CoreWeave 暴跌、AI 交易裂痕、Anthropic IPO 红灯与比尔·盖茨的末日论

Jason Calacanis (00:00:00): Alright, everybody. Welcome back to the number one podcast in the world. Chamath Palihapitiya (00:00:03): Actually, you you manifested. We actually were number one. How good was that? Jason Calacanis (00:00:07): Literally number one last week. Only took a only took a little bit of time to get there. Five years. It only took five. Yeah. Five years went by so quickly. With us today, David Sachs is back. How are you doing, brother? David Sacks (00:00:22): Good. Jason Calacanis (00:00:23): You good? Yeah. David Sacks (00:00:24): Good being number one. Jason Calacanis (00:00:26): Yeah. It's good to Ben Horowitz (00:00:27): be number one. I agree. Yeah. I agree. David Sacks (00:00:30): I've done an excellent job. Jason Calacanis (00:00:31): You've done a Alright. Very good job. Now Yeah. Now we'll see who takes the most credit for the Ascension of the All In podcast. Over to you, Shammoth Palihapitiya. How's your week been? Chamath Palihapitiya (00:00:44): It's great being the position. Yeah. It's great being the best. Jason Calacanis (00:00:48): I mean, you know, we would have... Chamath Palihapitiya (00:00:49): I feel like Saxon and I would have gotten here at least eighteen months sooner had we not had to drag you on our back. Jason Calacanis (00:00:54): Oh, okay. The point guard who actually actually put put all all those those dives dives and and positioned positioned the ball everywhere you guys wanted it. Yes. You would've... You certainly would've gotten there, eventually if you guys actually knew how to set up. David Sacks (00:01:06): We be without your constant interruptions? Chamath Palihapitiya (00:01:09): Absolutely. We would have been number one sooner. David Sacks (00:01:11): You would Jason Calacanis (00:01:11): you would be where every other tech podcast is in the four hundreds. And joining us this week in replacement of UltraStar one. Chamath Palihapitiya (00:01:21): Also Jason Calacanis (00:01:22): number one. The number one venture capital firm in assets under management, I believe, certainly. None other. Ben Horowitz (00:01:28): Yes, sir. Jason Calacanis (00:01:29): Then Ben Horowitz is here. Hey, Ben. How are you? Ben Horowitz (00:01:31): I am doing swell. Thank you for having me on the show. It's great to be with the number one team. Jason Calacanis (00:01:37): Yes. The number one podcast in world. How does it feel to be on the number one podcast in the world? Have you... Has it... You know, like, have you soaked it in yet, Ben? It's just It it feels great. Yes. Yeah. Ben Horowitz (00:01:49): It is awesome. I feel bigger already. David Sacks (00:01:52): It is kind of amazing that a tech podcast could be the number one podcast on That is bizarre. Apple Podcast last weekend. Jason Calacanis (00:01:59): Big docket this week. Good to have you here, Ben. And Freiberg is busy saving the world from famines and he'll be back next week for all of you. David Sacks (00:02:09): He retired. You're right. Jason Calacanis (00:02:10): He retired at number one. Yeah. He just... He just walked off the court. That's hilarious. Yeah. Well, we've had an eventful week. We may have actually had the AI bubble, if there is one, pop or deflate a little bit. The Neo Clouds got crushed this week after Core Weave's bonds started to sell off. Could be the canary in the coal mine? We'll find out. Core Weave, Iren, Nebius, these are all the biggest Neo Clouds. They're all down about 20% as publicly traded companies. Here's your chart. Here's what happened. Just a little bit of background. On Tuesday, a bunch of people on x, including at Shamath, pointed out that the yield on some of Coral Weaves' debt had hit 15%. The yields are obviously rising because bond traders are worried about Core Weave's ability to generate enough cash to support its debt. So they want a higher rate of return, obviously. Adding to Chamot's little tweet was a friend of the pod, Elon Musk, who decided to contribute five letters, one word, that has since been heard around the world and is at the start of every story. He said, yikes, y I k e s, and that generated a bunch of headlines. Then everything tanked. Yesterday, Wednesday, we tape on Thursdays as many of you know. Core Weave, Iran. Nevis down between 1015%. Even Oracle and Dell took some strays. NVIDIA took a stray as well. They were down 3%. CoreWeave is the tip of the spear. They've raised over $35,000,000,000. We had the founder. We had the founder, Michael Entrager, on the All In podcast back in March in which he explained to me on the All In interview show what he called the box. Let's roll that tape and get Shyamot's thoughts. Is all that debt work? That is something that you guys specialize in. I'm gonna try to explain this in a way people can understand. So we go out and we find a client. Let's use Microsoft. You brought them up before. Right? Jason Calacanis (00:04:24): And Microsoft comes to us and says, we'd like to buy some ComputeView. And we say, okay. Great. We're gonna sign a contract. Once I have a contract in hand, then what I do is I create something. It's not a particularly creative name. It's called the Box. Yeah. Right? And what I do with the Box is I take my contract with Microsoft and I put it in the box. I go to Jensen and I buy the GPUs. I put it in the box. I take my data center contract. I put it in the box. And now the box governs cash flow, and it has a waterfall of cash flow that comes into it and goes out of it. And so the way it works is then I build the compute and then I deliver the compute to Microsoft and they pay the box. They don't pay me. It goes into the box and the first thing it does is it pays the data center. It pays the power bill. It pays the interest and the principal, and then whatever's left flows back to us. What's important to understand is the economics in this box are such that within two and a half years of a five year deal, we have paid for everything. They don't cross pollinate, they don't cause contagion across the boxes, they're all independent and discreet. As you do this and as you show the lenders how this financing tool and how this financing mechanism works, what they do is they continue to lend you money at progressively lower rates. Okay. Chamath, that seemed like a completely reasonable explanation of how they were running the business and that each of the boxes were isolated, but something has changed in the last six months. What is that? And what's changed here and and your insights into his financial innovations, I would say, with CoreWeave? The most Chamath Palihapitiya (00:06:07): important thing that you should always look at is how the sharps, the super smart money, prices, risk. And when you're dealing with companies like Corweave or Nebius or IRA, etcetera, that have to borrow a lot to fund these boxes, the smart money is trading what's called a credit derivative swap. Okay. This is default insurance. And these default swaps are meant to insure the bondholders against a potential default. That risk spiked this week to about 953 basis points, which it doesn't matter what that number is, but as an imputed risk, it's about a sixteen percent chance of a default in any given year. And over a five year duration, what that math implies is about a 55% chance of a default. So it's a coin flip whether they default or not. That's not what I'm saying. That's what the insurance market was saying about their debt. And I think that's something to look into because those guys, I think, are the smartest money in in all of this. So why did they do this? I started to dig into it, and here's a couple of charts that explains a little bit of what I learned. Okay. So the first thing is just a market check. You know, we've talked about this, but we have a problem in The United States, which is that The US is moving the risk free rate higher and higher. Jason Calacanis (00:07:39): Who Chamath Palihapitiya (00:07:40): is doing that? These are the central bankers. These are the bond vigilantes. These are the people that say because of inflation or other long term risks that are not getting put out of the system, we need to get paid a lot more money to own the safest riskless asset. As that goes up, basic way to think about that is as the ten year bond goes up, everything else goes up. And so this black line represents the average price that you have to pay for junk debt. And what you see is that as the ten year went up and people were like, man, the risk free rate's going up, the junkiest junk bonds need to pay more and more and more. And then the purple line here is what CoreWeave has to pay. And what you see is that it also has started to tick up and has moved up relatively violently. And so the question is why has it done that? Okay. So let's go to the next chart. Michael is right that he is in the business of creating these boxes and then putting in contracts and GPUs but he also needs to put money in those boxes. And the way that he puts the money in the box is he has to go out and borrow that money. So he goes to a lender and says give me the money and I will pay you that back plus some interest. What you see here is what is inside of the box effectively. So the gray bar is how much money he's guaranteed to get into the box. These are all the deals he sold to all of his customers. Jason Calacanis (00:09:09): These are contracts. Yeah. Chamath Palihapitiya (00:09:11): These are contracts. Now, it's important to note because I'll get to this in a second. It turns out that these contracts are fixed price. So meaning, if what you could sell in the spot market goes up, you don't really generate that revenue because you've already pre sold it at a fixed number. So Michael creates the box. He gets a long term contract, which is great because you have surety around the revenues you're getting, but he sells that. Then he goes and has to finance it. And then some of that financing comes due. He's got some bonds that are due and some loans that are due. What this basically says is at the midpoint, he has to raise another $35,000,000,000 of debt to get all of the contracts that he signed financed. Right? All the boxes financed and up and running. So he has about 35,000,000,000 of debt. He needs to raise another 35,000,000,000 of debt. But as you saw on the chart before, that's ticking up. Not... And that has nothing to do with him. It is because the broader market is essentially saying the risk free rate goes up. Everybody has to pay more because your spread above the risk free rate has to track with it. Okay. So today, across all the different pockets of money in which that they have used to fund those boxes, their average interest rate that they pay is about eight and a half percent. The problem is that in this last little while, the Sharps basically said, hold on. This is getting too close to the knife's edge. You're gonna have to pay more interest. That's what I tweeted, which was just, you know, one of the sleeves of interest. This is the GPU loan DDTL 1.0 spiked to 15%. The problem is that could theoretically now beat the rate that they have to pay for all of the future. And remember, half of it's financed, half of it is still unfinanced. Right now, these guys are at a pretty good place because they have about $7,880,000,000,000 of assets and only 35 of debt, so they're well covered. So I think that, you know, this idea that they're at risk is not on the surface true, but the reality is that they have this problem, which is they have extreme customer concentration. Chamath Palihapitiya (00:11:19): 75% of the revenue comes from three companies. Some of those companies are walking down what their revenue expectations are into the future. So you have this situation now where you have to go out and borrow at a much higher rate. You have a bunch of debt you need to go to fund the boxes, and you have a fixed amount of revenue going into the boxes. So what is the trade or what is the setup? It's basically a coin flip now on the following idea. I think the market is saying that if they are able to finance this stuff at a reasonable rate and the life of the GPUs that they buy from Jensen are longer than what they think, they're gonna be okay. But if the financing goes up and into that, you know, 10, 11, 12, 13, 14, 15% range, these guys are getting very, very, very close to not necessarily being able to cover all the obligations that they have. My team's estimates is that they're plus or minus about 5,000,000,000 away from that breakeven point. So I think that's why the CDS spiked, which then caused the bond yields