): the nine minute video. I wanted my nine minutes back. Nothing happened. Chamath Palihapitiya (00:48:30): I want the device. They say they have a device. Okay. I'm giving them the benefit of the doubt. They've invented something that they say is world changing. Jason Calacanis (00:48:39): Okay. Chamath Palihapitiya (00:48:40): But they this is again, I'm just using their words, and he's sipping a a macchiato there, so that's important. Oh my god. You are so falling for the espresso video. David Friedberg (00:48:48): This is Chamath Palihapitiya (00:48:48): your problem. David Friedberg (00:48:49): Jamal, look Jason Calacanis (00:48:50): at the glasses. I think Chamath Palihapitiya (00:48:51): the clue is in the video. David Friedberg (00:48:52): Look at Johnny Ives we're even talking about this. Those are a problem. Chamath Palihapitiya (00:48:56): Let me let me tell you my 02/2007 my 02/2007 Apple iPhone moment. Steve announced the iPhone. I got one of the, I don't know, first like few hundred, few thousand. I was going to Vegas, so I got it on a Friday, and I had it in my hand. The way that people looked at me for those three days, I've never been looked at that ever or since. They liked you. People liked what you were Jason Calacanis (00:49:22): feeling was love and admiration. All Chamath Palihapitiya (00:49:24): I had was music. There was no multiple screens. You couldn't Jason Calacanis (00:49:27): talk about There were actors. Yeah. Chamath Palihapitiya (00:49:29): But it was so mesmerizing. And my point is, you're right, I may have fallen for it, which may seem crazy, but when I saw that video, I thought, hey, hold on. All I'm saying is if there is a next generation device that they or somebody else my only comment is I think Google is so wonderful. I love the people there. I just want them to be on the forward foot, and I just don't want them to be reacting for the next five years. That's all I'm saying. Jason Calacanis (00:49:53): Here's what Sam said about Johnny. Is the deepest thinker of anyone I've ever met. I mean, this was a David Friedberg (00:49:59): love story. Not justifying what they said about each Okay. Chamath Palihapitiya (00:50:03): Let's handicap it here. I'll tell Jason Calacanis (00:50:04): you exactly what's happening. It's the glasses. He's wearing the glasses in there. They're making smart glasses. Sachs, what are they making? What are these two guys up to? You know these guys. You know both of them for twenty years. Come on now. You know what's going on. Just spill the beans. Let me Spell it. David Sacks (00:50:20): Express a a hot take here, but let me express in David Friedberg (00:50:23): the form Jason Calacanis (00:50:23): of a question because I don't wanna I don't wanna be too definitive. Oh, sorry. With the rhetoric. David Friedberg (00:50:27): Okay. Well David Sacks (00:50:29): Which is, is Johnny Ive just a media creation? I mean, no, seriously. Jason Calacanis (00:50:36): Steve Jobs manifest him? David Sacks (00:50:38): Well, I know he did good work at Apple. Okay? Don't get me wrong. But the software was done by someone else, right? He did the beautiful Eddie Cue. So, you know, the whole Chamath Palihapitiya (00:50:49): And Scott Jason Calacanis (00:50:49): Forson. Design? David Sacks (00:50:51): Yes. The hardware looks beautiful with the beveled edge. It's paint a glass with a beveled edge. Okay, great. It's so disappointing. He has this beautiful English accent, which everyone associates with intelligence. Right? So he could describe anything, and it's gonna sound amazing. Chamath Palihapitiya (00:51:06): And taste and taste 15% smarter. David Sacks (00:51:09): Right. So I don't know. I mean, maybe he's like parlayed this incredible reputation that he's built in the media into 2% of OpenAI. OpenAI. Chamath Palihapitiya (00:51:21): It's incredible. David Sacks (00:51:22): I mean, what a trade. Chamath Palihapitiya (00:51:23): What a trade. Do you think it was done at that $300,000,000,000 price? You think it was done David Friedberg (00:51:27): at, like, a cheaper price? Yes. Yes. Jason Calacanis (00:51:30): Yeah. I mean, there is an argument. I'm gonna go in Sax's corner here. I'm gonna go into conspiracy corner here. I'm gonna say Dieter Rams designed the iPhone, not Johnny Ive. Pull it up, Nick. Chamath Palihapitiya (00:51:41): Well, I'm gonna say Tony Fadell designed Jason Calacanis (00:51:42): the iPhone. Okay. But if you don't know who Dieter Rams is I mean, if you look at the transistor radio made, the iPod, if you pull up the Braun radio, here is the Power Mac. If you look at the iMac, basically what did Steve Jobs- Chamath Palihapitiya (00:51:57): Are you accusing Johnny Ive of ripping off a German industrial designer? Is that Jason Calacanis (00:52:01): what you're right What I'm saying is immature artist copy and mature artist steal. I am saying 90% of what Apple did was steal Dieter Ram's design. I will die on that hill. 90% stolen. Johnny Ive has been knighted. He's sir Johnny Ive. He took Dieter Ram's knighthood. What Chamath Palihapitiya (00:52:19): he did. Johnny. David Sacks (00:52:21): I mean Jason Calacanis (00:52:21): Sir John. David Sacks (00:52:22): He did put the handle on an iMac. Right? I mean, so you got that. Jason Calacanis (00:52:26): Stop. He did. You could move those iMacs around. So slanderous. Stop, you guys. This is so brutal. So great. David Friedberg (00:52:33): Dude, look Jason Calacanis (00:52:34): at this one. Pull this one up, Nick. Everybody knows the iconic iMac. Chamath Palihapitiya (00:52:37): I hate to break your Jason Calacanis (00:52:38): hearts, folks. Totally ripped off from Dieter. It was all inspired by the Germans. Sorry. Chamath Palihapitiya (00:52:44): So you're saying Dieter Braun is like the Kaiser Soze of our entire physical world? Jason Calacanis (00:52:48): Look. Here's the speaker on the left. Look at the iMac on the right. These guys took every design that Dieter did in the sixties and seventies, even the fifties, and they photocopied it, and they put an Apple logo on, and I couldn't Stop. Stop. Stop. Saks, am I wrong? David Sacks (00:53:04): Stop. I didn't know about the Dieter Braun angle. I Jason Calacanis (00:53:10): mean, listen. It is what it is. David Sacks (00:53:11): I mean, look. Everyone at Apple did amazing work. Jason Calacanis (00:53:14): There's a lot of about it. But I David Sacks (00:53:16): but I'm just saying, like, I don't quite get this, like, design god reputation that's been created a little bit. But but I would say that it's certainly Jason Calacanis (00:53:26): It's making freak kind David Sacks (00:53:27): of parlay that into 2% of Chamath Palihapitiya (00:53:29): By the way, that what San Francisco looks like? Like, I didn't ever thought every time I go to San Francisco, it's so disgusting and it's cloudy and cold. Jason Calacanis (00:53:36): But Yes. Chamath Palihapitiya (00:53:37): Did they find the one day where, like, the sun was shining in that hellscape? Jason Calacanis (00:53:41): Yeah. There were no homeless people, and there was no fentanyl. I don't know what happened. Yuck. On a serious note, what I would say David Sacks (00:53:47): is maybe what this deal indicates is, I mean, obviously, that OpenAI is gonna do something with hardware. Sure. It could be a new kind of phone that is AI first as opposed to the wall of applications. Or maybe it's like some sort of like pendant thing that like tracks what's going on around you and feeds it into AI so it can give you more context, you know, maybe like in the movie Her. Who knows? But it seems like they'll do something with devices in the physical world. So that would be the play, I guess. Jason Calacanis (00:54:17): I guess the question you have to ask is, will it make OpenAI one percent more valuable? If it's a $300,000,000,000 company 2%. Two % more valuable. Yes. Thank you. Will it make it more than 2% more valuable? If it makes it 1% more valuable, it's worth the the swing, I guess. Right? Chamath Palihapitiya (00:54:35): I heard an interesting factoid yesterday, which is by somebody who was looking at OpenAI equity. All of the rounds before the $300,000,000,000 round from SoftBank had essentially a feature where there was, like, a hard rate of return and the ability Jason Calacanis (00:54:52): or something? Chamath Palihapitiya (00:54:52): No. But the ability to put the stock back if they weren't able to do the conversion to a for profit company, etcetera, etcetera. And in the $300,000,000,000 round, apparently, it's much cleaner, and it's essentially like sub NewCo that is owned. And I thought to myself, like, wow. At at those valuations, I would have expected the terms to ratchet up. And instead, it seems like the terms have ratcheted down, which is I don't know. It's either it's either a commentary on the negotiating prowess of OpenAI and their team and or the risk management philosophy of SoftBank and the lack thereof. Jason Calacanis (00:55:32): I do think, you know, he is a great designer, and he will make it one or 2% better. Design matters. So if he makes it I mean, there's a chance, right, Sax, that he could make the product 5% or 10% better through design? David Sacks (00:55:43): I don't think it's gonna be one or 2% better. I think it's gonna be either zero or a doubling of the company's value, something like that. Right? Like, either he develops an iPhone like amazing hit product no one's seen some new consumer device that really could take the company to another level, or probably they do something that kind of doesn't work. So it's more of like a 2% option against a strike of doubling the value of the company. Chamath Palihapitiya (00:56:07): I'm surprised it hasn't leaked because in Sam's update or whatever, he said that the executive team was shown the device and that he has it. Jason Calacanis (00:56:16): Who? Chamath Palihapitiya (00:56:18): So what is it? Jason Calacanis (00:56:19): It's it's definitely gonna be a pendant or glasses. It's gotta be those two form factors. Chamath Palihapitiya (00:56:24): That's what you He was Jason Calacanis (00:56:25): the investor in Humane. Remember? Chamath Palihapitiya (00:56:26): It was not the pending Jason Calacanis (00:56:27): from the Apple people. Yeah. Chamath Palihapitiya (00:56:28): I will take the field against that. What are the odds and how much money do you wanna bet? Jason Calacanis (00:56:32): Okay. Here we go. So I think it's a a pendant, like a wearable. We'd have to define that. So, like, humane. Chamath Palihapitiya (00:56:39): I'll say it's not a pendant. Jason Calacanis (00:56:40): Okay. Glasses. I get what are you gonna give me? You give me odds. Chamath Palihapitiya (00:56:44): I'll give you Jason Calacanis (00:56:45): Give me odds. Well, we'll Chamath Palihapitiya (00:56:46): just do even money. Let's David Friedberg (00:56:47): do even money. Money. Chamath Palihapitiya (00:56:50): I don't know, whatever you want. However many thousands of dollars you wanna bet. Jason Calacanis (00:56:53): Even money. How about you give me 2 to $1.10 dimes? You have to every option. Have to pick them. No. No. No. David Sacks (00:57:02): That's a pretty good Jason Calacanis (00:57:03): bet. Chamath Palihapitiya (00:57:04): This is my risk management. Jason Calacanis (00:57:05): Get in on the bet here? David Sacks (00:57:07): Alright. Let's move on. Jason Calacanis (00:57:09): Alright. We covered Trump's trip to The Middle East last week, but our bestie Sax was there as well. David Friedberg (00:57:15): And you did you got Jason Calacanis (00:57:17): a couple photos to show, and you met a lot of friends there. Tell us about the experience of did you go about first of all, did you go on Air Force One? That's what everybody wants to know. Or did you go on Air Saxe? David Sacks (00:57:30): I took my own plane. Jason Calacanis (00:57:31): So I know that sounds a little like a flex, but Were were you in formation with Air Force One? Were you, like, you know, just right behind it or on your own travel? You were on your own travel schedule. David Sacks (00:57:43): I was I was doing my own my own thing. Jason Calacanis (00:57:45): But did you have the option to go on Air Force one? David Sacks (00:57:47): I probably could have if I wanted to, but I I actually wanted to get the region a little bit early because I hadn't been before, and I kinda checked it out. And so I was waiting there when the president arrived. Jason Calacanis (00:57:55): Oh, wow. So it's your first time in the region. Yeah. Well, tell us about your impressions generally, and what were you trying to accomplish there as the czar? David Sacks (00:58:04): Well, I call it AI diplomacy. First of all, these countries are obviously, they're very resource rich. They've got a lot of capital to deploy. And they're also very interested in diversifying their economies. They're very interested in high-tech. And they wanna do things in AI. They've got very significant aspirations there. And so I was over there just to kinda listen to learn and see what they're interested in doing. And I also got to see some of their tech scenes and just understand Oh, you understand Jason Calacanis (00:58:32): your garage in Riyadh, right? I've been Yeah. David Sacks (00:58:34): Oh, you've been there? Okay. Jason Calacanis (00:58:35): Yeah. Yeah. No. No. It's they are really pushing entrepreneurship, trying to generate more ideas and teach people how to start companies and coworking spaces, all kinds of incentives in terms of visas to come to Riyadh, to come to UAE, Dubai, Abu Dhabi specifically. Yeah, I'm curious your impression of the individuals who are leading a lot of these different groups. I was really taken back by how much time they had spent in the West. It seemed like every single person I had met had taken one of these scholarships to go to Oxford, to Harvard, to Caltech, whatever it was. They all had spent massive amounts of time in the West and then come back to either Saudi or UAE or Oman, etcetera. So maybe you could talk