Anthropic 的世代级崛起、OpenAI 的焦虑、AI 护城河与 Meta 败诉

Jason Calacanis (00:00:00): Alright, everybody. Welcome back to the number one podcast in the world. The fantastic four, the original. Chamath Palihapitiya (00:00:06): Oh, the cast is back. Jason Calacanis (00:00:08): The cast is Chamath Palihapitiya (00:00:09): Our brothers in arms. Jason Calacanis (00:00:10): Brothers in arms. Here we go, boys. We got a big news week. David Sachs is back, and he's in the great state of Texas. How's it been, Sachs? How's Texas been for you so far? David Sacks (00:00:23): It's been great. Although, I just got back from DC. I got, like, three hours of sleep last night. So but we had a lot of news this past week. Jason Calacanis (00:00:31): Yes. And we'll be talking about PCAST and your role in the and your role going forward in the Trump administration. Big news that we'll be talking about today also relates to you, o sultan of science David Freiberg, with your background from the iconic film. For those not watching, looks like the iconic Thelma and Louise. I wonder if that has something to do with the budget of California, which you've been outspoken about recently. Chamath Palihapitiya (00:00:58): Great rant, which I Jason Calacanis (00:01:00): remember mega rant with Mali. David Sacks (00:01:01): Thank you, boys. I retweeted it too. If only David Friedberg (00:01:04): Thank you, boys. David Sacks (00:01:05): If only you could be allowed the time and space to do those kinds of rants on this pod. David Friedberg (00:01:10): Yeah. Thank you very much. Jason Calacanis (00:01:12): Why did I say to you David Friedberg (00:01:14): Jake L. Just let him know. Here he is. He's going again. He's going again. Jason Calacanis (00:01:17): There it is. Doctor Doom. Doctor Doom, your mayor, your new governor. Are you would you consider it, Freeburg, after O'Halo running for governor? David Friedberg (00:01:25): There is no after O'Halo. Chamath Palihapitiya (00:01:27): Oh, please do it. After O'Halo. Oh, please do it. Jason Calacanis (00:01:30): Wow. That'd be so great. Chamath Palihapitiya (00:01:31): I'm tempted to buy O'Halo for, like, 5 or 6,000,000,000 so he just killed it. David Friedberg (00:01:34): It's a dirty game, Pauli California politics is dirty, man. Chamath Palihapitiya (00:01:37): I don't even know what it does. I'll just have somebody else deal Jason Calacanis (00:01:39): with you imagine the oppo Chamath Palihapitiya (00:01:41): research about on Friedberg? No. No. No. No. We get him elected. He would do an incredible job. He would save the fourth largest economy in the world. It would be incredible. Jason Calacanis (00:01:49): It'd be amazing. David Friedberg (00:01:50): I would love the Jason Calacanis (00:01:51): Here's the opal resource, Axe. David Freiberg went to a rave in 1999 and stayed up until 10AM. We have witnesses. Chamath Palihapitiya (00:02:01): Once he he got tilted at the poker game, stole a bunch of pistachios and lactate and ran home. David Friedberg (00:02:06): He did. Jason Calacanis (00:02:09): We open sources to the fans, and they've just gone crazy with it. Love you, West. Queen of Kenwa. Going all in. And Proppik on a generational run. And OpenAI crashing out a bit, boys. Let's chop it up here. Just looking at Anthropic, pretty major heater this year. January, they launched Cowork for business users. You know what that does, cron jobs. You can connect to your Gmail, your Notion, whatever it is. And then Opus 4.6, which consensus wise, everybody thought this is a major step function. Jensen, Michael Dell, everybody's called it out. Jensen actually called it back in November an inflection point and the first agentic model. And Opus 4.6 has basically, Dell said, hit a threshold that we haven't seen before in terms of real productivity in Teams. February, they dropped a bunch of Clog code plug ins that caused the SaaS pocalypse, not the Sakspocalypse, the SaaS software as a service. Chamath Palihapitiya (00:03:20): Oh, it David Sacks (00:03:20): was a Sakspocalypse too. Jason Calacanis (00:03:22): Yeah. There was a little bit of that back and forth as well. David Sacks (00:03:25): No. I mean, as a SaaS investor, it was a Sakspocalypse. Jason Calacanis (00:03:28): It was David Friedberg (00:03:28): a bit of a Jason Calacanis (00:03:29): you you you were the tip of the spear there. We'll get into it. David Sacks (00:03:32): My exit comps were affected. That's all. Jason Calacanis (00:03:34): Yes. It seems like you may have divested at exactly the right time. Alright. $6,000,000,000 in annual run rate was added in February alone. Brad referenced a couple of weeks ago here on the pod. Earlier this week, they announced computer use, a new agentic system for enterprise grade kind of OpenClaw functionality. Now you can use the Clawd app from your phone to control your desktop computer. Really slick feature. Here's the calendar release over the past two months for the team at Anthropic. Dario, come on the pond anytime. Sax, you've had a couple of flare ups, and obviously, the administration and the Department of War had their kerfuffle. But just, you know, looking at it objectively, what's your take on the surging anthropic generational run as I've described it here? David Sacks (00:04:32): Well, I've never been a critic of Anthropix products. I've always been an admirer of their products. I think last year, gave them credit for MCP. I agree that they seem to be performing very well now. The company made a big bet on coding as the kind of big breakout use case. Whether that was done for business reasons or ideological reasons, I'm not sure. Anthropic is sort of the most AGI pilled of all the frontier labs, and I think they made this bet on coding as their way to get to a curse of self improvement. As it turns out, it was a very good business move as well because code is the gateway into enterprise and enterprise IT budgets. And so they've able to grow revenue pretty quickly as a result of getting into enterprise. Also, coding seems to be the basis for these other product extensions. So like you said, they went from Claude Code to Claude CoWork, the idea being that, well, if you can generate code, you can also generate PowerPoints or spreadsheets, and you do that by generating the code to create that output. So that was the first extension. Now they are extending it to agents. This computer use product is kind of like an Open Claw knockoff. So it looks like the generational run for Mac Mini is just about over. Look, I think they're firing on all cylinders. My issues with them in the past were related to what I have called the regulatory capture strategy. They do want a permissioning regime in Washington for chips and models, meaning you have to go to Washington to get permission to release new models or to sell GPUs anywhere in the world. I think that's excessively heavy handed. Their motives for doing that may be pure. It may not be regulatory capture. It may be ideologically motivated. Regardless, I do think it is a form of regulatory capture because it plays into the hands of the big companies and creates moats that new entrants will not be able to overcome. So I have, let's say, philosophical objection to that part of it. But again, I'm not a detractor of their products by any means. David Sacks (00:06:33): With respect to what happened between them and the Pentagon, I'm not involved in that. I've stayed out of military procurement. In general, I don't get involved in what are called party matters. I just focus on policy matters, which affect the whole space. I saw Emil Michael making this point a couple weeks ago on our podcast that if you as a company don't want your products to be used in war, don't sell to the Department of War. It's in the name. Yeah. But if you do, you know, if if you do decide to sell to the Department of War, you should expect it to be used for all lawful uses. So I think that was a very pragmatic observation. Again, I just have to underscore this again. I'm not involved in that dispute. It's the base of a lawsuit right now, and I don't want someone trying to draw lines between dots that aren't there. So Yeah. And in fairness I'm saying out of that one. Jason Calacanis (00:07:22): Objectively, they've been treated the same as any other large language model, even though they're not fans of the administration, they're not donators to the administration. They have specifically been critical of the administration as a company, perhaps cynically, Friedberg, a strategy to get you know, it's one of the conspiracy theories here in Silicon Valley is Dario is taking the position of being anti this administration, anti president Trump in order to get all the PhDs. You know, there's, three or 4,000 of these highly sought after PhDs, and it's a way to have them, you know, vote with their presence to come work in anthropic. Your thoughts on that and then just generally their general David Friedberg (00:08:01): He actually believes it, and I think they've actually created and fostered a culture of that since the beginning. And I think that they're representing it as a branding exercise at this point, but I don't think it's made up. I think it's directly representation of the people that work there and what they believe. Jason Calacanis (00:08:18): Yeah. And it's a strategic advantage because probably of those 3,000 PhDs, 90% of them are left leaning and wouldn't want to work necessarily David Friedberg (00:08:29): with the economy. Like like most things we see in the world today, in economics today, in markets today, in business today, everything seems to be politicized, and you have a left and a right version of everything. You have a left and a right version of media. You have a left and a right version of what food to buy. You have a left and a right version of what AI tool to use. So, you know, this effectively may just be the natural manifestation in the AI market of what's going on elsewhere in society as we all kinda fracture and hustle over to our side. Jason Calacanis (00:08:57): Chamath, before I go to OpenAI and their recent moves, any thoughts on Anthropic and Dario's positioning of the company? Chamath Palihapitiya (00:09:05): Look. I think both are incredible businesses. We're in the part of the cycle where we're trying to create drama where I don't think drama exists because they're still fundamentally in very different go to market motions. Now they may converge and compete over time, but I think it's important to separate where each of them are good. From an enterprise lens, which is where I see most of the action, particularly through 8090, it's all anthropic all the time. And I agree with Sacks. My philosophical issues with the management aside around their ideology and sometimes how they use some of the capital for things other than tech and r and d. I have issues with those things. But in terms of the quality of that technical team and what they create, it's head and shoulders above anything else. It allows us to build a vibrant business. Now do I have issues with how much it costs? Yes. Do I have issues with how fast we're consuming tokens? Also, yes. But I think those will get sorted