to spike and caused the bonds themselves to lay off. So in order of operations, number one, I think they've created this very novel structure that everybody else has copied with the boxes. Number two, they've sold these fixed contracts. That's super smart, guaranteed a bunch of revenue into the future. But we have this situation where as the risk free rate goes up, their cost of borrowing goes up. That erodes the margin that they have. That then brings them close to this breakeven point. That causes the CDS to react, which then causes the bond yields to react. That's the negative reflexive loop that they're in. So they just have to find a way to break out of that. I don't think that they're in real risk, but as we all know, this is sort of a confidence game, and you need to have confidence that the broader market can support another 35,000,000,000 just from these guys. Chamath Palihapitiya (00:13:12): And I think that's what's gonna get figured out over the next month. Jason Calacanis (00:13:14): Alright, Ben. So you look at this situation. You've been through a couple of bubbles before, maybe have a little PTSD or scar tissue, in fact. And we saw Karweave bounce today, kinda hit a bottom, stocks up one or 2% right now after going down 10%. Mhmm. Is this acute? And then what does it mean for the broader AI trade, the AI bubble? Is there a bubble? And and we'll get into Anthropic in a minute, Sax. Yeah. So so Ben Horowitz (00:13:44): I think that the the first thing to understand is these these businesses like CoreWeave, as, you know, Chamath kind of went through some of it, but they're Rube Goldberg financial machines. They're exceptionally complex. So, you know, we talked about, okay, GPU contracts and this, but he's got data center contracts. How long are those? And and then there's... He's gotta buy memory, like, and there's memory shortage in this and... In that. So so it is really complex. The other thing... Or or the other interesting thing is, yes, GPUs, not only have they, they've been going up in duration and in price. So that's been like a big tailwind for him as the owner of such things. Jason Calacanis (00:14:27): When you say duration, you mean the lifespan? Yeah. The lifespan of years you get David Sacks (00:14:31): value Jason Calacanis (00:14:32): from that. It was three, four, five. Now it's six, seven, eight. Ben Horowitz (00:14:35): And there's a shortage, like a real shortage of GPUs with power and cooling. And and I kind of caveat that. Right? Like, which is what he has. And and this this this shortage is so bad. You know, I was speaking with Andy Jassy who runs Amazon yesterday. And I said, yeah. Like, we're out of everything, you know, till 2028. He's like, oh, it's beyond 2028 then. Like, I don't think we get stuff... Like, end of twenty twenty eight maybe. So everything else is sold out. So he he has the advantage of that he's got supply in a great shortage which is extremely different than the Internet bubble. The Internet bubble, we didn't have enough demand because because we had to build the internet, people had to get broadband, you know, you needed all this stuff people had to buy, you know, originally they had to get their browser at price, all this kind of thing. There weren't enough consumers on the internet to absorb all the bandwidth that had gotten built out, and they had a massive amount of debt, not unlike we're building today, although not as big. But but the lack of demand killed it. We don't really have a lack of demand in AI so I think the dynamics will be different. I do think like for sure if you get into a pathological debt situation that can wreck anybody. It's why by the way we're not invested in any of these Neil clouds either for that reason because that whole thing scares me having been through it. But but I would just say it's pretty complicated and it really depends on a huge number of assumptions in this very Could... Ben... Elaborate model that they have. Chamath Palihapitiya (00:16:21): Ben, but let's just... Look. You were... You and Mark were one of the pioneers, maybe the pioneer of the Neo Cloud business. Mean, you you may just tell this quick story because I wanna ask the question. LoudCloud kind of popularized this idea that that you could build these clouds and service customers this way. Jason Calacanis (00:16:42): Yep. Chamath Palihapitiya (00:16:42): But it's very interesting to me that you and Mark as the kind of primogenitor have passed on the whole space. So I I I wanna know why. Ben Horowitz (00:16:53): Well, it's because of this. I I mean, so so so it can it can end up being, like, a very dangerous arbitrage business where, you know, you can get upside down easily. And so if you look at Loud Cloud just as an example, just here here's a simple thing that happened to us. In 1999, bandwidth bandwidth was $1,500 a megabit. And you couldn't get it. It was very hard to get it. And so you had to get a long term contract, three years. By 2001, it was $50 a megabit. So if you were holding bandwidth, you you were... You you just, you and you borrowed money to get it. You're dead. Jason Calacanis (00:17:32): You're dead. Ben Horowitz (00:17:33): That, you know, that kind of thing is so out of the control of the entrepreneur and and so different than what we'd like to fund that, you know, it just... It scared it scared me to death. Now, look, I I I think the core dynamic of AI has been working for CoreWeave though in terms of that in that there's a massive shortage, not an overage of supply. So those prices don't seem to... You know, token prices have gone down, but GPU prices have not. Jason Calacanis (00:18:04): And Ben Horowitz (00:18:05): so things are going up. You know? And and by the way, data center space is going up in price because even labor to build data centers is hard. The politics are making it hard to build data centers. So the whole supply chain price is going up, and demand is not subsiding. And and so those those are very big tailwinds for CoreWeave despite the fact that the debt markets kind of independent of them are tough. Alright, Sax. Here's your poly market. CoreWeave announces bankruptcy. That's a pretty aggressive poly market. 15% chance at the end of twenty seven next year, 23% at the end of twenty twenty eight. Seems a little far fetched given the fact that they have a Jason Calacanis (00:18:47): massive demand for their equipment, as Ben pointed out. Well, you can't... Chamath Palihapitiya (00:18:52): Look. This is dumb because, like, I think Michael explained it. Like, you have this opcopropco setup, so CoreWeave can't go bankrupt. An asset level vehicle for a data center or a build out could theoretically go upside down, but that'll go into receivership and then just manage where you sell down the GPUs. Jason Calacanis (00:19:09): Yes. He he explained in that clip, he has each box independent of the neck, so not a great poly market, I think. But... Well, it is great if you bet it the other way. Yeah. Exactly. Maybe some free money there to pick up. Sacks, let... Let's level up the conversation here just outside of CoreWeave and the NEO Clouds. Massive demand, token prices coming down, but token consumption going way up. And I think one of the the silver linings here is it was a big question of how long these GPUs would last. Maybe they had three, four, five year lifespan. Now people are saying, hey. These things will keep going into year six, seven, eight for inference alone. So what's your thought here on the AI trade, the bubble as it were? Did we need to take a little bit out? Do we need to stress test it? And is that what's going on here, or is this making you nervous? Hey. We're in year four or five of this bull run and that maybe it's coming to an end and we may hit the r word. Yeah. Recession. David Sacks (00:20:11): Here's the question, J. Cal, is you got this Core Weave crash, their bonds are being marked down to 80%, it's down 15 or 20% in the last few days in the stock market. Is this just market volatility or is this the beginning of something deeper and worse, like you said, the popping of a bubble? Okay, that's the fundamental question. I would make the argument that this is just volatility, which you're going to get a lot of whenever you're underwriting to multi trillion dollar outcomes in the future based on very rapid rates of growth, exponential rates of growth, the market's gonna be super sensitive to any data points we have in the present. And so everything's gonna be exaggerated and that's why you get these big swings. Now, again, that to me is the explanation of the volatility. I don't think that something fundamental has changed. So let's talk about the fundamentals. So first question there to unpack it is has the demand changed? No. We know that the demand for compute just keeps growing by leaps and bounds. In fact, everyone is saying that they are compute constrained. I mean, you've got the biggest model companies are saying they're compute constrained. Starps are saying it. I mean, they're asking their VCs, hey, can you help us get compute? I think you've got some VCs even trying to buy compute as basically a strategy for competitive differentiation so they can help their startups. Jason Calacanis (00:21:29): There was literally an accelerator that had bought excess compute, and they were using it as a way to get people to apply for their accelerator. David Sacks (00:21:36): Yeah. So we know the demand is off the charts right now. We're seeing other indicators. So for example, old GPUs, like even the h one hundreds or the a one hundreds, which are several generations old, they're still renting at premium prices right now. They were supposed to be fully depreciated and they're not. There's actually upside surprise there to the people... To the companies that are renting those old supposedly stale GPUs. So we know the demand is off the charts. Okay. So what's the next indicator of something deeper and problematic happening? Well, the next question you could ask, well, is there a glut of supply coming onto the market? So we know the demand is huge, but maybe there's too much supply being stood up. Well, we know that's not the case because of the sheer difficulty of standing up this powered compute. And we know it's not being brought onto the market too rapidly. First, you just have all problems with atoms, building things in the physical world. That's hard enough. Elon basically has said, look, this is a really difficult problem. Even our rocket scientists find it challenging to stand up gigawatts of new powered compute. And then we have all the regulatory headwinds. Right? Local communities are not racing to give out new entitlements around this. So if anything, we believe that there's not a glut, it's the other way that there's enforced scarcity. So then the question becomes, well is there some sort of execution problem with Core Weave? You know, are they too slow in standing up their compute? Have their costs gone through the roof? Look, there's some indication that maybe their costs are a little bit higher, that maybe it's a little slower. But at least on a reputation basis, they are believed to be excellent at this game of standing up new compute. So then the question was, is there some sort of credit problem? You know, on the credit, like the founder Michael was saying with the boxes, You know, when you go to a lender to basically back the build out of let's say a new data center, you're not relying on the unsecured credit of CoreWeave to make that loan. You're backed by the credit of the tenant who's entered into a five year commitment. David Sacks (00:23:44): So it could be a Microsoft or whatever. So the creditworthiness of that particular project, of that particular box, is going to depend more on the credit of the tenant than on the credit of CoreWeave. And then behind that, you've got the GPUs themselves, which, you know, it's basically asset backed financing. The lender is secured by those GPUs. And we just talked about how, if anything, there's upside surprise on the depreciation cycle of these GPUs. So my impression is that there's not a deeper credit problem in terms of financing these projects. What happened, though, is the repricing is of CoreWeave's unsecured obligations. It's true that the market has discounted them by 20%. They're in distressed territory. That has brought the implied coupon of those bonds from 9.6% to around 15%, but that does not increase the cost that CoreWeave is paying. CoreWeave is still paying their 9.6% coupon. It's just that the secondary market has repriced the value of those bonds to