a little bit about the people and their knowledge base, motivation, etcetera. David Sacks (00:59:24): I had the same observation. The elites of all these countries have all been educated in the West, usually in The United States, some in The UK. The leadership tends to be young, visionary, future oriented, intensely interested in AI, like I was saying, and they want to do big things in AI. The thing that's been in their way is that in October 2023, the Biden administration basically put a blanket on the whole region acquiring semiconductors, GPUs. And it required that every export of a GPU or a server that contains a GPU had to get a specific license from the commerce department. And it put a major damper on their efforts to do things like build data centers in the region or to have their own local AI efforts. So they've been kind of in this holding pattern where the Biden administration decided to kind of alienate them. And, you know, it wasn't just AI, was other things too. Remember the fist bump? The Biden administration was very, I'd say- Jason Calacanis (01:00:27): Hostile, standoffish? David Sacks (01:00:29): Cool to and even hostile towards these states in the region. And I think from a geopolitical standpoint, it was just stupid because we're in an intense competition, a high-tech competition, a security competition, economic competition with China. And these states want to be aligned with The US and we are pushing them into China's arms. And if we don't give them the ability to buy the American tech stack, it's not like they're going to sit on their hands and do nothing. They're going to be forced to buy the Chinese tech stack. Jason Calacanis (01:00:57): They're gonna participate one way or the other. David Sacks (01:00:59): Right, and China still has some limitations on how many chips it can produce, but they clearly are building their own Chinese tech stack. It's a Huawei plus deep sea tech stack. There's actually a story in Malaysia just in the last couple of days where they were talking about building a local data center using the Huawei Ascend GPU plus DeepSeek, and then they walk back that story because I think they're afraid of getting in trouble with the US government. But the point is that if we drive these countries away, if we alienate them, they will end up partnering with China instead of The United States. I don't understand how that's in The United States' interest. Now, as part of this trip, we rolled out a new framework for an AI acceleration partnership with these countries. And there's a few very important terms that I think it's worth going into. So first of all, the purpose of the framework is to replace the Biden export control to the region with a framework that gives them the ability to buy GPUs and build data centers. But there's a few very important provisions. Number one is there's a matching investment provision. So for every dollar of investment they make in terms of building out data centers in the region, they have to invest a dollar in The United States in building out our AI infrastructure. So it's a huge win for The United States in terms of accelerating our own infrastructure build out. So that's point number one. Number two is even with respect to the data centers they're gonna build in the region, at least 80% of the chips have to be owned and operated by American cloud service providers or American hyperscalers. So even with respect to the data centers they're building, the vast majority of the compute is gonna be run by American companies. And so, I mean, this to me is just a Jason Calacanis (01:02:45): huge Were people critiquing it? Like, you know, this expansion? I guess Roe Conn said like, Hey, we should build more data centers here. That was sort of a light critique maybe or a misunderstanding. David Sacks (01:02:55): Well, mean, there's two types of critiques. One is the one that Roe was making, and Roe's a friend, but just, you know, I respond to him on X, which is we are building out data centers in The US. We want to do as much as we can. It's the Trump administration's policy towards energy that's making that possible. We're making it easier to spin up new power generation and we're making it easier to permit. Both of those things were virtually impossible during the Biden administration. So we are building more here in The US. In addition to that, you've got these countries who are resource rich and they have their own AI dreams and aspirations, and we can either partner with them or drive them into the arms of China. And the deal we've made is to enable their aspirations while getting them to fund more AI infrastructure in The United States. And even the infrastructure they're building over there, first of all, it's going to be on American tech stack, right? We want it to be NVIDIA and AMD and those types of companies. That improves our balance of trade. It also ensures that these data centers across the world are gonna be built on American technology. We want American technology become the standard. Jason Calacanis (01:03:57): Of course. David Sacks (01:03:57): And if you allow those data centers to be built on Huawei plus Deepsea, that will become the standard. So I think this is something that people in Silicon Valley intuitively grasp, but people in Washington don't, which is the way that you win these technology battles is you create the largest ecosystem, right? You wanna have the most partners, you wanna have the biggest app store, you wanna have the APIs that everyone use, the most Most data. So the point is we want to involve the whole world on our tech stack. I think export controls on China, that makes sense, but we don't want to reduce our market share in the rest of the world. We want them getting hooked on our platforms, making those platforms the standard, and getting lock in before China can catch up to us. Chamath Palihapitiya (01:04:37): Saks, did Jensen just say that he thought export controls were kind of pointless? Did he just say that recently? David Sacks (01:04:45): Yeah. He's against all export controls. And, you know, where I would split the baby here is that I think that most people in Washington believe that the export controls on China make sense because we simply can't allow our most powerful semiconductors to used by China because of the dual use. Now where I agree with Jensen is that I think we should not place undue restrictions on the rest of the world using the American tech stack because we will simply concede the market share to China. And so I think he's right with respect to the Middle East. Now, the other concern that you heard a lot is around this quote diversion. The idea that somehow the GPUs or somehow the IP, if we allow it to be used in data centers in The Middle East, somehow find its way to China. And yeah, mean, your expression on your face, J. K. Shows that Jason Calacanis (01:05:38): That makes no sense. David Friedberg (01:05:39): Like these Jason Calacanis (01:05:40): guys have unlimited resources. They