out, and those are really tactical issues. So the reason why I think we're all breathlessly trying to pit OpenAI versus Anthropic is because we want some drama. But the reality is these are very different businesses. And Nick found this tweet, which I thought was really interesting. Because even at the absolute highest level, these things are sort of presented in an apples to oranges way. And there's, like, these very basic issues of rev rec that are fundamentally different. And you may say, well, who cares about revenue recognition? While the people that are trying to write the headlines that say one is overtaking the other and this or that sort of miss the fact that they're in completely different businesses, which has guided how they even think about growth. And so if you normalize these two businesses, what you would see is OpenAI is still the overwhelming revenue generator in this space. And that over time, Anthropic is catching up. And so this is this little diagram that tries to explain this. Chamath Palihapitiya (00:11:06): OpenAI is three quarters consumer subscriptions and a David Friedberg (00:11:11): quarter Chamath Palihapitiya (00:11:11): API. Anthropic is almost the exact opposite. OpenAI is used by consumers overwhelmingly. Anthropic is used either directly or through things like GitHub and Cursor. OpenAI, as a result, has a very conservative way of recognizing revenue. Anthropics, they sort of recognize gross tonnage as their revenue. And so when you start to hear these things about like, oh, this thing is at 20,000,000,000, and OpenAI is at n billion, They're two totally different conversations. And I think right now it's more about the press cycle of trying to create clicks than it actually is about the underlying quality of each business. Both are incredible businesses as this demonstrates. And by the time it goes public, both of these two businesses will have a very clean, and I suspect normalized way of telling a story so that you can actually compare. But what I would tell people right now is everybody's running with numbers to try to create a narrative that I don't think makes sense or applies to either. Jason Calacanis (00:12:12): Yeah. And there's been a lot of strategy change. OpenAI, some people are saying, is crashing out in panic mode. Obviously, they own the consumer with chat GPT. They are the verb, like, you know, taking an Uber or googling something people, consumers always just say, hey, did you check chat GPT? But obviously, other large language models are catching up. Here's I'm sorry. Chamath Palihapitiya (00:12:35): Can we say something to that, Jason? Because I Sure. Mentor tons of startups. Yeah. Sachs has done it. Freebrook has done it. I do it. What is the one thing we tell folks? Focus. Focus. Focus. Jason Calacanis (00:12:47): Focus. 100%. Chamath Palihapitiya (00:12:48): Do one, maybe one and a half things, but do it incredibly, incredibly well. And everything else, you start to bleed and smear. What was that Brad Garlinghouse term? Jason Calacanis (00:12:59): Peanut butter. Peanut butter. Chamath Palihapitiya (00:13:00): Yeah. You smear the peanut butter too far out. And so this is a good moment, by the way, if either of these two companies are in the smearing phase to recalibrate and reset because, yeah, you just can't do everything. David Sacks (00:13:14): Speaking of smears, I couldn't help but notice that Emile Michael was smeared by an article, was it in Lever or something like that, accusing him of of having a conflict in the anthropic dissmear. It was conflict. Did you guys see that? Jason Calacanis (00:13:30): I didn't. David Friedberg (00:13:31): Yes. I saw the art there was an article that said that he was an investor in perplexity, and therefore he's conflicted in his negotiation with Anthropic. That's what the article said pretty much. Jason Calacanis (00:13:43): Perplexity is LLM agnostic. That's a stupid claim. David Sacks (00:13:47): Right. Well, it's obviously heard by people who don't understand anything about AI really. Okay. Perplexity is a wrapper. You're like you're saying, it uses multiple AI models. And I don't think they sell to the Pentagon. They're not a competitor to Anthropic. And moreover, as I understand it, Emil's ownership of shares in that company was blessed by the Office of Government Ethics. Nonetheless, I think the timing of this is very suspicious, and it reminds me of what happened to me when I started opposing Anthropic, and all of a sudden there was that hippies in The New York Times accusing me of having conflicts. And I'll just say that Anthropic may pose as this company that's on the side of the angels, but they've hired a number of very seasoned brass knuckle political operatives in Washington and, you know, members of the Biden administration. Laura Loomer actually just had a piece today on one of them. I'm not gonna rehash that. But the bottom line is this is, I think, frankly, a political operation that's willing to get down and dirty, and they're not always on the side of the angels. Think they can be quite ruthless. Jason Calacanis (00:14:49): Sachs, remember, I told you you get one Biden mention a month in 2026, so you just used it up. So I don't want any more Biden Biden Biden. He's retired. David Sacks (00:14:57): That was not a Biden mention. No. Jason Calacanis (00:15:00): But the truth is, these dipshits whoever wrote the story, the actual best feature or amongst the best features of Perplexity, which is actually got a really great coworker competitor called Computer I've been playing with. I'm not a shareholder. To be clear, there's no book being pumped here. The model council is like the greatest feature that they have. And what is really brilliant about it is you ask it a question, Sax. It will go to all three different major models. You can pick which ones including open source. Then it tells you where they differ, and it tries to figure out why they differ. This is like one of the great features of the product. I think Perplexity is like could be a a really great company as well even without a language model. But let's talk a little bit more about OpenAI here and their market share because I think you're correct, Shammoth, but they are getting off their game. Here's what's going on. Quick look at the consumer market. And obviously, they started with a 100% market share. Right? They created the category in 2023, dropped down to 85% market share 2024, 75% market share 2025. Chamath Palihapitiya (00:16:10): But by how much has the market grown? Jason Calacanis (00:16:13): Precisely. So the market is still growing. So in terms of number of searches and queries, they're obviously growing tremendously. But they have major, major competitors, and the market share is going down. I had my team over at This Week in AI do a more thoughtful analysis of where this is going. And if you take a look at this, there's three players, and I'd like to get your guys' take on this, really haven't shown up yet. Apple, Meta, and obviously Windows. All three of those underrepresented. If you give them credit for just getting, you know, a half point of market share here and starting to intercept, which I think those three players were here, will be here, they're gonna be well under 50% market share. And I think Chachi PT is gonna have some big challenges there on the consumer side. While they're doing this stuff in consumer, they are cutting back on all their side projects. So you probably heard about the Sora video app. That's been shut down. This is kinda major news because Disney was gonna put a billion dollars into OpenAI as part of it, and they had done a licensing deal. And they were gonna integrate Sora, this, you know, short video product into Disney plus. All of that's now been canceled. Chamath Palihapitiya (00:17:27): The billion is not going in. Jason Calacanis (00:17:28): The billion is not going in. The licensing deal, all of that. And then in addition, there's supposedly at OpenAI, a newfound focus on chasing anthropic down the enterprise path. So getting off their game, getting a Chamath Palihapitiya (00:17:43): little Jason Calacanis (00:17:43): discombobulated perhaps, or maybe getting focused on what matters, which is enterprise, apparently, in terms of revenue. OpenAI also offered private equity investors a guaranteed minimum return of 17.5% as part of a joint venture that would help PE firms deploy AI and ease the high upfront cost of that. So lots of questions here, Chamath. I don't know if you've tracked this PE model, but obviously, lot of people are doing roll ups in services, accounting, legal. Josh Kushner's got a big effort here. A bunch of private equity firms trying to essentially, I guess, end run the transition process and arguably what you're doing with the software factory at 8090. So your thoughts on OpenAI and this pivot and this private equity Chamath Palihapitiya (00:18:36): a lot of sense for OpenAI to focus on a few things and do them exceptionally well. I disagree slightly with your first part, which is I think that people like to make new decisions about new experiences. And I think that OpenAI has incredible consumer mind share. I just see, like, how my kids use it. They started there, and it's very hard to get them to switch even when I say, hey. Have you tried Gemini? They use Gemini. And to your point, the reason is because they stumble into it more. Yeah. But if you give them a cold navigation experience, they rely on chat GPT. And it's the same, by the way, on the other side in the enterprise. If you give us a cold problem, my default reaction would be to use anthropic. Now I actually think that that's quite healthy because you're gonna segregate the market. And I think, look, if you go into the way back machine, when we first started talking about this thing, this is sort of how we all postulated this would work, where even if OpenAI just won the consumer business, it is a multi trillion dollar company with enormous scale and value. And I think that that's okay. So I think that what they probably need to do is say, where are we the strongest? Where is there the most obvious traction? Can traction in another market like an enterprise bleed into consumer usage? If it's true, then you have to win the enterprise. I think winning the enterprise, though, is a very different game than winning consumer. Very different set of features, very different set of expectations. So I think people either have to decide you're gonna compete everywhere or pick one thing and just nail it. And if I was OpenAI and you had to pick one thing, you would pick consumer because they're the juggernaut, and they're the clear leader, and they have an enormous brand. Jason Calacanis (00:20:23): Freiburg, let me pull you into this because my base case here is that all consumer queries are gonna be free. Apple's gonna make them free. They're already free for Google. I think Meta's gonna make them free and actually have a decent product soon, and Microsoft, same thing. ChatGPT has decided to push off advertising. They were gonna put advertising in it. Remember, they got mocked by Anthropic with their Super Bowl ads. So what