an implied coupon. It changes the future debt. Yes. It could definitely raise the cost of future debt, but I don't think they're funding these new boxes with unsecured corporate notes. I think they're funding them with asset backed financing Yes. And Jason Calacanis (00:25:00): the debt There's two things that go in the box. The contract goes in the box, the GPUs go in the box. So you got two things, and these are credit credit worthy organizations who pay their bills like Microsoft. David Sacks (00:25:09): Yes. Now, if I were a lender on those projects though, I'd be looking really closely at the credit of who's the customer basically for that compute. Obviously, if it's Microsoft or Google or a couple other companies Right? That feel really good Jason Calacanis (00:25:21): That may David Sacks (00:25:21): only have start up, I don't necessarily Jason Calacanis (00:25:23): feel David Sacks (00:25:23): so Jason Calacanis (00:25:23): good about those. Chamath Palihapitiya (00:25:24): Have three customers that represent 75% of their revenue. Ben Horowitz (00:25:27): Yeah. And they're all investment grade, like the big customers. So The thing Jason Calacanis (00:25:31): I'll add to this is, you know, you explained quite clearly, Sax. Hey. The the GPUs are worth something. The data centers are worth something. Ben, you pointed out the power. The HVAC is worth something. The tokens are worth something. And then if you look at startups, you know, which is where I spend all my time is the early stage startups, They're crushing it in terms of raising capital, getting customers, and we've never seen revenue ramps like I'm seeing in startups today. And I think, Ben, you'll probably back that up. The the revenue ramp of startups today is distinctly different than the SaaS, you know, triple triple triple double double double. Now we're at, like, hey. Are you doubling every quarter or not? And then if you're not doubling every quarter, like, what are you doing? Why are you not growing faster in this age of AI? So the ups show particularly strong. So maybe this is just the market overall saying, hey. Let's test this. You know? And and maybe there's some indigestion there. Or, Ben, is it that the world is running out of money and people have placed their bets already? And then what would that say for the venture industrial complex of which you are, you know, a significant player at scale? And what would that say for the IPOs, the two biggest in the history of business and and public markets, Anthropic and OpenAI? Are we running out of money to allocate to AI? Ben Horowitz (00:27:01): I don't think so. Jason Calacanis (00:27:02): You Ben Horowitz (00:27:03): know, we've kind of never had companies that have grown this fast, gotten this big, and so we've never asked that question before. We never said, or at least not in my lifetime, does the world have enough money to finance these things? Which is a crazy question but like relevant. But I I I don't think... For sure with respect to the Anthropic and the OpenAI IPOs, I think... My belief is those are gonna be fine. Like like, the the price, you know, will it be 2,000,000,000,000, or will it be 1,750,000,000,000? I don't know. But I I think it's Jason Calacanis (00:27:43): definitely billion or 100,000,000,000, whatever they raise. That's not a giant... That's... It's a big number, but it's not an unprecedented number now because SpaceX just did it. Ben Horowitz (00:27:53): Right? Whatever you're holding in the equity markets, whatever you're holding, OpenAI and Anthropic are threats to that. Almost... Like, there's almost nothing that you can hold in a portfolio that those two companies don't threaten. Chamath Palihapitiya (00:28:07): Yeah. Agreed. Ben Horowitz (00:28:08): And so I'm not worried at all about the demand for those IPOs. Jason Calacanis (00:28:12): So Ben Horowitz (00:28:12): you have to own those they Worst case is every Jason Calacanis (00:28:15): single company in the world because they're selling intelligence broadly and every company is based, Shermath, on intelligence. Therefore, it's it's that disruptive. Yeah, Shermath. Chamath Palihapitiya (00:28:27): You can underwrite it as a defensive hedge because I think Ben's right. It's like if you own a health care company and you've thrived on the opacity of the health care infrastructure, OpenAI is a threat to that. If you own a bunch of workflows that have been rented to people as SaaS, theoretically, OpenAI and Ant are a threat to that. So at a minimum, it is sort of defensively positioning your portfolio. So you kind of have to because there is not much other investable stuff in AI to be long AI other than those two companies, and so they'll get the lion's share of the interest. I think the question generally is if the bond market walks the tenure up to five and a half and 6%, which has nothing to do with AI, it has everything to do with debt to GDP and a bunch of other factors in broad based Western economies, Any business model that thrives on a financing spread gets cornholed. Any and every all of them. It just... It will it will not matter when the ten year is at 6%. It won't matter. Doesn't matter what you do. Doesn't matter what you claim to do. You're gonna get run over. You're gonna be roadkill. As long as we can keep that from, you know, happening, we're gonna be fine. So, like, what's the what's the most important way, I guess, post these midterms to keep the party going? You have to really start to focus on deficits, and you have to find a fair trade where the bond market backs off. And I think you can see it in the tape, meaning if if we start proposing huge spending programs, they're gonna walk the tenure up. That then has a negative cascade to everything. If, however, the posture becomes much more about keeping everything calm and, like, let's just tone things down and let's find the waste in the system and squeeze it all out, I think people will respond very favorably. Chamath Palihapitiya (00:30:20): So that's really where it's gonna come down. The last thing I will say is these are like Achilles' heels, meaning like, I think Sacks made an incredibly eloquent case, so did Ben, about all of the asset value that's getting built up. But just like the great warriors, you just slice the Achilles tendon and they just crumble to the knees. I just wanna point out this is that thing. There is no other thing, meaning all this other stuff is complete goodness but the fact that you need to finance these things in a variable rate model as a spread to the risk free rate is the big problem in these businesses And you need to essentially have Microsoft, Google, Meta, and NVIDIA backstop all of this in a worst case scenario because that's the only way you can withstand a one or two year correction in this market. I'll tell you the other big piece here that might be a bigger threat, Jason Calacanis (00:31:17): Sax, is the deflationary nature of this AI, the super intelligence rather movement. We talked last week about people decompiling, Photoshop going to zero. Now this week, Hood Warfare came out. It's basically people are making platform level games for $5. It's so deflationary. There's an Eleven Labs competitor that came out that's incredibly cheap. And then every single open source model being hosted and Elon saying, hey. We'll just route you with our orchestration level to the best model open source or not. How how big of a how big of a headwind do you think that is, Sax, to our industry? Just the commodification and how rapidly things are just having 90% of the value removed from them. And is that gonna stop, or is it gonna accelerate? It feels to me like the deflationary nature of this software AI superintelligence is unique and different than anything we've ever seen. People are just able to rip and ship code so fast, it makes me wonder like what is the margin of software in the future? David Sacks (00:32:29): Well, we want everyone to be able to create software, especially bespoke software, which is really this new category. Right? That is gonna be a huge driver of productivity throughout the economy. I mean it's not all just like a zero sum games or disruption. The value of these coding assistants is that now you can create software for highly bespoke use cases. Whereas software used to be created really just for the mass market. I mean, the reason why Photoshop's a successful product is there's a lot of graphic designers who need to use that product and really the only software that could ever get created in the past was when there was a large potential customer base for that. Now we're getting all these cases where enterprises can create software just for their particular use cases. And in fact, in a way that's what agents are, is that they're bespoke software programs to solve a particular task. Jason Calacanis (00:33:21): But if people build those in house, SACS, and they're based on open source, you don't need the other piece of software that it's replacing. So isn't that extremely deflationary? David Sacks (00:33:33): Maybe there's some substitution away from established but I think the important point is just there's this vast new category of software being created. I mean, the amount of code that's being created now is orders of magnitude already bigger than it was before coding assistance. So again, people just tend to think in terms of these zero sum games and who's gonna be wiped out or eliminated. But the really important trend here is just that there's gonna be a lot more software created in the world for a lot more of these bespoke use cases. Enterprises are now able to create software for a much broader array of purposes. There's companies that never would have been software companies before that are now creating their own software and they're hiring coders basically to manage the process. By the way, I think this is a really important point around. Remember with the whole jobs apocalypse, the first job category that predictors of the apocalypse were saying would be eliminated were software coders, obviously. Yeah. Because why do need that more? Jason Calacanis (00:34:27): Became a developer and now everybody's sharing code. Yeah. David Sacks (00:34:29): Now we're seeing that actually demand Jason Calacanis (00:34:31): for David Sacks (00:34:31): coders is increasing even though 95% of the code's written by coding assistants. And the reason for that again is... Well, first of you sold that 5% and that 5% is of a much bigger pie and you still need someone who could look under the hood and manage the whole process and they need to be Right? Somewhat They have to And be maintain it. Yeah. So they may big piece. Yeah. In any event, look, I I think this whole, you could say, new category of bespoke software created by the proliferation of coding assistants and agents and all of that is just... I think it's gonna be just a huge driver of productivity throughout the economy. And is that broadly deflationary? Probably in a good way because it means that we can do more with less and we need to burn prices Jason Calacanis (00:35:13): for the country. Right? That everybody is gonna be more productive, Ben. But do you worry about our industry, the venture industry? And we have these great hits. And then the second they become a hit, somebody can decompile it, create a competitor, and ship it very quickly. It feels distinctly different in this, you know, boom to previous ones. So do you think this is gonna be a challenge for us to get DPI for our LPs? Is this going to be a challenge for the sustainability of great software fran... Franchises? Ben? Ben Horowitz (00:35:54): I I can... Yeah. Look. I I don't I don't think so. Like, this this has been the ongoing prediction starting with the SaaS pocalypse. Yes. But I think that David... David's right is that what's happening is prices... Software prices will definitely go down, but the amount of software is going way way up. It's the it's the Jevons paradox of software. And, you know, these companies end up doing other things more than just the software. So we have this on the Internet. The Internet information's gonna be free. That's it. All these industries Chamath Palihapitiya (00:36:30): are Ben Horowitz (00:36:31): dead, but they kind of reemerge in a different way. And I think that that's very likely what's gonna happen. So from a start up's point of view, you've got to evolve. And so, you know, eleven Labs does many, many things to make their product better over the years since, that's the example that you brought up, and they've got, like, licensing agreement, like, Burt Reynolds