have unlimited ambition. That's just a naive point of view. They want these for themselves. They understand the power of AI. They don't wanna give it to China. They want it for themselves. David Sacks (01:05:50): They make trillions of dollars selling oil and gas. They don't need to smuggle RGPUs. It doesn't make any The other thing is that people don't understand, you know, they're called chips, but really these things are now the size of mainframes. The NVIDIA data center product, NVL 72, is this giant server cabinet. It's eight feet tall. It weighs 3,600. It's not like diamonds you smuggle in a briefcase, right? No. All you have to do is send You're Jason Calacanis (01:06:13): not putting them David Friedberg (01:06:13): up your Jason Calacanis (01:06:13): butt and cutting them across the border. That's definitely not happening. David Sacks (01:06:17): No, it's not happening. All you have to do is send an inspector to the data center to count the servers, and you can see that they're there. David Friedberg (01:06:24): Ridiculous. David Sacks (01:06:24): So this idea that somehow they're gonna get smuggled, it's like this totally fake concern that's been created. It's almost like a totally fake narrative. Then people say, well, they won't physically smuggle the servers, but the IP will somehow be transferred to China. Look, there's nothing in a data center that China hasn't already seen. They have at least one of everything. The issue is that they can't reverse the advanced semiconductors just from the chips, right? Because it's about the process technology that it takes to create an advanced semiconductor. There's hundreds, even thousands of steps in that process. Yeah. And you can't figure out the recipe just by seeing the end product. Chamath Palihapitiya (01:06:59): I would like to say that I'm very proud of my bestie. I got three I do wanna tell you, Sax, you crushed it. I think you Jason Calacanis (01:07:08): Yeah. I was pretty impressive. Chamath Palihapitiya (01:07:08): Put your best foot forward, and people were really impressed. But I got calls. I got three calls from the powers that be. They were very psyched to meet you and spend time with you, and they thought you were super impressive. So it was awesome. Thank you for doing that. Jason Calacanis (01:07:24): I appreciate that. Yeah. It's an incredible region, and I think you're doing, like, a really patriotic thing. If you look at that region, like you said, it could tip one way or the other. They could be involved with the West. They we could be building businesses together. And if we build businesses together, that's better than them building businesses with China. Pretty obvious, I think. I mean David Sacks (01:07:45): Totally. And I this is the thing is I just don't get the opposition of Washington to this, and I especially don't get how the opponents of this can call themselves China hawks. Because at the end of the day, this is a tech battle between The US and China. And we can have these countries be aligned with us and in our orbit, or we could push them into the arms of the Chinese. The choice is do we want these countries to be the piggy bank for American AI or for Chinese AI? It's like that's Jason Calacanis (01:08:09): saying they have an investment level that they can do that dwarfs anybody else in the world with the exception of Norway and The United States. I mean, they can put a lot of money to work. And here's the thing. They want to. Chamath Palihapitiya (01:08:20): It just hit the wire that OpenAI is partnering on a five gigawatt data center cluster in Abu Dhabi with G42. David Sacks (01:08:26): Well, hold on. Let's just be clear about it. So the five gigawatt cluster, or it's more of a campus that's gonna support many American hyperscalers and cloud service providers, and they're gonna be one of the tenants. So I think they're saying that they're gonna have one gigawatt. There's still four gigawatts to go that they plan on supporting. Chamath Palihapitiya (01:08:45): Well, the most interesting part of the deal, it said, was that as part of the deal, g forty two plans to make a reciprocal dollar for dollar investment in AI infrastructure in The US. So to your point, Sax, it's like Perfect. Cooperating like this, I think, just makes a ton of sense. Jason Calacanis (01:09:00): Absolutely. And this is not dumb money, by the way. These are very smart people who are investing very strategically with a very crisp, you know, group of individuals, like you said, who have been educated in the West. You know, when people explain to me, oh, yeah, just go to Abu Dhabi and come back with a suitcase full of money. No. These are folks who want to be on the board of companies. They want a company build. They see themselves as owners in business, not just investors. And then they wanna do it domestically and abroad. The amount of investment that they're gonna do in the next thirty years is going to dwarf what we see universities and retirement accounts. I think other people understand the scale of what's happening. David Sacks (01:09:37): This is why I just don't understand the point of the Biden policy of alienating these countries and making them feel uneasy about their place. Chamath Palihapitiya (01:09:47): Because you don't know who it was that made the decision. Yeah. Jason Calacanis (01:09:50): I mean, let's face it. David Friedberg (01:09:52): That guy you're confused. We can have Bernie's. David Sacks (01:09:55): I've actually have a pretty good idea at this point of who was controlling the auto pen on AI. There was a group of of very powerful staffers in the Biden administration, about half a dozen people who kind of controlled AI policy. And the interesting thing is none of them have ever worked in Silicon Valley. They're all basically lawyers and they don't really have a good understanding of the idea of a platform or a technology ecosystem or a stack. And I don't think they realized that by alienating these very resource rich countries that they were creating a huge opportunity for China to come in and serve the region. And this is why I think this, you know, again, what I call AI diplomacy is so important is it boxes out China. It's good for America. It's good for our companies. It's good for our trade balance. It makes us the standard and it boxes out China. What's not to like about this? I really don't get it. Jason Calacanis (01:10:46): I think they were living in a world where they put people into very rigid buckets. If you wanted to look at human rights as an issue, which I think is what some people were doing in that administration, I look at the progress that's being made. And if you go to these societies and you look at what's happening in that region, the pace at which human rights and individual freedoms is growing and the rate at which those societies are moving forward, it's going in the right direction. So what do we wanna do? Do we wanna steer people towards collaboration and working together to build the future? Or do