do you think is gonna happen on the consumer side? Consumers generally don't pay for services. That's usually five to 20% of the market is paid services, and everything else is free and ad supported. But it looks like Apple and Google are going to just let it rip. So that could take the revenue oxygen away from chat chippy tea. So what what is your thought here on who wins consumer? David Friedberg (00:21:11): I don't think that it's gonna be free. I think there's 290,000,000 subscribers for Spotify. They're paying what are they paying? $20 a month or something? Jason Calacanis (00:21:22): Probably less on average because it's global number. But yeah. David Friedberg (00:21:25): Netflix has 325,000,000 paid subscribers. And AI that can book your travel, answer questions for you, track your calendar, do your email, etcetera, etcetera, etcetera, etcetera, is likely gonna be the most valuable, call it, meta service that consumers have ever seen. Mhmm. And I think it's very likely that we're gonna end up seeing many more consumers subscribe to a consumer AI service than we've seen even with cable television. I mean, think about your cell phone. Everyone's paying $50.60 bucks a month for a cell phone. Why not pay Jason Calacanis (00:21:55): $80 a month? Chamath Palihapitiya (00:21:56): More. More. David Friedberg (00:21:56): You pay $100. Chamath Palihapitiya (00:21:57): You pay a $100. And by the way, in the pandemic, remember what we saw. The two things that people refused to cancel was not your mortgage payment or any car payment. You were willing to go into arrears and into default. The two things that people would would always keep was the cell phone number 1 and then electricity number 2. ChatGPT will be there. David Friedberg (00:22:17): So I think that's gonna be the case with these consumer apps, JKL. I think that they're all gonna be, like, ultra valuable, and they're gonna layer in services on top of them. Like, for example, do you wanna watch video embedded in your consumer AI app? Do you want your consumer AI app to, you know, do your finances for you? And it could be that the consumer AI app becomes the new platform much like the iPhone was for the app economy. There could almost be, whether it's through kind of connectors or embedded tools, an incredible ecosystem that were traditionally advertisers actually pay to be embedded and show up inside of the AI app, and the consumer can either pay for it or the advertiser can pay for it. So I think there's gonna be a very different economic model and still very early days. Jason Calacanis (00:23:00): Sacks, the numbers right now would, be more in my estimation. About 50,000,000 people subscribe to ChatGPT. They got a billion users or they're they're trended to a billion. I think they'll probably hit it in the next month or two. Certainly, they had 900,000,000,000 two or three months ago. So it's about 5%. Where do where do you think this winds up? Do you think it becomes, you know, 300, 400, 500,000,000 consumers are willing to pay $20 a month for this, or do you think it's more free and the data and the ad supportedness of it go the meta and the Google route? David Sacks (00:23:33): I think it's possible that you could get a few 100,000,000 subscribers for the premium tier. Look, I think most consumers will take the free service in exchange for advertising, right, some ad supported model, which by the way, I think could be quite successful. When ChatGPT started displacing Google for search, a lot of people were predicting the death of Google's model because who'd want to look at 10 blue links? I think that's true, but I think you can do something much more compelling in AI chat compared to just a list of links. So in any event, I think ad supported models might make a comeback here in addition to premium models. All that being said though, you know, as an investor, I always liked B2B businesses better than B2C because it is hard to monetize consumers. Their willingness to pay is not that high and they tend to have high churn rates. Whereas businesses tend to be very sticky and you can upsell them and you can get more than 100% net dollar retention year over year. So if you can make an enterprise business work, it's always been a model I've liked. But you know, that being said, obviously some of the most valuable companies in the world are consumer companies. Meta, Google, Apple, these are all consumer first companies. And look, I think ultimately both models can work. Jason Calacanis (00:24:51): Obviously both can work. Question is which one? I guess it really comes down to how motivated do we think Google and Facebook will be to build that bridge from their ad networks to their AI offerings? Obviously, is kinda MIA in all of this, but Google is not. And I think that will be the determinant. Here is David Sacks (00:25:11): Well, Google is gonna compete very vigorously for the consumer because it is existential to them. I mean, it's very clear that search and AI chat are kinda merging into one space. That means that ad links will kind of merge into being in chat advertising. So they have to adapt with that and compete for the consumer. I also think that Google is in an outstanding position to do the whole Open Claw thing because they already have access to your calendar, your documents, your email. So the agent doesn't really have to earn your trust because you already trust Google with all of your stuff. Jason Calacanis (00:25:46): Right. David Sacks (00:25:46): So I'm kind of waiting for the Google version of Open Claw because I don't really wanna share all my documents with some new service. Chamath Palihapitiya (00:25:54): They're the only one that has so much free cash flow that they can almost view it as two separate companies, which it effectively is. You know, GCP over here runs the enterprise play, and then Google consumer over here runs the consumer chatbot play, and they can keep them segregated. That's so much harder for a startup to do because on top of just keeping everybody organized, you have the financing problem of constantly having to raise more money because you don't yet have a profit engine that spits out cash. They're probably the only one. And you can see it in the valuations, actually, which I'm gonna get to in a second, but people believe the durability of Google more than they believe the durability of anything else. Jason Calacanis (00:26:33): And, Sax, I think you weren't on the pod last week or maybe two or three weeks ago, but Google has announced Google Workpay Workspace Studio to do AI automation. And it's, yeah, it's online and people are playing with it already. So they have joined the open claw party. Chamath Palihapitiya (00:26:52): By the way, Jaystal, you asked a different question earlier as well, which is around the PE story. And I think the PE story is a window into the rest of the broader market. The real open question is, what are these companies worth? There's, like, a very threshold question. It's sort of like a very important fork in the road right at the outset, which is, do you believe that we're on a path to superintelligence where everything is incredible, where there's infinite abundance, where you can magically describe things and beautiful things appear, complex things appear, groundbreaking things appear? Or do you believe that it's good next generational software? And the answer to that question is really important because we're financing things like it's the former. Jason Calacanis (00:27:33): And, GC has a big move in this. Hemant was on the program in January when we did the interview show, and he's got GC buying up and rolling up accounting firms, etcetera, health care firms, hospitals, etcetera. This seems to be part of the future of venture capital is taking AISACS and actually buying out, or I should say big VC, kinda starting to look like private equity, buying out hospitals, accounting firms, business processing firms in India, putting them all together, and then running them with AI. So any any final thoughts on that, Sachs, as a business strategy? David Sacks (00:28:11): Well, I think it's interesting. They're kinda betting on the idea that they can own the change management around AI. And this is the thing is everyone just kind of assumes that you throw AI over a wall and a business just automatically knows how to use it and drive efficiency And from what we're seeing is it's pretty difficult. Jamath, you've seen that. There's McKinsey studies showing that like ninety five percent of enterprise pilots aren't successful. There's tremendous value, latent value in AI, but it's hard to know exactly how to deploy it at this point in time. So I guess what these private equity firms are saying is that we know how to drive value from this, and if we own the business and then own the change management, then we'll be able to, you know, create value that way. Chamath Palihapitiya (00:28:55): Their business model makes solving this problem existential. And this was sort of along the lines of this essay that I wrote. Let me just give you the thought exercise and you guys react. Today we live in a world where the whole market is trying to debate what is the PE ratio that you'd be willing to pay. So Facebook is incredibly durable. I'm willing to pay 30 times. NVIDIA is really durable. I'm willing to pay 40 times. Tesla is incredibly asymmetric to the upside. I'm willing to pay 200 times. And then Caterpillar or John Deere, I'm willing to pay 15 times. I'm just using these as an example. And what it's effectively signaling to you is how durable all of these cash flows are. And all we do in the public markets when we make an investment is we're just guessing. When do the cash flows run out? And we try to say, well, here's how much it's worth, and here's how much I'd be willing to pay for today. But if you go back to this example and you say, well, what if there's this super intelligence on the horizon? I think it's fair to ask the question, what is anything worth? And what is anything worth in year ten or year fifteen or year twenty? Because if you have infinite abundance and you have all this creativity, won't all companies be disrupted? And won't we be in this constant churn of everything getting disrupted all the time? And if you were faced with that problem in the public markets, how would you react? And I think the canary in the coal mine are the sass talks. Yes, we jokingly call it the SaaSpocalypse, but I think it's much more important. I think it's a big societal question. How do you view capital markets? How do you view the health of a company in a world where we've been told there's a superintelligence on the horizon that makes everything much more fragile than it was before? And the market reaction is to put all these companies on a spectrum, and they started here in software, and they're rerating everything down. And they're changing the way that things are being framed from price to equity, to a multiple of the cash that you have on hand. And I think that has huge implications, mostly to Silicon Valley and largely to employees because we all sell the dream. Chamath Palihapitiya (00:31:11): We start