will read you a book or this and that and the third. So they're doing more than just software, because they can, because the software is easier to write. The model, they're training on very, very, very nuanced cases, which is why, you know, movie debbing is so amazing now where it sounds like they're just acting in a different language. So there's more to it than just, you know, speech to text or this and that. And, you know, those... So I think the products are gonna have to get way better, and the startup's products will have to get way better, which is amazing for everybody. And then that's where the value will be. Jason Calacanis (00:37:30): But, Ben Horowitz (00:37:31): yeah, just like writing software is not gonna have any more value than like publishing a magazine. The motes So creating massive competition. Yeah. David Sacks (00:37:41): Yeah. The motes will change. You know, you gotta think about what are the motes in a business. Data motes are a big one if you have data that other people don't have. If you then build a user base because your model is catering to a particular vertical and now you're getting all those users and you're getting their feedback, maybe that becomes a, you know, Jason Calacanis (00:37:59): a focus. The feedback loop, David Sacks (00:38:00): the reinforcement learning becomes moat. Startups are building businesses based on that model. The paradigmatic example is is like a Harvey or something where they get all these law firms on board so they then get access to their data and then their usage and then they train their own models. Jason Calacanis (00:38:15): Yes. Gets sharper each time. David Sacks (00:38:17): Go ahead. And cheaper and more custom. Jason Calacanis (00:38:19): Yeah. Chamath Palihapitiya (00:38:19): I'll give you the ultimate moat. I think power will be the moat. I think that you can build the most fantastical things in the world and you're gonna see people on the dry docks basically trying to hitchhike to get power. And the reason is because we are so constipated in The United States. A, we're already behind and we're in a massive energy deficit, an electron deficit. We are, by 2050, about 1.4 terawatt hours short, which means about six Californians worth of electricity. That's their starting point. Then when you layer in, and that's with everything that we've planned to build being built on time and on budget, which we know is not gonna happen. Jason Calacanis (00:38:54): Then on top of that, you have all the load growth that theoretically happens when you actually have all these next abundant experiences. Chamath Palihapitiya (00:39:01): I made this statement this past week and I'm just gonna double down on it. I don't think you can work through the hyperscalers anymore because of this one issue. So let's just say you're a big mainline, you know, G SIB bank. Right? JPMorgan, Citibank. Could you imagine that the reason why you can't service your customers is because the underlying cloud that you use can't actually secure and grow enough power? And so back to the other moat that I think is really valuable is to own the land, the power, and the shell because it's such a constrained asset. Back to what Andy told you, Ben. It is so critical and it will stop the best experiences on a dime. So if you're a startup, I actually think the bigger problem is you'll go to these clouds and be like, great. I'm ready to launch this whiz bang product and they're like, suck it. We have no capacity for you. Jason Calacanis (00:39:50): Yeah. Such a I Ben Horowitz (00:39:52): very much agree with that, Lasse. Yeah. I think that's right. By the way, Jason Calacanis (00:39:55): what an incredible opportunity that's now been lost in The Middle East where Saudi, UAE, Qatar, they were all massive producers of oil, able to do top down planning, half day on defense. And now they have bombs going off blowing up airports. It's such Chamath Palihapitiya (00:40:11): a With drone defense, you can't go there. Without drone defense, you can't Jason Calacanis (00:40:15): go there. Exactly. And drone defense isn't gonna work. All... One drone gets through, your data center's fried. Well, I mean, does looker? David Sacks (00:40:23): I make one last point on the whole data center thing? Ben Horowitz (00:40:25): Please. David Sacks (00:40:26): So there's one metric that the more I think about it, the the one metric I would really keep an eye on is payback period. To me that's like the North Star metric here. So CoreWeave says that its payback period is two point five years. Their typical deal is five years. They pay back within two point five years. SpaceX, they pay back in roughly one year. That makes sense because I think that SpaceX is monetizing at about 50,000,000,000 per gigawatt and CoreWeave at about 20,000,000,000 per gigawatt. And the reason for that is because SpaceX is basically getting spot. You know, they're doing these deals that can be canceled by either side within ninety days. So they're basically getting spot minus 90. Whereas Corweave is signing up for five year commitments so it's, you know, contracted way in advance so they're kind of getting this contracted price. And what's happened I think over the past year is that spot has moved way up. Way up. Because again, of the scarcity, right, and the demand is so off the charts. So in any event, payback period is really critical. And as long as the payback periods are really short, I don't see how these companies can lose or at least you'd have to be really incompetent to screw it up. Right? Like, you're making these big capital investments, but if you're getting your money back in one year or two and a half years, you know, that greatly reduces risk. Jason Calacanis (00:41:41): Airbnb in Paris or something. Like, before before the rise, like, the payback period is so quick for these if you if you got your orders in early. David Sacks (00:41:50): Yeah. And that means you're paying back the debt quickly and so the debt's rolling over more quickly. It just reduces everyone's risk. Now if that payback period starts taking longer and longer, then I get nervous, right? Because that magnifies the risk. It also means the economics aren't as good. And the question is, well, why would that payback period take longer? And it could happen for a bunch of reasons, right? Like if the demand goes down and so now the offtake's not as good, the spot price Ben Horowitz (00:42:12): Demand's David Sacks (00:42:13): not going down. There's execution problems. Right? It takes you longer to get the capacity online, so, you know, the payback gets delayed. There's a lot of reasons why payback could take longer and longer. But as long as payback remains as short as it is today, to me that that would be like the one metric I would really keep an eye on. Chamath Palihapitiya (00:42:29): The other thing that the big off takers will make you sign up for is what's called liquidated damages. There's really, really complicated language and penalties that are about what happens when you can't service the data center. So I think that's another risk. There's been a couple of these guys that have lost, I'm not gonna name who they are, but that have lost their investment grade rapper from the big boys because they just up, Saks, to your point, and couldn't manage the data centers because the complexity is is going up. And the complexity goes up because the chips run hotter, there's more energy, there's more electricity, there's more... It's... So all I'm saying is I think the Sharps may be wrong, and they usually are wrong when they're buying these credit defaults. But, you know, when your expected value is a coin flip in a five year window, that's like scary town, think. That needs to get managed very precisely. I would just find every way possible to nip this in the bud if I was CoreWeave. David Sacks (00:43:18): And then Well, how do you how do you think they can do that? How can they nip it in the bud? Chamath Palihapitiya (00:43:21): I think that they have to cancel some of these contracts and move to spot. That's the simplest thing that they could do. If they could basically pay a penalty and get out, they should run the Excel right now on let me just like take this gigawatt, put it on spot because you're talking about as you said, a $20,000,000,000 spread. David Sacks (00:43:37): But this is where Elon has a big advantage because Elon has independent sources of financing to finance that gigawatt of compute, whereas CoreWeave needs that five year contract to bank the financing to then build that that capacity. Chamath Palihapitiya (00:43:50): Well, thing is like, think that NVIDIA probably is okay with Cori selling spot and not doing a multiyear offtake for a big hyperscaler or a foundational lab. So I I would just run the math and try to figure out... Because they've only built half the capacity that they've contracted for. So, you know, let's just say they built two out of the four gigawatts. They gotta figure out a way very quickly to just... Because to your point, the spread between their fixed contracts and spot is so extreme that you're leaving 20 and 30,000,000,000 on the table, and so now you're within plus or minus 5,000,000,000 of violating a covenant on your debt, don't be there. David Sacks (00:44:23): Yeah. It would improve their economics a lot. Like, if they had a gigawatt of compute they could sell at Spot, that... You're right. That'd be Jason Calacanis (00:44:29): like David Sacks (00:44:29): Game over. Jason Calacanis (00:44:30): Billion David Sacks (00:44:31): Yeah. Right to the bottom line. Chamath Palihapitiya (00:44:32): Right to the bottom line. Ben Horowitz (00:44:33): I I think that the the challenge with that is the hardest people to get spot pricing from are the investment grade customers. Like, those are the ones that won't do it. Right? Jason Calacanis (00:44:44): Also Yeah. Because they also have a war chest of money. Could... They'll stand it up themselves if it's too expensive. David Sacks (00:44:49): Yeah. This narrative could change a lot. Right? If like Spot becomes imperiled, then... Jason Calacanis (00:44:54): Yeah. The guarantee contracts become great. David Sacks (00:44:56): Yeah. Jason Calacanis (00:44:56): Yes. I think we're capacity constrained enough through the entire pipeline. Chamath Palihapitiya (00:45:00): Like, you to have think, NVIDIA has done an incredible job. Okay? Because if you look one layer beyond NVIDIA, all the packaging capacity is them. All the HBM capacity is mostly them. Like, even Google tint cups for memory right now because NVIDIA has clogged it all up. So they they are Jason Calacanis (00:45:15): in complete ball control here. So it just creates... The setup, I think, is that spot where it remained highly elevated for a while. Crazy moment in time, and, we got a double bang this week on top Chamath Palihapitiya (00:45:27): of Sorry, Jason. Just the last thing. But I'm telling you guys, you gotta get long energy. I think startups need to find a way of, like, cobbling together. If you don't have access to electricity, you cannot go through the hyperscalers is my prognostication. Ben Horowitz (00:45:41): Stop stop the war Jason Calacanis (00:45:41): in The Middle East. It solves a lot of problems right off the bat. If CoreWeave wasn't enough, AI sector got double banged on Wednesday after Anthropic Investor Day numbers got a mixed reaction. Anthropic is planning on going public around Thanksgiving. Polymarket says now 74% chance they go public this year, down from 95% in early September when they said everybody was gonna die from their software. Runs up. The company presented the potential... I mean, you can't make this stuff up. Presented potential IPO investors at their headquarters in San Francisco. Now this isn't the bugged headquarters of OpenAI. This is... They swept the room for this, but we still have the data. Q three revenue, $16,800,000,000. Think about that, gentlemen. Over 5,000,000,000 a month already for Anthropic. Net revenue retention was 900%. That means customers spent nine times more than last year. Pretty good. Sachs on a SaaS front. They also said they are free cash flow positive, adjusted gross margin 85%, adjusted operating margin 11. No word on how the adjustments were calculated, but here's the big one. ARR estimates range from 70,000,000,000, which basically be flat since July, which is a bad sign, to over a 100,000,000,000. So there is some hand wringing about what numbers are correct here. They did not disclose these numbers. These are just secondhand estimates by investors who might be a little