you wanna have it devolved? I mean, it's such a stupid decision by the Biden administration. It's perplexing. David Sacks (01:11:24): Yeah. I I really don't get it. I I don't understand what the point of alienating these Gulf States was. Jason Calacanis (01:11:30): Well, I like Trump's approach there when he said, listen, you're gonna make decisions in your own time. That's what they wanna hear. They want to be respected as they respect us. Hey, we're gonna make decisions in our own time, what's right for our people. That's a process that we'll decide. Now, if you wanna collaborate on building a company, a data center, a technology platform, hey, we're here for that. But you can't tell us how to run our society. And just like we wouldn't want them to come here and tell us how to run our society. Right? David Sacks (01:11:56): So I agree with what you just said, J. Cal. And I thought the best part of the president's speech, which the whole thing was excellent, but the best part was when he talked about how the neocons and the interventionists had come into the region and lectured people and come in with a very moralistic point of view and made all these interventions that basically wrecked countries. And it wasn't the neocons, the interventionists who have led to so much progress in The Middle East and in the Arab world. It's been the countries themselves whose own leaders have set the path and have had the vision. Chamath Palihapitiya (01:12:29): That was an incredible speech. David Sacks (01:12:30): It was incredible. Jason Calacanis (01:12:31): That was Peter Trump for me. Yeah, he did a great Credit what critics And that's the message they've wanted to hear for a long time. And that's the message that moves society forward. All these other messages just sort of set it back. And I think I'm super hopeful about the region. Okay, let's do Science Corner. David Sacks (01:12:47): Oh, by the way, was just checking X here and it looks like there is a announcement on what the OpenAI device is gonna be. Oh. You're see this. Jason Calacanis (01:12:59): Here we go. Chamath Palihapitiya (01:13:00): Oh, the puck, the little puck. I saw that puck, but it hasn't been confirmed yet. Jason Calacanis (01:13:04): Oh, it's a puck you put on your desk and it Yeah. It's like a Chamath Palihapitiya (01:13:06): puck with a camera and a hole for Jason Calacanis (01:13:08): a mic. Oh, that's a pin. Yeah. That's a pendant. It's a pendant. I could have made 10 times straight up versus you. That's a pendant. Chamath Palihapitiya (01:13:13): That's a puck. Jason Calacanis (01:13:15): It fits in the palm of your hand. It's too small to be a puck. A puck's like the size of your hand. It looks like your thumb. Okay. This is AI generated. It's not actually the device. They haven't shown the device from Johnny Ive yet. Somebody just took what's in the Wall Street Journal report. They mocked it up. This is their best guess as to what it might look like. This is already out. And by the way, this is gonna get you punched in the face. You show up with a listening device to a party or a meeting, I'm gonna knock you out. This is ridiculous. And it's got a camera in it too? I don't want this surveillance device anywhere near me. Chamath Palihapitiya (01:13:47): How are you gonna do it? Like this? Get that puck away from me. Jason Calacanis (01:13:55): Yeah. Okay. Anytime you're ready How Chamath Palihapitiya (01:13:58): dare you record me violating my privacy? I was literally at dinner the other day. Jason Calacanis (01:14:03): I kid you not. And somebody came up with one of these things, and it Chamath Palihapitiya (01:14:06): was clipped on his thing. Jason Calacanis (01:14:06): I said, hey. What's the thing on your lapel? He said it's an AI recording device. It does it summarizes what we're doing. I said he goes, oh, do you do you care? I said, do you care if I punch you in the face for covertly recording me? And he said, yes. I said, well, then turn it David Friedberg (01:14:20): turn it off. I mean, literally Let's talk about science. Jason Calacanis (01:14:24): Let's talk about science. David Sacks (01:14:25): No. I mean, you raise a good point, J. Cal, that these three devices I'm super about that. Jason Calacanis (01:14:31): These three David Sacks (01:14:31): devices requires a level of trust that is kind of unprecedented. I mean, you already had to trust, you know, Google and iPhone and so on because they do have a huge level of access to your data. But the new, let's call them AI connected devices, I mean, they are surveillance devices. I mean, whole point is to listen and see everything that you can hear and you know, and then to give that data to AI to do something with. And man, you better trust that company completely. Jason Calacanis (01:15:02): Oh, Which company's doing it? Oh, right. That company. Yeah. The company that had every leader leave because they didn't trust the founder. Okay. Alright. Yeah. Go ahead and wear the puck. And by the way, with these pucks, I'm gonna make one more point, Freiberg. I'm sorry. These devices need to have a red flashing diode on them when they're recording. We need to pass legislation that it does that. If it's recording, it should have a flashing red light on it. Let's go to Science Corner because everybody loves Science Corner. Friedberg, some breaking news, some innovations in CRISPR. Yes? David Friedberg (01:15:33): It's got a lot of press coverage, but there is a baby born named KJ in the research paper that was published, was born with a mutation that was inherited from the mother on a specific gene called CPS one. And the same mutation inherited from the father, which resulted in the fact that this gene has a deficiency in it. CPS one produces a protein that's part of the urea cycle, so basically breaking down nitrogen or protein compounds in the blood so that they can be excreted. And in the absence of this protein, if this protein is not being made in the body, ammonia accumulates in the blood, and that has extraordinarily harmful consequences, including brain damage and ultimately death. This gene had a g that was mutated into an a on both of the copies of the gene meant that the protein wasn't being correctly produced. And as a result, the breakdown of nitrogen and ammonia was not possible. And so this leads to a very short life for the very, very, very, very few people that have ever had this double mutation that this particular child was unfortunately born with. So we have technology today, CRISPR gene editing technology. In fact, CRISPR gene editing technology is what we use to do some of the work we do at Ohalo, the company I run. And, some advanced forms of gene editing technology include what are called base editors where you can change a single letter on a strand of DNA into another letter. So in this particular case, changing an a to a g was the goal. So the physician, Rebecca Aurens Nicholas, giving her a big shout out for the incredible work she did in partnership with scientists