a company and we're like, okay, small salary, big equity upside. But that's implicitly saying in fifteen or twenty years, this thing is gonna be worth some gigantic number. But if instead every business gets disrupted every five or six years, all you're gonna end up with is just the cash. And so what should employees do? The rational reaction from employees will say, you know what? I don't want your equity. Give me more money. And if all of a sudden you do that, the valuation multiples and the complexity changes again. So I had my team put this chart together. Okay. What is this? Took a handful of SaaS companies and took the MAG six. And I just said, okay, if you take the market cap and you divide it by the annual free cash flow, What that tells you is how many years does it take to get back if you bought a share of stock? How many years does it take from the free cash flow to come back so that you've earned back the cost of one share? Snowflake in 2023, it would have taken you almost a hundred years. And where is it now? It's been cut in half. ServiceNow, Atlassian, Workday, see it. And I think what this speaks to is the beginning of this re rationalization in the public markets of saying if superintelligence is coming, we have to be very careful about what we're willing to pay for these things. But if you look on the right hand side and the Mag seven, what's so interesting is Apple, Microsoft Meta, and Alphabet, the market has completely flipped the other way. And what they're saying is we believe that these cash flows are essentially monopolistically durable forever. That's the only reason why you would walk them up like this, except NVIDIA, which is the most unbelievably accretive, well run company, highest margins, you know, making $200,000,000,000. And they're treating it like they're treating ServiceNow and Snowflake. I just think it's so interesting what's happening. I can't explain this, but here, this data sort of shows this reset that we're going through. Chamath Palihapitiya (00:33:12): A very complicated reset in the capital. Jason Calacanis (00:33:14): Friber, what's your take on this reset as Chamath describes it? Do you think this is just a flight to the quality of the free cash flow of the mag six and just how much cash they print? And then maybe the other ones are smaller footprints, and they're just more disruptible. We had this discussion many years that Google and Apple, Microsoft, they would all be disrupted at some point, Facebook, and that just simply hasn't happened. They've gotten much more nimble at copying products or incorporating, you know, features and products into their core offering. So your thoughts. David Friedberg (00:33:48): It's probably generally correct that there will be a decline, but there's also the selective opportunity. Do you guys see the LP slides that went on the Internet from Thoma Brava's LP conference? Chamath Palihapitiya (00:33:58): Yeah. Those are great. David Friedberg (00:34:00): Nick, maybe you could find that. They kind of highlight that within the broad market scape, there are companies that are not just gonna sit idly by and let AI kind of delete their business value, but they're integrating AI themselves, and they've got high quality people to do so, and they're reinventing their product themselves. So they've already got a beachhead. They've already got customer access. They've already got enterprise users. And in fact, if they can integrate AI into their products and into their tools, there's almost this, like, selective dispersion that happens in the market. And so the winners are gonna win, I think, truly in every market, not just in software, but across every market, including in industrial supply chains on who is gonna implement and utilize AI tools and agents to do work. And it's gonna expand the work productivity of that organization, not just create new features, which is what we focus on when we talk about software companies, but really imagine a complex business being able to do 10 times the output it can do today with the same capital equipment and the same labor force. Chamath Palihapitiya (00:35:01): Friedberg, what do you pay for in a world of superintelligence versus in a world of nonsuperintelligence in terms of the durability of the business? David Friedberg (00:35:10): Yeah. It's hard to say, man. I mean, we we don't know. Right? And that's why all the discount rates are going through the roof. And that's why the valuations are collapsing because we just don't know what multiple or what discount rate you apply or what terminal growth rate or which which effectively implies. Chamath Palihapitiya (00:35:24): What do you do in your PA? Like, do you say David Friedberg (00:35:26): I don't think Disneyland is going anywhere. You know? I think there's some stuff that you could say is the counter AI portfolio. And the counter AI portfolio, I think it's like physical experiences. Chamath Palihapitiya (00:35:35): Halo. They call it halo. High asset, low obsolescence. David Friedberg (00:35:39): Okay. That's a great ex yeah. I'm not a big investor trader like you guys, but that makes a lot of sense. I mean, I think that's like, intuitively to me, that seems to be an area where people are gonna be spending a lot of time, and they're gonna they're they're gonna have durability in those businesses. I I think businesses like Nat Gas production. You know, I just bought, LNG, that Cheniere company. Chamath Palihapitiya (00:35:58): Cheniere? Yeah. David Friedberg (00:35:59): Cheniere? Cheniere. Chamath Palihapitiya (00:36:00): Even Cheniere. David Friedberg (00:36:01): I bought Cheniere given, all the craziness in The Middle East. You know, I visited there with Doug Burghum. So it was the first time I'd ever been exposed to this business, and I Chamath Palihapitiya (00:36:07): checked it out. Business. It's a great business. It's really well run business. David Friedberg (00:36:10): So I think that's got durability. Obviously, unless it gets blown up by some enemy, that that would be a problem. Jason Calacanis (00:36:16): So the Adams thesis that TK share. David Friedberg (00:36:19): Adam's real life mining is a great one. Obviously, I think the space industry is gonna be a lot bigger than we recognize. I actually think there's probably a 15 to $30,000,000,000,000 a year economic opportunity on the moon. That kind of a business, like you're gonna see with SpaceX's IPO, is gonna have an insane multiple. So I think to your point, Shamat, there's a lot of stuff getting steamrolled here with crazy high discount rates where you just don't know. And there's a bunch of stuff where the pathway over the next fifteen to thirty years is maybe independent or unlocked because of AI. And then there's a bunch of stuff that's just unaffected. That and that that starts to get a higher multiple because that's where capital starts to flow. Jason Calacanis (00:36:56): Sacks, there are probably three things that we would agree are great moats for businesses, brands, network effects, and the management team. Those come into play here as well. Yeah? David Sacks (00:37:07): I don't know if I would consider management team to be a moat. I mean, it's like Warren Buffett says that you want businesses that are so strong that they could be run by a bunch of monkeys because one day they probably will be. Jason Calacanis (00:37:18): Well, I was thinking more like, obviously, Elon and Tesla is gonna just relentlessly innovate. David Friedberg (00:37:23): It's a great point, by the way, and it's true, especially in the age of agentic AI. David Sacks (00:37:27): Yeah. I mean, look. I think though that just up leveling a bit, I think you are right that the key question is moats. Because I do think that there are still strong moats in a lot of different kinds of businesses, and a lot of them are very subtle. Like you said, some are network effects, some of them are the difficulty of producing physical world products, things like that. So there's a lot of different types of moats out there, and that is the key question as we enter a world of, let's call it, digital abundance. Jason Calacanis (00:37:56): Yeah. The the network effect of Apple's ecosystem and they have hardware. Right? And they've been just on that path of making their own silicon. That's incredibly defensive. And they have brand. Right? So that that is pretty strong for Apple. And then you'd take Tesla, the same thing. You got Elon relentlessly innovating, and it's hard hardware stuff. And then if you look at Meta and Google, these are incredible brands with great management teams My assumption. Constantly innovating. Chamath Palihapitiya (00:38:21): If I had to bet, I'm gonna bet that brands go to zero. Jason Calacanis (00:38:25): Really? Chamath Palihapitiya (00:38:25): Yeah. Because I think that when you can make things that are as good or better and you can make them in a cheaper, faster, better way, people want that abundance more than they want an affiliation to a brand. Example? So the perfect example is actually what Tesla did to BMW. You know, what Tesla did to Mercedes, what Tesla did to Porsche, what BYD and Geely have done to the car manufacturing cycle in China. This is a fundamentally cheaper, faster, better product. Yes. It's got a great brand, but nobody's gonna pay a premium for these products. The reason why y has outsold everything else is because the Model y is priced better, and it's superior on every operational dimension of comparison. That's also true for the cars in China. So I think it's the opposite. I think that brands and the pricing power brands other than maybe premium luxury goods, but even that's eroding. Like, look at the stock. Like, I don't know, Nick, show the stock chart of LVMH or Ferrari. This is not a commentary on the quality of the actual product, but what this shows an erosion of pricing power. All of these things are being eroded away. Jason Calacanis (00:39:41): Yeah. This would be the value prop. Most people in brands would just say value propositioning. So JetBlue is a value brand. Tesla Model Y, perfect example of a value brand. And if you look at Apple's recent cohort, what did they focus on? The Apple MacBook Neo, which is a value laptop, $600, $700. So they're even going down market to try to capture that value. Chamath Palihapitiya (00:40:03): And to your point, maybe the right word is abundance. Like, the brands that bring abundance, that bring more to the table than their competitors, and they are able to bring more at the same unit cost or less capture share. That's probably true. Jason Calacanis (00:40:19): You know what's interesting about that, Shama? As we open up the aperture of this, if you one of the thesis we talked about here a couple years ago, say, hey, what happens with AI disruption, job disruption, etcetera? Cost coming down on cars with model y getting cheaper, cyber cab coming in, BYD, obviously, if you go to any foreign country, BYDs are everywhere, they cost 15 Then you look at Apple making the Neo, that's a $600 laptop. Everything getting cheaper seems to be happening. David Sacks (00:40:48): I just think it's very hard to know which of these