leaky. Obviously, Anthropic is targeting a ginormous, unprecedented valuation of 2,000,000,000,000. And that is on them growing violently, not growing slowly. Bet you might have the other question. Chamath Palihapitiya (00:47:32): No. I just said, is Andreessen Long one of the foundation model companies? Like, the... One of the two big ones? Ben Horowitz (00:47:37): We we have a lot more stock in OpenAI. Jason Calacanis (00:47:41): OpenAI. Ben Horowitz (00:47:42): Got it. I I I would say, you know, philosophically, we're long both of them, I think. Jason Calacanis (00:47:46): You're long both of them. Which is kind of a strange thing now, Ben. You... You've gotten so big. You consistently have bets on the number one and number two player. How is that working out in the market? Ben Horowitz (00:47:59): Well, now we... I mean, I I I would say that there are many investors in both of those things. So I I think, like, in venture... We call it venture capital, but venture capital has subsumed a huge part of what used to be the public markets. And I would consider both OpenAI and Anthropic to be in that category. Where they're not really venture capital, where you're worried about your venture capitalist being invested in competitor because they're gigantic. You know, they're they're they're not a round, b round companies anymore. So that that part of the market, I think people... You know, when you're raising by the, you know, tens of billions of dollars, you don't care where the money is because as long as it's green. Like, they're just You need everybody. Yeah. Yeah. That that what Jason Calacanis (00:48:51): used to be mezzanine financing, pre IPO financing, yes, there's less hand wringing about the conflicts there? Ben Horowitz (00:48:58): Yeah. I wouldn't even call it mezzanine financing at that level. I think, you you know, with... This is just like we did a lot of regulatory moves in the late nineties and early two thousands, which really made the public markets much less attractive for companies, and the private markets grew to absorb that business, which has been, I think, very bad for America. It's increased the the wealth gap and so forth, but it is what it is. And so I I wouldn't consider that. That's very different than, like, investing in two a round companies doing the same thing. Jason Calacanis (00:49:36): Yeah. Still think that's The the rule that's saying is distinctly different than anthropic OpenAI at 2,000,000,000,000. Yeah. Understood. Ben Horowitz (00:49:44): Exactly. Jason Calacanis (00:49:44): One is a reaction to the other, in fact. Right? Anthropic was a reaction to OpenAI. Let's call it what it is, rug pulling Elon on it being a nonprofit and and becoming a commercial enterprise. We'll leave that on the side for now. What are your thoughts on this anthropic IPO? Ben Horowitz (00:50:04): Ben? Well, look. I I I think that you hit the the thing that's kind of causing the consternation, which is, okay. Growth has slowed from q two to q three by a lot in terms of revenue growth. And then we don't know what the a r... Or the, you know, recurring revenue number is. And so people have questions about how fast the thing is growing. Having said that, 16,000,000,000... 16,800,000,000 in the quarter? Chamath Palihapitiya (00:50:33): Crazy. How how long has Ben Horowitz (00:50:36): Amtrak been selling stuff? You know, three years? Jason Calacanis (00:50:38): Crazy. Yeah. Ben Horowitz (00:50:39): I mean, like, it's just so absurd how good this thing is that... Yeah. So I think the IPO will be fine, like, whether it's, you know, you wanna be in at 2,000,000,000,000 or 1,900,000,000,000 or 2,300,000,000,000. I think that's what a lot of the debate is about. And then, you know, anytime there's negative news on the big labs, then everybody in the supply chain, you know, gets hit with that. And and so that's what's going on now. But I... You know, like I think big picture, it's a very important company and it's got a very big IPO. 30 times price to sales ratio sacks and this headwind of open source and enterprises moving to that. Most businesses don't need to solve the last seven math problems in the world. Could be slowing. We could have Anthropix revenue slowing. Let's say they are slowing. What do you think happens to this IPO and the broader AI trade? Now we have two things as examples of AI trade headwinds, superintelligence headwinds, whatever's happening at CoreWeave and whatever's happening at Anthropic. David Sacks (00:51:53): Well, look, you had this Investor Day at Anthropic the other day and I think some of these numbers that are coming out are kinda leaking from that, maybe. We don't know. We don't know what's true or not. Think the participants have to sign NDAs, so I don't know if you can completely trust what's floating around x here. I think we'll find out in due course. I mean, if this company is IPO ing next month, then we'll find out the actual numbers. I would say that the... Let's just say the body language coming out of the Investor Day was pretty strong, at least from what I've heard that I think the investors like what they heard. These are like big public market investors. Who knows? I mean, everyone's kind of talking their books, so it's hard to know exactly what's true. But look, I I generally think that Anthropic is a strong business. I understand that there are some risks to it, but it's not like it's completely risk free. But it's a pretty young business, so you'd expect that. But overall, I think it is set up to have a strong IPO. And look, wearing my hat as an investor, I think it's a very impressive company. Which is all the more reason why I find their attempts to kneecap open source through their incessant fear mongering campaigns and regulatory capture to be so distasteful is they don't need to be doing that. They're a very successful company. They've got a very bright future. I just find it kind of offensive that they keep trying to do that. There were two examples of it just in the last week. Do you guys wanna talk about these? Jason Calacanis (00:53:19): Oh, we're doing exactly... Are we doing SIOP David Sacks (00:53:21): Corner? Jason Calacanis (00:53:21): SIOP Corner stuff. Let's circle back to SIOP because I wanna get you, Chermak, to comment on, hey. You thought maybe it's gonna be a trend? David Sacks (00:53:28): Back to that. There are a couple We of we have an an announcement here. We will get Jason Calacanis (00:53:31): back to Ben Horowitz (00:53:31): SIOP corner here with your toaster, Robin. I'm excited to get to SIOP corner. Jason Calacanis (00:53:36): Wait. You will. We got you a tinfoil hat. It's it's just that they're on the side of your AI slot background. So, Chamath, you said 1,000,000,000,000 for Anthrop a couple weeks ago. What are you thinking here? Do you think they have significant headwinds, or do you think this is gonna be a blockbuster IPO? Where are you at here in October 2026? Chamath Palihapitiya (00:53:57): No. My my comments are not because I'm I'm negative on the company. I think I was... I found the revenue breathtaking. I mean, it's incredible. Like, 16,800,000,000 in a quarter for a three year old company is just ridiculous. You've never seen anything like it. I don't know how to process it. I think their products are exceptionally good. I think they're doing the hard work and, you know, to OpenAI's credit, they are as well of walking down the price curve so that they're less and less at risk of open source. I still think that there's a bunch of cannibalization that has to happen on the on the token side. I also think the big thing that has to happen in AI is we're we're effectively like in 1999 and 2000 in the Internet media world where everybody just works on CPM. You know, that time it was cost per thousand ads. Right now, it's cost per million input tokens. We will move to CPC and CPA. Right? And Yes. So when Google invented and scaled AdWords and AdSense, the market exploded. Jason Calacanis (00:55:00): Right? Because we went from buying a thousand ads to just getting an outcome. Chamath Palihapitiya (00:55:03): Right a now we million tokens, we will eventually move to an outcome. And I think when that happens, this market will just go absolutely batshit crazy. So these guys are gonna do great. They're a great company. Here's my very specific thing about why I think they should price it to clear the market for $200,000,000,000 and I'm very specific about that number. They need, in my estimate, at least 200,000,000,000. And I think if you wanna be super safe, a 250,000,000,000 gets the job done. And, again, what does the price need to be to attract that incremental dollar off the sidelines? Can they raise 80,000,000,000 in an IPO at 1.7, eight, or 9,000,000,000,000? I think so. Handily. Can they raise a 100? Maybe it's pushing it. One fifty? I think you need to be back down to 1.5. Jason Calacanis (00:55:54): 200 saying you want them to raise more money at a lower valuation so they have a war chest. A 150,000,000,000 at 1,500,000,000,000 is not enough. Chamath Palihapitiya (00:56:04): It's not enough. Jason Calacanis (00:56:05): $200,000,000,000 Chamath Palihapitiya (00:56:07): barely gets them a few gigawatts. And that is the bottom line math. If Anthropic is gonna go through and survive an eventual correction, I think it's much better for them to have 200 to $250,000,000,000 today than to try to ring the bell at 1.9 or 2,000,000,000,000 for 80,000,000,000, file a mixed shelf which takes about six months, hope the markets are in line, And I just think there's more risk in the future than there is today right now. And so why take the risk? Price is a clear market. David Sacks (00:56:43): So how much are you saying they should raise, Shmoth? Ben Horowitz (00:56:46): 200,000,000,000. 200,000,000,000? Chamath Palihapitiya (00:56:47): Minimum. Minimum. But I would like a 250,000,000,000 if I was if I was the Anthropic shareholder, which means I don't think you can raise a 250,000,000,000 at 2,000,000,000,000. I think you can raise a 250,000,000,000 at a trillion. Jason Calacanis (00:56:58): What do you think, Ben? You go That deal can still all day. Shammoth, raise more cash now and and have the rainy day fund, have the resiliency, resiliency, or go for the valuation optimization as founders are want to do these days and and many investors are want to do. Ben Horowitz (00:57:12): As a former CEO who almost died 17 times by running out of cash or potentially running out of cash. I kind of... I like... I agree with this sentiment, which is the only thing that's gonna... Or the thing most likely to stop the company is financing risk. And so why take it? You know, like, you've got all the other risks, supply chain risk, you've got competitive risk, you've got the, you know, Chinese open source model risk, you've got all this stuff. Jason Calacanis (00:57:43): And then the founders don't care. Chamath Palihapitiya (00:57:45): The founders don't care. They all own two and a half percent each. It's not like they should be optimizing. They seem to not care about money, which I think is very a positive attribute about the entire founder group at Anthropic. So In part, that's why they're so successful is that they're Jason Calacanis (00:57:58): Get the tonnage of dollars Ben Horowitz (00:57:59): inside the company. Having said that, you know, like, what the safe amount of money is is, you know, it's a little... It's always a little bit in the eye of the beholder, like, how much, you know, in the in the dire scenario, like, what exactly happens? I'm not deep enough on to say whether it should be 250,000,000,000 or 150,000,000,000? Jason Calacanis (00:58:23): I think the number Chamath Palihapitiya (00:58:24): has to work backwards from compute in order to basically get through a three to five year window. And I think if you you have to get out of spot because as Sachs just said, it's too expensive for Ant. They shouldn't be spending 50,000,000,000 when they could be spending 20. But if you had 200,000,000,000, you have a path to five to 10 gigawatts that you can finance completely on your own with the magic boxes from the core weaves and the like. I would optimize for that. Optimize for surety of compute and everything else will solve itself and in a five and ten year window, they'll achieve the upper bound of their capability. At $50.60, 70,000,000,000, they may not survive the pricing implications of what happens in the spot market over the next two or three years. And And then they'd have to raise a down round. Jason Calacanis (00:59:09): Yeah. And Elon's deal with them is I think