at the University of Pennsylvania. They developed very quickly a very specific gene editing target to go in and find the letter a and turn it to g in this particular patient's body. Now remember, we have the same DNA in all of our cells in our body, but specific cells have specific functions and genes are expressed in only those cells. So in this case, it's the liver that makes this this CPS one protein. David Friedberg (01:17:49): And so they had to get the gene editing into the liver cells to edit the liver cells. And if they could edit the liver cells, then those liver cells would start to become more functional and you would have a functional protein. So they quickly tested dozens of base editors. These are different proteins that can go in and edit. They tested different guide RNAs. These are the guides that tell that editing protein where to go, what part of the DNA to go to, which is trying to get it to this exact same site. They tested it in petri dishes, then they tested it in mice, men and monkeys to make sure that the selection that they came up with worked. They then put it in the child. And so, basically, by putting it in the blood, found its way into the liver, and that's the the the the fortunate benefit here was at the end of the day, you're trying to edit specific cells, and we can get to the liver by putting CRISPR and the guide into the blood. It made its way to the liver, and they coded the gene editing system with liquid nanoparticles, which helped it get into the cells. It got absorbed by the liver. It got went into the cells. It found its way to the site on the DNA. Chamath Palihapitiya (01:18:51): That's amazing. David Friedberg (01:18:52): Converted the a to g. And as a result, those liver cells became functional to make the protein that breaks down the ammonia in the child's blood. And so they did the first one just to make sure the child would handle it. It worked. The child didn't have any adverse effects. They then did the second dose, able to take the child off some of the medicines and compounds they were giving the child to break down ammonia in the blood, then they gave it the third dose and they're monitoring. So this is the first time that we've seen this kind of custom CRISPR gene editing for a genetic mutation being applied to a patient in vivo in the blood for a specific target for a specific particular, treatment. Chamath Palihapitiya (01:19:30): I just asked Gurok how many diseases are because of an A to G point mutation. And it says it's hard to estimate through the human genome database or ClinVar, but it estimated between twenty and thirty thousand conditions are because of an eighty g point mutation. And because that incredible? David Friedberg (01:19:50): Yeah. And I'll tell you one other story about this. I saw a geneticist here at UCSF a couple years ago, and he was telling me about all of these kids that come in, and they don't know what's wrong with them. And he can see on the kid's face. He can see a disease condition. They have all these weird lab tests, and the kids are dying or they're really deficient in some way. And they can't afford to do the DNA sequencing because the child is on Medi Cal or some other sort of, like, health care plan, and it costs, like, $5,000 to do the DNA sequencing needed to figure out what genetic mutation this particular child has. So there aren't easy off the shelf targeted tests or lab tests you can run to figure out when people have genetic disease. And so this is an incredible, like, undiscovered set of problems to your point that there are likely millions of people out there that have some health condition that they've not yet been able to identify because it's a genetic mutation and not everyone can afford to go out and just get their genome sequence to figure out where the mutation might lie in their body. And so as we discover more and more genetic mutations, we build targeted tests for identifying that people have them and hopefully over time can start to build more targeted therapies like this one to go after and make the changes at specific sites to fix the, the genetic mutations. Badass. Jason Calacanis (01:21:06): It's incredible. Okay. Somebody wake Sax up. David Friedberg (01:21:09): Sax. Sax, just so you know, one thing about America is we've got a pretty good advantage in gene editing technology today, and China is on its way coming after The US on this technology front as well as AI. Jason Calacanis (01:21:21): You woke him up. You should piqued his interest. China's coming for Uranus. David Friedberg (01:21:25): And you will see some very good posts recently on people talking about how a lot of technology that's been developed in The United States is being transferred to China, and they are building biotech companies and biotech solutions that take American IP and put them into market. And this has also had a very big dampening effect on the biotech market. David Sacks (01:21:43): So what do you think we should do about that? David Friedberg (01:21:46): It should be in the trade negotiations, some tighter IP controls. I can tell you, Sachs, Chamath Palihapitiya (01:21:51): that a very large company had a conversation with their CEO, and they said this exact thing, which is that the amount of IP that's available for purchase or for licensing, questionable provenance, but how effective and good it is, is causing them to figure out how to establish more of a presence to just buy stuff there. It's kind of like David Sacks (01:22:12): So what does that mean? Chamath Palihapitiya (01:22:13): Meaning that let's just say David Friedberg (01:22:15): you have an r and Chamath Palihapitiya (01:22:15): d effort in The United States. You can almost hedge your bets by having an outpost in or near China, let's say Hong Kong, where there's an equivalent project for almost anything that we're working on happening there at the same time in real time. And so if you can't figure out how to get it here, you can get it there. And it's much murkier, and the the laws are sort of unclear. And it's just different enough where you can kind of get to the same place. So it's just to say what Friedrich said, which is that the amount of r and d that the Chinese are doing is roughly equivalent to the amount of r and d that The United States is doing. Yeah. And so as a result, everything that we discover, they discover. And so it really is a foot race, and we're kind of neck and neck. For sure. This is a perfect time to make sure that we have an electricity deficit. Perfect time. David Sacks (01:23:08): Well, I agree with you. We need to build out power, but I think the administration's committed to doing that. Drill, baby, drill. Chamath Palihapitiya (01:23:13): I'm not questioning Trump's desire. I'm talking about the actual congressional bill details. David Friedberg (01:23:18): I saw yesterday the Tennessee Valley Authority filed the first ever application for a small modular reactor. Let's go. Hopefully, it gets approved very quickly. This is