companies is gonna be disrupted. A year ago on this pod, we were saying that Google was gonna be toast, or some of us were saying it Jason Calacanis (00:40:56): because Yeah. Of the David Sacks (00:40:57): Okay. Fine. But Yeah. You know, it looked to us like ChatGPT was taking massive share from Google search, and the AdWords model was becoming obsolete. Now, because of the success of Gemini and the potential for personal digital assistants, personal agents, I think we're probably pretty bullish on that company. And look at their stock chart, it reflects that. I mean, I think it's doubled in the last year. Now, you take something like Apple on the other hand, and I'm not saying this is going to happen, but I'll just throw out a counterfactual, which is what if your personal digital assistant or personal agent gets so good that you don't need to check your phone, you just tell it what to do, and you don't need the wall of apps anymore. I mean, the way that you call an Uber won't be to punch a few buttons. You'll just tell it what to do. So you could imagine the phone operating system getting disrupted if the agents are good enough. Chamath Palihapitiya (00:41:49): You're onto something huge because what you're saying is I can confirm this to you. Eighty nine, do we sell enterprise software? I'll tell you three conversations with huge enterprises asked exactly what you just said. And we jokingly called it strangulation as a service, which is they all say the same thing, what you just said. Okay. Look. Get all this complicated UI out of the way. Get all of these products out of the way. Find a way to create a shim where I can just write what I need, tell it what I need it to do. It deals with all this complexity in the background. I never wanna see these things ever again. And that's what people want to your point. They want they wanna be able to, like, say, okay. Pay this with my Venmo or use my Amex in this situation or get me that flight in some way and have all these wonderfully smart agents do all the work behind the scenes. Jason Calacanis (00:42:35): And that's actually tracks with exactly what I've seen with OpenClaw, Perplexity Computer, Claude Cowork. Instead of going to your Notion, instead of going into your Gmail, instead of pulling up your calendar, you ask it. Hey. What's on my schedule this week? It brings it to you. So you could you could have a dumb, you know, flat terminal, you know, chat interface on the $100 device, and it would do just as good. David Sacks (00:42:58): Just to make the counterargument against myself. I mean Yeah. Even though I think that you'll just increasingly tell your agent what to do instead of be clicking around or, you know, touching the screen, you still need a a dashboard or a user interface to, like, check on it and just see readouts of information. You still need to be able to visualize it. Where is the Uber that I've asked to be sent to me? How far away is it? Still wanna see it on a map? So I could imagine that even if, let's say, you know, Siri plus plus becomes the dominant way of interacting with your iPhone, you'll still want that Apple user interface. Hard to say. I mean, I see a lot of people out there tweeting that Apple is brilliant for kind of missing the whole AI wave and not spending a lot of money on data centers or CapEx. And then there's other people who say, well, wait a second. They're they're missing critical capabilities. Then there's a question, will they be able to make deals for, you know, an AI powered Siri? I don't know. I think this is very hard to know at this point in time. Jason Calacanis (00:43:58): Alright. And we will be discussing all these hard topics at liquidity. May 31 through June 3, Shmoth. Some big announcements here from you. You have taken control. This is what happens in the Game of Thrones known as the All In Corporation David Friedberg (00:44:16): The partnership. Jason Calacanis (00:44:17): LLC. The partnership, if we can The partnership. The chaotic partnership. Chamath Palihapitiya (00:44:22): No mids. There it literally is chaos. David Sacks (00:44:26): But wait. Wait. Why are we doing this in California? I don't even think I can I can go back to the state at this point in time? Jason Calacanis (00:44:30): You can come for forty eight hours, make an appearance Chamath Palihapitiya (00:44:32): in Texas. Know there are some people David Friedberg (00:44:34): tax that fly in. David Sacks (00:44:35): Zero days in state at this point in time. Jason Calacanis (00:44:37): I love it. I love it. You can do forty eight hours. It's okay. Well, Gavin Newsom might meet you at the airport. Could get up at the airport. David Friedberg (00:44:43): The air by the way, the airport is about ten minutes from the venue. You could fly in and fly out same day, and you don't have an overnight. David Sacks (00:44:49): No. For now, is that how it's counted? David Friedberg (00:44:51): That's how it it's counted as an overnight in California. Chamath Palihapitiya (00:44:53): Head on pillow. Yeah. You can come in on Monday, then fly David Friedberg (00:44:56): out to Chamath Palihapitiya (00:44:57): fly out to incline sleep, you know, at our friend's house, and then fly back in on Tuesday and then fly back out. You'll be fine. Jason Calacanis (00:45:03): Or you could fly to Vegas, do a blackjack run, overnight blackjack run, and then you come back in the morning, we just freshen up. No. It's good. Your fresh shirt. David Sacks (00:45:11): Nice and rusted. Chamath Palihapitiya (00:45:12): Let me announce the next two speakers. Jason Calacanis (00:45:14): Oh my god. I'm so excited. But just for background, Shmoth comes into this thing. Liquidity was this little conference I did. It's now part of all in. And I start setting up old speakers. And then Charmoth goes, not good enough. I'm not showing up unless I pick all speakers. And you know what Freiberg and I did? Well, finally, this this melon farmer is gonna actually do some work. Great. Chamath Palihapitiya (00:45:32): What did you call me? Jason Calacanis (00:45:33): Did you Melon farmer. It's a when they play a Quentin Tarantino movie on, like, TV, instead of saying mother effer, Samuel L. Jackson says, Melon farmer. Chamath Palihapitiya (00:45:46): Oh, I see. Jason Calacanis (00:45:47): So this Melon farmer took unilateral control of the 10 speakers. 10 speaker slots, very coveted. Chamath Palihapitiya (00:45:54): Okay. So we've announced Dan Loeb. We've announced Sarah Fryer. Incredible. And I'm very, very, very honored and excited to announce that Bill Ackman and Andre Karpathy will also be speaking. At liquidity. Jason Calacanis (00:46:08): Four heavy hitters, six to go. Chamath Palihapitiya (00:46:11): Two more goats on the roster of goats. Jason Calacanis (00:46:13): So goated. Chamath Palihapitiya (00:46:14): And we have a handful of other Jason Calacanis (00:46:16): Yeah. It might be some surprise guests, unannounced guests show up. Chamath Palihapitiya (00:46:19): TBD. TBD. More announced soon, but we're making Jason Calacanis (00:46:24): Let's get Dario to show up. Dario, come to the show. Come hang out with that all in boys. Chamath Palihapitiya (00:46:29): I'm really excited. I think you know what Andre's gonna do? What Andre agreed to do is he's gonna do, like, five or ten minutes of slides on, like, the future of the world with AI, and then we'll do a fireside. Jason Calacanis (00:46:38): Love it. That's gonna be tremendous. And, you know, he's he's been on a heater himself with his recursive GitHub. Chamath Palihapitiya (00:46:46): Oh, dude. Auto research is incredible. And Bill Ackman has a ton of points of view on all of this stuff, so we'll get a lot of his thoughts. I wanna give a shout out to Friedberg because when we did the interview with Jensen, he's like, guys, I was like I, like, had a glass of wine on a Sunday. I, vibe coded a replacement to my HR IS system. I asked all my team to do it. And I was like, oh my god. This is incredible. So I asked our folks. I'm like, hey. I don't like the website. This is eighty ninety. And the next day, they're like, yeah. We vibe coded a new one. We'll have it up. And then I'm like, well, do you like the CTAs and how it's doing? They're like, no. No. No. No. We put it into auto research, and we doubled the click through rate. And I was like, to Friedberg's point, this was this would have been many man months, tens of people. And instead, all these recipes, by the way, and these playbooks, you know, like the person that runs Growth at OpenAI publishes his recipes. Jason Calacanis (00:47:40): Yeah. You've been claw pilled. That's it. You've been one shotted. Chamath Palihapitiya (00:47:43): It's really incredible. This is why, like, I I mean, you commented on my post yesterday. I wake up every day and my head spins. I'm like, what is what is going on in the world? David Friedberg (00:47:51): It's crazy. Like, every day feels like a new era right now. Jason Calacanis (00:47:55): Yeah. It's disoriented. David Friedberg (00:47:58): Disoriented. I I think what's really interesting is you pull what would have normally been something that's, call it, a period of time out, like a year out or two years out. And you can pull it in and say, I can get that done in three days and I don't need to hire people. All the sequencing and staging that would normally go into accomplishing something has been reduced and then the time rushes in. So all your ideas rush into you and they're all like immediately accessible. And that's why it's like so every day it's like, oh my god. It's like orientated. Jason Calacanis (00:48:25): Yeah. Yeah. Yeah. Yeah. I bought the domain name annotated.com like fifteen years ago for $4. And I wanted to create a service, like a bookmark service to my point, highlight a paragraph from the New York Times, and then you write your comments on it, saves it, and you basically have the service. And I was talking to some developer about making it, and I literally vibe coded it and the Chrome extension this past week. And I was like, okay, I've been sitting on this domain and project for like fifteen years, and I did it in a weekend. Isn't it crazy? Weird. It's like very weird. Chamath Palihapitiya (00:48:57): It's tragic. It's really It makes Jason Calacanis (00:48:58): it feel like a simulation to me that everything can just manifest itself. It's the Star Trek version of the world. Like, remember the replicator of Saxe where you just say Earl Grey tea at this temperature? That's happening in business now. You're like, CRM system, buildannotated.com, build this new website for eighty, ninety. Boop. And it's a replicator just gives it to you. It's very strange. Chamath Palihapitiya (00:49:20): I've only felt this feeling twice. Once I was on the outside looking in, I was a derivative trader in Toronto. I was looking at the first.com wave, and I was like, I gotta be a part of this. How do I get to be a part of this? And I got a job in at WinAmp, and kind of the rest was history. Jason Calacanis (00:49:44): WinAmp. The original iTunes. Chamath Palihapitiya (00:49:46): But I missed the wave. Financially, it didn't do anything for me, but I was