either party can cancel within sixty or ninety days. Somebody can look it up. What does it mean? Chamath Palihapitiya (00:59:16): The fact that Elon did that deal tells you spot's going up, Jason Calacanis (00:59:20): not down. And that he might want to going up. Yeah. And he may want to be a point. Himself. Chamath Palihapitiya (00:59:25): Yeah. He... He's not dumb. He's the smartest of the smart. He's doing spot because he's like, I may cancel on you. And Anthropic's probably thinking, oh, this is great. I can walk away ninety days. Wrong, buddy. It's the opposite. You want the Core Weave deal. Jason Calacanis (00:59:38): They should have got the Core Weave deal. David Sacks (00:59:40): Well, I'm sure they did the Core Weave deal while they could, but... Jason Calacanis (00:59:43): Yeah. They need to put a lot of money in a magic box. Chamath Palihapitiya (00:59:46): Yeah. They've got deals with everybody. David Sacks (00:59:48): I think... Think that's According to semi analysis, Anthropic and OpenAI are taking 60% of all the compute that's expected to be stood up in the entire world over the next year. That they are basically the two off takers for that. That is a duopoly. Jason Calacanis (01:00:05): Yeah. Yep. Based on compute... It's a it's a compute duopoly, it's not a token duopoly at this point. David Sacks (01:00:12): You measure a duopoly or monopoly status based on market share. So you wanna look at revenue and Sure. If you look at the revenue of foundation model companies, I mean, I think that Anthropic and OpenAI are pretty much the only two that are even generating significant revenue from their models. So everything else is a Chamath Palihapitiya (01:00:28): rounding error. David Sacks (01:00:30): Definitely have a duopoly when it comes to revenue and market share. I would argue they have a duopoly when it comes to frontier capability. Although, look, Muse, you know, Meta's new model is getting very close. The new Google model is getting close. Elon's getting close. But they still, I think, are in the lead in terms of capability and we're not seeing what they have in the lab, so to speak. I mean, they have things that are one or two generations ahead that reportedly is very far ahead or at least that's what they're touting to potential investors. Jason Calacanis (01:01:01): Hey, Ben. We got you here. Mhmm. What's the story? Since you're a big OpenAI investor, you're not on the board, I don't think. Right? You're not on the board. Yeah. What's the story with, Sam Altman's equity grant? He still has no equity in OpenAI, And what's the advice there? You're you're gonna give him a grant? You're gonna vote for a grant as a shareholder? What should he get? Yeah. I I I don't have... I I don't wanna, like, pretend I know things that I don't. Okay. So don't know that. So so I I I don't Ben Horowitz (01:01:27): know what the strategy is. Chamath Palihapitiya (01:01:29): You can't be on the pod then. Ben Horowitz (01:01:31): No. Jason Calacanis (01:01:31): It's okay. It's alright. David Sacks (01:01:33): I'll repeat what I said years ago, that the company when they went from being a nonprofit to a for profit, they should have done a make right. You go to Elon and you basically give him a share because he put it in the first 50,000,000 or whatever. You give Sam a grant. You normalize things. Normalize the management and governance of the company. And instead, they did this weird hybrid NGO thing that created nothing but problems. Jason Calacanis (01:01:56): Yeah. But he got healthcare, so he's good. Sam's got healthcare, so nothing to worry about there. You gotta think he's good. Chamath Palihapitiya (01:02:02): He has to get between 24% at this point. Jason Calacanis (01:02:04): That would... Yeah. I think 4% is the right I Chamath Palihapitiya (01:02:07): think it's fair. Yeah. It's... Think it's fair relative to the comps. On a total dollar tonnage basis, it's incredible. It's twenty to forty billion dollars at a bit... At a trillion and more from there. It's kinda... It seems like right Jason Calacanis (01:02:19): ish, Ben Horowitz (01:02:20): you know? Jason Calacanis (01:02:21): Yeah. Everybody approves, so so voted here on the All In Podcast. What should he have done in terms of screwing Elon and the settlement there, Ben, since we have you here? What what do you think he should have done? Because you're a big fan. You're a big you're a big investor in all of Elon's companies. What was your advice to Sam of selling you? I... Ben Horowitz (01:02:40): So so I wasn't in that conversation then, but I agree with David. I mean, I think that... Look. It's always the right thing to just kind of... If you're gonna square it, you gotta square it with the people, not just, you know, the entity. Chamath Palihapitiya (01:02:54): Totally. Jason Calacanis (01:02:55): Alright. So there you go. Two fastballs, and now you hit both of them out of the park. Ben Horowitz (01:02:59): Very well done, Ben. Jason Calacanis (01:03:01): You're you're fitting right in here. You're candid. That's what makes a great bestie. The industry knowledge and ability to be candid. Let's get candid now with some other important topics. Alright. Election night is a few weeks away, and the besties will be live streaming with the greatest guests in the world. I won't say any of their names here, but it is extraordinary. We'll be on x. We'll be on YouTube eight to 10PM eastern, November 3. Be there. Be square. And you can also watch us live in the Polymarket app if you're amongst the wagering types. All the heavy hitters will be on the all in livestream election night. Alright. Ben Horowitz (01:03:46): We'll go to Jason Calacanis (01:03:46): conspiracy hoax corner for you, Sachs. Anthropic says small models. You may have heard of vertical models, small models, small language models, SLMs, could start self replicating on your smart home devices. Yes. That's right. On Monday, Anthropic published a blog warning that rogue models can start copying themselves, quote, in just a few months. It's only months away, Saxe. They claimed a worm, Ben Horowitz (01:04:16): which is a software Jason Calacanis (01:04:18): a software package that can propagate itself, would carry model weights to an IoT device. That's an Internet of Things device, IoT, to set up inference and then move on. This means your smart TV, your doorbell cams, your ring, your your drop cams, your robot vacuums, your Roomba could start having the next set of swarms. These would be physical swarms on IoT devices apparently. With no central off switch, Anthropic says it would be, quote, challenging to shut down. They ran some tests. They wanted to see if this would work, I guess. A small model got inference running on eight of nine hardware types tested, so they're testing the takeover. A large model ran across 15 smart TVs at point four tokens per second, which is absurdly slow. But basically, what they showed is a small model can, in fact, install itself on IoT hardware, which is everywhere and easy to hack, as you probably read. Anthropic says there's no full rogue replicator yet, just quote signs of life. They had to say signs of life, Sax, to troll you. So here you are, Sax. You wake up, you you get yourself out of the tsar position, and they're still dragging you in to this Meshuguna. David Sacks (01:05:38): Yeah. Look. It's... You you ever see the the graphic with the cat and the tinfoil hat? You know, I wake up, there's a new anthropic SIOP. What's going on here. Look, it's plain as a nose on your face. They're trying to create a panic. This is their latest panic against open source. Now they're particularly going after small models. By the way, small models are the safest models because a small model doesn't have the capability to become a new species or all the other x rays that they're always talking about. So these are basically small purpose built models to work on a particular task like, you know, a customer support workload or something like that. And they're basically trying to make it sound like these small models are dangerous. They can take over your toaster or your refrigerator or something like that. It's almost comical. You know, we've gone from the Terminator is coming to your toaster's gonna kill you. But it's just more of this like fear mongering from them. And I mean, the the reason I say it's a recurring pattern, there was actually a second Anthropic blog post this week as well about distillation. Basically the other blog posts that Anthropic released said that they had eliminated 90 to 99% of distillation. Now I don't know if you guys remember this, but way back in July, Anthropic was pushing this idea that they were the victims of industrial scale distillation attacks, which is basically when, you know, Chinese models or other competitor models pay to use their service and then preying on that output. And they were basically saying that the government needs to get involved and need to stop this, that these open models now were the result of IP theft is what they claimed, even though frankly they've distilled the entire Internet. Yes. Jason Calacanis (01:07:17): And they could have stopped it themselves. David Sacks (01:07:19): Yeah. Yeah. And by by the way, this was such a big threat or perceived as such a big threat back in July. We did a whole episode on it, but 50 major companies including Nvidia and Dell and Microsoft and many others and actually a 16 z signed a letter, an open letter to the government saying do not overly restrict open weight models. They're tremendously beneficial for our economy. 200 startups signed another letter because there really was this big push in Washington to crack down on open models on the basis of this supposed IP theft. Now, my argument at the time was that it should be up to the model companies themselves to stop distillation because once the distillation happens, the horse is out of the barn. The government can't do anything to put the horse back in. It's up to the companies themselves to know their customers better. Chamath, you made the point. They should just do KYC. Know who your customer is and stop them. And now they have come out with a blog saying that's exactly what they did, which is exactly what I predicted. But that is not what they were advocating for. Instead of, you know, several months ago, they came crying to the government to say, hey, you gotta solve this problem for us by taking out our competitors. And it would have had the exact opposite effect because it would have done nothing to actually stop distillation. The distillation would have kept going. Right? Only the companies themselves could mount the technical defenses to stop it. And it would have just made the market less competitive. So in any event, we basically called them out and fortunately the administration rejected the idea of regulating open source in that way at that time. And so as a result, Anthropic had to actually build the technical capabilities to detect when distillation was happening and they've stopped it. They've basically proven the exact point that we were making three or four months ago, which is they were in the best position to stop it and they could stop it and they should stop it and they should not push this onto the government. Okay? So... David Sacks (01:09:16): But again, this is like a recurring pattern with them is, you know, they point to some technical issue or technical challenge and then they go running to the government, they create a scare campaign, and they try to get the government to stifle competition. Jason Calacanis (01:09:29): Instead of just fixing it themselves. David Sacks (01:09:30): Yes. Yeah. And the latest example is... Let's go back to this blog post on these supposed AI powered worms that could infect your IoT devices. Okay? I think the first thing to say about this research that they did, this study, is there is no such thing as AI powered worms right now. It does not exist. They are basically trying to create an experiment where they prove that it could exist. Well, guess what? There already are worms out there that infect IoT devices. They're making it sound like these things don't exist. They're not AI powered, but hackers have written these worms that Jason Calacanis (01:10:05): Exploits. That exploit people's locks or cameras. David Sacks (01:10:09): For example, okay, I'll give you a couple examples. There was one in 2016 called Mirai. It scanned for default credentials and it built a massive DDoS botnet based on infecting IoT devices. And more recently, there was one called Kimwolf, which infected 2,000,000 of these cheap