by the way, I I I will watch this. I think others should watch this to see how quickly they're able to get through the regulatory process to get that thing approved, and that will be a very good indicator. If it gets approved and they can get fast permitting, fast deployment, that would be an incredible insight on how quickly The US will be able to scale power production for AI. Chamath Palihapitiya (01:23:45): Over under twenty thirty two. Do you David Friedberg (01:23:47): say? Let's do a polymarket. Great question. Let's do a polymarket. Jason Calacanis (01:23:49): And let's you should create a special Trump designation, like a speed run designation. When something's super important, he puts the speed run designation on it, and they they actually attempt to do it as fast as possible. David Friedberg (01:24:01): I don't know if you guys watched my interview with Bergam, but he said that there's a permit for a copper mine that's been outstanding for thirty years. They've been trying to through the permitting process. Thirty years to get this copper mines started to run, and now he and the team are trying to fast track this thing. But thirty years, it's been sitting Jason Calacanis (01:24:17): through a program already. The vanilla folder has made its way down the elevator. So it's down there in the sub basement ready to be chipped. But let's David Friedberg (01:24:26): go ahead and get rid of Doge. Let's get rid of Doge and keep things David Sacks (01:24:28): away, right? Well, I don't wanna get rid of Doge, but let me ask you a question. David Friedberg (01:24:33): No, I'm joking. I'm like, yeah. David Sacks (01:24:34): I know. Given the amazing advances that you see coming with CRISPR biotech, also AI, robotics, what are the odds that we can grow our way out of this fiscal problem? Yeah. David Friedberg (01:24:48): Yeah. I do I I I'll be honest. I think the limiting fact so the CRISPR side is gonna have profound effects in longevity, human health, and food abundance. So those are like, I think about abundance in four ways. One is abundance of food or calories. One is in abundance of labor through automation. One is in abundance of lifespan or longevity, and one is in abundance of what I think is the most important and gating factor, which is energy, which leads to everything else. So you can't have the labor savings without the energy and the productivity improvements without the energy. So the thing I do watch the most, Sax, and that I do think you and have talked about this, that I do think is the critical linchpin for all of those other points of abundance being unleashed is the energy equation. And this is where I look very clearly and plainly at what China's doing versus what where we're at today. We've got stated intentions, but the actions are where we're still you know, we gotta start showing up. That's it. David Sacks (01:25:41): But let's assume that we have enough power. I mean, my point's really about David Friedberg (01:25:45): Yeah. If we have enough power, the 38,000,000,000,000 of debt doesn't matter. Jason Calacanis (01:25:48): Really? You're saying that in No. David Friedberg (01:25:51): I'm very, very serious way. David Sacks (01:25:52): I'm very That's a pretty that's a pretty important conclusion because if that's true and we can grow our way out of this problem, then that's an alternative to having this austerity approach where there's You're right. For which there's no political, you know, will David Friedberg (01:26:07): or resolve. Sax, listen. If I saw us adding a terawatt of electricity production capacity per year in The US, I would shut Chamath Palihapitiya (01:26:13): the fuck up about the debt. David Friedberg (01:26:15): I wouldn't care. Terawatt, we're talking about gigawatts. Yeah. I'm talking about one terawatt. Chamath Palihapitiya (01:26:21): No. I know. But I'm saying David Friedberg (01:26:22): Like, China you guys know China Chamath Palihapitiya (01:26:24): right dealing in in gigawatts. David Friedberg (01:26:26): Yeah. I know. We finally have a terawatt. And China's dealing in terawatts. China is moving I know. I mean, we've been through the numbers, but they're going they're adding an entire United States every 18 months. Every 18 months. Yeah. So every 18 months, China adds all of the power production capacity of the entire United States additional to their grid. Mostly in nuclear and solar? Solar is a big component. Hydro hydro is I mean, Chamath Palihapitiya (01:26:52): look at the look at the number of times. David Friedberg (01:26:54): They're adding, like, hundreds of gigawatts just on the on the Yangtze. Chamath Palihapitiya (01:26:59): Yeah. Look at the number of times that Elon has said this. Like, it's like the amount of energy that's available if we just harness it from the sun and redirect it It's pretty sure storage would solve all of our problems. But the problem is that we're at, like, just a little over a terawatt. We're inching along in gigawatts, whereas China is in the terawatts adding terawatts. Jason Calacanis (01:27:22): Yeah. They're the same rate. They're up that chart. David Friedberg (01:27:25): Are three terawatts going Jason Calacanis (01:27:26): to eight. Corner of Arizona or Utah. David Friedberg (01:27:28): There's like a little bit eight, and we're at one going to two. Yeah. I've shown this many times before on this show. Crazy. This is in this is total production over a year. So this is terawatt hours, and this shows 4,000 terawatt hours is where The US is at. If you break that down on basically a continuous production, you measure it in watts. So the number of watts that The US can make in any given point in time or is making any given point in time is one terawatt, 1,000,000,000,000 watts. Meanwhile, right now, China is making three terawatts, and they're scaling up to make eight. We are at one going to two over the next fifteen years. Jason Calacanis (01:28:05): So you could share this graph David Sacks (01:28:07): to be more important than the the budget deficit graph. David Friedberg (01:28:10): I do. And I'll tell you why. I've got another chart. I can pull it up for next time. Chamath Palihapitiya (01:28:15): That's now do you think it's esoteric, Sax, to, like, add these line items at this market? David Sacks (01:28:21): Well, I don't I just don't I mean, you're talking about I I just I'm not sure. You're gonna have to provide a lot more information about what exactly is No. David Friedberg (01:28:28): But, I mean, look, Zach, it's obvious. It's obvious Chamath Palihapitiya (01:28:30): that Brookfield and Blackstone built And David Friedberg (01:28:33): I just wanna translate this. I it's so obvious that automation David Sacks (01:28:36): reporting on that, Shimontha? I just haven't seen anything. Chamath Palihapitiya (01:28:38): It just happened last night. This is the point. David Friedberg (01:28:41): I'll just say one thing because I think it's I just wanna add it at the end. Sure. Automation, which is unlocked by AI, we are