in the right place. Jason Calacanis (00:49:52): You got to the beach with a surfboard. That's all that matters. Chamath Palihapitiya (00:49:55): Then the second wave, I crushed and then moved to mobile and social. But this wave feels like a 100 times bigger than that. Jason Calacanis (00:50:02): It's a tsunami by comparison. I I I had three of these. Chamath Palihapitiya (00:50:05): It's probably what it's like to be at Nazare in Portugal. You guys ever see those clips of, like, that crazy place where, like, there's, like, foot waves or whatever, and you're just towed in, and you're like, okay. Let's just Jason Calacanis (00:50:16): Here we go. This could end one of two ways. Chamath Palihapitiya (00:50:18): Let it go. Jason Calacanis (00:50:19): Let's do it. Goodbye. No. I it was like literally when I first saw a PC, when I first got on the Internet and then saw a mosaic, like those two moments in the early nineties, and then seeing the iPhone, I think that, like, those three moments Chamath Palihapitiya (00:50:33): was very special. Jason Calacanis (00:50:35): Alright. Rough week for Zac. Two verdicts went against Meta in two days. They were first found liable for allowing child predators to access minors on Facebook and Instagram. New Mexico jury ordered Meta to pay 375,000,000 in damages. The AG's office there ran an undercover investigation. They created fake child profiles, Facebook, Instagram, these accounts were contacted by predators. People showed up, yada yada yada. A whistleblower and former Meta engineer testified that his own 14 year old daughter received sexual solicitations on Instagram. Then on Wednesday, an LA jury found Meta and YouTube negligent for designing addictive platforms that harmed a young user's mental health. Basically, the plaintiff in this case, Sacks, said they started using YouTube at age six and Instagram at age nine. And she testified that features like notifications, algorithms made the app so addictive that it caused depression and anxiety through that compulsive use. You have some thoughts on this. And we we had Jonathan Haidt. Right? Didn't we do an interview together? Wasn't that one of the first joint interviews, free birthday? David Friedberg (00:51:41): You and I did. You and I did. Yeah. Jason Calacanis (00:51:43): Incredible book. Yeah. These things are David Friedberg (00:51:45): obviously addictive. He he had a very important point, which is to try and keep kids off cell phones and social media until they're 16, and he was kinda cheerleading this this verdict. But, you know, I'll take a little bit of a contrarian to the popular kind of sentiment on this, and I'll just talk broadly about this idea of tort litigation. Tort litigation, you know, costs our economy $900,000,000,000 a year in The United States. 900,000,000,000 a year. That's how much is spent on the litigation costs, the settlements, the judgments. It's 3% of GDP, and it's growing roughly 10% per year. And these civil penalties decided by juries, like, they're, you know, going against big companies like Meta, YouTube, but it's also food companies, restaurants, everything. Anytime there's a window to sue someone and and extract, value from them, Tort firms are all over them. You know, it's called the tort tax now in America. It's not just losses paid by the companies because fundamentally, when a big company pays out these tort taxes, they're gonna invest less. There's less R and D, less product development costs stay high. There's new fewer new product launches and there's all these crazy restrictions on stuff. So, you know, look, I I agree. Social media causes immense harm. It particularly causes harm for kids. Kids should not be on social media until they're 16. Absolutely agree. Maybe adults shouldn't either be on an you know, as adults. But fundamentally, I think there's an important question that we often ignore, which is who is fundamentally responsible for that harm? You know, should the sugar beet and sugarcane farmers be responsible for diabetes in America? Should the soda companies be responsible, the retailers selling the soda, the FDA for not stopping at all? And fundamentally, I think we have to ask the question, what role does individual choice play and individual responsibility play in this equation? If everything is a liability What do you think? Anything I I think we have to take personal responsibility. David Friedberg (00:53:37): I think the parents that are absent taking care of their children are responsible for harm to their kids. You shouldn't let your kid play with a gun. You shouldn't let your kid go to some sketchy neighborhood after hours by themselves. You shouldn't let your kid play video games a hundred hours a week. You shouldn't let your kids eat nothing but soda and potato chips. You have responsibility as a parent. And I think parents should keep kids off screens and keep kids off social media. Once the harms are known of excess use or the harms are known of exposure to this sort of thing, I think there's responsibility that sits with the parents. Chamath Palihapitiya (00:54:09): What about things like tobacco or processed food? Jason Calacanis (00:54:12): Or Yeah. This is the key. It's an option. I mean, David Friedberg (00:54:15): the same the same is true of alcohol. I mean, dude, like, alcohol is terrible for you. There's nothing good about alcohol. But I think I should have a choice on whether or not I wanna consume alcohol, whether or not I consume tobacco, whether or not I consume processed goods. And the recognition that it's bad for you should be publicized by the government, should be publicized by the government. Chamath Palihapitiya (00:54:31): Well, if I had to summarize, what you would say is product liability law makes no sense. There should be human liability and human responsibility expectations in a society. David Friedberg (00:54:41): We never talk about responsibility. We always talk about where the government failed us and where these companies us. And we never talk about what did we individually do wrong? How did I individually choose to eat 100 sodas a week? How did I individually choose to get my kids addicted to social media? Where the was I as a parent? Like, we don't talk about our responsibility. And by the way, this fundamentally addresses this point about human agency, which I think is more critical in this era than ever because AI is gonna flood us with everything all the time nonstop. What we choose to do in a world where we're already getting everything and how we choose to not take everything that's being offered to us, I think is a critical part of what's gonna distinguish human success from human failure. And it's gonna become more apparent in the future. And not everything is about liability and not everything is about the government failing us. It's about people making choices. And we don't talk about it. Jason Calacanis (00:55:32): That's What I'll my counter, I agree, What personal choice, super you're probably leaving out here, which you're definitely leaving out here, is when these companies know they're doing something damaging and they do it anyway, that was the key to the RJR The companies. David Friedberg (00:55:50): What about what about a a whiskey company selling whiskey to an alcoholic? So What about a potato chip company selling potato chips to an obese person? Jason Calacanis (00:55:59): I'll put those two aside because I don't think we've seen major cases about that. But I will say the auto industry knew for a long time about seat belts. You remember that. And they didn't deploy them. RJR Nabisco, they knew that these were addictive, and they designed the cigarettes to become more addictive, and they didn't tell people about the health risks. Asbestos, same thing. Lead paint, same thing. This has happened over and over again where corporations subvert the release of information to make additional profit. So the question here with Facebook is, did they know how addicted these were? Did they know kids were being assaulted sexually and and they could have done something about it or didn't they? And so agree that there's too David Friedberg (00:56:45): much litigation. That's absolutely true. The the kids being assaulted, absolutely true. Jason Calacanis (00:56:48): Yeah. We're good on David Friedberg (00:56:49): that one. Not releasing information about the level of addiction if they had it. That's certainly bad. Should the product be legal? Number one. And if the product is legal, who's responsible for using it? You know? And and where do we draw the line? If we don't want if we Chamath Palihapitiya (00:57:02): don't want people to make David Friedberg (00:57:03): a choice, then we shouldn't put it out there. Jason Calacanis (00:57:04): But if you as a corporation know it's dangerous and then you lean into that, if you know, as is the case with Facebook, that this is super addicting, super damaging to young girls, and then you lean into making it more addictive, and you don't put safeguards in place, and you can prove that like RJR, like asbestos, like mini amusement on David Friedberg (00:57:24): the whiskey. What's the what safeguards does a whiskey company put? What safeguard what safeguards does the casino put? Jason Calacanis (00:57:30): Hold on. You asked the question. David Friedberg (00:57:31): Yeah. Age is one. But I'm not it's not about age. Jason Calacanis (00:57:33): Yeah. Second, after age, which is what we're really talking about with kids, and and Jonathan Hate would agree that they shouldn't be using this until the sixteenth. So I think that's a perfect analogy. Age gating and then labeling. And then if they know of something that's really damaging, releasing that. So there was a whole thing about alcohol in pregnancy, and they covered up in the alcohol industry or didn't disclose exactly how damaging it was to drink alcohol on a on a fetus or a developing fetus. And then remember all those signs went up in bars in the seventies and eighties? That was directly because of that. So labeling information and age gating would be the logical things to do for social media, and that's what's happened in past. So that that's the answer to your question. David Friedberg (00:58:14): I don't know about age gating, but I think informing parents about the risks is fine. Like, that should be a responsibility. But, you know, the the tort lawyers are one of the largest donors in political elections in The United States. They donate largely to Democrats in local elections and Republicans in national elections, and then they are the largest donor class to elections of judges. And it's a business. And I think we don't talk enough about the business of court law, the business of litigation in this country. And we often ignore this question about choice. And I don't want to live in a world, J. Cal, where the government and companies are telling me what to do and what not to do. No. Of course not. My life, etcetera. Jason Calacanis (00:58:49): You know? Jump in here. Personal freedom, and personal responsibility versus, hey. Corporations may be knowingly doing David Friedberg (00:58:59): things. Responsibility, J. K. Jason Calacanis (00:59:01): Parental responsibility in there as well. Yeah. What do David Friedberg (00:59:03): you think Jason Calacanis (00:59:03): is next? David Sacks (00:59:04): Well, look, there's no question that the trial lawyers wanna turn Meta into RJR and Nabisco and the cigarette companies and try to fit their fact pattern around that. I just think activity is fundamentally different than smoking. I mean, smoking is manifestly harmful to you, regardless of what your age is. And the only reason we allow it is because of assumption of risk it's a free country. I think in the case of social networking, it's much more unclear what the harms are and what the benefits are. And I think it's much more subjective and it's much more of a personal choice for adults and also for parents. Friedberg, mean, area where I disagree with you a little bit is you said the harms of this are immense and well known and understood. If that's the case, then let's just ban it for 13 or 16 or whatever it is. But I don't think that's the case. And because it's unclear, I think it's up to parents to decide what's appropriate for their families. And at the end of the day, I think the right way to deal with this is parental empowerment. You give parents the controls to set screen time limits or to decide what apps their kids install. Now, the debate has now moved over to AI apps. And there's a lot of parents groups that wanna ban kids or teenagers from being able to use AI chat apps because there was a couple of cases of self harm. Now, my reaction to that is, look, I've got a 10 year old, And if he starts using ChatGPT to get answers to questions, I would consider that to be a good thing. I mean, I'll keep an eye on the usage, but I want him to be an AI native. I want him to be able to do research. You know, I want him to be able to know how to use these tools. I want him to get the right skills to be successful in the twenty first century. In China, they're incorporating AI into K through 12 education. David Sacks (01:00:48): Are we gonna ban it for our kids and teenagers? I think that'd be a terrible mistake. So I think when it comes to AI and AI chat apps, it has to be up to the parents because there's too much manifest good that can come out of kids learning how to use these apps. Maybe social networking is in a different category, but I gotta say, I do think that the harms have been exaggerated because the trial lawyers have an incentive. And just to give you some facts about that LA case, so just so you understand, in this LA case, they were sued by a 20 year old woman who claimed that she became depressed because of using social media, and she apparently suffered body image issues because of social media, and she was able to win this judgment for millions of dollars. Look, I think there's big causation problems with that case. In the case of that plaintiff, the evidence showed that she came from an abusive home. Her father had abandoned her. Her own mother had body shamed her. So it was very unclear where her body image issues were coming from. I think it's possible that social media contributed to them, or it could just be that social media was a scapegoat. I also gotta say that I do think it's it's a dangerous precedent. I mean, are we going to allow plaintiff's lawyers to sue Spotify because you created a playlist of sad music, and that music contributed to your emotional distress. I mean, that's kind of what we're saying. You gotta remember, these are free services that people have a choice whether to use them or not. And if social media is making you feel bad, if listening to the wrong playlist is making you feel bad, then stop doing it. But what's going on here, I think, is the trial lawyers are trying to create the next big tobacco, and their goal is to try and sue these companies into oblivion. And I don't think that's the right answer either. Jason Calacanis (01:02:37): The consensus, Chamath, is kids who use this two or three hours a day. This has been across many survey many research studies is that it's massively correlated with depression and anxiety, and eating disorders specifically in young girls. Like, if you get to two or three hours a day of this. So that correlation's, I think, pretty well established. You pretty famously said, hey, and you worked at Facebook, so you saw this coming. But I think at Stanford 2738 timeframe, you actually had some comments on this. We could either play the clip or you could just describe it, I guess. Chamath Palihapitiya (01:03:15): I said what was obvious to me then. I lost a lot of friends at Facebook when I said it, unfortunately. But, essentially, what I said was I don't let my kids use it, and I don't think that this is a constructive part of a developing child's diet. I do think that Sacks is right that I view AI chat differently. There are different guardrails that are required so that if you go down some sort of, you know, dark corner But that's possible to understand, and the product is architected in a way to create cul de sacs. So if you're thinking about self harm or you're thinking about these other things, social media is very different. It's an incredibly fast twitch algorithm, and that's the optimization. And until the incentive for that optimization changes, these outcomes will continue to compound. I think the interesting thing is that the LA lawsuit was an individual lawsuit. The young woman, I think, was awarded 3 or $6,000,000. David Friedberg (01:04:14): Yeah. Chamath Palihapitiya (01:04:15): The other one, though, that they lost this week was in New Mexico, and that was for $375,000,000. And that was more around, I think, child exploitation. Yeah. The thing that I'll note is that these trial lawyers, which I'm not a fan of either, have been trying, as Sacks said and as Friedberg said, to make these folks a target because there's so much money on the line. And they've been batted back pretty successfully. But this was the first time where they were able to navigate the section two thirty protections that Facebook and Google have typically used to protect themselves because Google was a part of the LA lawsuit. And they were able to go down the pathway of product liability language. Now to Friedberg's point, I think he's generally right. I think it's my responsibility as a parent to take care of myself and my children. But to the extent we don't change these product liability laws that are on the books, I think the door has been opened and a map has been drawn, which is this is how you navigate around section two thirty and you can get a decisive lawsuit in your favor against these large companies with enormous cash flows. And so I expect that this will be a death by a thousand cuts kind of scenario where folks are just going to rally around this. I don't think it's right, but I do think that that's the rational reaction to what just happened. I mean, look. $6,000,000 to an individual 20 year old girl or $375,000,000, these are huge numbers. And the reality is that I think we've opened the flood gates. I do think there should be a better response, and I do think that parents should take a lot more responsibility. But I do hope that these products allow us a kill switch for when our kids are under the ages of 16. Frankly, I would love a kill switch under the age of 18, and there has to be simpler ways to age validate. You know, we used to work around this thing called COPPA compliance. COPPA's bull It's a nothingburger. Chamath Palihapitiya (01:06:19): Like a six year old can vibe code their way around COPPA. So it doesn't do anything. And so age verification is completely broken. It's harder to get age verified for a porn site than it is to get unaged verified for Facebook. Jason Calacanis (01:06:32): Same word, Chamath. How'd you get around Yeah. David Friedberg (01:06:34): You know you know that. Chamath Palihapitiya (01:06:35): How do you know That's just Jason Calacanis (01:06:36): for uploading. You were uploading at the time, Shabbat. This is not your only fans. Proof of of age. David Sacks (01:06:43): We actually deal with this in our new AI framework that the administration released last week because the number one issue is around online child safety, which I think, again, is mostly about social networking, but it touches on AI, and so it's kinda gotten lumped together. And I think we're, I mean, I'm referring now to the White House has said it's willing to support some form of age assurance technology and parental controls. So look, I think there needs to be a conversation around how true it is that social networking is just a fountain of ills for young people. If that's true, then why wouldn't you just disallow it, right? But if it's unclear, and I think it's more on the side of unclear, that's just me, then it's up to the parents. And what you wanna do is, again, have the age assurance technology and the parental controls. I don't the parents decide. Chamath Palihapitiya (01:07:35): I don't think that social media is net bad, broadly speaking. But I will tell you that if my child uses it for two or three hours a day for multiple days in a row, they become retarded. Jason Calacanis (01:07:49): Yes. They act weird. Chamath Palihapitiya (01:07:51): And so I don't know what tell you except I would love a kill switch until these kids turn 18 on all these products. David Sacks (01:07:57): Well, you Jason Calacanis (01:07:58): can you should You have to deal with dopamine, by the way. Chamath Palihapitiya (01:08:00): These what I do instead is I use Apple's family sharing, but it's hard. And I'll tell you how why it's hard. Our schools give our kids Chromebooks and say, use these Chromebooks because that's the way you're gonna access your LMS, your information, your content, your homework. And you know what's an integral part of that? YouTube. And then now it becomes a backdoor. So even when we take the devices, I take my devices, we lock them down. You can't bring them to your room, the whole thing. But if they need to do homework and I catch them in a little break, I'm like, what are you doing on YouTube? They're looking at shorts. David Friedberg (01:08:38): Of course. Chamath Palihapitiya (01:08:38): That's what they do. David Friedberg (01:08:39): Yes. Chamath Palihapitiya (01:08:40): And so it is a whack a mole problem for parents. Jason Calacanis (01:08:44): I think I'll I'll just give myself the final word here on behalf of the group. It's obviously addicting. It's obviously the industry has not policed itself nor would they police themselves because they wanna get people addicted now, so they're addicted when they're adults. The rest of the world has realized this. Australia now has 16 enforced. Malaysia, 16. Other countries are right behind them, Spain, Germany, UK. And what should happen here in The United States is this should be done with the handset manufacturers. If Android and Apple showed leadership with Facebook and said, we're going to by default when you buy a phone, you're gonna have to age verify, you know, kids under a certain age, which you kinda do already when you create a family plan like you did. We could solve this problem, and then parents