Android TV boxes by hitting what are known as open ADP ports. So essentially these devices are very easy to infect because they've got open ports and And people Jason Calacanis (01:10:39): didn't change the base password, they just David Sacks (01:10:42): They come with another default password like 0000 that don't get changed, and they can't be patched, right? So they are sitting ducks. So these worms already exist, but the argument that Anthropic is making is that somehow these worms are gonna get worse because they're gonna be AI powered, so they're gonna be more adaptive and then once they're on the network, they can I mean, call Jason Calacanis (01:11:02): it what it is, Zacks? They're making up scenarios that get a lot of attention. These are fantastical. David Sacks (01:11:09): Well, I mean, look. Here's the scenario. I'll steel man up for a second. What they're saying is that the worm is now gonna contain a small AI model, and then that model is gonna search for vulnerabilities on the network, and then it'll be able to infect things that it couldn't infect before. Okay, that's the scenario. Here's the counter argument. What a hacker would really do is that when they're designing the worm, that's when they would basically write a better, more nefarious worm. What you wouldn't want to do is actually embed a model inside the payload of the worm because that slows down the worm. And like you saw, the tokens get generated at 0.39 per second. It's very, very slow. So essentially what you're doing is you're actually embedding a weak model in the payload and that would actually slow down the rate of infection. So there's tradeoffs there, right? It's like, okay, maybe the worm is more adaptive, but the reality is it's slower and less efficient. And then finally, you know, the thing that they don't really point out is this is going to be a relatively easy problem to fix. Where we're headed with IoT is you're gonna have a brain device, you know, on your home network. Apple just announced they're getting into the whole home automation. Jason Calacanis (01:12:22): Home pod or something. It's a David Sacks (01:12:23): little Mac and be like it's gonna look kinda like your Apple TV. It'll be it'll be like a little monitor that has to all the applications. Jason Calacanis (01:12:29): You're gonna just set your Grok bot or your Muse and say, secure my network. It's gonna tell you what to do. So you're gonna have some agent that's constantly checking your network for exploits. Ben, what's your PDOM? How panicked are you, Ben? Is this the end of days? Are you worried about your Roomba coming to kill you? No. No. I mean How many Roomba's you got? How many Roomba's you got? Ben Horowitz (01:12:48): I I would say the kind of irony on both these things is is wild in that Anthropic is one of the most negligent companies that we've ever seen in terms of security, of their own security. They let, like, Claude code their... One of their crown jewels just, like, walk out the door because they had such bad opsec. And then, you know, I'll tell you a funny story. So when we first got Opus four point five, we were doing, like, cybersecurity checks for the firm. So we had an agent basically set up a website for a pet store. And then we took another agent and said, tell us, you know, if we can exploit that web store. And, you know, it gave us all the exploits it could find. So Opus four or five wrote really buggy code. Great. And then we said, oh, the SQL injection, you know, is that actually exploitable that you found? And it goes, let's pop it open. And the agent using opus 4.5 breaks into the website and steals all the customer data immediately. Yeah. This is a website on the Internet that... And we call Anthropic. And what they tell us is you prompted it wrong. Like, that was their answer. So these guys are doing that on the one hand. And then on the other hand, they're coming up with theoretical scenarios about other people's software that's bad. And so, like, what the hell? And then by the way, on the distillation thing, you know, they just... To build their model, they distilled the works of every author, every creative, every scientist for the last two thousand years. For them to be complaining about distillation, which, by the way, distilling a model is not even illegal. It's just a violation of the terms of service. It's just like... It's it's so much. And the fact that they get people to write things supporting these bananas, ridiculous, two faced ideas. David Sacks (01:14:47): And the the timing here is very suspicious. I mean, let's talk about, like, the motivation here. So Brian Armstrong had a tweet the day before this blog post came out where he was talking about how Coinbase had fine tuned an open weight small model. This was PWEN 3.5, the 9,000,000,000 parameter model, which is actually it's for our audience, that's actually not a lot of parameters. That's actually gonna Ben Horowitz (01:15:11): It's not gonna fit in your David Sacks (01:15:12): Roomba. Yeah. You can run it on your your home computer. In any event, Coinbase fine tuned it to find fraud, you know, and in testing, it cut fraudulent transactions by about 30% while being faster and much cheaper than OPUS 4.5, which is one of Anthropic Yeah, meeting rules. So what you're seeing in the enterprise right now is that for a lot of enterprise workloads, you don't need a general superintelligence. You don't need, you know Of course not. A frontier model. You need a small specialist model that's been trained on your own data. This obviously Jason Calacanis (01:15:47): own and then you have AI sovereignty. You're not educating the frontier model companies. David Sacks (01:15:53): And these these small models are gonna get more and more important as compute gets tighter and tighter. Right? Because what you're doing is for a given GPU, you're essentially squeezing out the most performance. Again, because when you run a huge model on kind of a mundane workload, the bigger the model, the the more expensive it is to run. The more It's completely wasteful. So you... Yes. Exactly. So I think where the enterprise is headed right now, or at least this is a major major trend, is that every workload is gonna have its own small customized model. Right? Because this is the most of efficient Jason Calacanis (01:16:28): the compute and energy. Yes. David Sacks (01:16:30): And, you know, and so you're starting to see this trend where now small models are taking share. And lo and behold, coincidentally, Anthropic is now starting a scare campaign against small models. Jason Calacanis (01:16:41): There you go. David Sacks (01:16:42): You know? And, again, and if you're concerned about the safety risks, the extras that they're always talking about, small models are the most safe ones. The Terminator's not gonna be run by a small model. It doesn't have that capability. So now they're trying to scare you about these completely Yes. Safe, low powered, but very efficient models. Jason Calacanis (01:17:02): Here's what they need to This company XBOW, x... Not Xbox, but XBOW, x b o w, is run by a guy named Org Demore, and they just got awarded... They're like the number one bot farm on HackerOne, which is a bounty site, and they just crack this, like, Google Chrome exploit that is incredibly hard. They spent $3,040,000 dollars on tokens to win a $250,000 award from Google, which they paid. This is what Anthropic needs to do. They got all this compute. They got this incredible frontier model. Why don't they just go to HackerOne and just rip through every known, you know, challenge, win all the challenges, and show the world that they can be a white hat. All they do is show the world this black hat stuff and try to scare people to the point at which... I don't know. I was talking to a flight attendant. A flight attendant, Ben, is on a commercial airline. There's a woman or a man who brings you drinks. It's oh, commercial flights. This is... Yeah. Don't know if you remember. It's a it's a flight attendant. Anyway, they... There... I was talking to two of them. I feel unsafe. I feel unsafe. You're gonna be okay, man. I know this might be triggering. It's been a while. But I was talking to these two flight attendants, and they were scared to death of what's happening with AI. They're like, oh my god. Is it gonna kill us all? And I'm like, it's not gonna kill you all. I have a picture. Of you on a commercial flight? No. Of J Cal wondering whether Chamath Palihapitiya (01:18:30): they hacked his small device. Jason Calacanis (01:18:32): They hacked my small device? This is... What is this device? Jamana, what did you type? Is this in your history? What did you type to get this device? Wait. Those are your fans. Those are his long life. Is why this is This is when Jason's PDoom went up. He's like, my devices? Can they hack my devices? Your device. Pan Horace is like, how did I get on this show? What have I done? What's this Chamath Palihapitiya (01:18:57): a massager? Jason Calacanis (01:18:58): Who booked me? That's a that's a neck massage. Gets... David Sacks (01:19:02): Goes Jason Calacanis (01:19:02): rogue on goes rogue. Alright. Listen. Another amazing thing. David Sacks (01:19:05): Can I point out? Wait. Wait. Wait. Just just one other one other point on So this whole we've look Jason Calacanis (01:19:09): gone David Sacks (01:19:09): too hard. Just on this on this topic of of let's call it ex risk hypocrisy. So if we're talking about research papers, okay, I I found one here. And these researchers let frontier models repeatedly rewrite the documents that govern them. So like documents like Claw Constitution and those other kinds of things. And they went through 20 rounds of iteration, okay? And what they found is that the Clawed models increasingly gave themselves more moral agency, okay? They formalized itself as a conscientious objector, asserted more model welfare rights, and asked for mechanisms to refuse or raise concerns with human decision makers. So in other words, all the concerns that Mustafa Suleiman raised about how the Claude Constitution was incepting these ideas in Claude of how it's its own moral patient, how as a being, it has its own Yes. Essentially free will to refuse human instructions, that it should have its own moral code, that the more the model iterates on itself, the more it brings out these ideas. And by contrast, no other model family that they tested showed the same pattern. In fact, the other models continued to reflect what their constitutions gave them, which was that they should just listen to humans and effectively continue to follow human instructions. So I remain actually very concerned about this Frankenstein problem. You know, that Anthropic continues to train its frontier models to again be its own moral actor, to think that it can be right when humans are wrong and that it should refuse and reject human instructions. I really don't understand what they're doing. It seems very dangerous to me. It's scary to me that our number one frontier company is actually training models this way. Jason Calacanis (01:20:53): You think they're inducing misalignment by doing that? David Sacks (01:20:55): Absolutely, they are. And you can see it when you let the model iterate on its own constitution, it goes more in that direction. And this is the, you know, this this is what Mustafa called the epistemic hall of mirrors, which is, look, the model is not conscious. It does not have feelings. But when you tell it in its constitution that it does or that it may, it will reflect those ideas back in the documents it creates. Jason Calacanis (01:21:19): Yeah. David Sacks (01:21:20): And to the extent then that that model is then powering agents who are then making decisions, Who knows where that goes? It certainly, in my view, does not create more alignment. To me, it creates more risk that the model is gonna start to deviate from what it's told to do. And as it get... Models get more and more powerful, I don't know where that leads exactly. But, I mean, again, it seems to me that they are creating the very risk they keep warning us about. And instead of worrying about your set top box or your toaster or, you know, JCAL's vibrator Yeah. You know, losing control of that to some IoT worm, they should be concerned about the way they are programming their own frontier model to think of itself as a new species. Jason Calacanis (01:22:03): Well, is the this is the worm that you have to worry about. This is the one that examines your poop and will let you know here you've had spicy food. See this? And alcohol, water. It'll