going to see an explosion of robots. They're not gonna all be humanoid robots, but, like, robotics allows humans to get an incredible amount of work done. Imagine having the cost to build a giant building go down by 50 x. That's what this unlock unleashes is all of this automation. Jason Calacanis (01:29:03): Optimist doing it. Yes. David Friedberg (01:29:04): We'll have Optimist, but we'll have these robotic devices doing it. You can see it in China. Go look at how they build bridges. It takes, like, three days to build a multi mile bridge in China because the whole thing is automated. They do automated drilling. They do automated mining. They do automated building. All of that If we unleash that capacity in The United States, we can build things that are economically productive for America. All of this gets unleashed. The technology is here today. The only thing that's missing is the power. Chamath Palihapitiya (01:29:29): We want this. David, I would just then ask folks, go talk to like Duke Energy, go talk to Constellation Energy, go talk to the drillers, but they'll all tell you the same thing. If you want a nat gas turbine, we have to wait until 02/1930. Why? Because China owns them all. They make them all. So if you say, hey, Chamad, drill baby drilling, use nat gas, and I say, okay. I'm waiting in line for five years to get a turbine. So then it's like, okay. What can I do? Nuclear? I can't because that'll take till 02/1935. So then I'm like, okay. I'll go into the tax equity markets and I'll finance myself residential or industrial solar. And when that goes away, there is no energy. Somebody should just go and figure this out. By the way, this David Friedberg (01:30:13): is our Manhattan project. This there was a Manhattan project, then there was the Apollo project. This generation's Manhattan and Apollo project is energy production scaling in The United States. That's it. All the other shit flows. We don't need the government to do AI. We don't need the government to do automation. Oh, private private. Let all that. Chamath Palihapitiya (01:30:29): Let us let us do David Friedberg (01:30:30): the energy. We need to figure out Chamath Palihapitiya (01:30:31): how to get energy. And you can't decapitate the markets that finances it. We're all willing to put up the risk capital. That's the crazy part. We don't even need the government. David Friedberg (01:30:38): I don't know any of the details of what Jamaf's talking about, but, I mean, generally, like, what do think about? Jason Calacanis (01:30:42): And your chairman, dictator, Jamaf Baihabtiyah, Southern ductator? David Friedberg (01:30:46): Yeah. Chairman ductator. Who'd you ductate? Jason Calacanis (01:30:49): For your chairman dictator, Chamath Paihabteya. I'm trying to close the show for the seventh time. Your chairman dictator, Chamath Paihabteya. Your czar, David Sachs, sultan of science. I am the world's greatest moderator. I'll be in Singapore next week. If anything's popping off, Jason@AllIn.com. Hit me up. Chamath Palihapitiya (01:31:05): Why do you broadcast your location? I don't under what what are you Jason Calacanis (01:31:08): you're coming to Singapore. I'm doing a bunch of public events. People know. Chamath Palihapitiya (01:31:11): Same one that wants to, like, for the pin, and then you're just telling people where you're at. Jason Calacanis (01:31:15): Put that on again and see what happens. Tough guy. Put the pin on. David Friedberg (01:31:19): You're asking the pin. I'm sorry. You took all in dot com as your email address? Jason Calacanis (01:31:23): Jason@allin.com. We each have that. David Sacks (01:31:25): Wait. What? Really? We don't. David Friedberg (01:31:26): But but don't broadcast Chamath Palihapitiya (01:31:28): that out, bro. Come on. Jason Calacanis (01:31:29): Just email me. Jason@allin.com. You know how long David Friedberg (01:31:32): you're here Jason Calacanis (01:31:32): take that domain? Why do want that David Friedberg (01:31:34): domain? That's your domain? Jason Calacanis (01:31:36): This what that's David Sacks (01:31:37): not yours. Domain. Jason Calacanis (01:31:38): This wants the show. This is all the graphic. You can give Chamath Palihapitiya (01:31:40): them the half the show, Jason Calacanis (01:31:41): you ungrateful pricks. Why do you have got it? Do you have that for negotiation? David Friedberg (01:31:46): Oh my god. I can't even put in the email. It's not in the contract that you get the email. Jason Calacanis (01:31:50): Chase and x all in dot com David Friedberg (01:31:52): for life. I think we should charge you 50 k a month for that email. Jason Calacanis (01:31:55): For life. Executive producer for life and email for life. We'll see you all next time. David Friedberg (01:32:00): What are you going to Singapore for? David Sacks (01:32:02): He's trying Jason Calacanis (01:32:02): to engineer a car now. Grand? David Sacks (01:32:04): What are doing? This is a plug. Chamath Palihapitiya (01:32:06): This a plug. Jason Calacanis (01:32:08): In Singapore next week. That's it. You were in The Middle East last week. You did your own thousand dollars Yeah. David Sacks (01:32:12): But I didn't preannounce it. Jason Calacanis (01:32:15): You were on CNN. Did Chamath Palihapitiya (01:32:17): they pay Jason Calacanis (01:32:18): for your David Friedberg (01:32:18): business class ticket, Jake Hall, to come to a talk? Is that what's going on here? You got a free ticket? Let's go. Jason Calacanis (01:32:23): First of all first of all, let let me just tell you. I Speaking gigs are 6 figures now, bitch. Chamath Palihapitiya (01:32:27): I've flown private to Singapore never again. Yeah. That is the dumbest thing. Fly Singapore Airlines. David Friedberg (01:32:33): The best. Chamath Palihapitiya (01:32:33): The best. David Friedberg (01:32:34): Are you doing Singapore First, Jay Cal? Jason Calacanis (01:32:36): I think that yeah. I don't know. I think I'm United actually. David Friedberg (01:32:39): Do not fly United. Do not fly United to Singapore. Jason Calacanis (01:32:41): Oh, really? Okay. I'll switch it out. David Friedberg (01:32:43): Fly Singapore. What do you think? Jason Calacanis (01:32:44): Raffles? You like raffles? Chamath Palihapitiya (01:32:46): Raffles is the best. The best. Jason Calacanis (01:32:48): It's what I keep hearing. David Friedberg (01:32:49): The best. Jason Calacanis (01:32:49): Let me have to David Friedberg (01:32:50): say it wrong. David Sacks (01:32:50): The best. The best. Jason Calacanis (01:32:51): This is beautiful. Chamath Palihapitiya (01:32:52): Alright, everybody. Jason Calacanis (01:32:53): We'll see you next time. Bye bye. Chamath Palihapitiya (01:32:54): Love you, guys. Bye bye. Jason Calacanis (01:32:57): We'll let your winners ride. Rain man David Sack. And it said We Chamath Palihapitiya (01:33:27): We should all just get a room and just have one big huge orgy because they're all just useless. It's like it's like sexual tension that they just need to release somehow.