would opt in to giving their kids access to this. No good comes out of kids 16 using social media. And Jonathan Haidt, in our interview, said you should be putting phone lockers in, and our school is doing that. Other schools are doing it. It is the greatest thing ever. Kids Chamath Palihapitiya (01:09:49): complain school. No. And then they love it. I don't think it's that great. I'll tell you why. Our school does the phone condoms. I don't know what they're called, but, like, you put them in the the bags and you whatever. The real problem is that there's enormous social pressure when you're in high school to use these products. I'll give you a specific example. Our rule is you cannot get Instagram or TikTok until you're 16. I would love it to be 18, but we all agreed 16 and were able to maintain that rule. But then high school comes around, and I have two kids in high school now. Oh, we need Snapchat. No. You don't. No. Yes. We do. No. You don't. Okay. Great. We'll have no friends. Thanks a lot. We'll just sit here in our room dark and there and, you know, there's an enormous amount of social pressure. So when you talk to the other parents, it's like, hey, guys. Can we all agree that we don't need Snapchat? You just can't get uniform agreement across all parents because everybody views this problem differently. And so I had to change the rule. Now when you get to high school, you're allowed Snapchat, but not Instagram. And, you know, when you're 16, you get Instagram. And that's the best we could do and TikTok and all that stuff. But Yeah. It's an impossible task for a parent. David Sacks (01:10:54): I find it indispensable to be able to do iMessage with my kids, and, also, I like the location awareness. You can track location. You compare iMessage, those features, to Snap. Is it really that different? I don't think it's that different. Jason Calacanis (01:11:09): Well, problem David Sacks (01:11:09): You're gonna is there's you're gonna ban Snap? Chamath Palihapitiya (01:11:13): No. I can't. My point is I had to give them Snap. But you're right. I was like, why can't you use iMessage? They're like, dad, don't be a loser. Jason Calacanis (01:11:19): Yeah. I signed up David Sacks (01:11:21): for a snap account just so I could iMessage them where they are, where they're messaging. I prefer if they were just on iMessage, but anyway, that's the reality. So you talk about banning all these things, but again, I think you're on a slippery slope. And I gotta I gotta respond now. Chamath Palihapitiya (01:11:36): Me as a parent ban. No. I'm saying me as a parent. Jason Calacanis (01:11:38): Yeah. You're setting guidelines. Chamath Palihapitiya (01:11:40): In my house, this is the rules. When you become a freshman, I'll give you snap. And when you're 16, I'll give you Instagram and TikTok. Otherwise, shut the up. Put your head down. Jason Calacanis (01:11:49): By the way, I also have a tip for parents. You know this issue with, like, kids in headphones where they wanna be listening to stuff all the time and you have kids walking around like zombies with headphones? I replaced their headphones with over the these brand called shocks or something. It goes over your ear, but your ears open so you can listen to an audiobook or music and still be able to talk. And so since we did that, it's like much less drama around the over the ear headphone issue. Chamath Palihapitiya (01:12:17): Man, many people don't need users. David Sacks (01:12:18): Well, again, it sounds like you're exercising parental supervision. Does it really make sense that later when your kid turns 20, they could sue these companies for Chamath Palihapitiya (01:12:31): Well, to your Jason Calacanis (01:12:32): point I just think it had to reverse. David Sacks (01:12:33): Emotional distress. Jason Calacanis (01:12:34): That doesn't make sense. Chamath Palihapitiya (01:12:35): You're right. Because to your point, that girl said she was using it from the age of, like, six and 10. Yeah. That's ridiculous. Product, six, and yet that's crazy. Crazy. I agree with you, Sachs. That's crazy. Where were the parents? Jason Calacanis (01:12:46): Alright. We got time for, I think, one more topic. It'd be amazing. President Donald Trump, forty seventh president of The United States, announced his council of advisers on science and technology. It's called PCAST. Sachs, you have now am I correct in saying, moved from the czar of crypto and AI to now the leader of PCAST? Is that the correct way to frame this? David Sacks (01:13:16): Well, the president has appointed me to be a member of his council advisers on science and technology and to co chair it along with Michael Kratzios, who's the director of OSTP. I'm still an AI advisor, but I do it on behalf of PCAST now. So you remember last year I was an SGE, we got up to 130. I used that time up, and the president appointed me to this new role, allows me to continue being a technology adviser, in fact, on a wider range of issues. So before it was AI and crypto. Now it's whatever PCAST wants to study or talk about or make recommendations. I think in addition to AI, other areas that are interesting are nuclear power, quantum computing, advanced semiconductors, all these different areas. Biotech. Biotech. Biotech. Thank you, Freiburg. And we have some incredible people who are now on PCAST to kinda run with this. Jason Calacanis (01:14:07): Yeah. I'm looking at it. Mark Andreessen, Sergei, Michael Dell, Larry Ellison, David Friedberg, Jensen, Lisa Su, Mark Zuckerberg, and some other folks there that maybe not as recognizable by the audience. How were they selected? Sacks, the only criticism I've seen of this is lots of business leaders, great. Lots of technology, great, but maybe a little light on the scientists. David Sacks (01:14:37): Well, I don't know. We have people who've won a Nobel Prize for physics on there. We're talking about people who are experts in, like I mentioned, quantum computing, fusion, nuclear, biotech, pretty much everything across the board. I would say that one difference between this PCAST and previous ones is you have more doers, more builders, people who've actually created products or companies. We think that's a good thing. Why would it be a bad thing? I mean, is it a bad thing that Marc Andreessen invented the first Internet browser or Jensen invented the GPU? If you're gonna make recommendations about advanced semiconductors, don't you want to have someone who actually invented some of the key products in the space? Jason Calacanis (01:15:17): The big question, of course, Sax, is as we've seen here with Science Corner, is how do you plan on staying awake for these meetings if it's gonna be like, well, science is usually when you dig your your bio break Well, David Sacks (01:15:28): it's it's science and technology. Jason Calacanis (01:15:31): Got it. So you'll be able find on the tech stuff. Got David Sacks (01:15:34): it. And then we got Freiberg to focus on the science stuff. Jason Calacanis (01:15:36): Got it. So Freiberg, this is incredible. You've joined president Trump's administration now. David Friedberg (01:15:43): I will say I'm honored to be invited and appointed by the president, and I appreciate Sachs and Michael Kratzios. You look back at PCAST, it's kind of rooted in FDR when he formed this council of advisers on science when nuclear physics and quantum mechanics was starting to kinda reinvent what was possible in the world. We're sort of at a similar era today because, arguably, AI is reinventing what is possible in the world. And I think there's this kind of acute moment that we find ourselves in in this extraordinary race against China. I'll give you a statistic. Ten years ago, China published 50% of the number of scientific research papers in peer reviewed journals as The United States. Last year, they published 50% more than The United States. This is across all disciplines and domains, including physics, material science, chemistry, biochemistry, broad life sciences. There's this moment that we're in right now where both the world is being reinvented by AI, but there's this extraordinary race with China, not just in fundamental research and discovery, but in the industrialization of new discoveries and new technologies. You could feel it in DC this week. I was at the Hill and Valley Forum, but literally everyone in Silicon Valley, everyone in DC is is, like, absolutely honed and focused in on what is going on in China. It used to be in biotechnology, for example, that China was kind of a copycat and a me too, or they were really good, for example, in manufacturing. But it is now the case that in many subdomains, China is becoming the scientific leader in biotechnology and in life sciences. And that is a scary thought because ultimately, China could end up engulfing the entire pharmaceutical industry and basically becoming the leader in things like medicine, but most importantly, foundational things like AI. So I just wanna defend and speak for a moment about the choice about putting what I would say are, like, industrial science and technology leaders on this commission because this is a moment where there's an industrial race, not just a discovery race underway. David Friedberg (01:17:40): That's why this moment is so critical. Anyway, I'm very appreciative to to have an opportunity to serve and thankful to David for his leadership. Jason Calacanis (01:17:48): And related news, Shimabuk will be joining the president's advisory council on bomb pots and wagering. He'll be joining that. And when I saw this, Saxe, I saw p PC, and I was like, oh, is it podcasting? I'm in. Finally, I've been invited to the president's council on podcasting. So big big news coming. I don't wanna tip anybody's cards. David Sacks (01:18:08): We'll let you know when that happens. David Friedberg (01:18:09): Yeah. Absolutely. When the when the Jason Calacanis (01:18:11): president's council on podcasting emerges, me and Lex Friedman will make our way to Washington David Sacks (01:18:18): I DC wanna thank the president as well, and it's a great honor to be named to co chair this. It is, like Friedberg was saying, this is a fairly august body that goes back a long time. I think the modern incarnation was created in 1990 by George Herbert Walker Bush, so this has been around for over thirty years. In its current formulation, I think we have a slightly different take on it, which is we're gonna have these builders and doers on there. Like Friedrich said, we've got some catching up to do on our industrial policy. We have named 15 people. There's still nine more slots. We can have up to 24. So I think it's possible that at some point there'll be a second round, and if we're missing some expertise, they can be filled in. Obviously, that's up to the president. He can decide later who else might join this. Jason Calacanis (01:19:02): Alright, everybody. That's another amazing episode, the number one podcast in the world, the All In podcast. Bye bye. Chamath Palihapitiya (01:19:09): Love you, boys. Bye bye. Jason Calacanis (01:19:12): We'll let your winners ride. 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.