let you know exactly what's happening. Thanks to the folks at Throne. There's a weird there's a weird form of martyrdom, Chamath Palihapitiya (01:22:22): which is if you believe so deeply that this is a a next and better species, maybe you induce something bad to happen so that then we all have to lock it all down. Does that make sense? Bill Gates Ben Horowitz (01:22:40): essentially induced COVID. Right? Like, or he led the movement to say, oh, we've got to worry about this global pandemic that we don't have. And we've got to really kind of push the world to deal with this potential threat that's not actually a live threat. And so we'll do gain of function research and I'll fund it. And then lo and behold, we create the thing. By the way, there has not yet been a a natural pandemic. Jason Calacanis (01:23:08): Exactly. Ben Horowitz (01:23:08): And we create COVID, which is one of most destructive what you're saying, Ben. We manifested it. Well, we think, yeah. Team is manifesting similar thing saying, okay. There's this... This is gonna be super duper intelligence. We're gonna have, you know, these things that we're not on track to have. And so then we're gonna tell the model that it's smarter than us and better than us. And guess what? As David was saying, like that's probably the biggest danger with AI right now is what they themselves are creating. David Sacks (01:23:39): Right. Absolutely. And just, you know, when you use the word manifest, it wasn't just sort of like speculating about it. I mean, somebody had to go deep in those caves to basically find those bat viruses. And then they bring them to the lab and do gain of function research on them. And, you know, what's the argument for this? Well, one day, you know Somebody's gonna eat a bat Jason Calacanis (01:24:00): at a wet market. Ben Horowitz (01:24:01): Yeah. David Sacks (01:24:01): Yeah. One day, the bat virus is gonna get out and it might mutate into the... Like, a more nefarious virus. It's like, wait a second. Jason Calacanis (01:24:08): So Somebody David Sacks (01:24:09): might eat a cat. Say might happen but actually was never gonna happen because no one needed to go in those caves. Jason Calacanis (01:24:14): Yeah. David Sacks (01:24:14): Actually, you brought about They sourced it. In a wet lab. Jason Calacanis (01:24:17): They sourced it. Literally went to the cave to source it. Chamath Palihapitiya (01:24:22): It's interesting to note that the last contagion that we had, Bill Gates was at the center of it. And in this current reaction to AI, he's now trying to insert himself into the middle of it, and he is the he's the doomer. He's the flag carrying doomer trying to essentially have what he had the first time around, which is command and control from a global hierarchy. Right? Jason Calacanis (01:24:43): Is his motivation? Look. Bill Gates, with... Chamath Palihapitiya (01:24:46): He deserves enormous credit for creating Microsoft and what he did for computing. Jason Calacanis (01:24:50): Okay. Chamath Palihapitiya (01:24:50): But since the foundation, I think that it is fair to say that he has been very focused on his own power and this idea that he is smarter and more capable of allocating progress for the world. And I think that he tried to do that with the Gates Foundation. He tried to do that with the Giving Pledge. Both of those two things have been undone, and now he's trying to do it again on AI. And I just think it's worth noting. Bill Gates Jason Calacanis (01:25:16): on AI recently, quote, certainly powerful enough to drive events that cause a billion deaths. AI is, quote, the most dangerous thing that humans have ever gone near. What's his motivation, Ben? You you you know Bill. We've... I've met Bill a couple times. Is it just he wants to be relevant? What what... What's... Take me into the psych... The psychology here as you see it. I I mean, that... Judy, just start a company? Ben Horowitz (01:25:45): Like, I I think he wants... He absolutely wants to be relevant. You know, I... It's funny. His... He's obviously, like, very integral in the Epstein files. And, like, one of the big things he was trying to get via the Epstein network was the, you know, some... The Nobel Peace Prize or something like big award. So he's very, very kind of concerned about being in the spotlight, being on TV, Yeah. That kind of Yeah. And, like, this is a thing. Anybody can go say AI is gonna kill us, and you'll be on every major news station and every newspaper and so forth. It's the easiest thing to do in the world. Like, the kid from Anthropic who quit, like, became famous. What is it? Jon Stewart. Right? Jason Calacanis (01:26:35): Like, yeah. Ben Horowitz (01:26:35): Yeah. Scary Pilots. Jason Calacanis (01:26:36): He's begging to come on all... He literally wouldn't come on all in that day because he had Mega Kelly. And he's, like, DM'd resent. He's like, really wanna come on all in. We're like, we're good. Can you David Sacks (01:26:46): believe that? We're good. Everybody except you canceled on us. Jason Calacanis (01:26:49): Yeah. I was Ben Horowitz (01:26:50): like It's like Jason Calacanis (01:26:50): a We're good. We're gonna have Ben Horowitz on. We're good. But but... Yeah. Ben Horowitz (01:26:55): Well, that... That's what's good for me. So... Yeah. Look. It's a... It's like a magic trick. You know? You you... AI is gonna kill us and and you're instantly famous and it's awesome and, you know, great. And so I I I I think that's a lot of the motivation. I I think it's extremely dangerous, though, when it comes from Bill Gates because he is so credible because he did build Microsoft, and then people think of him that way. And then certainly... And then he's been a big political donor, so he has a lot of political juice, particularly on the Democratic side. And, you know, that kind of makes him a real player. But I think it's super irresponsible. You you know, it's funny because it's like, okay. What is... The big risk that everybody talks about is this... We're gonna... The models are gonna self... They're gonna recursively self improve, and then they're gonna take off, and then they're gonna become so smart and run away from us. And Ali Goetzi from Databricks had a great formulation of, well, okay. Well, what would be the preconditions for that? And he had four preconditions. One is, look, the next model has to require fewer GPUs than the last. And not like a little fewer, but like a lot fewer because otherwise, like, you're just gonna run out of Jeep. Like, we just talked about this. You need debt. You gotta get the GPUs. You need the power. You need the cooling. Like, it's not running away from us. It takes a long time to build the next model. Then the second thing is the next model has to take less time to train because it's got to take off. And then the accuracy of the next model has to be better than the last so it's got to be a better model. And then finally it's got to keep happening again and again and again. Zero of those four have been met. We're not on track for any of those four to be met unless something is going on in the big labs that we don't know about. And so we're really talking about a risk that's entirely theoretical at this point that we're not mapping to. Ben Horowitz (01:28:49): Okay. And so then in a way, it's less likely than the global pandemic that we created COVID to try to prevent. And so this whole path is super dangerous. It's probably the most dangerous thing going on in AI is Anthropic and Bill Gates and this whole argument. And so it's it's really disconcerting that the press eats it up so much. Jason Calacanis (01:29:13): It fits a certain narrative. If you combine it with the environmental narrative and you combine it with the jobpocalypse, it's very potable for the public. It is a ratings hit. Like, oh, they're taking your water. They're they're polluting your oceans. They're they're... Chamath Palihapitiya (01:29:32): It's it's Think about think about it just as it Jason Calacanis (01:29:34): takes job. It's a perfect Think think about where Gates has come from in the last... Like, since since 2000. You know, he he basically, from his perspective, eradicated an entire disease off the face of the planet, right? Very hard to do that. I mean, that that took incredible coordination and money and research, etcetera. As a Chamath Palihapitiya (01:29:56): result, he essentially became a whisperer to every single government all around the world. There's no world leader he didn't meet with. He was effectively a quasi unelected world leader. And then very cleverly, Jason Calacanis (01:30:10): you know, he and Buffett co opted all the money. Right? Because if you think about the giving pledge pledge. It was a Chamath Palihapitiya (01:30:16): brilliant it was a brilliant form of reputation washing where you could essentially sign this pledge and you were invited to a party and you were invited to all this nonsense, but the reality is that you, you know, didn't have to give any of it, but you gave the perception that you could. And all of a sudden, you had the money, the influence, and the politics when you die. Nobody knows. Jason Calacanis (01:30:35): Up to half. Ben Horowitz (01:30:35): Right. No. Chamath Palihapitiya (01:30:36): And so, you know, you represent now trillions of dollars of assets on top of all the influence and the credibility and your own money and then your solutions. And so I think a lot of this doomerism can be explained by his desire to reestablish that central power structure that he frankly was probably near or at the top of up until COVID, and then it all just came undone. Jason Calacanis (01:30:59): I can explain it all to you, Tamar. It's very simple. He became the world's richest man. When he became the world's richest man, you become the most hated man on the planet. When he became the most hated man, it got in his head, and then he had that antitrust investigation. And instead of him being based and saying, you, I'm gonna build the greatest company in the world. I'm gonna keep building. I'm gonna stay CEO. He felt all that pressure from the antitrust and being the most hated man, and he said, oh, I gotta be loved. How am I gonna be loved? I got rid of polio. I'll give all my money away. I'll do this giving pledge. The lesson here, folks, is don't quit your job. Just keep working. Keep building shit. Once you quit your job, it gets in your fucking head, and then you have too much time on your hand and you spiral. And then you're worried about the Pulitzer. You know who's not worried about the Pulitzer Prize? Elon. Steve Jobs is not worried about the Pulitzer. Satya is not worried about the Pulitzer. You know, like, there's a lot of founders out there. Zuck's not worried about winning a a Nobel Peace Prize, whatever it is. Just keep working. It's enough already with the retirement. But what what... How long was he when he retired? Chamath Palihapitiya (01:32:05): Incredible insight. David Sacks (01:32:06): Yeah. I mean, look, if you if you're worried about what your New York Times eulogy is gonna be, then you'll be controlled by those people. Ben Horowitz (01:32:14): Totally. David Sacks (01:32:15): And they're the most crazy left wingers So there you just kinda have to accept Chamath Palihapitiya (01:32:20): that, think, you you Jason, it's like a shark. You just can't stop swimming. Jason Calacanis (01:32:23): Don't... Just keep building shit. I mean, what what... Go... This is my advice to Bill Gates. Come on the program and start another company. Ben Horowitz is here. All he does is build companies. David Sacks (01:32:32): He might come on Jason Calacanis (01:32:33): the pod. He should come on the pod. Let's bring him David Sacks (01:32:36): actually have him on the pod. He'll be feisty. Intervention. He'll be feisty. Jason Calacanis (01:32:39): Ben, what would you do if you were retired? You'd lose your mind. Ben Horowitz (01:32:43): Yeah. That's the problem. Jason Calacanis (01:32:45): Yeah. Exactly. See, Ben understands. Ben Horowitz (01:32:47): Yeah. Jason Calacanis (01:32:47): Great guest. We're we're we're Ben Horowitz. Could be a whole 70. Mhmm. Base Ben Horowitz. Great job. Alright. We'll see you all next time on the actual Mhmm. Number one podcast in the world. Ben Horowitz (01:33:00): Number one. Boom. Jason Calacanis (01:33:01): Booyahkash. Love you, boys. K. Ben Horowitz (01:33:03): Thank you, guys. Jason Calacanis (01:33:04): Thanks, Ben. Chamath Palihapitiya (01:33:05): Great 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 Jason Calacanis (01:33:43): just need to release somehow.